Good day, ladies and gentlemen, welcome to the Energy Focus Fourth Quarter and Fiscal Year 2015 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the conference over to Ms. Marcia Miller, Chief Financial Officer. Please go ahead, Ma’am.

Thank you, Katherine. Good morning, everyone and thank you for joining us Energy Focus’s fourth quarter and year 2015 earnings conference call. Today, James Tu, our Executive Chairman, Eric Hilliard, our President and Chief Executive Officer, and I will report on our results for the quarter and year. The news release with our earnings results, and our quarterly report filed on 10-K have been posted to our website under the Investors section. As a reminder today, the discussion will include forward-looking statements, including predictions, expectations, estimates and other information that might be considered forward-looking. These forward-looking statements are subject to numerous risks and uncertainties. We encourage you to review our most recent filings with the Securities and Exchange Commission including our 10-K and 10-Qs for a complete discussion of these factors and other risks that might affect our future results or the market price of our stock. We are not obligating ourselves to publicly release any revisions to these forward-looking statements in light of new information or future events. Now, I'd like to turn the call over to James.

Thanks Marcia. Good morning everyone and thank you for your participation in our fourth quarter and full year 2015 earnings call. In this call, as usual, I will focus on updating with you our business development efforts and progress, and Marcia Miller will discuss our financial and operational results in more details. We will then open up the call for questions. As you have read from our press release this morning, fourth quarter 2015 marked yet another high-growth period for Energy Focus. Our total sales grew 95% over the same quarter last year with continuing strong sales to the US Navy combined with 396% increase in our commercial sales from the same period last year. And we also continued to see significant profitability improvement from a year ago, with gross margin 43.9% and operating margin at 9.6%, up from gross margin of 36% and operating loss a year ago. Before I dive into more detailed review of the quarter and the whole year in 2015, I would like to affirm and clarify our outlook for the military and maritime sales for the first half of 2016. As we stated in the press release, the most adverse event during the fourth quarter was the budget impasse of the US government. Although the budget was passed later in October, the overhanging concerns of budget uncertainty coupled with year-end inertia make decisions dramatically slowed down purchases of our military and maritime product, especially navy ships during the quarter. Although we did ship approximately $10 million of military products during the quarter, our distributors saw abnormally slow movement of their inventory stock of our product, and therefore this temporary sales bottleneck will impact our sales the most in the first quarter of 2016. We believe as we stated in the press release that this…

Thank you, James. Before I get into the details, I’d like to remind everyone that during the third quarter of 2015, we reclassified the results of our former United Kingdom subsidiary, Crescent Lighting Limited, and our former turnkey solutions business, Energy Focus LED Solutions, to discontinued operations in our financial statements. Our historical results reflect this reclassification. We are very pleased to report another strong quarter to end a record 2015 year of financial results. Sales for the quarter was $17.2 million, an increase of 95% from prior year’s fourth quarter. Sales of our commercial products were almost four times those of the prior year and increased 107% sequentially from the third quarter 2015. Sales of our government products for the US Navy increased 39% from the prior year’s fourth quarter, but declined 31% sequentially resulting in a sequential decline in total sales of 6%. Through the quarter, commercial product sales comprised approximately 40% of the total, while sales for the Navy comprised approximately 60% of the total. The shift in product mix resulted in gross margins of 43.9%, a decline of 5.9 points from the third quarter of 2015 and an increase of 7.8 points from the prior year’s fourth quarter. We have said that we have seen improvements in gross margin resulting from improved operating efficiencies and our supply chain, building economies of scale from sales volume increases and product cost reduction efforts from value engineering processes, but that gross margins will go down as sales of commercial products became a bigger part of our total sales. Gross margins for the quarter exceeded our long-term target of 35%, but we do expect them to continue to drop from the fourth quarter level as sales mix changes to higher volume growth of our commercial products and our core Navy…

[Operator Instructions] And we’ll take our first question from Carter Driscoll with FBR.

You guys hear me?

Yes sir, I can hear you.

James, Marcia?

One moment sir, I’ll go and check if the line is, you would join us please standby. And once again, ladies and gentlemen please standby we’ll going back live momentarily. The standby will be going back live. And Miller's line has been re-established. Can you hear me now ma'am?

We can thank you, we apologize everyone for the technical difficult.

And Mr. Driscoll please go ahead.

