BUSINESS

CAUTION CONCERNING "FORWARD-LOOKING" STATEMENTS

This prospectus contains forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business," as well as in this prospectus generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur. In addition to the information expressly required to be included in this prospectus, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.

OVERVIEW

AeroGrow, formed on July 2, 2002, is a consumer products company. Our principal business is the research, development, and marketing of advanced hydroponic garden products designed for indoor use and priced to appeal to the mass-consumer kitchen, home, and office markets worldwide.

Our principal products are a line of "Smart Garden(TM)" indoor growing systems that allow consumers, with or without gardening experience, to grow fresh herbs, lettuces, vegetables, tomatoes and flowers easily, in their homes, offices and kitchens, year-round. Our "Smart Garden" systems are designed to be easy-to-use, affordable, and to provide an almost fool-proof growing experience as a result of the many technological developments we have pioneered. Based upon our review of the market, we believe that our products are the first of their kind.

We have filed thirteen patents to protect our core hydroponic inventions as well as our companion products and technologies. Many of our patent-pending companion technologies are based upon our innovations in the fields of biology, plant physiology, chemistry, physics, mechanics, electronics and adaptive learning computer science. In addition, we have developed certain trade secrets regarding simplifying, combining, and integrating our core technologies into our indoor gardening products that we believe are fundamental to providing the mass consumer market with a simple, consistently successful, and rewarding growing experience.

AeroGrow's proprietary technologies include:

o Our core hydroponic nutrient delivery system;

o The integration of full-spectrum lighting into our systems;

o Pre-seeded bio-grow domes that provide faster germination and a consumer friendly "plug-and-grow" planting experience;

o Automated microprocessor control of lighting, watering and nutrient delivery cycles;

o Adaptive learning technology that automatically adjusts light and nutrient cycles based on plant variety and maturity;

o Time-release nutrient tablets for simple bi-monthly plant feeding that includes a proprietary buffering formula which automatically adjusts and regulates pH levels from sub-optimal or poor municipal water sources to a level that supports healthy plant growth.

We believe that our inventions and combined technologies will allow virtually anyone, from consumers who have no gardening experience to professional gardeners, to enjoy consistent, year-round harvests of vine-ripened vegetables, herbs, tomatoes, lettuces and decorative and aromatic flowers regardless of season, weather, or lack of

natural light. Our "Smart Garden" systems' unique and attractive design makes them appropriate for use in almost any location including kitchens, bathrooms, living areas, offices and more.

AeroGrow's core products are projected to retail at prices ranging from $99 to $149 based on the channel of distribution in which the product is sold and the specific product features. We plan our initial product launch in the U.S. with our flagship $99 AeroGrow Kitchen Garden.

THE EXISTING HYDROPONIC INDUSTRY - BACKGROUND AND OPPORTUNITY

Hydroponics is the science of growing plants in water instead of soil. Used commercially worldwide, hydroponics is considered an advanced and often preferred crop production method. It is typically used inside greenhouses, where it gives growers the ability to better regulate and control nutrient delivery, light, air, water, humidity, pests and temperature. Hydroponic growers benefit by producing crops faster with significantly higher crop yields per acre, more consistently and predictably than traditional, soil-based farming.

Our informal market research, consumer interviews and focus groups lead us to believe that that there is a sizeable national and international market for attractive, affordably-priced, countertop-sized, soil-less "Smart Garden" systems for indoor use in kitchens, living rooms, family rooms, bedrooms, bathrooms, and in offices, lobbies, etc. Further, our analysis of existing technologies leads us to believe that until now, significant technical barriers, consumer-interface complexities, and user-unfriendly system design issues have prevented hydroponic technology from being incorporated into mainstream, mass-marketed consumer products.

