Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Jun. 30, 2018 | Aug. 06, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AeroGrow International, Inc. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --03-31 | |
Entity Common Stock, Shares Outstanding | 34,328,036 | |
Amendment Flag | false | |
Entity Central Index Key | 1,316,644 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Current assets | ||
Cash | $ 7,005 | $ 7,482 |
Restricted cash | 15 | 15 |
Accounts receivable, net of allowance for doubtful accounts of $23 and $39 at June 30, 2018 and March 31, 2018, respectively | 2,013 | 4,296 |
Other receivables | 195 | 281 |
Inventory | 4,208 | 5,047 |
Prepaid expenses and other | 2,867 | 493 |
Total current assets | 16,303 | 17,614 |
Property and equipment and intangible assets, net of accumulated depreciation of $4,480 and $4,386 at June 30, 2018 and March 31, 2018, respectively | 441 | 514 |
Other assets | ||
Deposits | 39 | 39 |
Total assets | 16,783 | 18,167 |
Current liabilities | ||
Accounts payable | 920 | 1,227 |
Accounts payable related party | 1,782 | 1,521 |
Accrued expenses | 1,550 | 2,231 |
Customer deposits | 146 | 163 |
Debt associated with sale of intellectual property | 71 | 80 |
Total current liabilities | 4,469 | 5,222 |
Long term liabilities | ||
Capital lease liability | 9 | 12 |
Other liability | 196 | 190 |
Total liabilities | 4,674 | 5,424 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock, $.001 par value, 750,000,000 shares authorized, 34,328,036 shares issued and outstanding at June 30, 2018 and March 31, 2018 | 34 | 34 |
Additional paid-in capital | 140,817 | 140,817 |
Accumulated deficit | (128,742) | (128,108) |
Total stockholders' equity | 12,109 | 12,743 |
Total liabilities and stockholders' equity | $ 16,783 | $ 18,167 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Allowance for doubtful accounts (in Dollars) | $ 23 | $ 39 |
Accumulated depreciation (in Dollars) | $ 4,480 | $ 4,386 |
Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 34,328,036 | 34,328,036 |
Common stock, shares outstanding | 34,328,036 | 34,328,036 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Net revenue | $ 3,743 | $ 2,462 |
Cost of revenue | 2,310 | 1,640 |
Gross profit | 1,433 | 822 |
Operating expenses | ||
Research and development | 160 | 91 |
Sales and marketing | 1,242 | 832 |
General and administrative | 685 | 627 |
Total operating expenses | 2,087 | 1,550 |
Loss from operations | (654) | (728) |
Other income (expense), net | ||
Other income (expense), net | 20 | 39 |
Total other income (expense) income, net | 20 | 39 |
Net loss | (634) | (689) |
Change in fair value of stock to be distributed for Scotts Miracle-Gro transactions | 0 | 581 |
Net loss attributable to common stockholders | $ (634) | $ (108) |
Net loss per common share, basic and diluted (in Dollars per share) | $ (0.02) | $ 0 |
Weighted average number of common shares outstanding, basic and diluted (in Shares) | 34,328 | 33,477 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (634) | $ (689) |
Adjustments to reconcile net loss to net cash used by operations: | ||
Depreciation and amortization expense | 95 | 102 |
Bad debt (recovery) expense | (16) | (10) |
Inventory allowance | 0 | (16) |
Accretion of debt associated with sale of intellectual property | (9) | (10) |
Change in operating assets and liabilities: | ||
Decrease in accounts receivable | 2,299 | 1,248 |
Decrease in other receivable | 86 | 82 |
Decrease (increase) in inventory | 839 | (27) |
(Increase) in prepaid expense and other | (2,374) | (634) |
(Increase) in deposits | 0 | (4) |
(Decrease) increase in accounts payable | (46) | 116 |
(Decrease) in accrued expenses | (676) | (654) |
(Decrease) in customer deposits | (17) | (21) |
Net cash (used) by operating activities | (453) | (517) |
Cash flows from investing activities: | ||
Purchases of equipment | (21) | (51) |
Net cash (used) by investing activities | (21) | (51) |
Cash flows from financing activities: | ||
Repayment of capital lease | (3) | (2) |
Net cash (used) by financing activities | (3) | (2) |
Net (decrease) in cash | (477) | (570) |
Cash and cash equivalents and restricted cash, beginning of period | 7,497 | 8,819 |
Cash and cash equivalents and restricted cash, end of period | 7,020 | 8,249 |
Cash paid during the year for: | ||
Interest | 0 | 0 |
Income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Change in fair value of SMG intellectual property royalty, branding license and interest on notes payable-related party | 0 | 570 |
Change in fair value of stock dividends accrued on convertible preferred stock | $ 0 | $ 11 |
1. Description of Business
1. Description of Business | 3 Months Ended |
Jun. 30, 2018 | |
Disclosure Text Block [Abstract] | |
Business Description and Basis of Presentation [Text Block] | 1. Description of the Business AeroGrow International, Inc. (collectively, the “Company,” “AeroGrow,” “we,” “our” or “us”) was incorporated in the State of Nevada on March 25, 2002. The Company’s principal business is developing, marketing, and distributing advanced indoor aeroponic garden systems designed and priced to appeal to the consumer gardening, cooking and small indoor appliance markets worldwide. The Company manufactures, distributes and markets ten different models of its AeroGarden systems in multiple colors, as well as over 40 varieties of seed pod kits and a full line of accessory products through multiple channels, including retail distribution (brick and mortar and online), catalogue and direct-to-consumer sales primarily in the United States and Canada. |
2. Basis of Presentation, Liqui
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | 2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies Basis of Presentation The unaudited interim financial statements of the Company included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These condensed statements do not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for annual audited financial statements and should be read in conjunction with the Company’s audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2018 (“Fiscal 2018”), as filed with the SEC on June 28, 2018. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, including recurring adjustments, necessary to present fairly the financial position of the Company at June 30, 2018, the results of operations for the three months ended June 30, 2018 and 2017, and the cash flows for the three months ended June 30, 2018 and 2017. The results of operations for the three months ended June 30, 2018 are not necessarily indicative of the expected results of operations for the full year or any future period. In this regard, the Company’s business is highly seasonal, with approximately 60.1% of revenues in Fiscal 2018 occurring in the four consecutive calendar months from October through January. During the three-month period ended June 30, 2018, the Company has further expanded its distribution channels and invested in necessary overhead in anticipation of the Fiscal 2019 peak sales season. The balance sheet as of March 31, 2018 is derived from the Company’s audited financial statements. Liquidity Sources of funding to meet prospective cash requirements during Fiscal 2019 include the Company’s existing cash balances, cash flow from operations, and borrowings under the Company’s debt arrangements. We may need to seek additional debt or equity capital, however, to address the seasonal nature of our working capital needs, increase the scale of our business and provide a cash reserve against contingencies. There can be no assurance we will be able to raise this additional capital. See Note 10 for subsequent events. Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that a change in the Company’s estimates could occur in the near term as additional or new information becomes available. Net Income (Loss) per Share of Common Stock The Company computes net income (loss) per share of common stock in accordance with Accounting Standards Codification (“ASC”) 260. ASC 260 requires companies with complex capital structures to present basic and diluted earnings per share (“EPS”). Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average shares of common stock outstanding for the period. Diluted EPS is similar to basic EPS, but presents the dilutive effect on a per share basis of potential common stock equivalents (e.g., convertible securities, options, and warrants) as if such securities had been converted into common stock at the beginning of the periods presented. Securities that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS include: (i) employee stock options to purchase 125,000 shares and warrants to purchase 2,000 shares of common stock for the period ended June 30, 2018; and (ii) employee stock options to purchase 175,000 shares and warrants to purchase 2,000 shares for the three months ended June 30, 2017. Concentrations of Risk ASC 825-10-50-20 Cash: The Company maintains cash depository accounts with financial institutions. The amount on deposit with several financial institutions exceeded the $250,000 federally insured limit as of June 30, 2018. The Company has not historically incurred any losses related to these deposits. The financial institutions are highly rated, financially sound and the risk of loss is minimal. Customers and Accounts Receivable: For the three months ended June 30, 2018 and 2017, one customer, Amazon.com, represented 41.8% and 23%, respectively, of the Company’s net revenue. As of June 30, 2018, the Company had three customers, Amazon.com, Bed, Bath & Beyond and Kohl’s, that represented 26.1%, 18.5% and 11.6% of the Company’s outstanding accounts receivable, respectively. As of March 31, 2018, the Company had two customers, Canadian Tire Corporation and Amazon.com, which represented 27.3% and 22.3%, respectively, of outstanding accounts receivable. The Company believes that all receivables from these customers are collectible. Suppliers: For the three months ended June 30, 2018, the Company purchased inventories and other inventory-related items from one supplier totaling $2.7 million. For the three months ended June 30, 2017, the Company purchased inventories and other inventory-related items from one supplier totaling $1.7 million. The purchase of inventories and other inventory-related items is tied to the anticipated timing and amount of sales for our highly seasonal business and payment terms with our suppliers. The Company’s primary contract manufacturers are located in China. As a result, the Company may be subject to political, currency, regulatory, transportation/shipping and weather/natural disaster risks. Although the Company believes alternate sources of manufacturing could be obtained, these risks and any potential loss of supply could have an adverse impact on operations, especially in the short term. Fair Value of Financial Instruments The Company follows the guidance in ASC 820, Fair Value Measurements and Disclosures Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants. ASC 820 also provides a hierarchy for determining fair value, which emphasizes the use of observable market data whenever available. The three broad levels defined by the hierarchy are as follows, with the highest priority given to Level 1 as these are the most reliable, and the lowest priority given to Level 3. Level 1 – Quoted prices in active markets for identical assets. Level 2 – Quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations. Level 3 – Unobservable inputs that are supported by little or no market activity. The carrying value of financial instruments including cash, receivables and accounts payable and accrued expenses, approximates their fair value at June 30, 2018 and March 31, 2018 due to the relatively short-term nature of these instruments. The Company’s intellectual property liability carrying value was determined utilizing Level 3 inputs. As discussed below in Notes 3 and 4, this liability was incurred in conjunction with the Company’s strategic alliance with Scotts Miracle-Gro. As of June 30, 2018 and March 31, 2018, the fair value of the Company's sale of the intellectual property liability was estimated using the discounted cash flow method, which is based on expected future cash flows, discounted to present value using a discount rate of 15%. As of June 30, 2018, the Company did not have any financial assets or liabilities that were measured at fair value on a recurring basis, subsequent to initial recognition. Accounts Receivable and Allowance for Doubtful Accounts The Company sells its products to retailers and directly to consumers. Retailer sales terms vary by customer, but generally range from net 30 days to net 60 days, while direct-to-consumer transactions are primarily paid by credit card. Accounts receivable are reported at net realizable value and net of the allowance for doubtful accounts. The Company uses the allowance method to account for uncollectible accounts receivable. The Company's allowance estimate is based on a review of the current status of trade accounts receivable, which resulted in an allowance of $23,000 and $39,000 at June 30, 2018 and March 31, 2018, respectively. Other Receivables In conjunction with the Company’s processing of credit card transactions for its direct-to-consumer sales activities and as security with respect to the Company’s performance for credit card refunds and charge backs, the Company is required to maintain a cash reserve with Vantiv, the Company’s credit card processor. This reserve is equal to 5% of the credit card sales processed during the previous six months. As of June 30, 2018 and March 31, 2018, the balance in this reserve account was $195,000 and $281,000, respectively. Advertising and Production Costs The Company expenses all production costs related to advertising, including print, television, and radio advertisements when the advertisement has been broadcast or otherwise distributed. In contrast, the Company records media and marketing costs related to its direct-to-consumer advertisements, inclusive of postage and printing costs incurred in conjunction with mailings of direct-response catalogues, and related direct-response advertising costs. Direct-to-consumer advertising costs incurred are reported as assets and should be amortized over the estimated period of the benefits, based on the proportion of current period revenue from the advertisement to probable future revenue. As the Company has continued to expand its retail distribution channel, the Company has expanded its advertising to include online gateway and portal advertising, as well as placement in third party catalogues. Advertising expense for the three months ended June 30, 2018 and June 30, 2017, were as follows: Three Months Ended June 30, (in thousands) 2018 2017 Direct-to-consumer $ 89 $ 72 Retail 372 185 Other $ 15 $ 10 Total advertising expense $ 476 $ 267 As of June 30, 2018 and March 31, 2018, the Company had deferred $3,000 and $14,000, respectively, related to such media and advertising costs which include the catalogue costs described above. The costs are included within the “prepaid expenses and other” line of the balance sheets. Inventory Inventories are valued at the lower of cost, determined on the basis of standard costing, which approximates the first-in, first-out method, or net realizable value. When the Company is the manufacturer, raw materials, labor and manufacturing overhead are included in inventory costs. The Company records the raw materials at delivered cost. Standard labor and manufacturing overhead costs are applied to the finished goods based on normal production capacity. A majority of the Company’s products are manufactured overseas and are recorded at standard cost, which includes product costs for purchased and manufactured products, and freight and transportation costs for inbound freight from manufacturers. Inventory values at June 30, 2018 and March 31, 2018 were as follows: June 30, March 31, 2018 (in thousands) 2018 (in thousands) Finished goods $ 3,078 $ 4,117 Raw materials 1,130 930 $ 4,208 $ 5,047 The Company determines an inventory obsolescence reserve based on management’s historical experience and establishes reserves against inventory according to the age of the product. As of June 30, 2018 and March 31, 2018, the Company had reserved $66,000 for inventory obsolescence. The inventory values are shown net of these reserves. Revenue Recognition The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers", and all the related amendments (collectively “ASC 606”) on April 1, 2018 using the modified retrospective method. The adoption did not have a material impact to the nature and timing of its revenues, results of operations, cash flows and statement of financial position. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods. The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited consolidated balance sheets as of June 30, 2018: As reported (in thousands) Adjustments Balance without adoption of ASC 606 (in thousands) Assets Accounts receivable, net $ 2,013 $ (376 ) $ 2,389 Liabilities Accrued expenses $ 1,550 $ (376 ) $ 1,926 The Company currently has two operating and reportable segments, (i) the Direct to Consumer segment, which composed of sales directly from our website, mail order or customer calls to our customer service department and (ii) the Retail segment, which is comprised of all sales related to retailers, including where possession of our product is taken and sold by the retailer in store or online, and drop ship orders that process from the retailer and drop directly to our warehouse for us to ship on behalf of the retailer. The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products and the risk of loss to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of June 30, 2018 or March 31, 2018. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. There were no changes to the Company’s accounting for variable consideration under ASC 606. However, the classification from a liability to a contra asset to show net realizable accounts receivable results in a change in presentation on the balance sheet. Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to retail customers including, but not limited to the following: ● discounts granted off list prices to support price promotions to end-consumers by retailers; ● the Company’s agreed share of fees given directly to retailers for advertising, in-store marketing and promotional activities; and ● incentives given to the Company’s retailers for achieving or exceeding certain predetermined purchases (i.e., rebates). The Company’s promotional allowance programs with its retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one day to one year. The Company’s promotional and other allowances are calculated based on various programs with retail customers, and accruals are established during the year for its anticipated liabilities. These accruals are based on agreed upon terms, as well as the Company’s historical experience with similar programs, and require management’s judgment with respect to estimating consumer participation and retail customer performance levels. Differences between such estimated expense and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. The Company records estimated reductions to revenue for customer and distributor programs and incentive offerings, including promotions, rebates, and other volume-based incentives, based on historical rates. Certain incentive programs require the Company to estimate the number of customers who will actually redeem the incentive based on historical industry experience. As of June 30, 2018 and March 31, 2018, the Company reduced accounts receivable $434,000 and accrued $430,000, respectively, as an estimate for the foregoing deductions and allowances within the “accounts receivable, net” and “accrued expenses” line of the balance sheets, respectively. Warranty and Return Reserves The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under its basic warranty program. The specific warranty terms and conditions vary depending upon the product sold, but generally include technical support, repair parts, and labor for periods up to one year. Factors that affect the Company’s warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy the Company’s warranty obligation. Based upon the foregoing, the Company has recorded a provision for potential future warranty costs of $122,000 and $111,000 as of June 30, 2018 and March 31, 2018, respectively. The Company reserves for known and potential returns from customers and associated refunds or credits related to such returns based upon historical experience. In certain cases, retail customers are provided a fixed allowance, usually in a range of 1% to 2%, to cover returned goods and this allowance is deducted from payments made to us by such customers. As of June 30, 2018 and March 31, 2018, the Company has recorded a reserve for customer returns of $183,000 and $293,000, respectively. Segments of an Enterprise and Related Information U.S. GAAP utilizes a management approach based on allocating resources and assessing performance as the source of the Company's reportable segments. U.S. GAAP also requires disclosures about products and services, geographic areas and major customers. At present, the Company operates in two segments, Direct-to-Consumer and Retail Sales. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 , , In February 2016, the FASB issued ASU 2016-02, “Leases.” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this ASU is expected to result in all operating leases being capitalized and a current and long-term liability recorded in the Company’s financial statements. We are currently evaluating the impact of adoption of this ASU on our consolidated financial statements and disclosures. In August 2015, the FASB issued ASU 2015-14 to defer the effective date by one year of previously issued ASU 2014-09, “Revenue from Contracts with Customers,” which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard became effective for us in Fiscal Year 2019 and did not have a material impact on our financial statements. The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers", and all the related amendments (collectively “ASC 606”) on April 1, 2018 using the modified retrospective method. The adoption did not have a material impact to the nature and timing of its revenues or changes to retained earnings due to the nature of revenues of our product which is related to product shipments and has relatively short revenue and accounts receivable cycles. Our revenues generally do not include future or multiple deliverables and as such our process to recognize revenue was consistent with the guidance and adoption of ASC 606. The adoption did not have a material impact on results of operations, cash flows but did impact the balance sheet classification of some accrued expenses which will now be reported as contra accounts receivable. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods. |
3. Notes Payable, Long Term Deb
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt | 3 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | 3. Notes Payable, Long Term Debt and Current Portion – Long Term Debt The following represents the changes to our Notes Payable, Long Term Debt and Current Portion – Long Term Debt for the periods presented. For a more detailed discussion on our previously outstanding Notes Payable, Long Term Debt and Current Portion – Long Term Debt, refer to the Company’s Annual Report on Form 10-K for the year ended March 31, 2018, as filed with the SEC on June 28, 2018. As of June 30, 2018 and March 31, 2018, the outstanding balance of the Company’s note payable and debt, including accrued interest, is as follows: June 30, 2018 March 31, 2018 (in thousands) (in thousands) Sale of intellectual property liability (see Note 4) 71 80 Total debt 71 80 Less notes payable and current portion – long term debt 71 80 Long term debt $ - $ - Liability Associated with Scotts Miracle-Gro Transaction The Company and Scotts Miracle-Gro also agreed to enter an Intellectual Property Sale Agreement, a Technology License Agreement, a Brand License Agreement, and a Supply Chain Services Agreement. The Intellectual Property Sale Agreement and the Technology License constitute an agreement of sales of future revenues. Since the Company received cash from Scotts Miracle-Gro and agreed to pay for a defined period a specified percentage of revenue, and because the Company has significant involvement in the generation of its revenue, the excess paid over net book value is classified as debt and is being amortized under the effective interest method. As of June 30, 2018 and March 31, 2018, a liability of $71,000 and $80,000, respectively, was recorded on the balance sheets for the Intellectual Property Sale Agreement. As of June 30, 2018 and March 31, 2018, the accrued liability for the Technology Licensing Agreement, the accrual is calculated as 2% of the annual net sales and recorded as a liability and amounts to $725,000 and $648,000, respectively. The accrued liability for the Brand License Agreement which is calculated at an amount equal to 5% of incremental growth and is recorded as a liability and amounts to $1.3 million and $1.3 million as of June 30, 2018 and March 31, 2018, respectively. |
