EX-99.C.1 2 d22041dex99c1.htm EX-99.(C)(1) EX-99.(c)(1)

Exhibit (c)(1)

 

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Presentation to the Special Committee of the Board of Directors of: AeroGrow INTERNATIONAL, INC. November 10, 2020 STIFEL


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Disclaimer General Information and Limitations This presentation (this “Presentation”) has been prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel” or “we”) for the exclusive use of the Special Committee (the “Special Committee”) of the Board of Directors (the “Board”) of AeroGrow International, Inc., a Nevada corporation (the “Company”) in connection with Stifel’s presentation to the Special Committee at a meeting to be held on November 10, 2020. The Special Committee has advised Stifel that the Company is considering entering into an Agreement and Plan of Merger (the “Merger Agreement”) with SMG Growing Media, Inc., an Ohio corporation (“Parent”), and AGI Acquisition Sub, Inc., a Nevada corporation and wholly-owned subsidiary of Parent (“Merger Sub”), pursuant to which, among other things, (i) Merger Sub will be merged with and into the Company with the Company continuing as the surviving corporation, and (ii) each issued and outstanding share of Common Stock, par value $0.001 per share, of the Company (the “Company Common Stock”) (such shares, excluding Dissenting Shares (as defined in the Merger Agreement) and shares of the Company Common Stock held in the treasury of the Company or owned by Parent, the “Shares”) will be converted into the right to receive $3.00 in cash (the “Merger Consideration”), on terms and conditions more fully set forth in the Merger Agreement (the “Merger”). This Presentation has been prepared further to Stifel’s rendering of an opinion (the “Opinion”) to the Special Committee as to the fairness, from a financial point of view, as of the date of the Opinion, to the holders of the Shares of the Merger Consideration to be received by such holders from Parent in the Merger pursuant to the Merger Agreement. This Presentation is being made to the Special Committee in support of our written Opinion, but this Presentation does not constitute our Opinion and is provided for informational purposes only. Our Opinion is limited to the terms of our written opinion letter. This Presentation summarizes the financial analyses we employed in reaching our Opinion, and is qualified in its entirety by the written Opinion delivered to the Special Committee, including the assumptions and qualifications contained therein. This Presentation contains information obtained from publicly available sources and from materials provided to Stifel by the Company. In rendering our Opinion, we have relied upon and assumed, without independent verification, the accuracy and completeness of all of the financial and other information that was provided to Stifel by or on behalf of the Company, or that was otherwise reviewed by Stifel, and have not assumed any responsibility for independently verifying any of such information. With respect to the financial forecasts supplied to us by the Company, we have assumed, at the direction of the Company, that they were reasonably prepared on the basis reflecting the best currently available estimates and judgments of the management of the Company as to the future operating and financial performance of the Company and that they provided a reasonable basis upon which we could form our Opinion. Such forecasts and projections were not prepared with the expectation of public disclosure. All such projected financial information is based on numerous variables and assumptions that are inherently uncertain, including, without limitation, factors related to general economic and competitive conditions and, in particular, assumptions regarding the widespread disruption, extraordinary uncertainty and unusual volatility arising from the effects of the COVID-19 pandemic, including the effect of evolving governmental interventions and non- interventions. Accordingly, actual results could vary significantly from those set forth in such projected financial information. Among other things, such projected financial information assumes that the ongoing COVID-19 pandemic will have a favorable impact on the Company. Stifel has relied on this projected financial information without independent verification or analyses and does not in any respect assume any responsibility for the accuracy or completeness thereof. We believe that our analysis should be considered as a whole, and that selecting portions of our analysis and the factors we considered, without considering all analyses and factors, could be misleading. The preparation of a fairness opinion is a complex process and, as a result, fairness opinions are not necessarily susceptible to partial analysis or summary description. In our analysis we made numerous assumptions where necessary with respect to industry performance, general business or economic conditions, many of which are beyond the control of the Company. Stifel did not attribute any particular weight to any single analysis or factor. The Presentation and the information contained herein have been prepared solely for the Special Committee and may not be used by any other person without the express prior written consent of Stifel. Any party receiving this Presentation (other than the Special Committee) is not authorized to rely on this Presentation for any purpose. The Company acknowledges that it shall not disclose to any person the existence of this Presentation or the Opinion, any view expressed by Stifel in connection herewith (in writing or otherwise) or any portion hereof or thereof, or Stifel’s engagement, without Stifel’s express prior written consent. This Presentation and the Opinion, and the materials and financial models used by Stifel in preparing this Presentation and the Opinion, have been developed by and are proprietary to Stifel and are protected under applicable copyright laws. Not in limitation of any of the foregoing, any recipient thereof, by virtue of such receipt, agrees that it will not reproduce, distribute or make publicly available all or any portion of the Opinion, this Presentation or such models or other materials contained therein without the prior written consent of Stifel. STIFEL 2


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Disclaimer Stifel Disclosures Stifel has acted exclusively for the Special Committee in rendering the Opinion and will receive a fee from the Company for our services. In addition, the Company has agreed to indemnify Stifel for certain liabilities arising out of our engagement. Our Opinion and this Presentation are necessarily based upon economic, market, financial and other conditions and circumstances as they exist on, and on the information made available to us as of, the date of the Opinion and this Presentation, respectively. It should be understood that, although subsequent developments may affect the Opinion or the analyses or information set forth in this Presentation, we do not have any obligation to update, revise or reaffirm our Opinion or this Presentation. A portion of Stifel’s fee is payable upon the rendering of the Opinion, which is not contingent upon successful consummation of the Transaction. Stifel is not opining on the fairness of the amount or nature of the compensation to the Company’s officers, directors or employees relative to any compensation to the common stockholders of the Company or any other party to the Transaction. In conducting our review and arriving at the Opinion, Stifel has relied upon the accuracy and completeness of all financial and other information provided to us or publicly available and Stifel has not independently verified the accuracy or completeness of any such information or assumed any responsibility or liability for such verification, accuracy or completeness. The issuance of the Opinion has been approved by our Fairness Opinion Committee. Stifel may seek to provide investment banking or financial advisory services to the Company or Parent in the future, for which Stifel would seek customary compensation. In the ordinary course of business, Stifel and its affiliates and their respective clients may transact in the securities of the Company and Parent, and may at any time hold a long or short position in such securities. STIFEL 3


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Table of Contents I. Introduction II. Market Check Process III. Valuation STIFEL


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I. Introduction STIFEL


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Introduction Situation Overview & Company Background AeroGrow International, Inc. (“AeroGrow” or the “Company”), founded in 2002 and headquartered in Boulder, Colorado, is the global leader in the rapidly growing indoor countertop garden category Products are sold primary direct to consumer through the Company’s own website and Amazon, with additional sales generated through specialty and mass retail AeroGrow’s stock began trading publicly on January 8, 2007 AeroGrow is publicly traded (OTCPK: AERO), and The Scotts Miracle-Gro Company (“Scotts” or “SMG”) owns a 80.5% stake in the Company and controls the Board (holds three of five seats) Scotts’ initial investment in the Company was a $4 million convertible stock purchase (with warrants) in April 2013, which was accompanied by a IP purchase and several operational agreements which are outlined later in this presentation On March 2, 2020, Scotts filed a Schedule 13D (“13D”) stating that it had “concerns regarding the complexity of the AeroGrow’s operating model and ownership structure, and the costs that AeroGrow incurs as a result of these complexities” Scotts recommended a range of operational adjustments for consideration by the AeroGrow board that would effectively outsource most of AeroGrow’s operations to Scotts In conjunction with the operational shift, Scotts recommended AeroGrow consummate a reverse stock split that would reduce the number of record stockholders to a number that would cause the Common Stock to “go dark” In response to the Scotts 13D, the Company formed a Special Committee of the Board of Directors (“Special Committee”) that is comprised of AeroGrow’s two independent board members to opine on the Scotts proposal on behalf of the Company’s minority shareholders The Special Committee then engaged Stifel on May 20, 2020 to conduct a strategic alternatives / market check (“market check”) review and to, in parallel, review and evaluate transaction proposal(s) made by Scotts Stifel performed a broad market check in July and August 2020 and continued discussions with Scotts about potential improvements to its proposal Market check resulted in four preliminary indications of interest (“IOIs”) that ranged in value from $1.98 - $3.32 per share; however, the highest offer would have required buying out Scotts existing commercial arrangements at a yet to be determined value (valuation analysis included in appendix) causing a reduction in per share price Scotts then submitted an offer to acquire all of the common shares of AeroGrow it does not already own at a price of $1.75 per share on August 18, 2020, which was verbally rejected by the Special Committee The process culminated upon the signing of a Letter of Intent (“LOI”) between Scotts and AeroGrow on October 1, 2020 whereby Scotts revised its offer to $3.00 per share STIFEL 6