First question obviously let’s talk about bit of the Navy weakness and then maybe the change in sales channel. So if I heard you correctly, I think that a couple of things, one of which is you expect at least to be able to generate the same level of revenue in 2016 as you did in 2015 is that - first is that correct?

No, that’s not what I said. We’re talking about overall sales growth, we believe that this is not - we’re still going to grow from 2015 that’s overall sales growth because commercial grew a lot faster right and to compensate any drop in the military side.

So you're not saying that the government side doesn't have the potential to decline in 2016?

We believe that it will decline, it is likely to decline from 2015 but it will be compensated by the growth on the commercial side.

And overall you're expecting growth in total revenue is that to fair to say?

Yes.

Can you quantify that more absolutely; I mean you think you can do double-digit growth year over year 20% growth?

I think it's too early for us to give our guidance not precisely we are still a small organization the contract are some of the sizeable, so based on the pipelines we have seen as I said in the opening remark, we believe that we have a very strong potential to grow over 2015. And obviously as the third quarter progresses, we will give more clear guidance. As you know we have not given out guidance in the past and this is the quarter we - the first quarter we did that and the reason is that this is truly a blip, a temporary blip on the financial impact because of the missed budget issue that somewhat caught us off guard. And that said, I have to say that we grew a lot faster in 2015 over 2014 then what we like to grow on annual basis. So at some point we could run into this quarterly volatility and that's what we've seen in the past but from now on because of the sort of the impact we experienced in the fourth quarter and the first quarter of 2016 as well, we want to start giving out some guidance so people understand that this is not an operational or fundamental issue its truly, truly a short-term issue.

But we’re talking more specifically about the Navy right, there are other areas that could potentially layer in hope in 2016 or when you’re talking about the government segment, are we still talking about overwhelmingly about the Navy?

No, just the Navy we are talking about exactly just the Navy product sales.

So Navy product sales but its potential of that segment could grow year over year if you layer in say military bases or Department of Defense or something along those lines is that --?

Absolutely, if you include that but understand we are selling to those government entities with our commercial product, so we characterize the military maritime sales as very specific product portfolio that is different from commercial product portfolio, which could be sold into the government or military bases, right.

So it's really mixing and matching of the two segments now and a blending so it's harder to isolate what might traditionally be considered a government product because of our commercial, your selling it as a commercial or segmenting it under the commercial and industrial?

This is why if you look at our press release, we segmented by military maritime sales and commercial product sales.

Next question is, you talked about changing the sales channel to get a better handle on sales directly into the Navy and moving more of a commission basis. So you believe this removes a layer in terms of distribution and brings you closer to that customer but I think you imply that maybe there was some inventory at that particular partner, could you talk to that a little bit more?

Yeah, Eric Hilliard is going to elaborate on that.

Okay thank you, so Collin, let me elaborate on that and I think that's a fair assessment of what you just laid out. As we decided to realign ourselves closer to the client base, it is to obviously gain as most transparency into the user as possible so that we have a better handle on the market, the channel and our ability to feed that market and channel on a consistent and standard basis. And so by realigning ourselves, we are able to have that transparency now, we have complete transparency now and complete the number of sockets that are filled, the vessels that they have, I mean on a weekly basis we are able to see that and that allows us a better planning platform now which was what we needed to do.

Moving over to a nice win at Kohl's, the announcement, can you talk about how quickly you expect to at least to fill the initial order and what the next step would be if there is successful implementation and how would you potentially expand and argument your C&I sales and then maybe also talk about maybe geographically some of the different hospital changes, you started some initial sales [indiscernible] clinic?

On the Kohl's, we’ve already got our first order, so we expect to have more orders. The first order covers the first 25 stores I believe and we’re going to expand from there. There are about 100 stores within the Kohl's system that this kind of particular location. I also like to add we have expanded our offering to their back of the house operation as well. So that’s additional opportunities outside of the press release we made. And that's actually a bigger opportunity, even bigger opportunities. So that's about Kohl's. As for the healthcare systems, obviously we function on a regional basis mostly for these healthcare systems and we have three existing offices in Midwest, Northeast and Mid-Atlantic and I think Ohio Midwest area is obviously where we come from and investing a lot of interest we have engaged with over 10 hospital systems just in Midwest. And we believe that we will continue to expand that we got into New York as well, we are working with already a state hospital system in New York already, so it's the most exciting vertical we have. One of the most exciting verticals we have.

Talking about expanding some of your channels using some of the escrows performance contracting is that really for penetration [indiscernible] market more than any other sector or --?