4. Scotts Miracle-Gro Transacti
4. Scotts Miracle-Gro Transactions - Convertible Preferred Stock, Warrants and Other Transactions | 3 Months Ended |
Jun. 30, 2018 | |
Convertible Preferred Stock, Warrants and Other Transactions [Abstract] | |
Convertible Preferred Stock, Warrants and Other Transactions [Text Block] | 4. Scotts Miracle-Gro Transactions – Convertible Preferred Stock, Warrants and Other Transactions Series B Convertible Preferred Stock and Related Transactions On April 22, 2013, the Company entered into a Securities Purchase Agreement with SMG Growing Media, Inc., a wholly owned subsidiary of Scotts Miracle-Gro (NYSE: “SMG”), a worldwide marketer of branded consumer lawn and garden products. Pursuant to the Securities Purchase Agreement, Scotts Miracle-Gro acquired 2,649,007 shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “ Upon demand by Scotts Miracle-Gro, the Company must use its best efforts to file a Registration Statement on Form S-3, or, if the Company is not eligible for Form S-3, on Form S-1 (collectively, the “Registration Statement”), within 120 calendar days after receipt of Scotts Miracle-Gro’s demand for registration. The Company must use its best efforts to cause the Registration Statement to become effective as soon as possible thereafter. In conjunction with the private offering described above, the Company and Scotts Miracle-Gro also agreed to enter an Intellectual Property Sale Agreement, a Technology License Agreement, a Brand License Agreement, and a Supply Chain Services Agreement. The Intellectual Property Sale Agreement and the Technology License constitute an agreement of sales of future revenues. For more details regarding these agreements, please refer to Note 3 “Scotts Miracle-Gro Transactions” to the financial statements included in the Company’s Annual Report on Form 10-K, as filed with the SEC on June 28, 2018. See also Note 10 for subsequent events. |
5. Equity Compensation Plans an
5. Equity Compensation Plans and Employee Benefit Plans | 3 Months Ended |
Jun. 30, 2018 | |
Share-based Arrangements with Employees and Nonemployees [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | 5. Equity Compensation Plans and Employee Benefit Plans For the three months ended June 30, 2018 and June 30, 2017, the Company did not grant any options to purchase the Company’s common stock under the Company’s 2005 Equity Compensation Plan (the “2005 Plan”) and no new options will be granted under this plan until a new plan is adopted. During the three months ended June 30, 2018, 50,000 options to purchase shares of common stock were cancelled or expired, and no shares of common stock were issued upon exercise of outstanding stock options. During the three months ended June 30, 2017, no options to purchase shares of common stock were cancelled or expired, and no shares of common stock were issued upon exercise of outstanding stock options. As of June 30, 2018, the Company had no unvested outstanding options to purchase shares of the Company’s common stock and that will result in no additional compensation expense. Information regarding all stock options outstanding under the Company’s 2005 Plan as of June 30, 2018 is as follows: OPTIONS OUTSTANDING AND EXERCISABLE Weighted- average Weighted- Aggregate Remaining average Intrinsic Exercise Options Contractual Exercise Value price (in thousands) Life (years) Price (in thousands) $ 1.55 11 2.14 $ 1.55 $ 2.20 21 0.31 $ 2.20 $ 5.31 93 1.10 $ 5.31 125 1.07 $ 4.47 $ 17 The aggregate intrinsic value in the preceding table represents the difference between the Company’s closing stock price and the exercise price of each in-the-money option on the last trading day of the period presented, which was June 29, 2018. |
6. Income Taxes
6. Income Taxes | 3 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | 6. Income Taxes The Company follows the guidance in ASC 740, Accounting for Uncertainty in Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at the end of each period, based on enacted laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income. Any liability for actual taxes to taxing authorities is recorded as income tax liability. A valuation allowance is established against such assets where management is unable to conclude more likely than not that such asset will be realized. As of June 30, 2018 and March 31, 2018, the Company recognized a valuation allowance equal to 100% of the net deferred tax asset balance and the Company has no unrecognized tax benefits related to uncertain tax positions. |
7. Related Party Transactions
7. Related Party Transactions | 3 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] | 7. Related Party Transactions See Note 6 “Related Party Transactions” of Form 10-K for the year ended March 31, 2018, as filed with the SEC on June 28, 2018 for a detailed discussion of related party transactions. Additionally, see Note 10 “Subsequent Events” to our financial statements for discussion related to debt and equity transactions involving our officers, directors and 5% or greater shareholders. |
8. Common Stock Warrants
8. Common Stock Warrants | 3 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | 8. Common Stock Warrants A summary of the Company’s common stock warrant activity for the period from April 1, 2018 through June 30, 2018 is presented below: Warrants Outstanding (in thousands) Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding, April 1, 2018 2 $ 2.10 $ 1 Granted - - Exercised - - Expired - - Outstanding, June 30, 2018 2 $ 2.10 $ 1 As of June 30, 2018, the Company had the following outstanding warrants to purchase its common stock: Weighted Average Warrants Outstanding (in thousands) Exercise Price Remaining Life (years) 2 $ 2.10 0.27 2 $ 2.10 0.27 |
9. Segment Information
9. Segment Information | 3 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | 9. Segment Information The Company has determined that its reportable segments are those that are based on its method of internal reporting and the perspective of the chief operating decision maker. The company has two reportable segments, Retail Sales and Direct-to-Consumers. The Company evaluates performance based on the primary financial measure of contribution margin (“segment profit”). Segment profit reflects the income or loss from operations before corporate expenses, non-operating income, net interest expense, and income taxes. The Company does not have individually identified assets regarding specific segments as all processes to manufacture products are not different based on segment. Three Months Ended June 30, 2018 (in thousands) Direct-to-consumer Retail Corporate/Other Consolidated Net sales $ 1,454 $ 2,289 $ - $ 3,743 Cost of revenue 889 1,421 - 2,310 Gross profit 565 868 - 1,433 Gross profit percentage 38.9 % 37.9 % - 38.3 % Sales and marketing (1) 75 432 111 618 Segment profit 490 436 (111 ) 815 Segment profit percentage 33.7 % 19.0 % - 21.8 % (1) Sales and marketing includes advertising, trade shows, media production and promotional products and other as discussed in the sales and marketing section of the MD&A. Three Months Ended June 30, 2017 (in thousands) Direct-to-consumer Retail Corporate/Other Consolidated Net sales $ 1,425 $ 1,037 $ - $ 2,462 Cost of revenue 936 704 - 1,640 Gross profit 489 333 - 822 Gross profit percentage 34.3 % 32.1 % - 33.4 % Sales and marketing (1) 20 251 69 340 Segment profit 469 82 (69 ) 482 Segment profit percentage 32.9 % 7.9 % - 19.6 % (1) Sales and marketing includes advertising, trade shows, media production and promotional products and other as discussed in the sales and marketing section of the MD&A. |