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Introduction AeroGrow / Scotts History April 22, 2013 Entered Securities Purchase Agreement with Scotts For $4 million, Scotts acquired 2,649,007 shares of Series B Convertible Preferred Stock and a warrant to purchase shares of common stock Scotts paid an additional $500k for the IP and entered into the following agreements with AeroGrow: Intellectual Property Sale Technology Licensing Brand Licensing Supply Chain Management July 2014 Term loan of $4.5mm from Scotts Use of proceeds: working capital and inventory acquisition 10% interest per year Expired: April 2015 July 2016 Term loan of $6mm from Scotts Use of proceeds: working capital and inventory acquisition 10% interest per year Expired: April 2017 September 2017 Term loan of $2mm from Scotts Use of proceeds: working capital and inventory acquisition 10% interest paid quarterly Expired: March 2018 July 2018 Term loan of $6mm from Scotts Use of proceeds: working capital and inventory acquisition 10% interest paid quarterly Expired: March 2019 June 20, 2019 Term loan of $10mm from Scotts Use of proceeds: working capital to support growth 10% interest paid quarterly Expired: March 2020 March 2, 2020 Scotts filed a 13D with recommendation to outsource AeroGrow operations to Scotts and “go dark” July 28, 2020 Scotts sent a letter to Stifel requesting a meeting to discuss the market check process and to discuss whether they would be a buyer or seller October 5, 2020 After further negotiation with the Special Committee, Scotts filed a 13D with a signed LOI to acquire the remaining shares of the Company for $3.00 per share A B C D E F G H I J K L M N O P Q First six months of Fiscal 2014 Cobranded products with the Miracle-Gro AeroGarden trade name November 29, 2016 Scotts fully exercised the Warrant As a result, Scotts owns approximately 80% of AeroGrow’s outstanding common stock The Convertible Preferred Stock was converted to common stock During the year ended March 31, 2019 Sold $5,000 of products to Scotts Paid Scotts $176,000 for D&O insurance, use of equipment purchased by Scotts and consulting expertise June 20, 2019 Term loan of $1.5mm from Scotts Use of proceeds: real estate lease obligations 10% interest paid quarterly Expires: March 2022 May 29, 2020 Scotts sent AeroGrow a proposal to outsource AeroGrow operations to Scotts and pay an ongoing sales royalty to the Company (no Scotts payment to shareholders at close) August 18, 2020 Scotts filed a 13D with an offer to buy remaining shares of the Company for $1.75 per share Key Stock Purchase-Related Financial Term Loan July 2015 Term loan of $6mm from Scotts Use of proceeds: working capital and inventory acquisition 10% interest per year Expired: April 2016 During the year ended March 31, 2018 Sold product to Scotts for ~$877,000 Paid Scotts $61,000 for warehouse charges to fulfill orders May 20, 2020 Stifel engaged as the financial advisor to the Special Committee (announced by AeroGrow June 23, 2020) STIFEL 7


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Introduction AeroGrow / Scotts History Stock Chart $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 A B C D E F G H I J K L M N O P Q Jan ’13 Jan ’14 Jan ’15 Jan ’16 Jan ’17 Jan ’18 Jan ’19 Jan ’20 Source: Factset as of 11/9/20. STIFEL 8


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Introduction AeroGrow Financial Overview ($ in millions, except per share values) Summary Operating Data (1) ($ in millions) Historical Estimated Projected FYE March 31, 2018A 2019A 2020A LTM Sep-2020 2021E 2022P 2023P Gross Revenue $40.8 $46.1 $46.9 $71.2 $92.0 $133.6 $188.2 % Growth 49.7% 12.9% 1.7% 80.6% 96.2% 45.3% 40.9% Net Revenue $32.3 $34.4 $39.2 $61.0 $78.4 $114.3 $161.8 % Growth 36.8% 6.4% 14.1% 97.2% 99.8% 45.9% 41.6% Gross Profit $10.7 $12.0 $14.0 $24.4 $30.7 $44.5 $63.4 % Net Revenue 33.1% 34.8% 35.8% 39.9% 39.2% 38.9% 39.2% Adj. EBITDA ($0.0) $0.5 $1.1 $7.6 $9.5 $15.3 $25.5 % Net Revenue (0.1%) 1.5% 2.7% 12.4% 12.1% 13.4% 15.8% Net Revenue Segmentation by Channel 10% 23% 42% 25% FY 2018A 10% 20% 47% 24% FY 2019A 9% 14% 43% 34% FY 2020A 2% 19% 7% 32% 40% FY 2021E 14% 14% 9% 27% 36% FY 2022P 23% 11% 11% 23% 32% FY 2023P AeroGarden.com Amazon Retail In-Store Retail E-Commerce Bloom Capitalization Summary (2) Maturity Rate Value LTM Sep-20 Adj. EBITDA Multiple FY 2021E Adj. EBITDA Multiple Cash and Equivalents $3.8 0.5x 0.4x Term Loan Mar-22 10.0% $2.9 0.4x 0.3x Finance Lease 0.0 0.0x 0.0x Total Debt $2.9 0.4x 0.3x Net Debt ($0.9) (0.1x) (0.1x) Market Capitalization (11/9/20) $2.75 $94.4 12.5x 9.9x Total Enterprise Value $93.5 12.4x 9.8x Source: Company internal financials and public filings, management “base case” estimates/projections. (1) LTM Sep-2020 and 2021E results include actuals through 9/30/20. LTM Sep-2020 EBITDA adjustments total $487k and include $386k of transaction costs, $237k of public company costs, $51k related to a one-time website security audit and ($188k) related to Scotts paying for an AeroGrow employee. (2) Balance sheet metrics as of 9/30/20. STIFEL 9


