Nexxus Lighting, a manufacturer of LED replacement bulbs, in a
preliminary, unaudited financial report today said that total revenue for
the three months ended June 30 decreased 74%, or approximately $3,012,000, to
approximately $1,053,000 as compared to approximately $4,066,000 for
the three months ended June 30, 2011. Sales of its Lumificient products increased 4% from
approximately $850,000 in the second quarter of 2011 to approximately $884,000 in
the second quarter of 2012. Sales of its Array products line decreased 95% from
approximately $3,216,000 in the second quarter of 2011 to approximately $170,000 in
the second quarter of 2012.
Sales in the second quarter of 2011 included the initial shipments
of its Array products to approximately 1,100 Lowe’s stores across the
United States which it was unable to replicate in the corresponding quarter of
2012. Nexxus expects that sales to this customer will not be significant in
2012.
For the quarter, the company said it expects a negative gross
profit of approximately $654,000, or 62% of revenue, as compared to a gross profit of
approximately $1,004,000, or 25% of revenue, for the comparable period of 2011. Direct
gross margin, which is revenue less material cost, increased from 35% in the
second quarter of 2011 to 40% in the second quarter of 2012. This increase
primarily reflects the shift in sales mix to Lumificient products, offset by
sales of surplus Array inventory at reduced prices and an increase in sales of Lumificient
product for national sign lighting programs.
Net loss for the three months ended June 30, 2012 and
2011 was approximately $2,416,000 and $868,000, respectively, including a net loss from discontinued operations
related to its legacy commercial and pool lighting businesses of approximately $2,000 for
the three months ended June 30, 2011.
In a statement, the Charlotte, N.C.-based company said, “As our
financial condition deteriorated during the last several months, it became
necessary for us to accelerate our cash conservation measures, including
delaying or withholding payments to vendors and terminating employees. Some of
our suppliers and service providers have stopped doing business with us, some
have threatened collection actions and others are expected to do likewise. In
addition, sales of our Array product in particular have been adversely affected
by our financial distress and negative business prospects.
“We expect continuing losses, further eroding our cash position.
In the event that we are unable to raise additional capital through debt or
equity financing, or the liquidation or divestiture of assets or businesses,
our financial distress and negative business prospects will impair our ability
to fund future operations. There can be no assurance that we will be able to
maintain adequate liquidity or remain viable. Our ability to meet our
obligations in the ordinary course of business is dependent upon our ability to
liquidate or divest assets or businesses, or raise additional capital through
public or private debt or equity financing. There can be no assurance such
financing will be available on terms acceptable to us, if at all, or that any
financing transaction will not be dilutive to our current stockholders. “
“On April 30, 2012, we announced that we are exploring
strategic alternatives available to us, including a possible sale of the
company. However, we can make no assurances and there is uncertainty regarding
our ability to conclude transactions necessary for us to maintain liquidity
sufficient to operate our business. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. If we are
unable to timely raise capital, we will not be able to maintain adequate
liquidity and our future operations will need to be discontinued. “
“We face significant challenges in order to achieve profitability and there can
be no assurance that we will achieve or sustain positive cash flows from
operations or profitability. We may reorganize our company, operations and
product offerings which may cause us to incur greater losses. Our review of
operations for additional opportunities to reduce costs may lead to the
determination to sell, close, eliminate, rationalize or reduce operations,
assets or businesses and/or alter our sales, manufacturing and/or distribution
structure. Should we decide to pursue any such changes, we may incur additional
charges and losses in connection with such changes in the future, and such
charges and losses may be material.”
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