-- Significantly expanding our domestic retail distribution, from 750
storefronts last holiday season to 3,900 storefronts this holiday season.
-- Completing development of multiple new products, including our new
lower cost, smaller footprint six pod AeroGardens and our new three pod
AeroGarden systems including Chef in a Box™ , Florist in a Box™ and
Garden in a Box™ products. We believe these products will greatly expand
both our domestic and international markets with new compact designs
tailored for smaller homes, condos and apartments with smaller kitchens as
well as better price points for greater mass distribution. We are
encouraged by the response these new products have received from major
catalog and home shopping channels interested in participating as launch
partners in 2008 for these new offerings.
-- Substantially completing two new infomercials for Florist in a Box and
Chef in a Box.
-- Strengthening our management team with the addition of a new President
and COO, a 30 year veteran in consumer products with a history of achieving
significant top line and bottom line results in large successful public
companies.
We have also begun our international launch, to date accomplishing:
-- Infomercial testing in Japan through our Japanese distributor, with
additional testing, including incorporation of Japanese video footage and
testimonials, to be completed by December 31, 2008.
-- Launching in the UK with successful airings of our infomercial and a
successful debut of the AeroGarden in Selfridges, a premiere London high
end department store. We have also obtained multiple catalog placements
including Scotts of Stow and additional retailers including Fenwicks and
Bentals who will begin selling the AeroGarden by December 31, 2008.
-- Obtaining commitments for airings by major home shopping networks in
the UK and Germany to feature the AeroGarden in February 2008.
-- Finalizing agreements with distributors to air the AeroGarden
infomercial before December 31, 2007 in Germany, Spain, Ireland and
Belgium.
As a result of these actions, we stand ready to maximize our opportunities
for the upcoming holiday season and beyond."
The following table sets forth, as a percentage of sales, our quarterly
financial results for the three and six months ended September 30, 2007 and
the three and six months ended September 30, 2006:
Three months ended Six months ended
September 30, September 30,
------------------ ------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue
Product sales- retail 77.2% 77.6% 71.5% 80.6%
Product sales- direct to
consumer 22.8% 22.4% 28.5% 19.4%
-------- -------- -------- --------
Total sales 100.0% 100.0% 100.0% 100.0%
Operating expenses
Cost of revenue 60.0% 80.3% 58.5% 81.1%
Research and development 10.0% 39.7% 9.2% 45.6%
Sales and marketing 50.2% 132.0% 48.5% 125.3%
General and administrative 15.6% 75.1% 17.6% 88.0%
-------- -------- -------- --------
Total operating expenses 135.8% 327.1% 133.8% 340.0%
-------- -------- -------- --------
Loss from operations -35.8% -227.1% -33.8% -240.0%
======== ======== ======== ========
Retail revenues for the quarter ended September 30, 2007, representing
sales to retailers, increased to $4.9 million, 77% of total sales,
reflecting an expansion in retail storefronts carrying the AeroGarden
products for the quarter of approximately 2,800 storefronts as compared to
the prior quarter, bringing the total to approximately 3,900 storefronts.
Initial inventory load in of these new retailers occurred primarily during
September 2007 and store merchandising has been substantially completed
during October and November. Direct to consumer sales derived through
AeroGrow's infomercials, websites and AeroGrow's newly launched catalog
mailings totaled $1.4 million for the quarter, 23% of total sales,
representing a decline from previous three quarters due to the seasonality
associated with television sales due to reduced viewership during the
summer months which resulted in a decrease of television media spending of
50% from the previous quarter, as well as seasonality related to the sale
of indoor gardening products during the summer outdoor gardening season.
Seed Kit and accessory sales increased to $1.5 million for the quarter to
23% of total sales, as a result both retail stocking of seed kits for the
holiday season as well as increases in sales to existing customers through
our websites and catalogs. A table reflecting our sales for the three and
six months ended September 30, 2007 and 2006 by both channel of
distribution (retail/direct) and product category (AeroGardens/Seed Kits
and accessories) is attached.
Net loss for the quarter was impacted by $730,000 in costs associated with
production of two new infomercials for the Chef in a Box and Florist in a
Box products to be launched in calendar year 2008 as well as $113,000 in
initial display and merchandising costs related to the expanded retail
distribution realized during the quarter.
Earnings Conference Call
AeroGrow will host a conference call today, Wednesday, November 14,
2007, to review operational results for the six months ended September 30,
2007. In addition, AeroGrow will discuss additional developments including
major new retailers that will be launching the AeroGarden within the next
six months.
The conference call is scheduled for 4:30 PM ET. To participate in the
call, please dial:
U.S. and Canada: 1 (800) 374-0113
International: 1 (706) 758-9607
A replay of the call will be available within 12 hours of completion. You
will be able to access it for the following 30 days through the AeroGrow
website at www.aerogrow.com/investors or by phone until December 14, 2007.
To access the replay by phone, please dial:
U.S. and Canada: 1 (800) 642-1687
International: 1 (706) 645-9291
Conference ID: 23976558
About AeroGrow International, Inc.