10. Subsequent Events
10. Subsequent Events | 3 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | 10. Subsequent Events On July 6, 2018, AeroGrow entered into a Term Loan Agreement (“Term Loan”) in the principal amount of up to $6.0 million with Scotts Miracle-Gro. The proceeds will be made available as needed in increments of $500,000, the Company may reborrow and pay down during the Term Loan, not to exceed $6.0 million with a due date of March 29, 2019. The funding will provide general working capital and will be used for the purpose of acquiring inventory to support anticipated growth as the Company expands its retail and its direct-to-consumer sales channels. Advances under the Term Loan Agreement will be secured by a lien on the assets of the Company. Interest will be charged at the stated rate of 10% per annum and will be paid quarterly in arrears on each of September 28, 2018, December 31, 2018 and March 29, 2019. The Term Loan Agreement has been filed as an exhibit to a Current Report on Form 8-K filed with the SEC on July 11, 2018. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. It is reasonably possible that a change in the Company’s estimates could occur in the near term as additional or new information becomes available. |
Earnings Per Share, Policy [Policy Text Block] | Net Income (Loss) per Share of Common Stock The Company computes net income (loss) per share of common stock in accordance with Accounting Standards Codification (“ASC”) 260. ASC 260 requires companies with complex capital structures to present basic and diluted earnings per share (“EPS”). Basic EPS is measured as the income or loss available to common stockholders divided by the weighted average shares of common stock outstanding for the period. Diluted EPS is similar to basic EPS, but presents the dilutive effect on a per share basis of potential common stock equivalents (e.g., convertible securities, options, and warrants) as if such securities had been converted into common stock at the beginning of the periods presented. Securities that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS include: (i) employee stock options to purchase 125,000 shares and warrants to purchase 2,000 shares of common stock for the period ended June 30, 2018; and (ii) employee stock options to purchase 175,000 shares and warrants to purchase 2,000 shares for the three months ended June 30, 2017. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of Risk ASC 825-10-50-20 Cash: The Company maintains cash depository accounts with financial institutions. The amount on deposit with several financial institutions exceeded the $250,000 federally insured limit as of June 30, 2018. The Company has not historically incurred any losses related to these deposits. The financial institutions are highly rated, financially sound and the risk of loss is minimal. Customers and Accounts Receivable: For the three months ended June 30, 2018 and 2017, one customer, Amazon.com, represented 41.8% and 23%, respectively, of the Company’s net revenue. As of June 30, 2018, the Company had three customers, Amazon.com, Bed, Bath & Beyond and Kohl’s, that represented 26.1%, 18.5% and 11.6% of the Company’s outstanding accounts receivable, respectively. As of March 31, 2018, the Company had two customers, Canadian Tire Corporation and Amazon.com, which represented 27.3% and 22.3%, respectively, of outstanding accounts receivable. The Company believes that all receivables from these customers are collectible. Suppliers: For the three months ended June 30, 2018, the Company purchased inventories and other inventory-related items from one supplier totaling $2.7 million. For the three months ended June 30, 2017, the Company purchased inventories and other inventory-related items from one supplier totaling $1.7 million. The purchase of inventories and other inventory-related items is tied to the anticipated timing and amount of sales for our highly seasonal business and payment terms with our suppliers. The Company’s primary contract manufacturers are located in China. As a result, the Company may be subject to political, currency, regulatory, transportation/shipping and weather/natural disaster risks. Although the Company believes alternate sources of manufacturing could be obtained, these risks and any potential loss of supply could have an adverse impact on operations, especially in the short term. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments The Company follows the guidance in ASC 820, Fair Value Measurements and Disclosures Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants. ASC 820 also provides a hierarchy for determining fair value, which emphasizes the use of observable market data whenever available. The three broad levels defined by the hierarchy are as follows, with the highest priority given to Level 1 as these are the most reliable, and the lowest priority given to Level 3. Level 1 – Quoted prices in active markets for identical assets. Level 2 – Quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations. Level 3 – Unobservable inputs that are supported by little or no market activity. The carrying value of financial instruments including cash, receivables and accounts payable and accrued expenses, approximates their fair value at June 30, 2018 and March 31, 2018 due to the relatively short-term nature of these instruments. The Company’s intellectual property liability carrying value was determined utilizing Level 3 inputs. As discussed below in Notes 3 and 4, this liability was incurred in conjunction with the Company’s strategic alliance with Scotts Miracle-Gro. As of June 30, 2018 and March 31, 2018, the fair value of the Company's sale of the intellectual property liability was estimated using the discounted cash flow method, which is based on expected future cash flows, discounted to present value using a discount rate of 15%. As of June 30, 2018, the Company did not have any financial assets or liabilities that were measured at fair value on a recurring basis, subsequent to initial recognition. |
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | Accounts Receivable and Allowance for Doubtful Accounts The Company sells its products to retailers and directly to consumers. Retailer sales terms vary by customer, but generally range from net 30 days to net 60 days, while direct-to-consumer transactions are primarily paid by credit card. Accounts receivable are reported at net realizable value and net of the allowance for doubtful accounts. The Company uses the allowance method to account for uncollectible accounts receivable. The Company's allowance estimate is based on a review of the current status of trade accounts receivable, which resulted in an allowance of $23,000 and $39,000 at June 30, 2018 and March 31, 2018, respectively |
Receivables, Policy [Policy Text Block] | Other Receivables In conjunction with the Company’s processing of credit card transactions for its direct-to-consumer sales activities and as security with respect to the Company’s performance for credit card refunds and charge backs, the Company is required to maintain a cash reserve with Vantiv, the Company’s credit card processor. This reserve is equal to 5% of the credit card sales processed during the previous six months. As of June 30, 2018 and March 31, 2018, the balance in this reserve account was $195,000 and $281,000, respectively. |
Advertising Costs, Policy [Policy Text Block] | Advertising and Production Costs The Company expenses all production costs related to advertising, including print, television, and radio advertisements when the advertisement has been broadcast or otherwise distributed. In contrast, the Company records media and marketing costs related to its direct-to-consumer advertisements, inclusive of postage and printing costs incurred in conjunction with mailings of direct-response catalogues, and related direct-response advertising costs. Direct-to-consumer advertising costs incurred are reported as assets and should be amortized over the estimated period of the benefits, based on the proportion of current period revenue from the advertisement to probable future revenue. As the Company has continued to expand its retail distribution channel, the Company has expanded its advertising to include online gateway and portal advertising, as well as placement in third party catalogues. Advertising expense for the three months ended June 30, 2018 and June 30, 2017, were as follows: Three Months Ended June 30, (in thousands) 2018 2017 Direct-to-consumer $ 89 $ 72 Retail 372 185 Other $ 15 $ 10 Total advertising expense $ 476 $ 267 As of June 30, 2018 and March 31, 2018, the Company had deferred $3,000 and $14,000, respectively, related to such media and advertising costs which include the catalogue costs described above. The costs are included within the “prepaid expenses and other” line of the balance sheets. |
