Three Months Ended
September 30,
------------------------
2010 2009
----------- -----------
Revenue
Product sales - retail, net 20.8% 55.8%
Product sales - direct to consumer, net 77.7% 41.8%
Product sales - international 1.5% 2.4%
----------- -----------
Total sales 100.0% 100.0%
Operating expenses
Cost of revenue 75.3% 69.1%
Research and development 3.8% 5.3%
Sales and marketing 43.0% 38.0%
General and administrative 58.9% 41.2%
----------- -----------
Total operating expenses 181.0% 151.9%
----------- -----------
Profit/(loss) from operations -81.0% -51.9%
=========== ===========
AEROGROW INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months ended Six Months ended
September 30, September 30,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenue
Product sales $ 1,379,617 $ 3,285,949 $ 3,197,636 $ 6,265,642
Operating expenses
Cost of revenue 1,038,812 2,270,556 2,360,515 4,140,361
Research and
development 52,745 173,354 89,760 292,552
Sales and marketing 593,309 1,248,102 1,410,287 2,407,898
General and
administrative 812,300 1,299,598 1,708,483 2,753,806
----------- ----------- ----------- -----------
Total operating
expenses $ 2,497,166 $ 4,991,610 $ 5,569,045 $ 9,594,617
----------- ----------- ----------- -----------
Profit (loss) from
operations (1,117,549) (1,705,661) (2,371,409) (3,328,975)
Other (income) expense,
net
Interest (income) (1,900) (61) (8,530) (141)
Interest expense 933,400 239,940 1,451,500 485,990
Interest expense -
related party 94,490 - 155,749 -
Other (income) (13,986) (180,286) (111,525) (987,838)
Total other (income)
expense, net 1,012,004 59,593 1,487,194 (501,989)
----------- ----------- ----------- -----------
Net income (loss) $(2,129,553) $(1,765,254) $(3,858,603) $(2,826,986)
=========== =========== =========== ===========
Net income (loss) per
share, basic $ (0.17) $ (0.14) $ (0.31) $ (0.22)
=========== =========== =========== ===========
Net income (loss) per
share, diluted $ (0.17) $ (0.14) $ (0.31) $ (0.22)
=========== =========== =========== ===========
Weighted average number
of common shares
outstanding used to
calculate basic net
income (loss) per
share 12,566,486 12,422,249 12,566,486 12,729,125
=========== =========== =========== ===========
Effect of dilutive
securities:
Equity based
compensation - - - -
Weighted average number
of common shares
outstanding used to
calculate diluted
net income per share 12,566,486 12,422,249 12,566,486 12,729,125
=========== =========== =========== ===========
AEROGROW INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
September March 31,
30, 2010 2010
------------ ------------
(Derived
from Audited
ASSETS (Unaudited) Statements)
Current assets
Cash $ 629,178 $ 249,582
Restricted cash 87,904 443,862
Accounts receivable, net of allowance for
doubtful accounts of $85,416 and $87,207
at September 30, 2010 and March 31, 2010,
respectively 360,411 478,113
Other receivables 104,108 259,831
Inventory 4,245,458 3,493,732
Prepaid expenses and other 552,994 338,095
------------ ------------
Total current assets $ 5,980,053 $ 5,263,215
Property and equipment, net of accumulated
depreciation of $2,875,420 and $2,486,377
at September 30, 2010 and March 31, 2010,
respectively 672,731 1,002,530
Other assets
Intangible assets, net of $16,468 and $6,854
of accumulated amortization at September 30,
2010 and March 31, 2010, respectively 270,053 275,599
Deposits 217,840 240,145
Deferred debt issuance costs, net of
accumulated amortization of $244,316
and $486,791 at September 30, 2010 and March
31, 2010, respectively 1,867,280 62,291
------------ ------------
Total other assets $ 2,355,173 $ 578,035
------------ ------------
Total Assets $ 9,007,957 $ 6,843,780
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Current portion - long term debt - related
party $ 143,743 $ 911,275
Current portion - long term debt 1,914,636 3,053,984
Accounts payable 1,974,605 3,354,703
Accrued expenses 2,006,646 1,449,977
Customer deposits 13,223 339,041
Deferred rent 32,519 40,773
------------ ------------
Total current liabilities $ 6,085,372 $ 9,149,753
Long term debt 1,407,070 1,020,957
Long term debt - related party 136,926 -
Stockholders' equity
Preferred stock, $.001 par value, 20,000,000
shares authorized and 7,586 shares issued
and outstanding at September 30, 2010
and March 31, 2010 8 8
Common stock, $.001 par value, 500,000,000
shares authorized, 12,650,605 and
12,398,249 shares issued and outstanding at
September 30, 2010 and March 31, 2010,
respectively 12,650 12,398
Additional paid-in capital 61,497,338 52,933,467
Accumulated (deficit) (60,131,407) (56,272,803)
------------ ------------
Total Stockholders' Equity (Deficit) $ 1,378,589 $ (3,326,930)
------------ ------------
Total Liabilities and Stockholders' Equity
(Deficit) $ 9,007,957 $ 6,843,780
============ ============
SALES BY CHANNEL
Three Months Ended September 30,
--------------------------------
Product Revenue 2010 2009
--------------- ---------------
Retail, net $ 287,373 $ 1,831,781
Direct to consumer, net 1,071,606 1,375,141
International 20,638 79,027
--------------- ---------------
Total $ 1,379,617 $ 3,285,949
=============== ===============
SALES BY PRODUCT TYPE
Three Months Ended September 30,
-------------------------------
2010 2009
-------------- --------------
Product Revenue
AeroGardens $ 510,458 $ 2,343,439
Seed kits and accessories 869,159 942,510
-------------- --------------
Total $ 1,379,617 $ 3,285,949
============== ==============
% of Total Revenue
AeroGardens 37.0% 71.3%
Seed kits and accessories 63.0% 28.7%
-------------- --------------
Total 100.0% 100.0%
============== ==============
About AeroGrow International, Inc.:
Founded in 2002 in Boulder, Colorado, AeroGrow International, Inc. is
dedicated to the research, development and marketing of the AeroGarden line
of foolproof, dirt-free indoor gardens. AeroGardens allow anyone to grow
farmer's market fresh herbs, salad greens, tomatoes, chili peppers, flowers
and more, indoors, year-round, so simply and easily that no green thumb is
required. See www.aerogrow.com.
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Statements by Jack Walker and/or the Company, statements regarding
growth of the AeroGarden product line, optimism related to the business,
direct-to-consumer strategy, expanding sales, improved margins, operating
efficiencies and other statements in this press release are forward-looking
statements within the meaning of the Securities Litigation Reform Act of
1995. Such statements are based on current expectations, estimates and
projections about the Company's business. Words such as expects,
anticipates, intends, plans, believes, sees, estimates and variations of
such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and involve certain risks and uncertainties that are difficult
to predict. Actual results could vary materially from the description
contained herein due to many factors including continued market acceptance
of the Company's products or the need to raise additional capital. In
addition, actual results could vary materially based on changes or slower
growth in the indoor garden market; the potential inability to realize
expected benefits and synergies; domestic and international business and
economic conditions; changes in customer demand or ordering patterns;
changes in the competitive environment including pricing pressures or
technological changes; technological advances; shortages of manufacturing
capacity; future production variables impacting excess inventory and other
risk factors listed from time to time in the Company's Securities and
Exchange Commission (SEC) filings under "risk factors" and elsewhere. The
forward-looking statements contained in this press release speak only as of
the date on which they are made, and the Company does not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this press release.
Contact Information: John Thompson AeroGrow International, Inc. 303-444-7755