AeroGrow revenue down

BOULDER – AeroGrow International Inc. (OTCBB:AERO) reported a lower revenue and a narrower loss for its fiscal 2009 fourth quarter ending March 31.

The Boulder-based indoor-gardening product company said its fiscal fourth quarter revenue fell to about $5.86 million, down 47 percent from a year ago. AeroGrow’s fiscal fourth-quarter loss narrowed to about $3.2 million, slightly better than its $3.7 million loss a year ago.

For its full fiscal 2009 year, ending March 31, AeroGrow reported revenue of about $37.4 million, down 2.4 percent from a year ago. It reported a full fiscal year loss of $10.3 million, slightly worse than its $9.8 million loss a year ago.

“Our financial results mirrored that of the overall economy as our high-growth strategy ran into the sudden, severe and unforeseen market contraction,´ said AeroGrow Chief Executive Jerry Perkins. “The speed of the contraction left us with far too much product on the shelves both at retail and in inventory, and this has dramatically impacted our wholesale shipments, marketing spend and overall sales for the last two quarters.”

AeroGrow also announced that it had completed a private placement in which the company raised cash or converted other obligations or existing loans in excess of $6.3 million through the issuance of Series A preferred stock and warrants to accredited and institutional investors.

The company raised $3.8 million in new cash at the closing of the private placement, primarily from existing shareholders and its chairman of the board, Jack Walker, who is now AeroGrow’s largest beneficial shareholder. In addition, the company issued $2.5 million in preferred stock for noncash consideration, including the conversion of existing accounts payable and other obligations. In total, 6,836 shares of preferred stock were issued. The preferred stock is convertible to common shares at the rate of 5,000 shares of common stock for every share of preferred.

“The economic crisis forced us to quickly shift from targeting double digit growth to targeting the cost containment, overhead reduction and recapitalization needed to survive the downturn and preserve the long-term equity in the products and brand that we’ve built,” Perkins said. “In the last few months we’ve executed initiatives that reduce our costs by about $10 million annually, and we’ve just completed a major restructuring of our balance sheet.”

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