On February 20, 2017, Energy Focus, Inc. (the Company) announced
a restructuring initiative (the Restructuring), which is being
implemented during the first quarter of 2017 to achieve higher
operating efficiencies and reduce the Companys annual operating
costs by approximately $10 million from 2016 levels. The
Restructuring includes a workforce reduction of approximately
15%, consolidation of the Companys office facilities,
reorganization of the commercial sales force, integration of
engineering and research and development teams, reconfiguration
of certain manufacturing lines, and the reduction in
administrative expenses and professional fees. The Company
expects to record a one-time restructuring charge of
approximately $1.1 million in its first quarter 2017 associated
with these actions, consisting of (a) approximately $0.8 million
of employee-related costs, including severance; and (b)
approximately $0.3 million of lease termination costs. The
amounts and timing of all estimates are subject to assumptions
where actual results may differ.

Forward-Looking Statements

Forward-looking statements in this report are made to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Generally, these statements can be identified by the use
of words such as believes, estimates, anticipates, expects,
seeks, projects, intends, plans, may, will, should, could, would
and similar expressions intended to identify forward-looking
statements, although not all forward-looking statements contain
these identifying words. These forward-looking statements include
all matters that are not historical facts and include statements
regarding our current expectations concerning, among other
things, our results of operations, financial condition,
strategies, capital expenditures and the industry in which we
operate. By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend
on circumstances that may or may not occur in the future.
Although we base these forward-looking statements on assumptions
that we believe are reasonable when made, we caution you that
forward-looking statements are not guarantees of future
performance and that our actual results of operations, financial
condition and liquidity, and industry developments may differ
materially from statements made in or suggested by the
forward-looking statements contained in this report. We believe
that important factors that could cause our actual results to
differ materially from forward-looking statements include, but
are not limited to: the Companys expectations regarding the
amount and timing of the Restructuring charges, including costs
subject to future negotiations with third parties; estimates of
the amount of savings that will be realized; the effectiveness of
the Restructuring in achieving intended cost reductions and
operational efficiencies; our history of operating losses and our
ability to effectively implement cost-cutting measures and
generate sufficient cash from operations or receive sufficient
financing, on acceptable terms, to continue our operations; our
reliance on a limited number of customers, in particular our
sales of products for the U.S. Navy, for a significant portion of
our revenue, and our ability to maintain or grow such sales
levels; the entrance of competitors in the market for the U.S.
Navy products; general economic conditions in the United States
and in other markets in which we sell our products; our ability
to utilize our resulting operational structure to implement and
manage our growth plans to increase demand, diversify our
customer base, increase sales, control expenses and respond to
new technologies and market trends; our ability to compete
effectively against companies with greater resources, lower cost
structures, or more rapid development efforts; our ability to
protect our intellectual property rights and other confidential
information, manage infringement claims by others, and the impact
of any type of legal claim or dispute; our ability to attract and
retain qualified personnel, and to do so in a timely manner; and
our ability to maintain effective internal controls and otherwise
comply with our obligations as a publicly traded company. In
light of the foregoing, we caution you not to place undue
reliance on our forward-looking statements. Any forward-looking
statement that we make in this report speaks only as of the date
of such statement, and we undertake no obligation to update any
forward-looking statement or to publicly announce the results of
any revision to any of those statements to reflect future events
or developments.

Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.

CEO and Board Changes

On February 19, 2017, the Board of Directors of Energy Focus,
Inc. (the Company) appointed Ted L. Tewksbury III, Ph.D to serve
as Chairman of the Board, Chief Executive Officer and President,
effective immediately. Dr. Tewksbury has been serving as the
Companys Executive Chairman of the Board of Directors since
December 12, 2016.

James Tu has stepped down as Chief Executive Officer and
President of the Company and as a member of the Board of
Directors, effective February 19, 2017. Mr. Tus decision to
resign was not as a result of any disagreement with the Company.
The Company and Mr. Tu entered into a Separation Agreement and
Release dated February 18, 2017, which provides for the continued
payment of Mr. Tus salary at the rate then in effect for a period
of 12 months following his separation date and 12 months of
continued benefits.

