Fri, 2009/04/17 - 8:23pm
Form 8-K for AEROGROW INTERNATIONAL, INC.
17-Apr-2009
Notice of Delisting or Failure to Satisfy a Continued Listing Rule o
Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On April 16, 2009, AeroGrow International, Inc. (the "Company" or "AeroGrow") was notified by The Nasdaq Stock Market ("Nasdaq," and the staff of Nasdaq, the "Staff") that it has not paid certain fees required by Listing Rule 5210(d). Accordingly, Nasdaq informed the Company that it will be delisted unless AeroGrow appeals the determination by April 23, 2009. The Company plans to appeal the determination.
On April 17, 2009, the Company issued a press release announcing receipt of the Nasdaq letter. A copy of the press release is included as Exhibit 99.1 to this Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is filed with this Form 8-K:
Exhibit No. Description
99.1 Press Release dated April 17, 2009.
Portions of this report may constitute "forward-looking statements" as defined by federal law. Although the Company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the "safe harbor" protections provided under the Private Securities Litigation Reform Act of 1995. Additional information about issues that could lead to material changes in the Company's performance is contained in the Company's filings with the Securities and Exchange Commission.
Sat, 2009/04/18 - 6:46pm
#2
That would be sad, Bruce. (Great to see you back, btw - hope you're feeling better!)
But it's pretty common with startups to try to build a business, and then sell it as a going concern. Hopefully with customer service intact - get a bonus, work for new top management. (Top management will surely change if they sell.)
Sat, 2009/04/18 - 8:22pm
#3
Thanks gisette, it's nice to feel like perusing the boards again, I see you're doing a great job as usual. I guess you're right about building a business looking for a buyout but I always wanted to be the new kid on the block kicking butt and was, for a short while. Looking back, it would have been nice to start a business, sell it for a few billion and retire at 25 but that never crossed my mind and I don't think that was the intent of Mr. Bissonnette either.
Sat, 2009/04/18 - 8:32pm
#4
Well... he may have wanted to keep Aerogrow. But even if the desire is there, the skills to get a company up and running, and grow it as a going concern, seem to differ. A lot of companies seem to hit that size point where they need new management, whether the old management wanted to keep it or not. There's a kind of hump that most starting crew can't seem to get past, somehow.
Anyway, the great reward is to see the brainchild survive and prosper, and hopefully get a good financial return on your own contributions as well. Watching someone else get all the reward from something you've sweated to build, is truly hideous.
Sun, 2009/04/19 - 12:27am
#5
The previous warning about delisting was due to requirement in market capitalization and profit if I remember correctly. If AERO forgot to / cannot pay NASDAQ fees, that is a whole different situation signaling either someone really dropped the ball or they are in serious cash crunch issues.
Sun, 2009/04/19 - 12:54am
#6
Are NASDAQ fees a lot of money?
Sun, 2009/04/19 - 2:19am
#7
I would think it would be a sizable chunk of change.. Listing tend to involve IPO, etc which can be very significant in terms of costs as well as ongoing commitments of certain fees
Sun, 2009/04/19 - 2:30am
#8
Bruce,
I think this 10-K is going to be pretty ugly.
They are already at negative book value and with large box stores such as Costco, Target, Sam's club, etc. getting out of AGs with help of discount from AERO (I have not dug deep enough to know when they account for the sales to retailers) plus Aerogarden.com and the aerogardenoutlet.com's own discounting, I think the sales and marketing expenses are going to be high and revenue lower than before.
They have some notes / credit facilities coming due and I have not researched enough to find out who are the main creditors / noteholders. If they are really facing a cash crunch, they would need to find a buyer or convert the noteholder to shareholder if possible.
Sun, 2009/04/19 - 2:43am
#9
Bruce,
AG has very good products but I think their sales and marketing guys are not top notch and I think their processes are not very good.
Also I suspect AERO don't have a good grasp on cost accounting their actual cost since support is all coming out of direct and likely not allocated out to indirect sales. I am suspecting they are running but not in a focused, organized fashion that support the delivery of the vision and finding different prices points for different segments of their customer base.