Yeah that's mostly for the government sector, right federal and state opportunities including the military bases. We are seeing a lot of traction there, ESCO is many of you know have this very unique financing mechanism to enable and it's upgrades for longer payback and we have been working on that sector for multiple years and we believe that we are seeing a very exciting breakout for that whole sector and we are consider the leading provider for the ESCO industry and we are expanding that aggressively. 2015 I think we are going to see pretty explosive potential there.

And talk about the impact on the margin side from using ESCO, I would assume that it's going to put pressure on your corporate gross margin?

Actually Carter, we have a pretty strict margin discipline. Our model is to continue to improve operationally efficiency for the organization so we can enable competitive price and value proposition to our customers. Truly I have to say that we are selling absolutely highest quality product in the market, I mean the issue is can be also price competitive and I believe that we have been able to do that and with a strong margin discipline.

Thank you. [Operator Instructions] We’ll go to [indiscernible].

Can you talk a little bit about the pattern that you're seeing with the US Navy right now that gives you the confidence on the recovery in that business? I think as you’re talking about a little bit of impact to 2Q, you would suggest that you're already seeing orders now for the back half of 2Q and just can you give us a just a bit more granularity on how that’s working and where the conference is coming from?

I will talk about it and maybe Eric can pitch in as well. So we have seen as I said earlier that since 2016, opening of 2016 we have seen the orders started to come back alive from the ship level and we’re seeing pretty healthy rate of movement now. And on the other hand, the distributor still have the inventory to digest and I think based on the movement we are seeing right now, the sort of the impact on our orders, distributors order to us is probably going to be mostly in first quarter impact and a little bit on the second quarter. How much of that I think is a little early to tell but we should have that in the next 1 to 2 months but at this point we believe that it will heavily in the first quarter and slightly and modestly in the second quarter. And from third quarter, we expect a more stable rate of revenues.

It sounds like you answered perfectly.

And with the foreign Navy, obviously you’re making some good progress there. If you look at kind of historical sales patterns and how those things ramped up, getting these initial orders is a very good move but how do you expect that to go forward and how should we think about that over the next several quarters, understanding that you’re not providing guidance?

It's another exciting market for us and as I indicated that we have been talking to a few countries over the past year, we believe that Royal Australian Navy will continue to order, will give us more orders this year plus they have installed the first product that they order from us and they were very happy about it. There are a few more countries that are testing our products, I believe that additional one to two countries should become our customer in 2016 at least.

I’ll take the rest of my questions off-line but thanks a lot guys.

Thank you. I will now go to Amit Dayal with Rodman & Renshaw.

So does the guidance for the first quarter $7 million to $9 million in revenues imply nothing coming in from the Navy side?

No, there will be some but again the commercial revenues obviously will be bigger the income than the military maritime sales but again, we are the quarter is not done yet that's the most we can do.

And just to double check on the margin side, is commercial revenues are going to be stronger component of revenues in 2016 should be anticipate margins to be on the 40% level for the year?

Again, I think it's a little bit earlier too early to tell but I think it's too early to tell depends on the mix of the military product sales and the commercial product sales but obviously as we have always said that our long-term gross margin target is 35% and I don't see any reason why we will be not be at that level for 2016. How much more can be doing, again it depends on the mix. We can be above 35%, there is nothing that has changed and Marcia has indicated to that we have not seen any strong margin pressure in both either the military or commercial product line. So I think that's the most we can give out at this point just because of the mix is unclear at this point.

I guess the next question is for Marcia. What should we be using for tax rate for 2016?

So as I indicated we've got $6 million of NOL that we can utilize so anything beyond that would be likely tax at the statutory rate.

And just one final question for James may be, are we considering any personal financing options to support deployment order flow?

We have been sort of prototyping different ways to go to the market to meet customer needs. I think it's too early to tell. We have the ability to do it but it has to be for the right type of customers. Honestly we are seeing just so many opportunities right now that we don't have to even consider providing financing, we are - our growth right now is pretty much limited by the ability for us to expand our staff. And so again will continue to prototype this potential new business and we will talk more about it when we are ready to launch.

Our next question comes from Mark Miller with The Benchmark Company.

Just wondering about your R&D, are you going to stay roughly at the same level it has been the couple of - for the last two quarters for product development?

Likely yes, I mean it may fluctuate a little up or down depending on the product supplies that they need for development but generally that organization is pretty steady right now.

