Exhibit 99.1
FOR IMMEDIATE RELEASE
AeroGrow Reports Fourth Quarter and Year End Financial Results
- | Revenues of $6.4 million for the quarter |
- | Revenues of $13.1 million for the full year |
- | Quarterly revenue for the AeroGarden exceeds prior “holiday” quarter |
Boulder, CO - June 27, 2007 -- AeroGrow International, Inc. (NASDAQ: AERO ) ("AeroGrow" or the "Company"), makers of the AeroGarden® kitchen garden appliance, announced results for the quarter and year ended March 31, 2007.
For the quarter ended March 31, 2007, AeroGrow reported revenues of approximately $6.4 million, an increase of 30% over the $4.9 million reported for the previous “holiday season” quarter ended December 31, 2006. Further, for the quarter ended March 31, 2007, gross margins improved to 43.7%, or $2.8 million, from 32.4%, or $1.6 million, for the quarter ended December 31, 2006, an increase of 11.3%. For the quarter ended March 31, 2007 AeroGrow reported a net loss of $2.0 million or $0.20 per share.
For the year ended March 31, 2007, AeroGrow reported revenues of $13.1 million, the first full year of operations since the introduction of the AeroGarden in March 2006. For the three month period ended March 31, 2006, AeroGrow had reported $35,245 in revenues, the period during which AeroGrow first began shipment of its AeroGarden products.
“Our first year of operations was exceptional in terms of our sales growth, the number of new products launched, the number of retailers carrying our products in multiple channels, the success of our products on TV, including our infomercials and QVC and the awareness our products have gained on a national scale,” stated AeroGrow Founder and CEO, Michael Bissonnette. “We intend to continue to build on these important first steps, not only to expand our distribution both domestically and internationally, but to improve our margins, expand our product offerings and increase our recurring revenue stream from our growing customer base.”
The year ended March 31, 2007 represented AeroGrow’s first full year of revenues from operations. Initial shipments of our products began in March 2006. The following table sets forth, as a percentage of sales, our quarterly financial results for this first twelve months of operations:
| | | Three months ended |
| | | 31-Mar-07 | | | 31-Dec-06 | | | 30-Sep-06 | | | 30-Jun-06 |
| Revenue ($000) | | $ | 6,434 | | | $ | 4,857 | | | $ | 1,030 | | | $ | 821 | |
| Revenue (%) | | | | | | | | | | | | | | | | |
| Product sales- retail | | | 65.1 | % | | | 67.2 | % | | | 77.6 | % | | | 84.4 | % |
| Product sales- direct to consumer | | | 34.9 | % | | | 32.8 | % | | | 22.4 | % | | | 15.6 | % |
| Total sales | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % | | | 100.0 | % |
| Operating expenses | | | | | | | | | | | | | | |
| Cost of revenue | | | 56.3 | % | | | 67.5 | % | | | 80.3 | % | | | 82.2 | % |
| Research and development | | | 8.8 | % | | | 14.4 | % | | | 39.7 | % | | | 52.9 | % |
| Sales and marketing | | | 44.0 | % | | | 40.5 | % | | | 132.0 | % | | | 116.9 | % |
| General and administrative | | | 21.4 | % | | | 21.5 | % | | | 75.1 | % | | | 104.1 | % |
| Total operating expenses | | | 130.5 | % | | | 143.9 | % | | | 327.1 | % | | | 356.1 | % |
| Loss from operations | | | (30.5 | %) | | | (43.9 | %) | | | (227.1 | %) | | | (256.1 | %) |
For the year ended March 31, 2007, AeroGrow reported a net loss of $10.1 million. For the year ended March 31, 2007, gross margins were $4.7 million or 36.1% of revenues. Impacting gross margins for the year ended March 31, 2007 were costs associated with AeroGrow electing to expedite shipping of approximately 15,000 AeroGardens from its factory in China by air rather than by sea in order to expedite our initial deliveries in April 2006 and to satisfy customer demands in the November/December 2006 holiday timeframe, at an incremental air-freight cost of $27 per unit, as well as air-freight costs associated with expediting component parts for seed kit production in January 2007, for a total of additional freight cost of approximately $490,000.
Also included in the net loss for the year ended March 31, 2007 were the following non-cash charges:
| · | $1.66 million in penalties payable to investors of the Company's 2005 convertible debt offering and 2006 private placement offering which were payable in the form of shares of the Company's common stock. These penalties were related to delays experienced by the Company in obtaining SEC approval for the registration of the Company's common stock and shares of common stock underlying outstanding warrants and convertible debt related to these offerings. |
| · | $1.07 million in stock and stock option grants to management, employees, directors and consultants under the Company's Equity Compensation plan during the Company's launch phase. |
| · | $242,000 in non-cash interest charges related to the issuance and subsequent modification of the Company's 2005 convertible debt offering. |
Earnings Conference Call
AeroGrow will host a conference call today, Wednesday, June 27, 2007 to review operational results for the three months and fiscal full year ended March 31, 2007. In addition, AeroGrow will discuss additional developments including new major retailers that will be launching the AeroGarden within the next six months.
