CHARLOTTE, N.C., March 25, 2011 /PRNewswire/ -- Nexxus Lighting, Inc. (Nasdaq Capital Market: NEXS) today reported its fourth quarter and full year 2010 results. Highlights include:
- Full year revenue increases 9% to $5.4 million in 2010 versus $5.0 million in 2009
- Sales of Array LED replacement light bulbs increase 32% to $1.8 million in 2010 versus $1.4 million in 2009
- Expansion of our patent portfolio to 33 patents issued and 29 patents pending, including 31 issued and 28 pending patents related to our Array product
- Array LED lamps are among the first to qualify for ENERGY STAR label
2010 Full Year Performance
Revenue for the year ended December 31, 2010 was approximately $5,422,000 as compared to approximately $4,989,000 for the year ended December 31, 2009, an increase of approximately $434,000, or 9%.
Sales of our Array LED lamps grew approximately $441,000 to approximately $1,808,000 for the year ended December 31, 2010, as compared to approximately $1,366,000 for the year ended December 31, 2009. This growth reflects the full year impact of the Array business launched in 2009; the expansion of the Array product line, particularly with the introduction of the PAR38 products; and the award of ENERGY STAR certification to a number of Array lamps. Sales of Lumificient products remained flat at approximately $3,615,000 for the year ended December 31, 2010, reflecting penetration into new markets offsetting the difficult environment for sign lighting businesses.
As we have accounted for our legacy commercial and pool lighting businesses as discontinued operations, sales of LED products represented 100% of our revenue from continuing operations for the years ended December 31, 2010 and 2009.
"Nexxus finished 2010 with solid performance highlighted by growth in Array sales," stated Mike Bauer, Nexxus' President and Chief Executive Officer. "The fourth quarter was our strongest of the year for Array sales and this growth reflects a number of high profile projects at universities, hotels and a large regional mall. We also completed the sale of our legacy commercial and pool businesses, allowing us to redirect resources to our core Array and Lumificient businesses."
"As we progress in 2011, I am encouraged by the many opportunities that lie before us," concluded Mr. Bauer. "One of these opportunities is our recently announced partnership with Lowe's which includes our Array brand of LED replacement lamps being sold through Lowes.com and through 1,100 Lowe's stores beginning in June of this year. Not to be overshadowed, we also are seeing sales growth for Lumificient through several national sign programs."
Gross profit for the years ended December 31, 2010 and 2009 was approximately $1,363,000 and $1,620,000, respectively. Gross margins decreased from approximately 32% of sales in 2009 to approximately 25% of sales in 2010. Direct gross margin, which is revenue less direct material costs, decreased from 48% in 2009 to approximately 45% in 2010. The decline in direct gross margin reflects more aggressive pricing of both Array and Lumificient products, particularly for the 230v Array product used in certain international markets.
Production costs in 2010 increased to approximately $1,075,000, or 20% of revenue, as compared to $783,000, or 16% of revenue, in 2009. The increase of approximately $292,000 in production costs for the year ended December 31, 2010, as compared to the year ended December 31, 2009, includes an increase of approximately $226,000 in our inventory reserves for excess Array product, particularly for the 230v product and certain products made with cool white LEDs. In addition, we incurred an increase of approximately $47,000 in depreciation expense primarily related to tooling for our Array lighting products for the year ended December 31, 2010 as compared to the year ended December 31, 2009.
"Our financial results for the year, and especially for the 4th quarter, were significantly affected by the increased reserves and inventory adjustments noted above," commented Gary Langford, Nexxus' Chief Financial Officer. "These adjustments primarily reflect the lower sales volumes from international markets and of higher color temperature products. We continue to look for improvements in our global go-to-market strategy and are committed to driving profitability based on accelerated growth and operating leverage."
Selling, general and administrative ("SG&A") expenses were approximately $6,097,000 for the year ended December 31, 2010 as compared to approximately $5,858,000 for the same period in 2009, an increase of approximately $239,000, or 4%. This increase primarily reflects higher investment in resources dedicated to the sale of our Array products, including internal sales, advertising and commissions.
Research and development costs were approximately $944,000 for the year ended December 31, 2010 as compared to approximately $551,000 for the year ended December 31, 2009.
This increase of approximately $393,000 was primarily due to higher employee and project-related costs in 2010 as compared to 2009.