Supply chain is another issue. I almost bought an Elite + this week (not the eBay one) but after issue with eBay auction direct from AG during the 10% off sale. It ended up the out of stock situation of booster nutrient caused a chain reaction and thus out of stock the nicely priced power gardener kit which cause issue with delivery date and thus my window to pick it up... Judged it too much hassel and they want a little too much for it shipped to Canada.
Sun, 2009/04/19 - 4:40am
#10
Mary, I'm just hoping to see a 10-Q sometime mid May and I'm afraid it will be ugly, cubed. You're exactly right, they dropped below the market cap requirement last year and if I remember, we figured it was about $1 a share. They let the chief marketing manager go the end of last year and evidently have no plans to replace him, that's scary too. Like you, their supply chain problems cost them a couple hundred dollars from me, I got tired of waiting. And on top of that, a Pro 200 I ordered through Amazon came in a plain Chinese cardboard box and the light bar literally blew up in two hour, that was pretty much the end of me buying AGs.
I just hope they get acquired and keep going, it would be a shame to see such an innovative product and such great people bite the dust.
Sun, 2009/04/19 - 6:06am
#11
Dropping down the market cap requirement takes a while to get delisted but not paying fees to nasdaq would be a fast drop so it raises question what is AERO's strategy or are they so hurting for cash?
Bruce, have you heard who their lenders are? The lenders would be in tremendous power since Aerogrow is already in violation of their loan convenant. Also there was also references to someone was interested in acquiring them early or mid last year but got sent away, have you heard anything on that front before since you seem to be following them earlier than I was. Mid May is going to be interesting...
AERO used to have a little newsletter which is not a bad thing and probably does not take that long to put together but that stopped last fall too. Some of my thoughts are:
* AERO need to better segment their users and find different price points for them
* I think they need to have an entry level AG that is more price friendly than $100.
* I think they need to introduce new model(s) and lower the price of older model i.e. the classics - maybe with shorter warranty periods to lower costs.
* I think they need to do more multi- or bulk pricing of nutrients and pod refills more in line with what they did for 1 season vs Deluxe Master Gardener Kit. They leave too much room for competitors or me toos to try and tap the lucrative supplies market. For those that owe multiple unit, the users can leverage their economies of scale and there is room on AG's side since a lot of their cost are packing and shipping and the marginal cost of additional nutrients is probably low.
* Axe the 3 pod seed kits except for 1 flower, 1 herb, 1 lettuce and 1 cherry tomato. If you want more configuration, buy 6 pod kits and have 2 seasons. They need to streamline the products they carry and $15 seed kit does not make sense longer term or higher volume users when you can get 2 seasons for $20.
* They chould give e-coupons, maybe with serial numbers for purchase of AGs through them for follow up purchase of accessories i.e. 10%-20% off discount if over say $50 purchased. This would incentice people to order on their website if they prefer to do direct and also higher dollar value per sale order since shipping costs can be amortized over more products than the minimal $25.
* registration of warranty requiring serial number.
* replacement of pod guarantee for germination - maybe for international or all customer offer option of coupon for $5, 10 off or replacement kit usable online and with retailer to save on shipping. My replacement pod(s) took 4 weeks to arrive.
Lots of other ideas to improve efficiency for AG.
What happened when the amazon AG you purchased almost blew up? Did Amazon or AERO replace or repair or something?
What would be your speculation on potential purchaser that might be a good fit?
They got a delist notice for share price below $1 last year but nothing's happened even though it's in the 20¢ range. Failure to pay fees is a whole 'nother thing, ya' gotta pay the piper. They filed another 8-K last month giving bonuses to executives if AG is acquired for more than $2 million so it looks like they're shopping for a buyer. The next 10-Q will be interesting but it would be a crying shame to see such an innovative company go under or the name changed for chump change.
It's so sad, they have fantastic people working for them and their customer service is beyond reproach but they got caught up in the financial crisis. Makes a great lesson in how to get ahead doesn't it?.... Invent something innovative, get the patents to cover it, surround yourself with top drawer people, work your butt off and get cut off at the knees. I'm glad I'm an old retired phart.