Inventory, Policy [Policy Text Block] | Inventory Inventories are valued at the lower of cost, determined on the basis of standard costing, which approximates the first-in, first-out method, or net realizable value. When the Company is the manufacturer, raw materials, labor and manufacturing overhead are included in inventory costs. The Company records the raw materials at delivered cost. Standard labor and manufacturing overhead costs are applied to the finished goods based on normal production capacity. A majority of the Company’s products are manufactured overseas and are recorded at standard cost, which includes product costs for purchased and manufactured products, and freight and transportation costs for inbound freight from manufacturers. Inventory values at June 30, 2018 and March 31, 2018 were as follows: June 30, March 31, 2018 (in thousands) 2018 (in thousands) Finished goods $ 3,078 $ 4,117 Raw materials 1,130 930 $ 4,208 $ 5,047 The Company determines an inventory obsolescence reserve based on management’s historical experience and establishes reserves against inventory according to the age of the product. As of June 30, 2018 and March 31, 2018, the Company had reserved $66,000 for inventory obsolescence. The inventory values are shown net of these reserves. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers", and all the related amendments (collectively “ASC 606”) on April 1, 2018 using the modified retrospective method. The adoption did not have a material impact to the nature and timing of its revenues, results of operations, cash flows and statement of financial position. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods. The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited consolidated balance sheets as of June 30, 2018: As reported (in thousands) Adjustments Balance without adoption of ASC 606 (in thousands) Assets Accounts receivable, net $ 2,013 $ (376 ) $ 2,389 Liabilities Accrued expenses $ 1,550 $ (376 ) $ 1,926 The Company currently has two operating and reportable segments, (i) the Direct to Consumer segment, which composed of sales directly from our website, mail order or customer calls to our customer service department and (ii) the Retail segment, which is comprised of all sales related to retailers, including where possession of our product is taken and sold by the retailer in store or online, and drop ship orders that process from the retailer and drop directly to our warehouse for us to ship on behalf of the retailer. The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products and the risk of loss to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of June 30, 2018 or March 31, 2018. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. There were no changes to the Company’s accounting for variable consideration under ASC 606. However, the classification from a liability to a contra asset to show net realizable accounts receivable results in a change in presentation on the balance sheet. Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to retail customers including, but not limited to the following: ● discounts granted off list prices to support price promotions to end-consumers by retailers; ● the Company’s agreed share of fees given directly to retailers for advertising, in-store marketing and promotional activities; and ● incentives given to the Company’s retailers for achieving or exceeding certain predetermined purchases (i.e., rebates). The Company’s promotional allowance programs with its retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one day to one year. The Company’s promotional and other allowances are calculated based on various programs with retail customers, and accruals are established during the year for its anticipated liabilities. These accruals are based on agreed upon terms, as well as the Company’s historical experience with similar programs, and require management’s judgment with respect to estimating consumer participation and retail customer performance levels. Differences between such estimated expense and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. The Company records estimated reductions to revenue for customer and distributor programs and incentive offerings, including promotions, rebates, and other volume-based incentives, based on historical rates. Certain incentive programs require the Company to estimate the number of customers who will actually redeem the incentive based on historical industry experience. As of June 30, 2018 and March 31, 2018, the Company reduced accounts receivable $434,000 and accrued $430,000, respectively, as an estimate for the foregoing deductions and allowances within the “accounts receivable, net” and “accrued expenses” line of the balance sheets, respectively. |
Standard Product Warranty, Policy [Policy Text Block] | Warranty and Return Reserves The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under its basic warranty program. The specific warranty terms and conditions vary depending upon the product sold, but generally include technical support, repair parts, and labor for periods up to one year. Factors that affect the Company’s warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy the Company’s warranty obligation. Based upon the foregoing, the Company has recorded a provision for potential future warranty costs of $122,000 and $111,000 as of June 30, 2018 and March 31, 2018, respectively. The Company reserves for known and potential returns from customers and associated refunds or credits related to such returns based upon historical experience. In certain cases, retail customers are provided a fixed allowance, usually in a range of 1% to 2%, to cover returned goods and this allowance is deducted from payments made to us by such customers. As of June 30, 2018 and March 31, 2018, the Company has recorded a reserve for customer returns of $183,000 and $293,000, respectively. |
Segment Reporting, Policy [Policy Text Block] | Segments of an Enterprise and Related Information U.S. GAAP utilizes a management approach based on allocating resources and assessing performance as the source of the Company's reportable segments. U.S. GAAP also requires disclosures about products and services, geographic areas and major customers. At present, the Company operates in two segments, Direct-to-Consumer and Retail Sales. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 , , In February 2016, the FASB issued ASU 2016-02, “Leases.” The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this ASU is expected to result in all operating leases being capitalized and a current and long-term liability recorded in the Company’s financial statements. We are currently evaluating the impact of adoption of this ASU on our consolidated financial statements and disclosures. In August 2015, the FASB issued ASU 2015-14 to defer the effective date by one year of previously issued ASU 2014-09, “Revenue from Contracts with Customers,” which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard became effective for us in Fiscal Year 2019 and did not have a material impact on our financial statements. The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers", and all the related amendments (collectively “ASC 606”) on April 1, 2018 using the modified retrospective method. The adoption did not have a material impact to the nature and timing of its revenues or changes to retained earnings due to the nature of revenues of our product which is related to product shipments and has relatively short revenue and accounts receivable cycles. Our revenues generally do not include future or multiple deliverables and as such our process to recognize revenue was consistent with the guidance and adoption of ASC 606. The adoption did not have a material impact on results of operations, cash flows but did impact the balance sheet classification of some accrued expenses which will now be reported as contra accounts receivable. The comparative information has not been restated and continues to be reported under the accounting standards in effect in those periods. |