The conference call is scheduled for 4:30 P.M. Eastern Time (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 July 27, 2007. To access the replay by phone, please dial:
| U.S. and Canada: | 1 (800) 642-1687 |
| International: | 1 (706) 645-9291 |
| Conference ID: | 4224537 |
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.
CONTACTS:
| AeroGrow International, Inc. |
| After Market Support, LLC |
| Toll Free: (800) 979-2494 |
| justin.davis@aftermarketsupport.com |
FORWARD-LOOKING STATEMENTS
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements by 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 | | Year ended | | | Three months ended | | | Three month transitional period ended | |
| | | March 31, | | | March 31, | | | March 31, | |
| | | 2007 | | | 2007 | | | 2006 | |
| | | | | | (Unaudited) | | | | |
| Revenue | | | | | | | | | |
| Product sales | | $ | 13,144,037 | | | $ | 6,434,179 | | | $ | 35,245 | |
| Operating expenses | | | | | | | | | | | | |
| Cost of revenue | | | 8,404,507 | | | | 3,619,356 | | | | 134,622 | |
| Research and development | | | 2,113,255 | | | | 568,760 | | | | 978,539 | |
| Sales and marketing | | | 7,117,613 | | | | 2,831,764 | | | | 2,548,583 | |
| General and administrative | | | 4,050,312 | | | | 1,378,373 | | | | 2,010,907 | |
| Total operating expenses | | | 21,685,687 | | | | 8,398,253 | | | | 5,672,651 | |
| | | | | | | | | | | | | |
| Loss from operations | | | (8,541,650 | ) | | | (1,964,074 | ) | | | (5,637,406 | ) |
| Other (income) expense, net | | | | | | | | | | | | |
| Interest (income) | | | (176,173 | ) | | | (18,665 | ) | | | (39,919 | ) |
| Interest expense | | | 356,594 | | | | 51,149 | | | | 1,813,278 | |
| Loss on modification of debt | | | - | | | | - | | | | 132,578 | |
| Registration rights penalty | | | 1,664,380 | | | | - | | | | - | |
| Total other (income) expense, net | | | 1,844,801 | | | | 32,484 | | | | 1,905,937 | |
| Net loss | | $ | (10,386,451 | ) | | $ | (1,996,558 | ) | | $ | (7,543,343 | ) |
| Net loss per share, basic and diluted | | $ | (1.10 | ) | | $ | (0.20 | ) | | $ | (0.84 | ) |
| Weighted average number of common shares outstanding, basic and diluted | | | 9,505,926 | | | | 10,121,762 | | | | 8,956,353 | |
BALANCE SHEET DATA | | March 31, | | | March 31, | |
| | | 2007 | | | 2006 | |
ASSETS | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 5,495,501 | | | $ | 8,852,548 | |
| Restricted cash | | | 84,363 | | | | - | |
| Accounts receivable, | | | 1,884,743 | | | | 43,156 | |
| Other receivable | | | 182,221 | | | | - | |
| Inventory | | | 3,940,614 | | | | 192,946 | |
| Prepaid expenses and other | | | 480,990 | | | | 199,590 | |
| Total current assets | | | 12,068,432 | | | | 9,288,240 | |
| Property and equipment | | | 909,496 | | | | 480,771 | |
| Other assets | | | 63,878 | | | | 71,998 | |
| Total Assets | | $ | 13,041,806 | | | $ | 9,841,009 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| Current liabilities | | | | | | | | |
| Due to factor | | $ | 645,151 | | | $ | - | |
| Accounts payable | | | 3,192,734 | | | | 487,474 | |
| Accrued expenses | | | 1,166,485 | | | | 334,524 | |
| Deferred rent | | | 53,531 | | | | - | |
| Convertible debentures | | | - | | | | 792,539 | |
| Mandatorily redeemable common stock | | | - | | | | 310,000 | |
| Total current liabilities | | | 5,057,901 | | | | 1,924,537 | |
| Stockholders' equity | | | | | | | | |
| Common stock | | | 11,065 | | | | 9,103 | |
| Additional paid-in capital | | | 37,765,003 | | | | 27,313,081 | |
| Accumulated (deficit) | | | (29,792,163 | ) | | | (19,405,712 | ) |
| Total Stockholders' Equity | | | 7,983,905 | | | | 7,916,472 | |
| Total Liabilities and Stockholders' Equity | | $ | 13,041,806 | | | $ | 9,841,009 | |
