Prophotonix Regulatory News (PPIR)

THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

This announcement is not an admission document. This announcement does not constitute or form a part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in ProPhotonix Limited. nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. This announcement does not constitute a recommendation regarding any securities. Any investment decision must be made exclusively on the basis of the final admission document issued in connection with the placing and the admission to AIM.

The securities discussed herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act") and may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act. No public offering of the securities discussed herein is being made in the United States and the information contained herein does not constitute an offering of securities for sale in the United States, Canada, Australia, Japan or the Republic of South Africa or in any other jurisdiction in which such offering would be unlawful.

23 December, 2010

PROPHOTONIX LIMITED ANNOUNCES ADMISSION TO AIM

AND FIRST DAY OF DEALING

ProPhotonix Limited ("ProPhotonix" or "the Company"), (PPIX.LN, PPIR.LN) a designer and manufacturer of LED light engines and laser diodes modules with operations in Ireland and the U.K, today announces its admission to the AIM market of the London Stock Exchange. Libertas Capital Corporate Finance Limited ("Libertas") is the Nominated Adviser & Broker to the Company. Dealings are expected to commence at 8.00 am on 23 December 2010.

The Company is issuing £1.6 million in new equity in connection with a placing and conversion of debt into equity. It has raised £825,000 ($1.3 million) through a placing of 4,125,000 new common shares at a price of 20 pence per share (the "Placing"). Concurrent with the Placing the Company is converting $1,274,544 of debt into equity by way of the issue of 4,031,646 new common shares at the Placing price of 20 pence per share. In addition, the Company is issuing 50,000 new common shares to Libertas as part payment for services provided in relation to the Placing.

The unrestricted Common Shares will trade under the ticker PPIX with ISIN US7434651060 and may be traded as Depositary Interests in CREST. The new Common Shares trade with ISIN USU743121068 under the ticker PPIR and are Regulation S restricted under US securities laws and therefore trade outside CREST.

Overview

ProPhotonix designs and manufactures LED light arrays and light engines through its Cork-based subsidiary ProPhotonix Ireland. In addition the Company produces laser modules and distributes laser diodes through its UK based subsidiary, ProPhotonix UK. The Company has traditionally focused on the machine vision market but more recently has had notable successes in building its business supplying the medical sector.

ProPhotonix has specific proprietary know-how in relation to chip-on-board technology bringing together expertise in thermal management, electronics and optical systems thereby enabling it to produce high powered LED arrays and light engines. The Company's ability in developing and producing products for highly demanding applications has already helped to build a base of high quality customers in the machine vision and medical markets. The Company's strategy is to build on this core expertise to expand market share in existing markets as well as expanding into new and larger markets such as the general illumination sector including architectural, commercial and industrial sectors.

The Company's area of focus, high Brightness LED applications, is projected to exhibit strong growth, notably in the general illumination market where the transition from traditional incandescent and fluorescent mediums to more energy efficient LED is just beginning. The increased application of LED technologies represents a significant growth opportunity for the Company.

Mark Blodgett, Chairman & CEO, commented, "We are delighted that the AIM flotation of the Company has been completed successfully. As an Irish and UK-based growth business, the AIM market represents a logical platform for us to build our business. The Admission and equity raise will assist the Company in capitalising on the opportunities available in our chosen markets through the application of our proprietary technology and know-how in relation to LED-based lighting applications and in developing our laser module business.

Our aim is to build on our base businesses in the machine vision and medical markets and we have a strategy to move into specific segments in the large and growing architectural, commercial and industrial light fixture markets."

Enquiries:

Notes to Editors

Business Overview

ProPhotonix Limited designs and manufactures LED arrays and light engines through its subsidiary ProPhotonix Ireland, located near Cork, Ireland and produces laser modules and distributes laser diodes through its subsidiary ProPhotonix UK, located near Stansted, UK.

ProPhotonix has established a strong position in the machine vision sector supplying both LED light engines and laser modules to this market. Building on this base, the Company has identified opportunities to grow its business significantly over the medium-term to long-term. The Company plans to use its expertise and know-how in the field of LED arrays and light engines to grow its market share in the machine vision sector as well as the medical market and, in the longer-term, penetrate a number of markets outside of the machine vision space which are both substantially larger than that of the machine vision market and growing more strongly.

The Company has significant expertise, know-how and proprietary technology in the LED array and light engine space. Utilizing the Company's chip-on-board LED technology, its expertise in thermal management, electronics and optical systems, the Company produces high powered LED arrays. The Directors believe that this technology and know-how can be applied to significant and growing markets such as the medical and general illumination markets. The Directors believe that the Company can repeat the success it has had in securing customers in the area of medical applications in these new markets.

The market for High Brightness ("HB") LEDs is $6 billion in 2010 and is expected to grow to $14.9 billion by 2013 (Strategies Unlimited - August 2009). The largest market is for mobile appliances where LEDs are used to backlight mobile phone screens. The Directors believe that it is the general illumination sector that presents the greatest opportunity for growth for the Group. This is demonstrated by the fact that despite a decline in the overall lighting market in 2009, the LED lighting market grew by 24 per cent. reflecting the increased use of HB LEDS in general lighting applications. The value of HB LEDs used in general illumination in 2010 is anticipated to be $817 million, approximately 45 times larger than the machine vision market currently addressed by the Group.

Machine Vision

Machine vision systems consist of a combination of lighting, detectors and computers that enable the automation of processes in a wide variety of industries, including automotive, food and beverage, chemical, pharmaceutical, solar and semiconductor.

The market for lighting systems for the machine vision sector is estimated at $108 million in 2010 and is forecast to grow to $154 million by 2013 (IMS Research, February 2010). Recent growth in the machine vision market has been driven by the improved performance of LED systems as compared to traditional light sources such as halogen (fiber optic) and fluorescent systems.

Medical

LEDs are used in a wide range of applications in the medical and dental markets, including blood sensors and photodynamic therapy such as teeth whitening, hair growth/restoration, acne treatment and other cosmetic procedures. The technology is also used as a light source in medical equipment such as endoscopes. This is a growing market with many of the possible applications still in the research stage. In addition the penetration of LEDs is still very low relative to more established light sources like halogen and xenon. Use of LEDs in the medical and dental markets is forecast to increase by an annual growth rate of 30.8 per cent. reaching volumes of 1.783 billion LEDs in 2013. The medical market is an OEM market and with the LED portion of it estimated at $140 million in 2010, 39 per cent. of this market is accounted for by the use of LEDs as a light source for medical instruments.

General Illumination

LED lighting offers a number of advantages over incandescent and fluorescent lighting. It is more robust, longer lasting and is more compact. Its compact nature has led to the rapid adoption of LEDs in the backlighting of LCD monitors and other similar applications. Typically LED lighting lasts three times longer than fluorescent lighting and twenty times longer than incandescent lighting. LEDs were initially used in the lighting market in colour applications in the architectural and entertainment sectors due to availability in a wide range of colours with colour changing easily controlled by software. Since then their use has expanded into more general applications.

The global lighting fixtures market (including all lighting types) in 2007 was estimated to be between $85 and $90 billion. The Company estimates that in 2009, this market is in the order of $100 billion and that LEDs accounted for just 3 per cent. of this market. With the increased performance of HB LEDs and the availability of high power white LEDs, the range of addressable applications is increasing rapidly.