Nexxus Lighting Announces Third Quarter 2012 Results

             Nexxus Lighting Announces Third Quarter 2012 Results

Aston Capital Investment Positions Company for Growth

PR Newswire

CHARLOTTE, N.C., Nov. 14, 2012

CHARLOTTE, N.C., Nov.14, 2012 /PRNewswire/ --Nexxus Lighting, Inc. (NASDAQ
Capital Market: NEXS) today reported its third quarter 2012 results. Key
highlights include:

  oCompleted an initial $6 million investment by Aston Capital to enhance
    operational and financial discipline and accelerate growth to tap into the
    large and growing LED lighting market

  oEvaluating Strategic Acquisitions with the expectation to significantly
    enhance breadth of offerings and distribution capabilities

  oSignificantly strengthened the balance sheet including the extinguishment
    of $2.4 million of debt and cash position strengthened to $4.3 million at
    September 30, 2012
    

Vision and Company Strategy

The Company and Aston's joint vision is to build the market's leading
designer, developer and distributor of energy efficient LED Lighting solutions
for the commercial, industrial, government and municipal markets. The
Company's values will be defined by a dedication to customer education,
best-of-breed technology, high quality products and leading customer service.
The identified customer markets represent significant LED lighting adopters
and growth potential for the Company due to their operational and financial
requirements for longer burn hours and operating cost sensitivities.

The Company intends to significantly expand its product offerings to address
growth areas in these identified markets and to simultaneously enhance the
distribution capabilities and channels to drive market education, adoption and
sales growth. The Company in conjunction with Aston is currently evaluating
strategic opportunities and expects to drive significant growth and synergies
through investments and acquisitions. The Aston Capital team has a proven
track record of building market leaders and increasing shareholder value by
combining sound fundamental operating principles with the acquisition of
complimentary assets.

Recent Events

On September 12, 2012, we entered into an Investment Agreement with RVL 1 LLC,
an affiliate of Aston Capital, LLC. The closing of the Investment occurred on
September 25, 2012. In consideration of a cash payment of $6 million, we
issued to the Investor 600,000 shares of newly-created Series B Convertible
Preferred Stock, $.001 par value per share. The Preferred Stock is
convertible into shares of our common stock, $.001 par value per share at a
conversion price per share equal to $0.13, subject to certain anti-dilution
adjustments. The conversion price was the closing price of the Company's
Common Stock on August 2, 2012, the date the Company entered into the letter
of intent.

In September 2012, we used a portion of the proceeds from the Investment to
the settle a patent infringement lawsuit brought against the Company by
Koninklijke Philips Electronics N.V. and Philips Solid-State Lighting
Solutions, Inc. (collectively, "Philips").

In addition, concurrent with closing the Investment, on September 25, 2012,
the holders of $2.4 million in aggregate principal amount of convertible
promissory notes of the Company (the "Exchange Notes") exchanged the Exchange
Notes (including interest) for a total of $880,000 in cash and 1,000,000
newly-issued shares of the Company's Common Stock.

Third Quarter 2012 Performance

Total revenue for the three months ended September 30, 2012 decreased 41%, or
approximately $862,000, to approximately $1,251,000 as compared to
approximately $2,113,000 for the three months ended September 30, 2011.
Revenues decreased primarily due to lower sales to Lowe's due to the
expiration of our arrangement. Gross profit for the three months ended
September 30, 2012 was approximately $315,000, or 25% of revenue, as compared
to gross profit of approximately $656,000, or 31% of revenue for the
comparable period of 2011 due to certain non-recurring activities. Selling,
general and administrative (SG&A) expenses were approximately $899,000 for the
quarter ended September 30, 2012 as compared to approximately $1,433,000 for
the same period in 2011, a decrease of approximately $534,000, or 37%
reflecting a continued focus on costs, operating leverage and efficiencies.

In the third quarter of 2012, we recorded a gain on debt restructuring of
approximately $1,048,000 related to our extinguishment of debt concurrent with
the Investment. The Exchange Notes had a principal value of $2.4 million,
plus accrued interest. Net income for the three months ended September 30,
2012 was approximately $259,000. As more fully described in the Company's
10-Q and shown below, net loss attributable to common stockholders includes a
non-cash adjustment of approximately $5,195,000 (net value of the preferred
stock investment) since the price of the Company's stock appreciated from the
time the Company entered into the Investment Agreement and the closing price.
Net loss for the three months ended September 30, 2011 was approximately
$1,029,000, including income from discontinued operations related to our
legacy commercial and pool lighting businesses. As of September 30, 2012, we
had cash and cash equivalents of $4,298,000 compared to $1,086,000 at June 30,
2012.

Year to Date 2012 Performance

Total revenue for the nine months ended September 30, 2012 declined 55% to
approximately $3,452,000 as compared to the nine months ended September 30,
2011. Revenues decreased primarily due to lower sales to Lowe's due to the
expiration of our arrangement. Negative gross profit for the nine months ended
September 30, 2012 was approximately $378,000, or -11% of revenue, as compared
to gross profit of approximately $2,150,000, or 28% of revenue for the
comparable period of 2011. Direct gross margin, which is revenue less
material cost, remained flat at 40% for both periods.