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Introduction Summary of Scotts 13D Filings As beneficial owner of AeroGrow, Scotts has had a 13D on file with the SEC since its initial investment in 2013 Since March 2020, Scotts has filed a series of amendments to its 13D that have outlined its opinions regarding streamlining AeroGrow’s operations and ownership structure: March 2, 2020 Scotts disclosed that it had recommended, at the February 27, 2020 AeroGrow Board meeting, that AeroGrow implement a series of “operational adjustments” and a reverse stock split that would (i) significantly simplify AeroGrow’s organizational structure, (ii) reduce AeroGrow’s operating expenses and (iii) alleviate the burden of public company reporting requirements by effecting a delisting of its publicly-traded stock These recommendations led to the formation of the Special Committee, which subsequently engaged Stifel to advise on this proposal The Special Committee was tasked with advising on the feasibility of these operational adjustments July 31, 2020 Scotts disclosed that it had sent a letter to Stifel to request a meeting to discuss: The status of Stifel’s market check process Scotts’ interest in acting as a buyer vs. a seller of its 80.5% stake in AeroGrow and associated rights (i.e. IP) This disclosure was made in response to: The Special Committee’s verbal rejection of proposal from Scotts, dated May 29, 2020, that would (i) license back to Scotts all IP owned by AeroGrow and (ii) absorb AeroGrow’s operations into Scotts, in exchange for a 5% royalty, leaving AeroGrow as a public shell collecting this royalty Stifel’s market check process to assess third party interest in acquiring AeroGrow Continued appreciation in AeroGrow’s stock price August 18, 2020 Scotts disclosed that it had submitted an indication of interest to acquire the shares of AeroGrow it does not own for $1.75/share This valuation was predicated upon Scotts’ opinion of the value of the rights of AeroGrow (i.e. IP, licenses, etc.) that it owned This filing was made with limited prior disclosure to Stifel and the Special Committee about a public filing stating a $1.75/share valuation The closing share price of AeroGrow’s stock on this day was $5.74/share, having briefly traded above $6/share the day prior This filing led to AeroGrow’s share price to drop ~30% the following day AeroGrow issued a press release on August 19, 2020 confirming receipt and acknowledging the ongoing nature of the strategic review process October 2, 2020 Scotts disclosed that it had executed a non-binding LOI with AeroGrow to acquire the shares of AeroGrow it does not own for $3.00/share, with the transaction structured as a merger Coincidentally, the closing share price of AeroGrow’s stock on this day was $3.00/share STIFEL 10


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Introduction AeroGrow Historical Stock Performance (2013 to 2016) Price $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Jan-2013 May-2013 Sep-2013 Jan-2014 May-2014 Sep-2014 Jan-2015 May-2015 Sep-2015 Jan-2016 May-2016 Sep-2016 Volume 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Key Stock Purchase-Related Term Loan received from Scotts April 22, 2013: Entered Securities Purchase Agreement with Scotts 2014: Cobranded products with Miracle-Gro November 29, 2016: Scotts fully exercised the warrant Source: Capital IQ as of 11/9/20. STIFEL 11


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Introduction AeroGrow Historical Stock Performance (2017 to current) Price $10.00 $9.00 $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 Jan-2017 May-2017 Sep-2017 Jan-2018 May-2018 Sep-2018 Jan-2019 May-2019 Sep-2019 Jan-2020 May-2020 Sep-2020 Volume 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 Key Stock Purchase-Related Term Loan received from Scotts October 5, 2020: Scotts filed a 13D with a signed LOI to acquire the remaining shares of the Company for $3.00 per share August 19, 2020: AeroGrow press release stating the Special Committee will review the 13D August 18, 2020: Scotts filed revised 13D, offering a share price of $1.75 July 31, 2020: Scotts filed revised 13D June 23, 2020: Announces FY 2020 results, sales are tracking to 3x prior year levels, and that Stifel has been engaged as financial advisor to Special Committee May 20, 2020: Stifel hired as financial advisor March 26, 2020: Special Committee formed March 2, 2020: First 13D filed by Scotts Source: Capital IQ as of 11/9/20. STIFEL 12


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Introduction Summary of IP Ownership and Rights AeroGrow IP Overview IP is divided into Hydroponic IP (general term), Large Scale Product IP, and collaborative Lighting Product IP Scotts owns: All Hydroponic IP developed through April 2013 All Large Scale Product IP and Lighting Product IP developed through July 2019 AeroGrow owns: All Hydroponic IP developed since April 2013 All Large Scale Product IP and Lighting Product IP developed since July 2019 The AeroGarden and AeroGrow trademarks AeroGrow has licenses, all subject to a 2% net royalty on sales and terminable on certain conditions, to use: Hydroponic IP in North America – exclusive Large Scale Product IP in the Direct-to-Consumer (“DTC”) channel – exclusive Lighting Product IP in the DTC channel – non-exclusive AeroGrow has licenses, terminable on certain conditions, for Hydroponic IP in a number of international territories AeroGrow has a license, subject to a 5% royalty on net sales of seed pods / nutrients and terminable on certain conditions, to use the Scotts “MiracleGro” trademark Expiration and Renewal Terms of Scotts Agreements Current Term Expiration Renewal Rights of AeroGrow IP License March 31, 2023 At AeroGrow’s option, consecutive additional 5 year terms by providing 6 months written notice Trademark License March 31, 2023 At AeroGrow’s option, consecutive additional 5 year terms by providing 6 months written notice STIFEL 13


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ II. Market Check Process STIFEL


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Market Check Process Overview Stifel was engaged by the Special Committee on May 20, 2020 to conduct a strategic alternatives / market check (“market check”) review and to, in parallel, review and evaluate transaction proposal(s) made by Scotts Stifel and the Special Committee agreed upon a market check process that was comprised of a three-phase approach: Phase 1 (month of June): Preparation of marketing materials and market check outreach list (in consultation with management) Phase 2 (month of July): Formal market check outreach, solicitation of non-binding initial Indications of Interest (“IOI”) and planning for next steps of the process (early August) Anticipated Phase 3 (5-6 week period): Advanced due diligence and solicitation of second-round bids, with virtual management presentations, electronic data room access and detailed follow-up due diligence sessions Market check outreach was deliberately planned and executed as being broad and comprehensive to encompass all potential strategic buyers (domestic and global) and private equity firms that met defined strategic and financial criteria as capable acquirers Strategic buyer outreach was based on six primary buyer categories: Home Appliance Lawn & Garden Connected Home Food & Agriculture Retailers Cannabis The market check process was undertaken on an agreed and efficient timeline, without compromising the breadth or inclusiveness of the process STIFEL 15


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Process Calendar May 2020 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 June 2020 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 July 2020 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 August 2020 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 September 2020 S M T W Th F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Stifel Engaged Outreach and Buyer Diligence Extended IOI Due Date Market Check Preparation IOI Due Date AeroGrow Board Meeting with Stifel AeroGrow announces Stifel as financial advisors to SC Scotts 13D Filing Market Holiday STIFEL 16


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Market Check Process Statistics Overview of Buyers Contacted Category U.S. International Total Home Appliance 22 21 43 Lawn & Garden 9 11 20 Connected Home 11 6 17 Food & Agriculture 12 1 13 Retailers 5 2 7 Cannabis 1 1 2 Total Strategics 60 42 102 Sponsors with Adjacent Portfolio Companies 14 1 15 Other Sponsors 185 20 205 Total Sponsors 199 21 220 Total Buyers 259 63 322 Marketing Process Statistics 350 300 250 200 150 100 50 0 322 102 220 Contacted 79 5 74 Signed NDA & Received CIM 15 4 11 Held Post-CIM Call 4 2 2 Submitted IOI (1) Sponsors Strategics (1) Note: Includes two verbal indications and 2 letters. STIFEL 17