So you expect to see maybe a 10% increase overall for next year or for this year?

Yeah, I mean we haven't really given out guidance but I’d say that's probably in the neighborhood. Like we said, we opened an R&D center in Taiwan and if we’re looking at resources it would likely happen there.

All right. And also just from your sales guidance, are you anticipating a sequential, somewhat of a sequential decline in commercial sales for this quarter?

Again, it's probably a little bit early to tell. We have a lot of opportunities in the pipeline and how much of that is coming through the first quarter, how much of that is coming to the second quarter is still too early to tell. I do have to say that, as we said that for the whole year, it's looking like we’re going to have a pretty strong growth on the commercial business overall. Again, our sales levels are still pretty modest for us to really manage across the smooth growth in a way - to have a very smooth quarter. Overall, on an annual basis, we believe that that's going to be, this is going to be a very exciting growth year.

Thank you. We will now go to George Gaspar, private investor.

Yes. Good morning to everyone. First question on property and equipment net, it jumped from 456,000 to 2.4 plus million. Can you identify the breakdown of that increase and how do you look at that requirement there and what your investment might be for the New Year here?

As we said, the acquisition of the property, plant and equipment was for surface mount technology equipment. What that does, it will allow us to look at making some of our own kind of components instead of sourcing them from the vendor. So that was the majority of the increase in 2015. That was much higher than it’s been historically. So I wouldn't anticipate 2016 capital fees to be anywhere near 2015.

Okay. But this is the carrying number, so I mean, I assume that it's going to be higher than your net property and equipment number, it should be higher than 2.5 million for 2016?

Yeah. I'm not completely sure I understand the question, but yeah, it was capital I guess added to the property, plant and equipment, and then we will depreciate it over the life of the equipment.

Got you. Okay. And secondly, I don’t know if you could possibly answer this question, you are in a pretty good position, you were pretty successful at getting an offering off at a much higher price than the current market and you’ve got a pretty good cash position relative to your operation stream. Do you see a strategy, are you looking around for product acquisition possibilities to broaden your operations even more than what you’re trying to do currently? You see that opportunity to do that?

Yeah. George, obviously, we are always on the lookout for potential opportunities to expand our product portfolio. We are very careful doing that just because we want to be able to be the best in our - in any market we choose to be in. This is why our customers, most of them, very large enterprises trust a small company like Energy Focus. We're doing absolutely the best job by now. So when we consider acquiring other technologies or products, that's along the way of serving our customers better and there are actually a lot exciting technologies and potential out there from the building control space, what people call internal things, the IOP space that is also emerging and it's likely that we could expand our product portfolio, enhance our product appeal through acquisitions of these potential technologies that is not developed in-house. In the meantime, we are also developing our technologies for this emerging space. So to your question, we are constantly looking for technologies and products that can expand our portfolio to meet our customers’ needs better.

Great. Thank you for that explanation. You are certainly in a pretty prime position to take advantage of that and this market is really broadening out in the LED area and it looks like across the whole spectrum, there is plenty of opportunity. Thank you.

Thank you. We’ll now hear from Bill Hardy, private investor.

I think maybe be kind of little more clear to me what is going on, I was concerned about the accounts payable or accounts receivable on the balance sheet going from the second quarter of ‘15 at 2.6 million to the fourth quarter of ‘15 at 10.1 million. And maybe I can answer my own question and it would appear that those shipments which weren't paid for ended up going to your distributors’ warehouse and are sitting there waiting for Navy orders, is this a reasonable assumption or is somebody else owing you money?

No. You are right, but we ship to our Navy distributor and it's all the timing thing, I mean, they have 30 day payment terms and they pay in 30 days. So if we shipped it out about last half - of the last month of the quarter and they pay it in January. So it’s that AR.

Well, I guess why are they exploded to a four time quantity over the end of the second quarter of ‘15?

Well, I mean, if you look at our sales, the sales have grown and again, it's the timing. Most of our customers are on 30 or 60 day terms, and so depending on when we ship out large orders depends on when we pay for them, but again, we don't have any issues with our accounts receivable. Generally, our customers are paying timely.

Yeah. Bill, if that’s - your concern is if there is any bad debt situation, this is not definitely the case. It is purely timing.

Well, do you expect then in the first quarter of ‘16 for those accounts payable to continue to increase?

You mean accounts receivable? So no, like I said, we've already collected the majority of what was sitting out there at December 31. Today is March 10 and again, we've got generally, 30, 45, or 60 day terms with our customers and so most of that AR has already turned over. So they paid.