Selling, general and administrative (SG&A) expenses were approximately
$3,855,000 for the nine months ended September 30, 2012 as compared to
approximately $4,654,000 for the same period in 2011, a decrease of
approximately $799,000, or -17%. These expense reductions were offset by
higher expense of approximately $265,000 to resolve patent infringement
litigation and other potential claims during the nine months ended September
30, 2012 compared to the same period in 2011.

In the second quarter of 2012, we recorded an impairment charge for our Array
segment of approximately $3,378,000 and an impairment charge for our corporate
trademarks of approximately $19,000. These charges include approximately
$1,989,000 for goodwill impairment, approximately $1,015,000 for impairment of
other intangible assets and approximately $393,000 for impairment of property
and equipment. Net loss for the nine months ended September 30, 2012 and 2011
was approximately $7,240,000 and $3,226,000, respectively, including income
from discontinued operations related to the legacy commercial and pool
lighting businesses in 2011. As more fully described in the Company's 10-Q
and shown below, net loss attributable to common stockholders includes a
non-cash adjustment of approximately $5,195,000 (net value of the preferred
stock investment) since the price of the Company's stock appreciated from the
time the Company entered into the Investment Agreement and the closing price.
Basic and diluted loss per common share attributable to common stockholders
was $0.75 and $0.20 for the nine months ended September 30, 2012 and 2011,
respectively. Basic and diluted loss per common share from continuing
operations attributable to common stockholders was $0.75 and $0.20 for the
nine months ended September 30, 2012 and 2011, respectively.

"Recapitalizing the Company and successfully resolving the Philips litigation
were critical in providing the Company with the required stability to meet our
customer's long-term product and service needs," stated Mike Bauer, Nexxus'
President and Chief Executive Officer. "We accomplished those goals in the
3^rd Quarter and are now focused on both organic and strategic growth as we
move through the end of the year and into 2013."

Nexxus Lighting, Inc. Life's Brighter!™

For more information, please visit the new Nexxus Lighting web site at
www.nexxuslighting.com.

Certain of the above statements contained in this press release are
forward-looking statements that involve a number of risks and uncertainties.
Such forward-looking statements are within the meaning of that term in Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Reference is made to Nexxus Lighting's filings under the
Securities Exchange Act for factors that could cause actual results to differ
materially. Nexxus Lighting undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events, or otherwise. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those indicated in the forward-looking statements as a result of various
factors. Readers are cautioned not to place undue reliance on these
forward-looking statements.



Nexxus Lighting, Inc.
Consolidated Balance Sheets
                                                 (Unaudited)
                                                 September 30,    December 31,
                                                 2012             2011
ASSETS
Current Assets:
 Cash and cash equivalents                   $ 4,297,721      $ 3,014,656
 Trade accounts receivable, less allowance
for doubtful accounts of                        594,640          564,474
 $57,931 and $52,912
 Inventories, less reserve of $1,524,419 and   1,336,677        2,977,047
$895,415
 Prepaid expenses                              92,890           65,749
 Other assets                                  8,772            26,359
Total current assets                             6,330,700        6,648,285
Property and equipment                           509,247          3,279,121
 Accumulated depreciation and amortization      (364,131)        (2,536,144)
 Net property and     145,116          742,977
equipment
Goodwill                                         —                1,988,920
Other intangible assets, less accumulated
 amortization of $800,080 and           1,418,841        2,543,969
$879,490
Other assets, net                                9,295            23,857
                                               $ 7,903,952      $ 11,948,008
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                            $ 772,642        $ 825,100
 Accrued liabilities                           135,707          245,816
 Related party payable                         3,868            18,151
 Accrued compensation and benefits             91,337           206,803
 Current portion of deferred rent              1,330            25,882
 Other current liabilities                     280              74
Total current liabilities                        1,005,164        1,321,826
Convertible promissory notes to related          —                2,314,854
parties, net of debt discount
 Total            1,005,164        3,636,680
liabilities
Commitments and contingencies
Stockholders' Equity:
Series B convertible preferred stock, $.001
par value, aggregate liquidation
 preference of $6,000,000;       $ 5,195,225      $ —
1,000,000 shares authorized, 600,000
 and 0 issued and outstanding
Common stock, $.001 par value, 40,000,000 and
30,000,000 shares
                                                 17,453           16,453
 authorized, 17,452,738 and
16,452,738 issued and outstanding
Additional paid-in capital                       50,638,575       50,007,362
Accumulated deficit                              (48,952,465)     (41,712,487)
Total stockholders' equity                       6,898,788        8,311,328
                                               $ 7,903,952      $ 11,948,008



