Nexxus Lighting Reports Full Year 2011 Results

Sales of our Array LED lamps increased 173% to approximately $4,939,000 for the year ended December 31, 2011 compared to approximately $1,808,000 for the year ended December 31, 2010. The sales increase of approximately $3,131,000 reflects the launch of Array products for sale through the consumer market channel. In the second quarter of 2011, we completed our initial shipments of Array products to approximately 1,100 home improvement stores across the United States. The home improvement retailer offers seventeen different Array products, including our PAR38, R30, R16, MR16 and GU10 lamps that have qualified for the Energy Star rating.

We believe the 2011 launch of our Array products into the consumer market channel represents an important step in our company's strategy and demonstrates our ability to respond operationally to significant growth in a cost effective manner. Sales of our products to the consumer market channel are affected by the resale of these products by our customer to the consumer.

While we do not provide specific information on consumer demand due to confidentiality and other obligations, sales of Array products to the consumer have been slower than anticipated. In partnership with our major customer, we are exploring additional opportunities to increase retail sales and in-store inventory turns. These opportunities may include utility rebate programs, price concessions, sales initiatives, marketing programs, advertising campaigns, training sessions and point-of-sale educational materials.

Based on our experience we also are working with this customer to identify other products to add to their offering in response to customer demand for existing products. However, based on our experience, we do not anticipate that our sales to this customer will be as significant in 2012 as they were in 2011.

"We are excited about the achievements that we made in 2011, including our sales growth and entry into the consumer market channel where we have begun the process of building a national consumer brand," stated Mike Bauer, Nexxus' President and Chief Executive Officer. "During this process we maintained our quality and performance market position and, despite intense competitive pressure, we refrained from cutting prices to untenable levels. We also demonstrated our ability to expand Array production cost-effectively and service the more challenging consumer market channel."

"Unfortunately, retail sales levels did not meet our expectations nor those of our customer," added Bauer. "We continue to work with this customer while also pursuing new retailers in 2012 to balance our sales across a greater number of customers within the consumer market channel."

"Throughout 2011 and as we move into 2012, we remain optimistic about our ability to take advantage of the positive trends in our industry," commented Gary Langford, Nexxus' Chief Financial Officer. "We anticipate LED lighting adoption to accelerate in both commercial and consumer markets. In addition, we expect LED and other material costs to continue their decline, further spurring adoption. It will be our challenge to demonstrate the strength and flexibility of our operating structure to take advantage of these trends, much as we did in 2011. The non-GAAP financial measures presented below reflect the impact that a number of noncash items had on our results and demonstrate our ability to leverage our sales growth."