"Our plans entering 2010 were to significantly increase the engineering resources for our Array line. We are pleased with the results of our investment. We grew our portfolio of intellectual property to 33 issued patents and 29 combined U.S. and foreign patent applications related to our Array Lighting and Lumificient product offerings," noted Mr. Bauer. "Four of our Array lamp types were among the first lamps to be certified under the Energy Star program. We introduced our new PAR38 product in the 3rd quarter; saw its sales ramp in the 4th quarter; and recently qualified two of these PAR38 lamps under the ENERGY STAR program. In addition, our new MR16 HO product, which was officially launched in January, was designed and developed in 2010."
Net loss for the years ended December 31, 2010 and December 31, 2009 was approximately $8,011,000 and $7,155,000, respectively, including a loss from discontinued operations related to the legacy commercial and pool lighting businesses of approximately $1,646,000 and $1,908,000 for 2010 and 2009, respectively. On December 21, 2009, we consummated the exchange of our Series A preferred stock for other securities of our company. As a result of the exchange, we recorded deemed dividends of approximately $6,420,000 as of December 31, 2009. After including the effects of the dividends related to the preferred stock and warrants issued in November 2008, net loss attributable to common stockholders was approximately $8,011,000 and $14,900,000 for the years ended December 31, 2010 and 2009, respectively. Basic and diluted loss per common share attributable to common stockholders was $0.49 and $1.71 for the years ended December 31, 2010 and 2009, respectively. Basic and diluted loss per common share from continuing operations was $0.39 and $0.60 for the years ended December 31, 2010 and 2009, respectively. Basic and diluted loss per common share from discontinued operations was $0.10 and $0.22 for the years ended December 31, 2010 and 2009, respectively.
LED Supply Update
Nexxus purchases LEDs from two suppliers, both of whom produce and package the product in plants located in Japan. To date, Nexxus has not been materially affected by the tragedy in Japan. The facilities that produce our LEDs were not damaged and we continue to receive product from both suppliers. Where necessary, we have adjusted production schedules between suppliers to reflect any delays at a supplier. We continue to monitor the situation and are in close communication with our suppliers.
Fourth Quarter 2010 Performance
Total revenues for the three months ended December 31, 2010 were approximately $1,422,000 as compared to approximately $1,486,000 for the fourth quarter of 2009. Revenue from sales of our Array LED lamps was approximately $550,000 in the quarter. This represents a 68% increase over the 3rd quarter of 2010 and was the highest revenue from sales of Array lamps of any quarter in 2010. Compared to the 4th quarter of 2009, Array revenues decreased 16% due to the timing of a large project shipment. Sales of Lumificient products increased slightly to approximately $872,000 for the fourth quarter of 2010, compared to approximately $833,000 for the fourth quarter of 2009.
Gross profit for the quarter ended December 31, 2010 decreased $130,000 to $287,000 as compared to $417,000 for the quarter ended December 31, 2009. Direct gross margin, which is revenue less material costs, decreased from 46% in the fourth quarter of 2009 to 42% in the fourth quarter of 2010.
Production costs in the fourth quarter of 2010 increased to approximately $313,000, or 22% of revenue, as compared to $261,000, or 18% of revenue, in the fourth quarter of 2009. Expenses for obsolete inventory, scrap and inventory reserves for our Array product increased by approximately $38,000 in the fourth quarter of 2010. In addition, we incurred an increase of approximately $14,000 relating to distribution and third party warehousing costs for the year ended December 31, 2010 as compared to the year ended December 31, 2009.
Operating expenses for the quarter ended December 31, 2010 decreased approximately $73,000 to approximately $1,645,000 as compared to approximately $1,718,000 for the quarter ended December 31, 2009.
Fourth Quarter Net Loss
Net loss for the fourth quarter ended December 31, 2010 and December 31, 2009 was approximately $1,268,000 and $2,708,000, respectively, including a gain from discontinued operations related to the legacy commercial and pool lighting businesses of approximately $123,000 for the fourth quarter of 2010 and a loss from discontinued operations of approximately $1,188,000 for the quarter ended December 31, 2009.
After including the effects related to the preferred stock, net loss attributable to common stockholders was approximately $1,268,000 and $9,480,000 for the three months ended December 31, 2010 and December 31, 2009, respectively.
Cash and Recent Activities
"One of our objectives for 2010 was to re-engineer our infrastructure to focus on Array. The sale of our legacy commercial and pool businesses was a central target in this endeavor," said Langford. I am pleased that we ended 2010 with $5.3 million in cash and that the purchaser of our legacy businesses has since paid-off the $1.1 million note receivable that we reported outstanding as of December 31."