Nexxus Lighting, Inc.
Consolidated Statements of Operations (Unaudited)
                     Three Months Ended            Nine Months Ended
                     September 30,                 September 30,
                     2012           2011           2012            2011
Revenue              $ 1,250,515    $ 2,113,003    $ 3,452,067     $ 7,732,313
Cost of sales          935,379        1,456,946      3,830,215       5,582,692
 Gross profit       315,136        656,057        (378,148)       2,149,621
(loss)
Operating expenses:
 Selling, general   899,116        1,432,920      3,854,782       4,654,095
and administrative
 Research and       125,924        214,116        448,920         631,799
development
 Impairment         —              —              3,397,212       —
charge
 Total    1,025,040      1,647,036      7,700,914       5,285,894
operating expenses
Operating loss         (709,904)      (990,979)      (8,079,062)     (3,136,273)
Non-operating income
(expense):
 Interest expense   (79,452)       (41,576)       (210,014)       (97,198)
 Gain on debt       1,048,308      —              1,048,308       —
restructuring
 Other income       17             85             107             489
 Total
non-operating income
                       968,873        (41,491)       838,401         (96,709)

(expense), net
Income (loss) from
continuing           $ 258,969      $ (1,032,470)  $ (7,240,661)   $ (3,232,982)

 operations
Discontinued
operations:
 Income from
discontinued
                       —              3,272          683             7,102

operations
Net income (loss)    $ 258,969      $ (1,029,198)  $ (7,239,978)   $ (3,225,880)
Accretion of
preferred              (5,195,225)    —              (5,195,225)     —
stockbeneficial
 conversion feature
Net loss
attributable to
common               $ (4,936,256)  $ (1,029,198)  $ (12,435,203)  $ (3,225,880)

 stockholders
Basic and diluted
loss per common

 share:
 Loss from
continuing
operations           $ (0.30)       $ (0.06)       $ (0.75)        $ (0.20)

 attributable to
common stockholders
 Discontinued     $ 0.00         $ 0.00         $ 0.00          $ 0.00
operations
 Net loss
attributable to
common               $ (0.30)       $ (0.06)       $ (0.75)        $ (0.20)

 stockholders
Basic and diluted
weighted average
                       16,517,955     16,452,738     16,474,716      16,389,967
 shares
outstanding





Nexxus Lighting, Inc.
Consolidated Statements of Cash Flows (Unaudited)
                                                  Nine Months Ended
                                                  September 30,
                                                  2012           2011
Cash Flows from Operating Activities:
 Net loss                                       $ (7,239,978)  $ (3,225,880)
 Adjustments to reconcile net loss to net cash
used in operating activities:
 Depreciation                            210,556        349,295
 Amortization of other intangible        193,070        214,299
assets
 Amortization of debt discount and       68,976         84,277
debt issuance costs
 Amortization of deferred rent           (24,552)       (59,491)
 Impairment charge                       3,397,212      —
 Gain on debt restructuring              (1,048,308)    —
 Interest expense forgiven on debt       140,667        —
restructuring
 Loss on sale of businesses              —              622
 Loss on disposal of property and        6,062          3,401
equipment
 Increase in inventory reserve and       629,004        114,470
inventory write downs
 Stock-based compensation                44,313         291,759
 Changes in operating assets and
liabilities:
 (Increase) decrease in:
 Trade accounts              (30,166)       (145,709)
receivable, net
 Inventories                 1,011,366      (253,612)
 Prepaid expenses            (27,141)       20,328
 Other assets                25,959         8,847
 Increase (decrease) in:
 Accounts payable,          (178,950)      280,413
accrued liabilities and related party payable
 Accrued compensation and   (115,466)      6,300
benefits
 Other liabilities          206            (3,369)
 Total adjustments      4,302,808      911,830
 Net cash used in       (2,937,170)    (2,314,050)
operating activities
Cash Flows from Investing Activities:
 Patents, trademarks and other intangible         (83,076)       (134,321)
assets costs
 Purchase of property and equipment               (19,599)       (216,661)
 Proceeds from the sale of property and           7,685          7,500
equipment
 Proceeds from the sale of businesses, net of     —              1,110,360
transaction costs
 Net cash (used in)       (94,990)       766,878
provided by investing activities
Cash Flows from Financing Activities:
 Proceeds from issuance of convertible            5,195,225      —
preferred stock, net of issuance costs
 Payment to restructure convertible promissory    (880,000)      —
notes
 Proceeds from exercise of employee stock         —              319,750
options and warrants, net
 Net cash provided by     4,315,225      319,750
financing activities
Net increase (decrease) in Cash and Cash            1,283,065      (1,227,422)
Equivalents
Cash and Cash Equivalents, beginning of period      3,014,656      5,308,900
Cash and Cash Equivalents, end of period          $ 4,297,721    $ 4,081,478



SOURCE Nexxus Lighting, Inc.

Website: http://www.nexxuslighting.com
Contact: Gary Langford, Chief Financial Officer, Nexxus Lighting, Inc.,
+1-704-405-0416