Nasdaq to delist AeroGrow May 4th, 2009 try to move to OTC | AerogardenMastery

Nasdaq to delist AeroGrow May 4th, 2009 try to move to OTC

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anonymous (not verified)
Nasdaq to delist AeroGrow May 4th, 2009 try to move to OTC

 

http://ca.us.biz.yahoo.com/iw/090501/0496984.html

http://ca.us.biz.yahoo.com/e/090501/aero8-k.html

http://www.denverpost.com/business/ci_12275865
 

Nasdaq to delist AeroGrow

The Denver Post
 

AeroGrow International Inc., a Boulder- based maker of indoor gardening products, announced that trading in AeroGrow shares will be suspended on the Nasdaq capital markets, effective Monday.

"After a prolonged series of notices and appeals with Nasdaq, we have halted our efforts to remain listed and are allowing Nasdaq's delisting process to continue without further action on our part," said Jerry Perkins, chief executive of AeroGrow. The company will seek to have its common stock traded on the OTC Bulletin Board.

 

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MaryH (not verified)
Found some more about the

Found some more about the large credit facility of up to $12Million that they broke covenant on

As of June 30, 2008, the Company was not in compliance with two covenants under the FCC Loan Agreement.  As of July 31, 2008, FCC and AeroGrow executed an amendment to the FCC Loan Agreement (the “First FCC Amendment”).  The First FCC Amendment re-set the covenant levels for June 30, 2008 and future periods, thus waving the non-compliance as of June 30, 2008, under the old covenants, temporarily reduced certain restrictions on the Company’s ability to borrow against inventory, and increased the interest rate from Base Rate plus 2% to the current rate of Base Rate plus 3.5%.  After the First FCC Amendment, the Company was in compliance with the revised covenants as of June 30, 2008.

As of September 30, 2008, the Company was not in compliance with two covenants under the revised FCC Loan Agreement.  On October 24, 2008, FCC and the Company executed a second amendment to the FCC Loan Agreement (the “Second FCC Amendment”).  The Second FCC Amendment waived the covenant violations as of September 30, 2008.  In addition, the Second FCC Amendment changed the definition of Base Rate to be the higher of the prime rate or one-month LIBOR + 2.75%, and adjusted the interest calculation under the FCC Loan Agreement such that the interest rate resets monthly, rather than daily.

As of October 27, 2008, FCC and the Company executed a temporary amendment to the FCC Loan Agreement that temporarily reduced certain restrictions on the Company’s ability to borrow against inventory, and increased the advance rate against inventory.

On January 16, 2009, the Company and FCC executed a temporary amendment to the FCC Loan Agreement that temporarily reduced certain restrictions on the Company’s ability to borrow against inventory, and increased the advance rate against inventory as of January 1, 2009. 

As of December 31, 2008, the Company was not in compliance with three covenants under the revised FCC Loan Agreement.  Effective as of January 31, 2009, FCC and the Company executed a forbearance agreement related to the FCC Loan Agreement (the “Forbearance Agreement”).  Pursuant to the terms of the Forbearance Agreement, FCC agreed to forbear its rights and remedies under the FCC Loan Agreement and related documents with respect to any existing defaults under the FCC Loan Agreement (the “Existing Defaults”) until the earlier of June 30, 2009, or the date of occurrence of a default other than the Existing Defaults.  The Forbearance Agreement also increases the Company’s ability to borrow against inventory and accounts receivable during the term of the Forbearance Agreement (the “Additional Borrowing Capacity”).  In return for FCC providing the forbearance period and the Additional Borrowing Capacity, the Company agreed to pay FCC a $25,000 forbearance fee (in five monthly installments), an amendment fee equal to 1.5% per month on the average utilization of the Additional Borrowing Capacity, and issue to FCC a minimum of 250,000 warrants to purchase common stock of the Company at a purchase price of $1.00 per share.  Simultaneously with the execution of the Forbearance Agreement, Mr. Walker provided a $1 million guarantee against certain liabilities under the FCC Loan Agreement.  As compensation for providing the guarantee, the Company has agreed to issue Mr. Walker 50,000 warrants to purchase common stock of the Company at a purchase price of $1.00 per share.  In accordance with SFAS No. 78, the loans outstanding under the FCC Loan Agreement are classified as current because the term of the Forbearance Agreement does not exceed one year.

 

Some of the smaller ones terminate this year with one coming up May 19th.  The big one with FCC was originally good till June 2010 if I remember correctly and they had something like 8-9 million out on that but that AERO has already broke covenant several times and each time the lender FCC extracted more concessions and not they are paying FCC a high amount for fees, additional for the use of the facilities plus interest.   But if there are further default, FCC do not have to extend and forebearance but could demand payment before the June 30, 2009.

In the q3 report AERO mentioned that they need to raise 8-10 million dollars but with the stock price so low, they would have issue to do so.  They had issues shares in the 5-6.25 range before.

MaryH (not verified)
Okay, did a bit of digging. 