So they paid down on the 10 million?

Yes.

What would you consider then to be a running rate of the accounts receivables in the future?

It really depends on the timing of shipments again. If - you take what you expect us to ship and divide it by 30 or 45 days and that's when we collect.

Yeah. Bill, I have to add that this is a classic issue with a company like Energy Focus when our sales are not that large and average order size could be very large that impact our quarter. If we were a private company, we are not going to have this discussion. Because if we look at the company, everything is looking really, really exciting, except you have a quarter of blip and then you have to talk about the accounts receivable, you talk about sales and financial performance. That's purely temporary, but you look at everything we are developing, the pipeline and everything, it’s certainly exciting and unfortunately we are a public traded company and you are going to look at this quarter and say what's going on with the company, well, the answer is nothing. Everything is great. But we do learn that we still have a good portion of our sales in military maritime sales and we are subject to these issues that truly are somewhat unpredictable. But other than that, I would say that - I would - you chose to look beyond the quarterly number and say how are we executing towards our goal and what's the annual number going to look like.

Well, as investors, we have to take a long-term view.

Yeah. Thank you.

When you look at the numbers, particularly in the accounts receivable, it raises a question as to why they are increasing so rapidly.

Again, it's the timing of shipments and it's not a collection problem, I assure you that.

Okay. So the Navy paying these bills are just not presenting you with orders?

Well, as we say, the slowdown in the fourth quarter was the issue. [Technical Difficulty] Yeah.

Thank you. And Mr. Hardy, again, thank you for your question. [Operator Instructions] And we will go to Martin Yokosawa with Torii Asset Management.

You have the 30% penetration into the Navy, what is the expected terminal penetration that you can get?

We like to continue to penetrate the Navy, I would say that, between 10% to 20% per year. So that should give us another two years, three years of run rate. On the other hand, we are also developing more products to come back and retrofit the same sockets with further rate of proposition at the end of this whole retrofit.

And this retrofit, you several times said the ship level, so now I guess the other level would be a base level, is that military base level or what is that exact ship level, why do you use that term versus something?

Because we sell through the distributor, but the distributor has the fulfilment function, so we get the order from distributor and distributor gets the order from the ship level. On the other hand, we also have to sell at the ship level because we are Energy Focus, we got to educate our customers, right. So that's why I guess that's how you get to a level, the distribution level and the ship level. The military base is probably another market, it’s not our military maritime product.

Martin, this is Eric. Is that clear enough or would you like me to go elaborate a little further on your question?

Go ahead and elaborate.

Okay. The mechanisms for the Navy to actually acquire the assets they want are what are important here, because Energy Focus cannot obviously sell directly to the Navy. So we utilize the current mechanisms they have in place, they have a number of mechanisms. One, our distributor has a unique mechanism to take orders and deliver assets to the Navy, one being our product. And so we're removed in that regard. So that's why the partnership with our distributor is critical. But we still must go to the ship, which we have access to, we have base access - we have our account management force that goes out there to educate the platforms, one on the existing technology and the other is the application of the technology and how to acquire the technology to better align their acquisition mechanisms. And so that's why we speak in levels of ship level and distribution.

And then when you discuss the, you expect things to stay stabilize by the end of the second quarter, what's that stabilized rate?

Again, I think it's probably too early to tell. If you look at our 2015, across the year, the quarterly run rate could be at $10 million to $15 million at the top. We will be striving towards I guess the $10 million level and that's the level we would like to stabilize in, around that level.

And then you have been delivering to the military, what satisfaction program do they have or you have with them, I mean, do they have any complaint, is everything great or how do they evaluate what you’ve sold on and how it's going?

That's a great question. We have put out media communications. I think they exist on our YouTube channel and through our social media. The Navy has gone as far as to make videos of how absolutely inspired and enlightened they’ve become with Energy Focus and this product. And I can tell you that every ship we walk on and we walk on a lot of ships, that echoes throughout the U.S. Navy. Once they realize this product is available, they can acquire this product and all the benefits it brings to them from obviously fuel savings to maintenance savings to better quality of work and light for the Navy. So they’ve been absolutely thrilled as far as any type of feedback, we have received literally, I mean not on what everyone say, no negative feedback from the United States Navy. We have had no failures, we've had no concerns, no issues at all. So it's been great, and if you go out to our social media, or you join our social media, I think you’ll be able to see some of that out there, the videos specifically, which are great because what better testimonial than the US Navy themselves and the warfighters themselves talking about how much they enjoy this technology.