Simon Cheng has also resigned as a member of the Board of
Directors effective February 19, 2017. Mr. Chengs decision to
resign from the Board was not as a result of any disagreement
with the Company.

In addition to serving as the Companys Executive Chair since
December 2016, Dr. Tewksbury, age 60, has been Founder and CEO of
Tewksbury Partners, LLC, providing strategic consulting, advisory
and board services to private and public technology companies,
venture capital and private equity firms, since 2013. He had
served as President and Chief Executive Officer (from November
2014) and a director (from September 2010) of Entropic
Communications, a public company specializing in semiconductor
solutions for the connected home, until its sale to MaxLinear,
Inc., another public semiconductor company, in April 2015, and he
remains a director of MaxLinear, Inc. He is also a director of
Jariet Technologies, a private company specializing in digital
microwave integrated circuits for wireless infrastructure,
backhaul and military applications. From 2008 to 2013, Dr.
Tewksbury had been President and Chief Executive Officer and a
director of Integrated Device Corporation, a public semiconductor
company.

Dr. Tewksburys base salary will increase to $450,000 annually and
he is eligible for a performance-based bonus of up to 50% of base
salary at target level. In connection with his appointment, he
also will be granted restricted stock units (RSUs) having a grant
date value of $225,000 and options equal to 1.5 times the number
of RSUs that will vest over three years. Dr. Tewksbury will also
participate in the Companys Change in Control Plan (the CIC Plan)
adopted by the Board on February 19, 2017 and described in more
detail below, which provides for a severance payment to Dr.
Tewksbury upon a qualifying termination occurring within 24
months after a Change in Control (as defined in the CIC Plan)
equal to one times his base salary and annual target bonus, a
pro-rated portion of any current year bonus, 12 months of
continued benefits and full vesting of all outstanding equity
awards provided that he remains in compliance with
confidentiality, non-competition, non-solicitation and other
covenants. Additional terms of the CIC Plan are described below.

Change in Control Plan

On February 19, 2017, the Board of Directors of the Company
adopted the CIC Plan, which provides for (a) full vesting of
equity awards held by non-employee directors upon a Change in
Control and (b) severance payments (Severance) to be made in the
event of a qualifying termination within 24 months of a Change in
Control (a Qualifying Termination) to employees designated by the
Board for participation in the CIC Plan, payable in the amounts
designated by the Board and set forth in a participation
agreement with the employee.

The Severance will be reduced by the amount of any similar
payments and benefits under any employment agreement or other
arrangement with the Company and is subject to the employees or
directors compliance with confidentiality, non-competition,
non-solicitation, other restrictive covenants and the provision
of a full release of claims against the Company and its
successors. To the extent any Severance would constitute a
parachute payment within the meaning of Section 280G of the
Internal Revenue Code (the Code), the Company would

reduce the employees payments and benefits payable under the CIC
Plan to the extent necessary so that no portion thereof would be
subject to the excise tax imposed by Section 4999 of the Code.

The Board of Directors designated the Chairman of the Board,
Chief Executive Officer and President and the Chief Financial
Officer for participation in the CIC Plan and each have entered
into a participation agreement providing for the following
Severance upon a Qualifying Termination: (a) full vesting of all
outstanding equity awards, (b) a lump sum equal to one times the
sum of base salary and target annual cash bonus and (c) continued
company paid participation in group health benefits for 12 months
following the termination.

A copy of the related press release announcing these changes is
attached hereto as Exhibit 99.1. A copy of Dr. Tewksburys offer
letter, the CIC Plan, Mr. Bradley B. Whites participation
agreement under the CIC Plan, and the separation and release
agreement with Mr. Tu are attached hereto as Exhibits 10.1, 10.2,
10.3, and 10.4, respectively.

(d) Exhibits.