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Market Check Process Feedback Commonly-Cited Positive Feedback Unique product, market, and business model, experiencing very rapid and, now, profitable growth Proven, scalable and fast-growing recurring revenue model Proven and consistent innovation and market leadership Sizeable growth opportunity / revenue upside with significant domestic runway (underappreciated and under-recognized market), with international growth potential, including both new customer relationships and new products currently in development Responsive to multiple long-term consumer product trends Food security / safety At-home / year-round convenience Smart home / kitchen Health / “better-for-you” edibles DIY / recession-resistant attributes DTC business models increasingly well-positioned given short-term and longer-term trends Loyal customer base through AeroGarden.com, and data-centric insight into customer buying behavior Opportunity to accelerate growth with full and proper capitalization Commonly-Cited Concerns Concerns about sustainability of recent growth in a “post-COVID” environment Continued reliance on Scotts’ intellectual property, including key technology and trademarks Lower-than-expected profitability profile Transaction complexity, over an above normal public company transaction – recent and significant run-up in stock price and valuation, and increased complexity due to existing commercial relationship with Scotts Unclear if and why Scotts would be a seller Potential cannabis exposure Outsourced manufacturing model – manufacturing concentration in China and uncertainty about future trade relations Product concentration – some perceived concerns around marketing one product family today Channel concentration – limitations with direct-to-consumer sales model; potential for margin pressure through Amazon Projected growth reliant in some part on the success of Bloom – difficult to project STIFEL 18


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Summary of Initial Indications of Interest Verbal Indication Verbal Indication Group Party B Party A Party C Party D Bid Received Date July 31 July 30 August 10 August 10 Buyer Type Financial Financial Strategic Strategic Enterprise Value $88 million - $106 million / $68 million - $81 million (1) $50 million - $75 million (2) $68.7 million - $85.9 million $60 million - $80 million Currency Cash Cash + Earn-out Stock (+ Potential Minority Cash) Cash Earn-out No $25 million No No Implied 12/31/20E EBITDA Multiple (3) 10.0x – 12.0x (1) 5.8x – 8.7x 8.0x – 10.0x 7.0x – 9.3x Implied Per-Share Value (4) $2.80 - $3.32 / $2.21 - $2.60 (1) $1.69 - $2.42 $2.24 - $2.74 $1.98 - $2.56 Premium / (Discount) to 8/10/20 Share Price (5) (37.9%) - (26.2%) / (50.9%) - (42.2%) (1) (62.5%) - (46.3%) (50.3%) - (39.2%) (56.0%) - (43.0%) Premium / (Discount) to 3/2/20 Share Price (6) 108.7% - 147.8% / 64.7% - 94.2% (1) 26.1% - 80.4% 66.8% - 104.1% 47.8% - 91.3% IP Bid is inclusive of IP ownership Assumes existing commercial arrangements Assumes existing commercial arrangements Preference to own relevant IP Third-Party Debt Financing Yes Yes No No
Amount of Debt Modest, but not specifically stated Approximately half of purchase price N/A N/A (1) Based on bid’s stated multiple range of 10.0x-12.0x EBITDA. First set of numbers listed corresponds to EBITDA with royalty payments added back, second set does not add back payments. (2) Enterprise Value consists of $50 million upfront consideration with a maximum potential $25 million earn-out tied to performance to plan through FY 2023. (3) 12/31/20E EBITDA of $8.6 million. (4) Based on an estimated net cash position at close of $8 million. (5) Share price on 8/10/20 was $4.50. (6) Share price on 3/2/20 (trading day prior to initial 13D filing after market close on 3/2/20) was $1.34. STIFEL 19


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Evolution of Scotts’ Offers Since its original 13D filing on March 2nd, Scotts has submitted three proposals to the Special Committee to address its concerns as listed in the March 2nd 13D filing: Intellectual Property License Proposal (May 29, 2020) Scotts submitted this proposal under the premise that its licensed IP accounted for substantially all of AeroGrow’s value Scotts proposed that AeroGrow license its owned IP to Scotts in order for Scotts to assume control of AeroGrow’s operations and satisfy Scotts’ concern about AeroGrow’s prohibitive cost structure In exchange, Scotts would pay AeroGrow a 5% net sales royalty on most of AeroGrow’s product suite This would leave AeroGrow as a public shell that would distribute this royalty in a yearly dividend to shareholders Assuming (i) no haircut to management’s projections and (ii) 5% revenue growth beyond management’s projections, a DCF of this proposal yields a share price of approximately $1.33 at a zero net debt position Acquisition of Unowned AeroGrow Shares at $1.75 / Share (August 18, 2020) Scotts submitted a revised proposal on August 18, 2020 that proposed a payment of $1.75 per share for its unowned shares of the Company The value of the Scotts IP relative to third party offers was a key element of comparing the offers, though there was a question regarding how much of the third party value must be attributed to Scotts’ IP Acquisition of Unowned AeroGrow Shares at $3.00 / Share (October 1, 2020) Following further negotiation with Stifel and the Special Committee, Scotts submitted a revised proposal on October 1, 2020 (that was accepted and filed via a 13D on October 5, 2020) that proposed a payment of $3.00 per share for its unowned shares of the Company The Special Committee agreed to enter into a letter of intent with Scotts based on this offer STIFEL 20


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~ Included herein for illustrative purposes only; this analysis was not used by Stifel in calculating its valuation of AeroGrow ~ Market Check Process Summary of Scotts LOI dated October 1, 2020 Structure: Merger of a wholly-owned acquisition subsidiary of Scotts with and into AeroGrow Consideration: AeroGrow shareholders (other than Scotts) will receive $3.00 per share in cash Financing Contingency: None Due Diligence: Confirmatory in nature Definitive Agreements: Merger Agreement and associated ancillary agreements (final approval required from both companies’ boards) Conditions and Approvals: Satisfactory completion of due diligence Execution of Definitive Agreements Receipt of all required governmental, regulatory and third-party approvals and consents Expiration of HSR waiting period (if applicable) Absence of any material adverse change in AeroGrow business or prospects Special Committee receipt of the Stifel fairness opinion Timing: Both sides to use commercially reasonable efforts to close the transaction by December 31, 2020 LOI Expiration Date: March 31, 2021 Exclusivity Period: Through November 15, 2020 at 5:00pm ET (extended only by mutual written agreement of both parties) STIFEL 21


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III. Valuation STIFEL


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Valuation Overview of Valuation AeroGrow Financials Base case financials used throughout analyses are management estimates A second Discounted Cash Flow analysis is performed on an “adjusted case” developed in conjunction with management, which reduces management growth estimates for annual core business revenue growth by 10% and annual Bloom revenue growth by 50% Comparable Public Companies Analysis Analysis of market valuations and implied trading statistics for selected publicly traded housewares companies Looked at multiples for both the aggregated set of comparable housewares companies, as well as for the subset of companies with an equity value of less than $500 million Stifel selected the 1st and 3rd quartile EBITDA multiples of publicly traded comparables’ CY2020 and CY2021 estimates and applied them to AeroGrow’s corresponding EBITDA figures to arrive at an implied enterprise value range EBITDA multiples are the relevant valuation metrics for the housewares and consumer products segments Precedent Transaction Analysis Analysis of selected comparable precedent transactions in the housewares sector Stifel applied the 1st and 3rd quartile multiples to AeroGrow’s LTM EBITDA to arrive at an implied enterprise value range Discounted Cash Flow Analysis Analysis utilizing the terminal multiple method and perpetuity growth method Present value of unlevered free cash flows Terminal values of 7.0x and 9.0x based on public comparable median forward year 2021 EBITDA multiple Perpetuity growth rate method utilizes long-term growth rates of 1.0% to 3.0% Range of discount rates based on weighted average cost of capital analysis of selected comparables STIFEL 23