These complexities and barriers include:

o Consumers generally lack the specialized knowledge required to select, purchase, set up, operate and maintain the various components that make up a typical hydroponic system: growing trays, irrigation channels, growing media, nutrient delivery systems (consisting of electronic timers, pumps, motors, tubing and nozzles), nutrient reservoirs, etc;

o Knowledge of the many and varied indoor lighting systems and how to purchase, set up, operate and maintain them in the absence of adequate indoor natural light;

o Consumers generally lack the knowledge required to properly mix and measure hydroponic nutrient formulas, including the problems of nutrient precipitation and spoilage, and the different nutrient requirements for different plant varieties at different stages of growth;

o The pH of the water in many large cities is too high for hydroponic growing and requires chemical treatments to lower the pH into the proper range. Consumers generally lack any knowledge of the pH level in their area and also lack the know-how and equipment for adjusting the pH into the proper ranges for plant growth;

o Current systems generally require users to have knowledge of and access to specialized monitoring equipment for measuring water pH levels and nutrient concentration.

These complexities have been accepted in the existing hydroponic market channels because hydroponic manufacturers have generally focused their product development and marketing efforts on satisfying the needs of the commercial greenhouse and dedicated hobbyist markets. These users are motivated to gain the specialized knowledge, equipment and experience currently required to grow successfully with these products.

We believe that the complexities of currently available commercial hydroponic products fail to address the needs and wants of the mass consumer market, leaving that market unserved. We further believe that our trade secrets and patent-pending inventions and companion technologies have advanced, simplified, and improved hydroponic technology, enabling us to create the first indoor, hydroponic gardening system appropriate for the mass consumer market.

AeroGrow has conducted focus groups and informal marketing research that indicates consumer satisfaction with the ease-of-use, design aesthetics and overall benefits provided by our "Smart Garden" products.

AEROGROW'S PROPRIETARY TECHNOLOGY

AeroGrow has spent more than two years innovating, simplifying, combining, and integrating numerous proprietary technologies and inventions into a family of turnkey, "plug-and-grow," hydroponic "Smart Garden" systems specifically designed and priced for the mass consumer market.

Thirteen patents have been filed to protect our inventions. Following is a partial list of our proprietary technologies and inventions and the conditions and challenges that they address:

1. THE RAIN-FOREST SYSTEM - AN INNOVATIVE HYDROPONIC NUTRIENT DELIVERY TECHNOLOGY

Our patent-pending Rain-Forest(TM) system incorporates features from several advanced hydroponic methodologies, NFT, Drip, and Deep Water Culture technologies, into a proprietary system designed to provide the benefits of accelerated, hydroponic plant growth in a system that is simple, reliable, quiet, and affordable.

2. PRE-SEEDED BIO-GROW DOMES PROVIDE FASTER GERMINATION AND A SIMPLE "PLUG AND GROW" EXPERIENCE

Our patent-pending Bio-Grow pods include pre-planted, specially-selected seeds, bio-sponge grow medium, and removable bio dome covers (see Figure 1).

Seeds (see Figure 1(b)) have been pre-selected through an extensive two-year research process. This process included:

o Analyzing thousands of seed varieties;

o Growing and testing of several hundred varieties of plants in our greenhouse and in our R&D grow labs; and

o Conducting consumer research trials for taste and appearance.

We pre-plant our selected seeds in a peat-based bio-sponge growing medium (see Figure 1(c)), principally developed for rapid germination and enhanced root growth. The bio-sponge helps facilitate and regulate oxygen, moisture, and nutrition, and supports plant roots from germination through maturity and harvest.

Our Bio-Grow Domes (see Figure 1(a)) create a mini-greenhouse environment, encapsulating the grow surface to create a temperate, near 100% humidity chamber, which is considered close to optimum for most plant germination and initial growth. The Bio-Grow Domes address common germination problems associated with planting seeds in an environment having too much or too little moisture, and/or too low a temperature. When combined with the bio-sponge in an AeroGrow system, seeds typically germinate faster than seeds planted in dirt.

3. MICROPROCESSOR-BASED "SMART GARDEN" CONTROL PANELS AND ADVANCED "ADAPTIVE LEARNING" TECHNOLOGY

We believe that certain common problems face both experienced gardeners and beginning gardeners alike. These include:

o Over-watering or under-watering plants;

o Over-feeding or under-feeding plants, or feeding at improper intervals;

o Failing to provide plants with sufficient light needed for healthy growth.

To assist consumers, especially those with little to no gardening experience, we have developed two, patent-pending, microprocessor-based, "Smart Garden" technologies that address these common problems. These technologies:

o Regulate the lighting system;

o Automatically alert users when it is time to add water and nutrients;

o Help simplify and reduce the time and involvement ordinarily required of consumers;

o Reduce variables and errors often made by consumers;

o Enhance plant growth.