Okay, did a bit of digging.  Some of the findings

1. Nasdaq 5210 (d) or continued listing 5900 rules search on another company seem to indicate that that annual cap for that other company on fees are around $65,000
2. As of March 31, 2008, we had manufactured and shipped over 440,000 AeroGarden® garden units and 1,137,000 seed kits to consumer and retailers worldwide
3. Retail sales are recognized when sales are made minus a certain amount allowance counted for expected returns since they offered 36 day trials via HSN.
4. $400K bad debt from bankruptcy of Linen's and Things.
5. AERO has been negative income and negative cashflow in the last few years.  They has sold some shares via private placements and $7 million (minus 700K for investment bankers) in NASDAQ back in 2007.
6. Three main suppliers of different indoor garden models in China.  A) Mingkeda Industries Co, Ltc. (“Mingkeda”) a Chinese company capable of producing 40,000 gardens per month.  B) Main Power Electrical Factory Ltd. (“Main Power”), which began shipping products during the first calendar quarter of 2007 with capacity estimated to be 180,000 units per month.  C)Kayue Electric Company Limited, started producing gardens in June 2007, and has a production capacity of 50,000 units per month. 
7. The bio-grow seed pods are currently produced and assembled in our laboratory facilities in Longmont, Colorado.
8. The seed kits and indoor gardening products are shipped to a fulfillment center in Chino, California. A third-party logistics firm provides warehousing, order fulfillment, and shipping for our products.  2008 opened of an additional, company-owned distribution center in Indianapolis, Indiana.
9. To date, product returns have been within our expectations for both retail and direct-to-consumer sales.  At retail, we utilize a “Destroy in Field” methodology for certain customers as the cost of shipping the return, if used, does not justify the value of the recovered unit. In certain cases, customers are provided a fixed allowance, usually in the 1% to 2% range, to cover returned goods which allowance is deducted from payments from such customers.
10. The stock was traded as on OTCBB from January 8, 2007 to June 12, 2007 as AGWI and from Jun 13, 2007 on NASDAQ as AERO.

As to financing arrangements
I. Sales to retailers used to be factored, i.e. sold invoices to finance company  with ????Benefactor Funding Corp??? for 1.5% of invoice plus interest rate of prime + 3% and factor pays 85% upfront, the remaining 15% after a period net of uncollectables and deductions.

II. On May 16, 2008, we entered into a Business Loan Agreement (the “Business Loan Agreement”) with Jack J. Walker as co-borrower, and First National Bank, for a loan to the Company for the principal amount of up to $1,000,000 (the “First National Loan”).  Pursuant to the Business Loan Agreement, the Company and Mr. Walker provided First National Bank with a promissory note for a principal amount of up to $1,000,000 (the “First National Note”).  The First National Note has an initial interest rate of 5.5% and matures on May 16, 2009.  We paid Mr. Walker $50,000 as compensation for entering into the Business Loan Agreement and First National Note. 

*** III. On May 20, 2008, we entered into a Commitment for Credit Facility with FCC, LLC, d/b/a First Capital ("FCC") (the "FCC Commitment"), for a revolving credit facility in the amount of $12,000,000 (the "Revolving Credit Facility"). In consideration of FCC issuing the FCC Commitment, we paid FCC a commitment fee of $10,000. The Revolving Credit Facility will have a maturity date of two years, with one-year renewals thereafter. The Revolving Credit Facility will bear interest at a rate of prime plus 2%, with the interest rate adjusting to prime plus 1.5% as of January 1, 2009, and we are obligated to pay a minimum monthly interest that would have been earned on an outstanding principal amount of $3,000,000. Continued availability of the Revolving Credit Facility will also be subject to our compliance with customary financial and reporting covenants. The purpose of the Revolving Credit Facility is to pay off our current accounts receivable factoring facility and to provide additional working capital. As collateral for the Revolving Credit Facility, we will grant FCC a first priority security interest over all of our assets, including, but not limited to, accounts receivable, inventory, and equipment. On June __, 2008, the Revolving Credit Facility was finalized and became effective.

IV. As of July 24, 2008, we owed $1,000,000 in principal amount on the First National Note.  During Fiscal 2008, we paid no principal or interest on the First National Note.

This is not arms length dealing at very high interest rate.
** V. On May 19, 2008, we also entered into a Loan Agreement (the “WLoans Loan Agreement" and associated Promissory Note with WLoans, LLC, a Colorado limited liability company, ("WLLC") as lender, and Jack J.  Walker.  The WLoans Loan Agreement provides for a loan up to a maximum of $1,500,000, for business purposes, at an annual interest rate of 12% (the "WLLC Loan").  Mr. Walker is the manager of WLLC and owns a 73.3% membership interest in WLLC, with the remaining membership interest owned by other AeroGrow employees, directors and former directors including Sylvia Bernstein, W. Michael Bissonnette, Jeffrey M. Brainard, Jervis B. Perkins, W. Terry Robertson, Randal L. Seffren, John Thompson, Frederic Wiedemann, and J. Michael Wolfe.  As a condition of the WLLC Loan, we paid WLLC a non-refundable availability commitment fee of $37,500 in June 2008.  Further, in consideration of WLLC holding available funds equal to the principal amount not yet disbursed, we must pay a non-refundable fee of 1% of the retained funds as a holding fee, payable quarterly.  In June 2008, we paid WLLC an availability fee of $15,000.  As of July 24, 2008, we owed $600,000 in principal amount on the WLLC loan.  During Fiscal 2008, we paid no principal or interest on the WLLC Loan.