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Valuation Implied Transaction Value at Scotts’ Offer Price Noteworthy Dates for Scotts Offer Price Comparison: 3/2/20: Scotts’ original 13D (filed after market close) 6/23/20: Stifel hiring disclosure in 8-K (filed after market close) 7/30/20: Updated 13D stating Scotts’ interest in discussing status of process with Stifel (filed before market open on 7/31) 8/18/20: Updated 13D disclosing Scotts’ offer to acquire unowned shares for $1.75 per share (filed after market close) 10/5/20: Updated 13D disclosing execution of LOI to acquire unowned shares $3.00 per share (filed after market close) Reference: VWAP (1) 30 day: $3.18 60 day: $3.82 90 day: $3.63 ($ in millions, except per share data) Price as of 3/2/20 Price as of 6/23/20 Price as of 7/30/20 Price as of 8/18/20 Price as of 10/5/20 Scotts Offer Price Price per Share $1.34 $2.92 $3.98 $5.74 $3.00 $3.00 Premium to 3/2/20 - - - - - 123.9% Premium to 6/23/20 - - - - - 2.9% Premium to 7/30/20 - - - - - (24.6%) Premium to 8/18/20 - - - - - (47.7%) Premium to 10/5/20 - - - - - 0.0% Implied Value Shares Outstanding 34.3 34.3 34.3 34.3 34.3 34.3 Equity Value $46.0 $100.1 $136.6 $196.9 $103.0 $103.0 Plus: Net Debt (0.9) (0.9) (0.9) (0.9) (0.9) (0.9) Enterprise Value $45.1 $99.2 $135.7 $196.0 $102.1 $102.1 Multiples EV / EBITDA Final Metric LTM 9/30/20 $7.6 6.0x 13.1x 17.9x 25.9x 13.5x 13.5x CY2020E $9.4 4.8x 10.6x 14.5x 20.9x 10.9x 10.9x CY2021E $13.3 3.4x 7.5x 10.2x 14.7x 7.7x 7.7x Note: Assumes Net Debt of ($0.9M) and 34,328,036 shares outstanding to calculate a per share valuation based on implied Enterprise Value. CY2020E EBITDA includes actuals through 9/30/20. (1) Source: Capital IQ as of 10/5/20. STIFEL 24


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Valuation Football Field Summary – Enterprise Value Basis ($ in millions) Comparable Public Companies Precedent Transactions Discounted Cash Flow CY2020E Housewares Overall CY2020E Housewares: Sub-$500M Equity Value CY2021E Housewares Overall CY2021E Housewares: Sub-$500M Equity Value Housewares Base Case Perpetuity Growth Base Case Terminal Multiple Adjusted Case Perpetuity Growth Adjusted Case Terminal Multiple Scotts LOI: $102.1 $58.9 $102.3 $48.9 $66.3 $65.8 $122.0 $59.7 $79.4 $56.3 $97.7 $65.5 $85.9 $118.3 $155.9 $53.1 $69.5 $96.7 $127.4 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 $160.00 Metric (1) EV / EBITDA 2020E Overall Housewares: 6.3x – 10.9x Sub-$500M Housewares: 5.2x – 7.1x PF Adj. CY2020E EBITDA: $9.4M EV / EBITDA 2021E Overall Housewares: 4.9x – 9.2x Sub-$500M Housewares: 4.5x – 6.0x PF Adj. CY2021E EBITDA: $13.3M EV / EBITDA LTM: 7.4x – 12.9x LTM Sep-20A PF Adj. EBITDA: $7.6M Long-Term Growth: 1.0% – 3.0% Terminal Multiple: 7.0x – 9.0x WACC: 14.0% – 16.0% Adjusted Case: Reduced revenue growth rates for Core Business by 10% and Bloom by 50% Note: Assumes Net Debt of ($0.9M) and 34,328,036 shares outstanding to calculate a per share valuation based on implied Enterprise Value. LTM metrics as of 9/30/20. (1) Multiple ranges are based on the 1st and 3rd quartiles of comparable public company estimates and precedent transaction multiples. STIFEL 25


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Valuation Football Field Summary – Per Share Basis Comparable Public Companies Precedent Transactions Discounted Cash Flow CY2020E Housewares Overall CY2020E Housewares: Sub-$500M Equity Value CY2021E Housewares Overall CY2021E Housewares: Sub-$500M Equity Value Housewares Base Case Perpetuity Growth Base Case Terminal Multiple Adjusted Case Perpetuity Growth Adjusted Case Terminal Multiple Scotts LOI: $3.00 $1.74 $3.01 $1.45 $1.96 $1.94 $3.58 $1.77 $2.34 $1.67 $2.87 $1.93 $2.53 $3.47 $4.57 $1.57 $2.05 $2.84 $3.74 $1.00 $2.00 $3.00 $4.00 $5.00 Metric (1) EV / EBITDA 2020E Overall Housewares: 6.3x – 10.9x Sub-$500M Housewares: 5.2x – 7.1x PF Adj. CY2020E EBITDA: $9.4M EV / EBITDA 2021E Overall Housewares: 4.9x – 9.2x Sub-$500M Housewares: 4.5x – 6.0x PF Adj. CY2021E EBITDA: $13.3M EV / EBITDA LTM: 7.4x – 12.9x LTM Sep-20A PF Adj. EBITDA: $7.6M Long-Term Growth: 1.0% – 3.0% Terminal Multiple: 7.0x – 9.0x WACC: 14.0% – 16.0% Adjusted Case: Reduced revenue growth rates for Core Business by 10% and Bloom by 50% Note: Assumes Net Debt of ($0.9M) and 34,328,036 shares outstanding to calculate a per share valuation based on implied Enterprise Value. LTM metrics as of 9/30/20. (1) Multiple ranges are based on the 1st and 3rd quartiles of comparable public company estimates and precedent transaction multiples. STIFEL 26