And then who were some of the other players trying to get access to the military sales?

Well, I'm sure there are players out there trying, but fortunately, Energy Focus stands above all because we are the only qualified retrofit to the United States Navy this day. We’ve worked very hard and long at this. This just never happened overnight. There is a lot of you who've been with the company now. This was many years in the making to build this relationship, and so we expect to hold our position here for the future.

There was a remark that your growth 2015 over 2014 was a little quicker and faster than preferred, maybe you can elaborate that on your manufacturing capacity or utilization capacity or utilization rate?

I think I'll talk about it first and then Marcia could pitch in. I think we did grow fast, we see a lot of demand from the ships and in hindsight, we probably grow 100%, instead of 180% [ph] just to smooth out the quarters. On the other hand, we were responding to customer demand, and we expanded our production capacity accordingly. Now, a good part of our staff are temporary workers. So we do have the flexibility to reduce the utility - our utilization to reduce the capacity in a flexible way. Marcia, you can elaborate further on that.

Yeah. I mean, that's exactly, we - as I mentioned in my comments, we started the year with 35,000 square feet, which included 15,000 square feet of office space and then expanded that to 75,000 square feet by the end of the year. So the building that we are in allows us the flexibility to lease more space as we need it. As James mentioned, our production workers start out as temporaries and then when we’re ready to add them to staff up the production area as full-time employees, we put them on our table, so it does give us that flexibility to scale up and down. The other thing that I can add is the Military IntelliTube, we source the products or we source the components in the US and then we’re primarily doing an assembly of it here. So it doesn't take necessarily a big time our capital investment and it's relatively easy for us to scale up and down. Having said that, the purchase of the service mount technology equipment will allow us to make some of our own sub components, which could help us take some cost out once we get that up and running, but generally we can be pretty flexible with our manufacturing capacity.

Do you foresee a shortage, because other people are - not the military, but for just even municipal applications, some large companies are gearing up and I'm sure the components, you have the same suppliers. I mean is there a foreseeable shortage?

Well, that's a good question and that's why we reinforce and expand our Asian supply chain through the Taiwan office. We have multiple highly qualified and established suppliers now, I would say that we have made really exciting progress there over the past six months. So we ensure that we have very strong supply chain to feed the growth from the commercial business, and so again, that's obviously one of our priorities to ensure that we can meet the demand of our customers. So far, we haven't seen any issue and the capacity for our suppliers, qualified suppliers is pretty significant.

The last question is on - in the press release, there is a greatest growth opportunity in the commercial products, I’ve already seen you already have military people, you have had success in the military, US, and then expanding into international markets, why the commercial, because the commercial is so small that it can percentagewise grow or is it absolute dollars or is it the commercial or the military is finite and more or less finite and that's going to trail away in two, three years as a growth?

Well, I think - we have said that, it is a niche market and we have said that the whole market size for the military products is about, for the core Navy product, it’s about $250 million and that has always been the case. On the other hand, the dynamics of LED product is that you continue to improve the efficiency and even intelligence of the products. So, our strategy is twofold. One is obviously continue to penetrate the military market, the Navy market. In addition to the U.S. Navy, also including the foreign Navy market and then continue to develop products that can expand outside of the IntelliTube market as well as adding new technologies. So in the few years’ timeframe, when we totally retrofit the fleet and we can come back with additional new products to - with lower power consumption and more intelligence and that applies to the commercial products as well. Many people believe that the LED market is finite, even the commercial side, you don't have or had to replace those bulbs again. I don't think that's true, especially for business markets where you have so many intelligence and still more efficiency to drive on that. So you have two exponential technologies in play here that I believe will shorten the total product life-cycle, you’re talking about probably 5 to 7 years of cycle where people will come back and replace the existing lighting because of the additional benefits and utilities you can get from the new generational products. I believe that's what we're going to see. So we have significant products that keep pushing better efficiency, better intelligence to meeting this potential demand.

Thank you. I would now like to turn the conference back over to James for any additional or closing remarks.

Well. Thank you again for your participation in the call. As we said, we remain very excited about the prospect of Energy Focus, and we will look forward to talking to you again in our first quarter 2016 earnings call.

Thank you. And ladies and gentlemen, again, that does conclude today's conference. Thank you all again for your participation.