Founded in 2002 in Boulder, Colorado, AeroGrow International, Inc. is
dedicated to the research, development and marketing of the AeroGarden®,
the world's first kitchen garden appliance. The AeroGarden features
NASA-proven, dirt-free aeroponic technology, allowing anyone to grow
farmer's market fresh herbs, salad greens, tomatoes, chili peppers,
strawberries 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 Michael Bissonnette and/or the Company, statements
regarding growth of the AeroGarden product line, optimism related to the
business, expanding sales 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 kitchen garden appliance 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.
AEROGROW INTERNATIONAL, INC.
CONDENSED STATEMENTS OF
OPERATIONS (Unaudited)
Three months ended Six months ended
September 30, September 30,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenue
Product sales $ 6,283,645 $ 1,030,316 $12,562,079 $ 1,852,254
Operating expenses
Cost of revenue 3,765,376 827,165 7,347,794 1,502,860
Research and
development 628,542 409,453 1,157,987 844,384
Sales and marketing 3,156,414 1,359,797 6,091,537 2,320,271
General and
administrative 982,181 773,362 2,208,033 1,629,402
----------- ----------- ----------- -----------
Total operating
expenses 8,532,513 3,369,777 16,805,351 6,296,917
----------- ----------- ----------- -----------
Loss from operations (2,248,868) (2,339,461) (4,243,272) (4,444,663)
Other (income) expense,
net
Interest (income) (32,341) (60,749) (70,200) (144,862)
Interest expense 125,664 101,804 191,849 203,604
Other income (2,929) - (2,929) -
Registration rights
penalty - 1,028,250 - 1,028,250
----------- ----------- ----------- -----------
Total other (income)
expense, net 90,394 1,069,305 118,720 1,086,992
----------- ----------- ----------- -----------
Net loss $(2,339,262) $(3,408,766) $(4,361,992) $(5,531,655)
=========== =========== =========== ===========
Net loss per share,
basic and diluted $ (0.20) $ (0.37) $ (0.39) $ (0.60)
=========== =========== =========== ===========
Weighted average number
of common shares
outstanding, basic and
diluted 11,469,707 9,286,678 11,278,598 9,202,219
=========== =========== =========== ===========
BALANCE SHEET DATA September 30, March 31,
2007 2007
------------- -------------
ASSETS (Unaudited)
-------------
Current assets
Cash and cash equivalents $ 6,193,987 $ 5,495,501
Restricted cash 85,712 84,363
Accounts receivable 4,873,177 1,884,743
Other receivable 180,449 182,221
Inventory 6,480,391 3,940,614
Prepaid expenses and other 415,629 480,990
------------- -------------
Total current assets 18,229,345 12,068,432
Property and equipment 1,138,965 909,496
Other assets 108,128 63,878
------------- -------------
Total Assets $ 19,476,438 $ 13,041,806
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion - capital lease
obligation $ 52,913 $ -
Due to factor 3,577,447 645,151
Accounts payable 4,036,087 3,192,734
Accrued expenses 1,544,109 1,166,485
Customer deposits 900,568 -
Deferred rent 61,035 53,531
------------- -------------
Total current liabilities 10,172,159 5,057,901
-------------
Capital lease obligation - long term
portion 79,137 -
Stockholders' equity
Common stock 12,018 11,065
Additional paid-in capital 43,367,278 37,765,003
Accumulated (deficit) (34,154,154) (29,792,163)
------------- -------------
Total Stockholders' Equity 9,225,142 7,983,905
------------- -------------
Total Liabilities and Stockholders' Equity $ 19,476,438 $ 13,041,806
============= =============
Sales by Channel Three months ended Six months ended
(Unaudited) September 30, September 30,
------------------------ ------------------------
Product Revenues 2007 2006 2007 2006
----------- ----------- ----------- -----------
Product sales- retail $4,850,298 $ 799,335 $ 8,979,900 $ 1,492,945
Product sales- direct to
consumer 1,433,347 230,981 3,582,179 359,309
----------- ----------- ----------- -----------
Total $ 6,283,645 $ 1,030,316 $12,562,079 $ 1,852,254
=========== =========== =========== ===========
% of Revenues
Product sales- retail 77.19% 77.58% 71.48% 80.60%
Product sales- direct to
consumer 22.81% 22.42% 28.52% 19.40%
----------- ----------- ----------- -----------
Total sales 100.00% 100.00% 100.00% 100.00%
=========== =========== =========== ===========
Sales by product Three months ended Six months ended
category (Unaudited) September 30, September 30,
------------------------ ------------------------
Product Revenues 2007 2006 2007 2006
----------- ----------- ----------- -----------
AeroGardens $ 4,816,504 $ 889,979 $10,460,138 $ 1,616,870
Seed kits and
accessories 1,467,141 140,337 2,101,941 235,384
----------- ----------- ----------- -----------
Total $ 6,283,645 $ 1,030,316 $12,562,079 $ 1,852,254
=========== =========== =========== ===========
% of Revenues
AeroGardens 76.65% 86.38% 83.27% 87.29%
Seed kits and
accessories 23.35% 13.62% 16.73% 12.71%
----------- ----------- ----------- -----------
Total 100.00% 100.00% 100.00% 100.00%
=========== =========== =========== ===========
Contact Information: CONTACTS: Corporate John Thompson AeroGrow International, Inc. (303) 444-7755 Investor Budd Zuckerman Genesis Select Corporation (303) 415-0200