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Valuation Housewares Comparable Public Companies: Trading Metrics ($ in millions, except per share values) Stock Price Market Value Valuation Multiples Growth Metrics Housewares: Above $500M Equity Value 11/9/20 % 52-wk High Equity Value Enterprise Value EV / Revenue EV / EBITDA P/E PEG LT EPS LTM CY2020E CY2021E LTM CY2020E CY2021E LTM CY2020E CY2021E 2021E Growth Whirlpool $180.69 87.2% $11,302 $13,944 0.7x 0.7x 0.7x 6.7x 6.3x 6.0x 10.7x 10.0x 9.5x 1.10 8.6% Newell Brands 19.11 91.9% 8,108 13,672 1.5x 1.5x 1.4x 12.0x 10.8x 9.8x 4.9x 11.3x 11.7x 2.57 4.5% SEB SA 169.07 93.3% 8,482 10,824 1.4x 1.3x 1.2x 11.4x 11.7x 9.9x 15.8x 25.4x 17.5x 2.46 7.1% Helen of Troy 187.42 86.1% 4,752 4,903 2.6x 2.5x 2.5x 14.3x 14.5x 13.7x 16.8x 16.7x 16.7x 1.53 10.9% Spectrum Brands 60.90 90.8% 2,622 4,847 1.3x 1.3x 1.2x 8.5x 8.5x 8.2x 10.0x 14.9x 13.7x 0.86 15.9% Breville Group 20.12 93.0% 2,795 2,706 4.1x 3.6x 3.2x 28.2x NM 22.3x NM 48.1x 40.4x 3.91 10.3% Central Garden & Pet 38.66 86.3% 1,967 2,153 0.8x 0.8x 0.8x 7.7x 9.0x 9.0x 12.8x 18.3x 17.8x 2.54 7.0% Tupperware Brands 27.23 79.1% 1,337 1,957 1.2x 1.2x 1.1x 9.5x 6.2x 4.9x 9.8x 8.7x 8.2x 0.82 10.0% 1st Quartile $25.45 86.2% $2,458 $2,568 1.0x 1.0x 0.9x 8.1x 7.4x 7.1x 9.9x 10.7x 10.6x 1.04 7.1% Mean $87.90 88.5% $5,171 $6,876 1.4x 1.3x 1.3x 10.0x 9.6x 8.8x 11.6x 15.0x 13.6x 1.97 9.3% Median $49.78 89.0% $3,773 $4,875 1.3x 1.3x 1.2x 9.5x 9.0x 9.0x 10.7x 14.9x 13.7x 1.99 9.3% 3rd Quartile $171.97 92.1% $8,202 $11,536 1.4x 1.4x 1.3x 11.7x 11.3x 9.8x 14.3x 17.5x 17.1x 2.55 10.5% Housewares: Sub-$500M Equity Value Dorel $11.51 93.6% $373 $739 0.3x 0.3x 0.3x 3.7x 4.0x 4.5x 20.1x 11.0x 14.0x NA NA National Presto Industries 85.38 87.2% 599 469 1.4x NA NA 7.8x NA NA 12.5x NA NA NA NA Lifetime Brands 10.38 82.6% 226 446 0.6x 0.6x 0.6x 6.4x 6.4x 6.0x 25.6x 17.6x 12.1x 0.93 13.0% Noritake 28.75 61.9% 415 374 0.4x 0.4x 0.3x 5.5x 5.2x 4.2x 22.1x NA NA NA NA Hamilton Beach Brands 20.36 81.4% 278 318 0.5x NA NA 8.0x 7.1x 7.1x 11.8x 9.3x 9.3x NA NA Churchill China 14.65 54.7% 161 143 2.0x 2.8x 2.2x 10.7x NM NM 19.4x NM 27.3x NA NA Portmeirion 5.06 43.3% 71 69 0.6x 0.6x 0.6x 5.5x 11.2x 4.9x 20.8x NM 10.6x NA NA 1st Quartile $10.94 58.3% $194 $231 0.4x 0.4x 0.3x 5.5x 5.2x 4.5x 16.0x 10.1x 10.6x 0.93 13.0% Mean $25.16 72.1% $303 $365 0.8x 0.9x 0.8x 6.8x 6.8x 5.3x 18.9x 12.6x 14.6x 0.93 13.0% Median $14.65 81.4% $278 $374 0.6x 0.6x 0.6x 6.4x 6.4x 4.9x 20.1x 11.0x 12.1x 0.93 13.0% 3rd Quartile $24.56 84.9% $394 $457 1.0x 0.6x 0.6x 7.9x 7.1x 6.0x 21.4x 14.3x 14.0x 0.93 13.0% Overall 1st Quartile 80.3% $326 $410 0.6x 0.6x 0.6x 6.5x 6.3x 4.9x 11.0x 10.3x 10.3x 0.93 7.1% Overall Mean 80.8% $2,899 $3,838 1.1x 1.2x 1.1x 8.4x 8.4x 7.3x 15.2x 14.3x 14.0x 1.86 9.7% Overall Median 86.3% $1,337 $1,957 1.0x 1.0x 0.9x 7.9x 7.8x 6.5x 14.3x 13.1x 12.9x 1.53 10.0% Overall 3rd Quartile 91.3% $3,773 $4,875 1.4x 1.4x 1.3x 10.4x 10.9x 9.2x 19.9x 17.3x 16.9x 2.54 10.9% Source: Wall Street equity research, public filings, company press releases. *Breville metrics are excluded in the Valuation Multiples as they are outliers. Note: Share prices for Central Garden & Pet reflect common stock figures, and share prices for Dorel reflect class B share figures. STIFEL 27


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Valuation Housewares Comparable Public Companies: Operating Metrics ($ in millions) Revenue EBITDA Net Income Margin Data Gross Profit EBITDA Net Income Housewares: Above $500M Equity Value LTM CY2020E CY2021E LTM CY2020E CY2021E LTM CY2020E CY2021E CY2020E LTM CY2020E CY2021E LTM CY2020E CY2021E Whirlpool $18,840 $19,186 $20,025 $2,074 $2,206 $2,317 $1,057 $1,128 $1,192 18.5% 11.0% 11.5% 11.6% 5.6% 5.9% 6.0% Newell Brands 9,190 9,304 9,638 1,140 1,262 1,399 1,649 717 694 32.9% 12.4% 13.6% 14.5% 17.9% 7.7% 7.2% SEB SA 7,727 8,098 8,683 951 924 1,096 535 335 485 37.9% 12.3% 11.4% 12.6% 6.9% 4.1% 5.6% Helen of Troy 1,869 1,945 2,001 342 337 359 282 284 284 NA 18.3% 17.3% 17.9% 15.1% 14.6% 14.2% Spectrum Brands 3,787 3,857 4,026 570 570 591 261 176 192 NA 15.1% 14.8% 14.7% 6.9% 4.6% 4.8% Breville Group 657 744 839 96 106 121 52 58 69 NA 14.6% 14.3% 14.5% 7.9% 7.8% 8.3% Central Garden & Pet 2,560 2,584 2,626 278 238 240 154 108 110 NA 10.9% 9.2% 9.1% 6.0% 4.2% 4.2% Tupperware Brands 1,668 1,700 1,850 207 317 395 137 154 164 66.6% 12.4% 18.6% 21.4% 8.2% 9.1% 8.9% 1st Quartile $1,819 $1,884 $1,963 $260 $297 $329 $149 $142 $151 29.3% 12.0% 11.5% 12.4% 6.7% 4.5% 5.4% Mean $5,787 $5,927 $6,211 $707 $745 $815 $516 $370 $399 39.0% 13.4% 13.8% 14.5% 9.3% 7.2% 7.4% Median $3,173 $3,221 $3,326 $456 $454 $493 $272 $230 $238 35.4% 12.4% 13.9% 14.5% 7.4% 6.8% 6.6% 3rd Quartile $8,093 $8,399 $8,922 $998 $1,009 $1,172 $666 $430 $537 45.1% 14.7% 15.4% 15.5% 9.9% 8.1% 8.4% Housewares: Sub-$500M Equity Value Dorel $2,644 $2,646 $2,587 $197 $184 $165 $19 $34 $27 19.8% 7.5% 7.0% 6.4% 0.7% 1.3% 1.0% National Presto Industries 325.7 NA NA 60.1 NA NA 47.8 NA NA NA 18.5% NA NA 14.7% NA NA Lifetime Brands 737.7 747.0 756.6 69.3 69.3 74.7 8.8 12.9 18.6 36.0% 9.4% 9.3% 9.9% 1.2% 1.7% 2.5% Noritake 1,060.5 1,015.4 1,083.2 67.7 71.6 88.1 18.7 NA NA NA 6.4% 7.1% 8.1% 1.8% NA NA Hamilton Beach Brands 613.2 NA NA 40.0 45.0 45.0 23.6 30.1 30.1 NA 6.5% NA NA 3.8% NA NA Churchill China 72.5 51.2 66.4 13.4 5.3 10.9 8.3 1.6 5.9 NA 18.4% 10.3% 16.4% 11.5% 3.1% 8.9% Portmeirion 118.7 107.6 118.0 12.7 6.2 14.1 3.4 0.3 6.7 NA 10.7% 5.8% 11.9% 2.9% 0.2% 5.7% 1st Quartile $222 $108 $118 $27 $16 $22 $9 $2 $7 23.9% 7.0% 7.0% 8.1% 1.5% 1.0% 2.1% Mean $796 $913 $922 $66 $64 $66 $18 $16 $18 27.9% 11.0% 7.9% 10.5% 5.2% 1.6% 4.5% Median $613 $747 $757 $60 $57 $60 $19 $13 $19 27.9% 9.4% 7.1% 9.9% 2.9% 1.5% 4.1% 3rd Quartile $899 $1,015 $1,083 $68 $71 $85 $21 $30 $27 32.0% 14.6% 9.3% 11.9% 7.7% 2.1% 6.5% Overall 1st Quartile $635 $747 $839 $64 $70 $78 $19 $30 $27 23.1% 10.0% 9.2% 9.9% 3.4% 2.7% 4.6% Overall Mean $3,458 $3,999 $4,177 $408 $453 $494 $284 $234 $252 35.3% 12.3% 11.5% 13.0% 7.4% 5.4% 6.4% Overall Median $1,668 $1,945 $2,001 $197 $211 $202 $52 $108 $110 34.5% 12.3% 11.4% 12.6% 6.9% 4.4% 5.8% Overall 3rd Quartile $3,215 $3,857 $4,026 $456 $512 $542 $272 $284 $284 37.4% 14.8% 14.3% 14.7% 9.8% 7.7% 8.4% Source: Wall Street equity research, public filings, company press releases. STIFEL 28