As of December 31, 2010, we had cash and cash equivalents of $5,309,000 and long term debt of $2,232,000, net of an unamortized debt discount of approximately $216,000. Our long term debt consists of promissory notes issued in exchange for our preferred stock in December 2009. These notes have a principal amount of $2.4 million, bear interest at 1% per annum, mature three years from the date of issuance and are convertible into shares of common stock at a fixed conversion price of $5.33.
On October 28, 2010, we sold substantially all of the assets of our legacy commercial and pool lighting businesses for a purchase price of approximately $2.3 million, with approximately $1.3 million accounting for the purchase of inventory. Of the total consideration, we received $1.0 million in cash in connection with closing, which included $750,000 of non-refundable deposits previously paid by the buyer. Subject to the terms of the purchase agreement and a secured promissory note, the buyer was obligated to pay the remaining approximately $1.3 million over the seven month period ending May 28, 2011 as the buyer sold the purchased inventory, with 50% of the agreed upon value of the inventory paid no later than February 28, 2011 and the balance paid no later than May 28, 2011. As of March 4, 2011, the $1.3 million balance of the purchase price was paid in full.
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
Cash and cash equivalents
Trade accounts receivable, less allowance for doubtful accounts of $35,899 and $60,000
Inventories, less reserve of $270,797 and $0
Assets associated with discontinued operations, current
Total current assets
Property and equipment:
Machinery and equipment
Furniture and fixtures
Computers and software
Accumulated depreciation and amortization
Net property and equipment
Other intangible assets, less accumulated amortization of $592,645 and $342,858
Other assets, net
Assets associated with discontinued operations, noncurrent
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities
Accrued compensation and benefits
Related party payable
Current portion of payable to related party under acquisition agreement
Current portion of deferred rent
Other current liabilities
Liabilities associated with discontinued operations
Total current liabilities
Promissory notes, net of debt discount
Promissory notes to related parties, net of debt discount
Convertible promissory notes to related parties, net of debt discount
Deferred rent, less current portion
Common stock, $.001 par value, 25,000,000 shares authorized,
16,245,503 and 16,240,503 issued and outstanding
Additional paid-in capital
Total stockholders' equity
NEXXUS LIGHTING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Twelve Months Ended
Cost of sales
Selling, general and administrative
Research and development
Total operating expenses
Non-Operating Income (Expense):
Debt extinguishment costs
Total non-operating income, net
Loss from continuing operations
Loss from discontinued operations
Preferred stock dividends:
Accretion of the preferred stock beneficial conversion feature and preferred stock discount
Accrual of preferred stock dividends
Deemed dividend on issuance of promissory notes and warrants for preferred stock
Deemed dividend on issuance of common stock for preferred stock
Net loss attributable to common stockholders
Basic and diluted loss per common share attributable to common stockholders:
Net loss attributable to common stockholders
Basic and diluted weighted average shares outstanding
NEXXUS LIGHTING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2010 and 2009
Year Ended December 31,
Cash Flows from Operating Activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets and other assets
Amortization of debt discount and debt issuance costs
Amortization of deferred rent
Write down of assets relating to discontinued operations
Gain on sale of businesses
Loss on disposal of property and equipment
Debt extinguishment costs
Restructuring and impairment charge
(Decrease) increase in inventory reserve
Changes in operating assets and liabilities:
Decrease in trade accounts receivable, net
Increase in inventories
Decrease (increase) in prepaid expenses
(Increase) decrease in other assets
Decrease in accounts payable, accrued liabilities and related party payable
Decrease in accrued compensation and benefits
Decrease in other liabilities
Net cash used in operating activities
Cash Flows from Investing Activities:
Proceeds from sale of businesses, net of transaction costs
Proceeds from sale of property and equipment
Purchase of property and equipment
Acquisition costs of Lumificient Corporation
Acquisition costs of Advanced Lighting Systems, LLC
Patents and trademark costs
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities:
Payments on promissory note
Payment of dividends
Proceeds from sale of common stock, net of issuance costs
Net proceeds from issuance of secured promissory notes
Net proceeds from issuance of preferred stock and warrants
Net proceeds from exercise of employee stock options and warrants
Costs associated with the issuance of common stock for preferred stock
Costs associated with the issuance of promissory notes and warrants for preferred stock
Net cash (used in) provided by financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Supplemental Disclosure of Cash Flow Information:
Cash paid during period for interest
Non-cash investing and financing activities:
Note receivable from sale of businesses
Issuance of common stock for acquisition
Issuance of common stock to related party for settlement of lease and severance obligations
Issuance of common stock to promissory notes placement agent
Exchange of preferred stock for promissory notes and warrants
Exchange of preferred stock for common stock
SOURCE Nexxus Lighting, Inc.