AeroGrow has developed both "basic" and "advanced" "Smart Garden" controls. They are as follows:

BASIC "SMART GARDEN" TECHNOLOGY:

o Regulates the on/off times for the integrated lighting controls;

o Regulates the nutrient flow timing cycles; and

o Automatically alerts consumers when it is time to add water and nutrients

"ADVANCED" "SMART GARDEN" WITH ADAPTIVE LEARNING TECHNOLOGY:

o Provides the benefits of the basic "Smart Garden" technology; and, in addition,

o Provides a smart panel interface that enables consumers to select the specific type of plants to be grown (lettuce, herbs, tomatoes or flowers), and then automatically analyzes, adjusts and optimizes the nutrient, water and lighting cycles based on the plant variety selected and its stage of growth (germination, initial growth, or advanced growth).

Our Adaptive Learning Technology was developed through extensive research and testing in our grow lab. Our plant scientists determined that better growth could be achieved when nutrients, moisture and lighting were adapted and customized to each plant variety, and that growth could be further improved by adjusting the nutrients, moisture and lighting to the specific stages of the plants' growth (germination, initial growth, advanced growth).

4. FIRST TIME-RELEASE NUTRIENT TABLETS FOR SIMPLIFIED SOIL-LESS GARDENING:

For optimal growth, plants require a balanced mixture of macro- and micro-nutrients. Certain nutrient combinations, including calcium nitrate and magnesium sulphate, generally cannot be combined, mixed or stored in the same container due to specific chemical reactions that bind them together, rendering them useless to plants. Hydroponic growers seek to solve this problem by packaging various nutrient concentrations in up to four separate containers which are individually measured and added as needed by the consumer.

These nutrient complexities require consumers using hydroponic systems to have an understanding of these plant nutrient mixtures and knowledge of professional EC meters to properly monitor nutrient levels. Such knowledge and expertise includes:

o Understanding of the blends of nutrient fertilizer that are best suited for the specific variety of plants they are growing;

o Understanding the nutrient requirements of a specific plant variety at each of three stages of its growth and maturity;

o Measuring and blending nutrients from up to four different concentrated solutions and adding them to specific measured quantities of water;

o Monitoring nutrient fertilizers over time and adjusting them as necessary, often requiring the nutrients to be dumped and re-mixed on a weekly or bi-weekly basis.

We believe that current plant nutrition regimes and processes required for successful hydroponic growing are cumbersome and complex, and have thus created barriers to mass consumer use and acceptance.

To help overcome these barriers, we have spent two years developing proprietary, time-release nutrient tablets designed specifically to deliver the proper nutrients to the plants, while offering the consumer a simple, user-friendly nutrient regime. The consumer simply adds the nutrient tablets, usually once every two weeks, when instructed to do so by the microprocessor-based nutrient reminder system.

Nutrient tablets include organic seaweed that supplies multiple micro- and macro-nutrients, amino acids, and minerals like calcium, magnesium, and iron to create an effective formula customized for specific plant varieties at different stages of their growth.

5. AUTOMATED PH WATER BALANCING SYSTEM

Typical garden and house plants grow well in hydroponic systems when the pH level of the water is maintained in a 5.0 to 6.5 range. Many varieties of plants exhibit retarded growth or cannot be grown hydroponically in water having a pH level of 7.0 and above. (High pH water is much less a problem when growing plants in dirt as the dirt helps neutralize the negative effects of high pH levels.) Many U.S. municipal water systems have higher pH levels than the desirable range for hydroponic growing. These include major cities such as: Los Angeles with a recently published pH range of 7.5 to 8.5; Boston reported at 9.0; the San Francisco Bay Area at 7.5 to 9.7; St Louis: 9.0 to 9.2; and Washington DC at 7.7 to 8.5.

To address these conditions, most hydroponic growers monitor and chemically adjust water pH levels as needed on an ongoing basis, sometimes weekly or even daily. This generally requires both the purchase of a professional meter for monitoring pH as well as the purchase of various pH-adjusting chemicals.