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Valuation Housewares Precedent Transactions Date Target Buyer Enterprise Value ($mm) Enterprise Value / Revenue EBITDA Pending Whirlpool China Guangdong Galanz Household Appliances Manufacturing Pending StoreBound Groupe SEB Sep-20 Pacific Topsoils GRO-Well Brands Jun-20 Meathly MVP Holdings Sep-19 Furlong Mills Limited Churchill China $9.0 0.8x 6.7x Aug-19 CAN SRL Airxcel, Inc. Jul-19 Timber Industries Samson Holding Jul-19 Nambe Portmeirion 12.0 0.7x 10.9x Jul-19 Nadir Figueiedo Industria e Comercio Flamengo Participacoes Jun-19 Essco, Inc. CapitalWorks Jun-19 United Solutions Camber Holdings Jun-19 Royale Furniture Holdings Science City May-19 Reddy Ice Corp. Stone Canyon Industries May-19 D.W. Haber & Son Steelite International May-19 Schulthess Maschinen Hlvetica Capital May-19 Royal Sleep Products Diamond Mattress Company Apr-19 SEMPA Sarl Photo-Me International Mar-19 Flawless & Finishing Touch (IdeaVillage Products) Church & Dwight Co., Inc. 900.0 5.0x 16.4x Mar-19 Avanti Products The Legacy Companies Mar-19 Instant Brands Corelle Brands Feb-19 Standex Cooking Solutions Group The Middlebay Corporation 106.1 1.5x NA Feb-19 Rexair Holdings, Inc. Rhone Capital 235.0 1.9x NA Feb-19 Perennials and Sutherland Acacia Partners Jan-19 Aquion, Inc. Pentair Jan-19 Enviro Water Solutions, Inc. Pentair Oct-18 McNeilly Furniture Ison Furniture Sep-18 MTD Products (20% minority stake) Stanley Black & Dekcer 1,170.0 0.5x NA Aug-18 SodaStream International PepsiCo, Inc. 3,221.7 5.9x 31.1x Jul-18 Capital Brands (Magic Bullet) Centre Lane Partners May-18 Vornado Air, LLC ThreeSixty Group Jan-18 Global Battery and Lighting Business (Spectrum Brands, Inc.) Energizer Holdings, Inc. 2,000.0 2.3x 11.8x Dec-17 Filament Brands Lifetime Brands, Inc. 313.0 1.8x 6.3x Jul-17 Water Pik, Inc. Church & Dwight Co., Inc. 1,033.0 3.9x 12.9x Apr-17 World Kitchen Cornell Capital LLC Jan-17 Craftsman (Sears) Stanley Black & Decker, Inc. 900.0 4.5x NA Dec-16 Tablewerks, Inc. Steelite International Nov-16 Lasko Products, Inc. Comvest Partners Source: Press releases, company filings, Capital IQ and Mergermarket. STIFEL 29


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Valuation Housewares Precedent Transactions (cont’d) Date Target Buyer Enterprise Value ($mm) Enterprise Value / Revenue EBITDA Oct-16 Jemella Limited (hair straighteners, hair dryers, curlers) Coty Inc. 511.8 2.4x NA Oct-16 Tools Business (Newell Brands Inc.) Stanley Black & Decker, Inc. 1,950.0 2.6x 13.0x Oct-16 Copco (Wilton Industries, Inc.) Lifetime Brands, Inc. Jan-16 Haier US Appliance Solutions, Inc. Qingdao Haier Co., Ltd. 5,600.0 0.9x 8.2x Dec-15 Jarden Corp. Newell Rubbermaid Inc. (nka:Newell Brands Inc.) 17,957.0 2.2x 21.6x Oct-15 Visant Holding Corp. (Jostens Holding Corp.) Jarden Corp. 1,500.0 1.8x 7.4x Jul-15 Aga Rangemaster Group plc The Middleby Corporation 200.0 0.5x 9.1x Jun-15 Beko plc Arçelik Anonim Sirketi Nov-14 Duracell International, Inc. Berkshire Hathaway Inc. 4,724.5 NA 7.0x Sep-14 BSH Hausgeräte GmbH Robert Bosch GmbH 8,467.2 0.6x 6.5x Jul-14 Fagor Electrodomésticos, S.Coop. Ltda. Cata Electrodomésticos S.L. Jul-14 Rexair Holdings, Inc. Sunbeam Products, Inc. Jul-14 Whirlpool EMEA S.p.A. Whirlpool Corporation Sep-13 Yankee Candle Investments LLC Jarden Corp. 1,750.0 2.1x 8.6x Jun-13 Water Pik, Inc. MidOcean Partners Feb-13 Jemella Limited (hair straighteners, hair dryers, curlers) Lion Capital LLP Dec-12 Viking Range, LLC The Middleby Corporation 380.0 1.9x NA Dec-12 Bradshaw International, Inc. ONCAP Nov-12 Zelmer Spolka Akcyjna BSH Sprzet Gospodarstwa Domowego Sp. z o.o. Oct-12 Hardware and Home Improvement Group (Stanley Black & Decker, Inc.) Spectrum Brands, Inc. 1,400.0 1.4x 7.4x Apr-12 Braun (Procter & Gamble Co.) De’Longhi S.p.A. 279.7 1.1x 7.6x Dec-10 Quickie Manufacturing Corporation Jarden Corp. Dec-10 Kaz Inc. Helen of Troy Limited Aug-10 OBH Nordica A/S Triton Jul-10 The Ames Companies, Inc. Clopay Ames True Temper Holding Co. Feb-10 Russell Hobbs, Inc. Spectrum Brands Holdings, Inc. 675.0 0.8x NA 1st Quartile $304.7 0.9x 7.4x Mean $2,304.0 2.0x 11.3x Median $966.5 1.8x 8.6x 3rd Quartile $1,962.5 2.3x 12.9x Source: Press releases, company filings, CapitalIQ and Mergermarket. STIFEL 30