2. Basis of Presentation, Liq17
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Advertising Expenses [Table Text Block] | Advertising expense for the three months ended June 30, 2018 and June 30, 2017, were as follows: Three Months Ended June 30, (in thousands) 2018 2017 Direct-to-consumer $ 89 $ 72 Retail 372 185 Other $ 15 $ 10 Total advertising expense $ 476 $ 267 |
Schedule of Inventory, Current [Table Text Block] | Inventory values at June 30, 2018 and March 31, 2018 were as follows: June 30, March 31, 2018 (in thousands) 2018 (in thousands) Finished goods $ 3,078 $ 4,117 Raw materials 1,130 930 $ 4,208 $ 5,047 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The following table summarizes the impacts of adopting ASC 606 on the Company’s unaudited consolidated balance sheets as of June 30, 2018: As reported (in thousands) Adjustments Balance without adoption of ASC 606 (in thousands) Assets Accounts receivable, net $ 2,013 $ (376 ) $ 2,389 Liabilities Accrued expenses $ 1,550 $ (376 ) $ 1,926 |
3. Notes Payable, Long Term D18
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt [Table Text Block] | As of June 30, 2018 and March 31, 2018, the outstanding balance of the Company’s note payable and debt, including accrued interest, is as follows: June 30, 2018 March 31, 2018 (in thousands) (in thousands) Sale of intellectual property liability (see Note 4) 71 80 Total debt 71 80 Less notes payable and current portion – long term debt 71 80 Long term debt $ - $ - |
5. Equity Compensation Plans 19
5. Equity Compensation Plans and Employee Benefit Plans (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Share-based Arrangements with Employees and Nonemployees [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block] | Information regarding all stock options outstanding under the Company’s 2005 Plan as of June 30, 2018 is as follows: OPTIONS OUTSTANDING AND EXERCISABLE Weighted- average Weighted- Aggregate Remaining average Intrinsic Exercise Options Contractual Exercise Value price (in thousands) Life (years) Price (in thousands) $ 1.55 11 2.14 $ 1.55 $ 2.20 21 0.31 $ 2.20 $ 5.31 93 1.10 $ 5.31 125 1.07 $ 4.47 $ 17 |
8. Common Stock Warrants (Table
8. Common Stock Warrants (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | A summary of the Company’s common stock warrant activity for the period from April 1, 2018 through June 30, 2018 is presented below: Warrants Outstanding (in thousands) Weighted Average Exercise Price Aggregate Intrinsic Value Outstanding, April 1, 2018 2 $ 2.10 $ 1 Granted - - Exercised - - Expired - - Outstanding, June 30, 2018 2 $ 2.10 $ 1 |
Schedule of Warrants Outstanding [Table Text Block] | As of June 30, 2018, the Company had the following outstanding warrants to purchase its common stock: Weighted Average Warrants Outstanding (in thousands) Exercise Price Remaining Life (years) 2 $ 2.10 0.27 2 $ 2.10 0.27 |
9. Segment Information (Tables)
9. Segment Information (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The Company does not have individually identified assets regarding specific segments as all processes to manufacture products are not different based on segment. Three Months Ended June 30, 2018 (in thousands) Direct-to-consumer Retail Corporate/Other Consolidated Net sales $ 1,454 $ 2,289 $ - $ 3,743 Cost of revenue 889 1,421 - 2,310 Gross profit 565 868 - 1,433 Gross profit percentage 38.9 % 37.9 % - 38.3 % Sales and marketing (1) 75 432 111 618 Segment profit 490 436 (111 ) 815 Segment profit percentage 33.7 % 19.0 % - 21.8 % Three Months Ended June 30, 2017 (in thousands) Direct-to-consumer Retail Corporate/Other Consolidated Net sales $ 1,425 $ 1,037 $ - $ 2,462 Cost of revenue 936 704 - 1,640 Gross profit 489 333 - 822 Gross profit percentage 34.3 % 32.1 % - 33.4 % Sales and marketing (1) 20 251 69 340 Segment profit 469 82 (69 ) 482 Segment profit percentage 32.9 % 7.9 % - 19.6 % |
2. Basis of Presentation, Liq22
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | |
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Cash, FDIC Insured Amount | $ 250,000 | ||
Fair Value Inputs, Discount Rate | 15.00% | ||
Allowance for Doubtful Accounts Receivable | $ 23,000 | $ 39,000 | |
Other receivable, reserve percentage of credit card sales | 5.00% | ||
Other Receivables, Net, Current | $ 195,000 | 281,000 | |
Deferred Advertising Costs | 3,000 | 14,000 | |
Inventory Valuation Reserves | 66,000 | 66,000 | |
Increase (Decrease) in Other Accounts Payable | (434,000) | ||
Other Accrued Liabilities | 430,000 | ||
Provision for Future Warranty Costs | $ 122,000 | 111,000 | |
Number of Operating Segments | 2 | ||
Sales Returns and Allowances [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Customer Refund Liability, Current | $ 183,000 | $ 293,000 | |
Minimum [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Returns Reserves Allowance, Percentage | 1.00% | ||
Maximum [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Returns Reserves Allowance, Percentage | 2.00% | ||
Seasonal Revenue [Member] | Sales Revenue, Net [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration Risk, Percentage | 60.10% | ||
Customer Concentration Risk [Member] | Major Customer 1 [Member] | Sales Revenue, Net [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration Risk, Percentage | 41.80% | 23.00% | |
Credit Concentration Risk [Member] | Major Customer 1 [Member] | Accounts Receivable [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration Risk, Percentage | 26.10% | 27.30% | |
Credit Concentration Risk [Member] | Major Customer 2 [Member] | Accounts Receivable [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration Risk, Percentage | 18.50% | 22.30% | |
Credit Concentration Risk [Member] | Major Customer 3 [Member] | Accounts Receivable [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Concentration Risk, Percentage | 11.60% | ||
Supplier Concentration Risk [Member] | Cost of Goods, Total [Member] | Major Supplier 1 [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Cost of Goods and Services Sold | $ 2,700,000 | $ 1,700,000 | |
Employee Stock Option [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 125,000 | 175,000 | |
Warrant [Member] | |||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 2,000 | 2,000 |
2. Basis of Presentation, Li
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Advertising Expenses - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Advertising Expenses [Line Items] | ||
Advertising expense | $ 476 | $ 267 |
Direct-to-consumer [Member] | ||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Advertising Expenses [Line Items] | ||
Advertising expense | 89 | 72 |
Retail [Member] | ||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Advertising Expenses [Line Items] | ||
Advertising expense | 372 | 185 |
Other Advertising [Member] | ||
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Advertising Expenses [Line Items] | ||
Advertising expense | $ 15 | $ 10 |
2. Basis of Presentation, 24
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Inventory - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Schedule of Inventory [Abstract] | ||
Finished goods | $ 3,078 | $ 4,117 |
Raw materials | 1,130 | 930 |
$ 4,208 | $ 5,047 |
2. Basis of Presentation, 25
2. Basis of Presentation, Liquidity and Summary of Significant Accounting Policies (Details) - Schedule of Adopting New Accounting Standard - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Assets | ||
Accounts receivable, net | $ 2,013 | $ 4,296 |
Liabilities | ||
Accrued expenses | 1,550 | $ 2,231 |
Restatement Adjustment [Member] | ||
Assets | ||
Accounts receivable, net | (376) | |
Liabilities | ||
Accrued expenses | (376) | |
Previously Reported [Member] | ||
Assets | ||
Accounts receivable, net | 2,389 | |