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Valuation Discounted Cash Flow Analysis (Base Case) ($ in millions, except per share values) Projected Cash Flow Calendar Year Ended December 31, 2021E 2022P 2023P 2024P 2025P Net Revenue $105.7 $151.9 $159.5 $167.5 $175.9 % Growth 41.4% 43.8% 5.0% 5.0% 5.0% PF Adj. EBITDA $13.3 $23.2 $24.3 $25.5 $26.8 % Margin 12.6% 15.3% 15.3% 15.3% 15.3% Less: D&A (1) $1.2 $1.2 $1.5 $1.6 $1.7 EBIT $12.1 $22.0 $22.8 $23.9 $25.1 Less: Taxes @ 23.5% ($2.8) ($5.2) ($5.4) ($5.6) ($5.9) Less: Change in Net Working Capital (2) (5.2) (7.5) (7.9) (8.3) (8.7) Less: Capex (3) (0.9) (0.9) (0.9) (0.9) (0.9) Plus: D&A 1.2 1.2 1.5 1.6 1.7 Unlevered Free Cash Flow $4.4 $9.7 $10.3 $10.8 $11.4 Weighted-Average Cost of Capital 14.8% PV of Annual Cash Flows $3.8 $7.3 $6.8 $6.2 $5.7 Total $29.9 Terminal Multiple Method Terminal Multiple 8.0x Terminal Value $214.6 PV of Terminal Value $107.6 PV of Annual Cash Flows 29.9 Total Enterprise Value $137.5 Less: 9/30/20 Net Debt (0.9) Total Equity Value $138.4 Divided by: Shares Outstanding 34.3 Implied Share Price $4.03 Perpetuity Growth Method Long-Term Growth 2.0% Terminal Value $90.7 PV of Terminal Value $45.5 PV of Annual Cash Flows 29.9 Total Enterprise Value $75.4 Less: 9/30/20 Net Debt (0.9) Total Equity Value $76.3 Divided by: Shares Outstanding 34.3 Implied Share Price $2.22 Sensitivity Analysis Terminal Multiple Method Discount Rate Exit Multiple 7.0x 7.5x 8.0x 8.5x 9.0x 17.0% $3.34 $3.52 $3.70 $3.88 $4.06 16.0% $3.47 $3.66 $3.85 $4.03 $4.22 15.0% $3.61 $3.81 $4.00 $4.19 $4.39 14.0% $3.76 $3.96 $4.16 $4.37 $4.57 13.0% $3.91 $4.12 $4.33 $4.55 $4.76 Perpetuity Growth Method Discount Rate Long-Term Growth Rate 1.0% 1.5% 2.0% 2.5% 3.0% 17.0% $1.80 $1.84 $1.88 $1.92 $1.96 16.0% $1.93 $1.98 $2.02 $2.07 $2.12 15.0% $2.08 $2.13 $2.19 $2.25 $2.31 14.0% $2.26 $2.32 $2.38 $2.45 $2.53 13.0% $2.46 $2.53 $2.61 $2.70 $2.80 Source: Management projections. (1) Holds constant at ~1.0% of Net Revenue (average of 2021E and 2022E D&A margin from management). (2) Calculated at 4.9% of Net Revenue (historical average). (3) Holds constant at $858,000 (historical average). STIFEL 31


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Valuation Discounted Cash Flow Analysis (Adjusted Case) ($ in millions, except per share values) Projected Cash Flow Calendar Year Ended December 31, 2021E 2022P 2023P 2024P 2025P Net Revenue $98.2 $126.3 $131.8 $137.5 $143.4 % Growth 31.4% 28.7% 4.3% 4.3% 4.3% PF Adj. EBITDA $12.4 $19.3 $20.1 $21.0 $21.9 % Margin 12.6% 15.3% 15.3% 15.3% 15.3% Less: D&A (1) $1.1 $1.0 $1.3 $1.3 $1.4 EBIT $11.3 $18.3 $18.8 $19.7 $20.5 Less: Taxes @ 23.5% ($2.6) ($4.3) ($4.4) ($4.6) ($4.8) Less: Change in Net Working Capital (2) (4.8) (6.2) (6.5) (6.8) (7.1) Less: Capex (3) (0.9) (0.9) (0.9) (0.9) (0.9) Plus: D&A 1.1 1.0 1.3 1.3 1.4 Unlevered Free Cash Flow $4.0 $7.9 $8.3 $8.7 $9.1 Weighted-Average Cost of Capital 14.8% PV of Annual Cash Flows $3.5 $6.0 $5.5 $5.0 $4.6 Total $24.6 Terminal Multiple Method Terminal Multiple 8.0x Terminal Value $175.0 PV of Terminal Value $87.7 PV of Annual Cash Flows 24.6 Total Enterprise Value $112.3 Less: 9/30/20 Net Debt (0.9) Total Equity Value $113.2 Divided by: Shares Outstanding 34.3 Implied Share Price $3.30 Perpetuity Growth Method Long-Term Growth 2.0% Terminal Value $72.7 PV of Terminal Value $36.5 PV of Annual Cash Flows 24.6 Total Enterprise Value $61.0 Less: 9/30/20 Net Debt (0.9) Total Equity Value $62.0 Divided by: Shares Outstanding 34.3 Implied Share Price $1.81 Sensitivity Analysis Terminal Multiple Method Discount Rate Exit Multiple 7.0x 7.5x 8.0x 8.5x 9.0x 17.0% $2.74 $2.88 $3.03 $3.17 $3.32 16.0% $2.84 $3.00 $3.15 $3.30 $3.45 15.0% $2.96 $3.12 $3.27 $3.43 $3.59 14.0% $3.07 $3.24 $3.41 $3.57 $3.74 13.0% $3.20 $3.37 $3.55 $3.72 $3.89 Perpetuity Growth Method Discount Rate Long-Term Growth Rate 1.0% 1.5% 2.0% 2.5% 3.0% 17.0% $1.47 $1.50 $1.53 $1.56 $1.60 16.0% $1.57 $1.61 $1.64 $1.68 $1.72 15.0% $1.69 $1.73 $1.78 $1.82 $1.87 14.0% $1.83 $1.88 $1.93 $1.99 $2.05 13.0% $1.99 $2.05 $2.12 $ 2.19 $2.27 Source: Management projections. Note: Adjusted case haircuts core business revenue growth by 10%, haircuts Bloom revenue growth by 50%, and maintains EBITDA margins. (1) Holds constant at ~1.0% of Net Revenue (average of 2021E and 2022E D&A margin from management). (2) Calculated at 4.9% of Net Revenue (historical average). (3) Holds constant at $858,000 (historical average). STIFEL 32


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Valuation Weighted Average Cost of Capital Analysis ($ in millions) Comparable Public Companies Company Name Total Debt (1) Market Cap (2) Debt / Equity Levered 5 Year Beta Unlevered Beta Whirlpool $5,263.0 $11,301.6 46.6% 2.04 1.51 SEB 4,354.7 8,481.6 51.3% 0.94 0.67 Newell Brands 6,183.0 8,108.4 76.3% 0.95 0.60 Helen of Troy 300.1 4,751.7 6.3% 0.97 0.93 Breville -- 2,795.0 -- 0.73 0.73 Spectrum Brands 2,691.1 2,622.1 102.6% 1.91 1.07 Central Garden & Pet 694.0 1,966.8 35.3% 0.73 0.58 Tupperware Brands 768.1 1,337.5 57.4% 3.32 2.31 National Presto -- 599.5 -- 0.77 0.77 Noritake 47.3 414.5 11.4% 1.24 1.14 Hamilton Beach 41.8 278.3 15.0% 1.45 1.30 Lifetime Brands 283.2 226.0 125.4% 1.20 0.61 Churchill China -- 161.5 -- 1.41 1.41 Portmeirion 14.8 70.7 20.9% 1.40 1.21 Median 28.1% 1.22 1.00 Assumptions Cost of Debt (3) 10.0% Tax Rate (4) 23.5% Risk Free Return (5) 1.51% Risk Premium (6) 7.2% Size Premium (6) 6.6% Cost of Capital Cost of Equity Relevered Beta 1.21 Cost of Equity 16.8% Cost of Debt After-Tax Cost of Debt 7.7% Weighted Average Cost of Capital WACC 14.8% Source: Public filings, Capital IQ. (1) As of most recent public filings. Excludes leases. (2) As of 11/9/20. (3) Reflects AeroGrow’s current cost of debt. (4) Reflects AeroGrow’s current tax rate. (5) 20-Year U.S. Treasury rate, 11/9/20. (6) Per Duff & Phelps 2020 Valuation Guide. STIFEL 33