Liabilities | ||
Accrued expenses | $ 1,926 |
3. Notes Payable, Long Term D26
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | |
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Details) [Line Items] | ||
Debt, Current | $ 71,000 | $ 80,000 |
Accrued Liabilities, Current | 1,550,000 | 2,231,000 |
Scotts Miracle-Gro Company [Member] | ||
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Details) [Line Items] | ||
Debt, Current | $ 71,000 | 80,000 |
Technology License Agreement [Member] | Scotts Miracle-Gro Company [Member] | ||
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Details) [Line Items] | ||
Royalty, Percentage | 2.00% | |
Accrued Liabilities, Current | $ 725,000 | 648,000 |
Brand License Agreement [Member] | Scotts Miracle-Gro Company [Member] | ||
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Details) [Line Items] | ||
Royalty, Percentage | 5.00% | |
Accrued Liabilities, Current | $ 1,300,000 | $ 1,300,000 |
3. Notes Payable, Long Term
3. Notes Payable, Long Term Debt and Current Portion - Long Term Debt (Details) - Schedule of Debt - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Schedule of Debt [Abstract] | ||
Sale of intellectual property liability (see Note 4) | $ 71 | $ 80 |
Total debt | 71 | 80 |
Less notes payable and current portion – long term debt | 71 | 80 |
Long term debt | $ 0 | $ 0 |
4. Scotts Miracle-Gro Transac28
4. Scotts Miracle-Gro Transactions - Convertible Preferred Stock, Warrants and Other Transactions (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 22, 2013 | Jun. 30, 2018 |
Scotts Miracle-Gro Company [Member] | Series B Preferred Stock [Member] | ||
4. Scotts Miracle-Gro Transactions - Convertible Preferred Stock, Warrants and Other Transactions (Details) [Line Items] | ||
Stock Issued During Period, Shares, New Issues | 2,649,007 | |
Shares Issued, Price Per Share | $ 0.001 | |
Stock Issued During Period, Value, New Issues | $ 4 | |
Convertible Preferred Stock, Terms of Conversion |   On November 29, 2016, Scotts Miracle-Gro fully exercised the Warrant and, by its terms, the Series B Preferred Stock automatically converted into the Company’s common stock. | |
Scotts Miracle-Gro Company [Member] | ||
4. Scotts Miracle-Gro Transactions - Convertible Preferred Stock, Warrants and Other Transactions (Details) [Line Items] | ||
Equity Method Investment, Ownership Percentage | 80.50% |
5. Equity Compensation Plans 29
5. Equity Compensation Plans and Employee Benefit Plans (Details) - Equity Compensation Plan (2005 Plan) [Member] | 3 Months Ended |
Jun. 30, 2018shares | |
5. Equity Compensation Plans and Employee Benefit Plans (Details) [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | 50,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 0 |
5. Equity Compensation Plans
5. Equity Compensation Plans and Employee Benefit Plans (Details) - Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
5. Equity Compensation Plans and Employee Benefit Plans (Details) - Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Line Items] | |
Options Outstanding (in Shares) | shares | 125 |
Options Outstanding, Weighted-average Remaining Contractual Life | 1 year 25 days |
Options Outstanding, Weighted-average Exercise Price | $ 4.47 |
Options Outstanding, Aggregate Intrinsic Value (in Dollars) | $ | $ 17 |
Options Exercise Price $1.55 [Member] | |
5. Equity Compensation Plans and Employee Benefit Plans (Details) - Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Line Items] | |
Exercise Price | $ 1.55 |
Options Outstanding (in Shares) | shares | 11 |
Options Outstanding, Weighted-average Remaining Contractual Life | 2 years 51 days |
Options Outstanding, Weighted-average Exercise Price | $ 1.55 |
Options Exercise Price $2.20 [Member] | |
5. Equity Compensation Plans and Employee Benefit Plans (Details) - Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Line Items] | |
Exercise Price | $ 2.20 |
Options Outstanding (in Shares) | shares | 21 |
Options Outstanding, Weighted-average Remaining Contractual Life | 113 days |
Options Outstanding, Weighted-average Exercise Price | $ 2.20 |
Options Exercise Price $5.31 [Member] | |
5. Equity Compensation Plans and Employee Benefit Plans (Details) - Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Line Items] | |
Exercise Price | $ 5.31 |
Options Outstanding (in Shares) | shares | 93 |
Options Outstanding, Weighted-average Remaining Contractual Life | 1 year 36 days |
Options Outstanding, Weighted-average Exercise Price | $ 5.31 |
6. Income Taxes (Details)
6. Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Deferred Tax Asset, Net, Valuation Allowance, Percent | 100.00% | 100.00% |
Unrecognized Tax Benefits | $ 0 | $ 0 |
8. Common Stock Warrants (De
8. Common Stock Warrants (Details) - Schedule of Stockholders' Equity Note, Warrants or Rights $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Schedule of Stockholders' Equity Note, Warrants or Rights [Abstract] | |
Outstanding, April 1, 2018 | shares | 2 |
Outstanding, April 1, 2018 | $ / shares | $ 2.10 |
Outstanding, April 1, 2018 | $ | $ 1 |
Outstanding, June 30, 2018 | shares | 2 |
Outstanding, June 30, 2018 | $ / shares | $ 2.10 |
Outstanding, June 30, 2018 | $ | $ 1 |
Granted | shares | 0 |
Granted | $ / shares | $ 0 |
Exercised | shares | 0 |
Exercised | $ / shares | $ 0 |
Expired | shares | 0 |
Expired | $ / shares | $ 0 |
8. Common Stock Warrants (33
8. Common Stock Warrants (Details) - Schedule of Warrants Outstanding - $ / shares shares in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Mar. 31, 2018 | |
Schedule of Warrants Outstanding [Abstract] | ||
Warrants Outstanding | 2 | 2 |
Weighted Average Exercise Price | $ 2.10 | $ 2.10 |
Weighted Average Remaining Life | 98 days |
9. Segment Information (Details
9. Segment Information (Details) | 3 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Number of Reportable Segments | 2 |
9. Segment Information (Deta
9. Segment Information (Details) - Schedule of Segment Reporting Information, by Segment - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Segment Reporting Information [Line Items] | |||
Net sales | $ 3,743 | $ 2,462 | |
Cost of revenue | 2,310 | 1,640 | |
Gross profit | 1,433 | 822 | |
Sales and marketing | 1,242 | 832 | |
Consolidated Entity [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 3,743 | 2,462 | |
Cost of revenue | 2,310 | 1,640 | |
Gross profit | $ 1,433 | $ 822 | |
Gross profit percentage | 38.30% | 33.40% | |
Sales and marketing | [1] | $ 618 | $ 340 |
Segment profit | $ 815 | $ 482 | |
Segment profit percentage | 21.80% | 19.60% | |
Direct-to-consumer [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ 1,454 | $ 1,425 | |
Cost of revenue | 889 | 936 | |
Gross profit | $ 565 | $ 489 | |
Gross profit percentage | 38.90% | 34.30% | |
Sales and marketing | [1] | $ 75 | $ 20 |
Segment profit | $ 490 | $ 469 | |
Segment profit percentage | 33.70% | 32.90% | |
Retail [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ 2,289 | $ 1,037 | |
Cost of revenue | 1,421 | 704 | |
Gross profit | $ 868 | $ 333 | |
Gross profit percentage | 37.90% | 32.10% | |
Sales and marketing | [1] | $ 432 | $ 251 |
Segment profit | $ 436 | $ 82 | |
Segment profit percentage | 19.00% | 7.90% | |
Corporate and Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ 0 | $ 0 | |
Cost of revenue | 0 | 0 | |
Gross profit | $ 0 | $ 0 | |
Gross profit percentage | 0.00% | 0.00% | |
Sales and marketing | [1] | $ 111 | $ 69 |
Segment profit | $ (111) | $ (69) | |
Segment profit percentage | 0.00% | 0.00% | |
[1] | Sales and marketing includes advertising, trade shows, media production and promotional products and other as discussed in the sales and marketing section of the MD&A. |
10. Subsequent Events (Details)
10. Subsequent Events (Details) - Subsequent Event [Member] - Scotts Miracle-Gro Company [Member] $ in Millions | Jul. 06, 2018USD ($) |
10. Subsequent Events (Details) [Line Items] | |
Debt Instrument, Face Amount | $ 6 |
Debt Instrument, Description | The proceeds will be made available as needed in increments of $500,000, the Company may reborrow and pay down during the Term Loan, not to exceed $6.0 million with a due date of March 29, 2019 |
Debt Instrument, Interest Rate, Stated Percentage | 10.00% |