We believe that the problems associated with the wide-range of pH levels which are found throughout the United States (and possibly internationally), as well as the complexities involved in monitoring and regulating pH levels, are significant further barriers limiting the use of hydroponic gardening by the general public.

AeroGrow has developed a patent-pending buffering formula that automatically adjusts and balances the water's pH to a level capable of sustaining healthy plant growth, optimally in the 5.5 to 6.5 range. This buffering formula is pre-mixed into our time-release nutrient tablet, thus eliminating any need for knowledge of water chemistry or the equipment required to monitor and regulate pH levels.

We believe that our automated pH buffering system is an important step forward in our creation of a simple, plug-and-grow system that will have mass consumer market appeal.

6. INTEGRATED AND AUTOMATED LIGHTING SYSTEM

Hydroponic systems typically do not incorporate built-in lighting systems. Ordinarily, lighting systems must be purchased as separate, add on components to the systems. Hydroponic lighting systems generally consist of a ballast, reflector hood, metal halide or high pressure sodium lights, and an electronic timer. The consumer ordinarily is required to suspend the lighting system, usually with chains, over the hydroponic unit, and then continually raise the lights as the plants grow. Complete lighting systems often cost hundreds of dollars, which is considerably more than the cost of our entire "Smart Garden" growing system.

In contrast to the typical lighting system, we have designed and will include built-in adjustable grow lights (including ballast, reflector hood, lights, and electronic timer) as an integral part of our "Smart Garden" systems. Our integrated lighting systems include cost effective, high-output, compact fluorescent lights that deliver a spectrum and intensity designed to help optimize plant growth. In addition, the lighting system is fully automated and controlled by our proprietary "Smart Garden" microprocessor.

TECHNOLOGY SUMMARY

We believe that the above six technologies, which are integrated into AeroGrow's "Smart Garden" systems, create a significant industry first:

A line of simple, easy to use, inexpensive, indoor, hydroponic gardening systems that allow consumers, with or without gardening experience, to grow almost anything, in their own homes, year-round.

The "Smart Garden" systems generally eliminate the need for gardening experience, plant knowledge, seed selection, seed germination, plant nutrition, water pH levels, and light requirements.

In addition, our gardening systems overcome many of the obstacles involved in outdoor gardening, including the need for land, time, work, and tools as well as the kneeling, bending, weeding, pests and pesticides.

We further believe that our easy-to-use, micro-processor-based, turnkey systems, with their consumer friendly features and benefits, have the potential to create an entirely new product category.

"SMART GARDEN" PRODUCTS

AeroGrow is developing a variety of indoor "Smart Garden" growing systems designed to meet a wide range of consumer needs. Anticipated retail price points of our "Smart Garden" systems are projected to range from $99 to $149, depending on features and model selected, and the channels of distribution through which they are marketed. These products are designed to be attractive and appropriate for use on kitchen and bathroom countertops, in living rooms, bedrooms, family rooms, offices, cubicles, waiting rooms and lobbies.

THE BASIC AEROGROW KITCHEN "SMART GARDEN"

Our planned initial product includes our hydroponic Rain-Forest Nutrient Delivery technology, integrated grow light systems, and the customer's choice of one of four pre-packaged, pre-planted, plug-and-grow seed kits (lettuce, tomatoes, herbs or flowers) which include the Company's time-release nutrient tablets and pH buffering system. The system is projected to retail at a price of $99.

We plan to offer a "Smart Garden" electronic control panel as an optional accessory for this system, which includes a microprocessor to control the timing of the lights and a nutrient reminder system. The control panel is projected to retail for $19.

THE DELUXE, AEROGROW KITCHEN "SMART GARDEN"

The Deluxe "Smart Garden" is our most technologically advanced and automated system. It includes our patent-pending hydroponic Rain-Forest Technology and Adaptive Growth Nutrient Delivery system, an electronic water level indicator, and integrated, automated light system. The Deluxe also includes the customer's choice of one of four pre-packaged, pre-planted, plug-and-grow seed kits (lettuce tomatoes, herbs or flowers) which include our time-release nutrient tablets specifically customized to enhance the growth of the selected plants. This product is projected to retail at a price of $149.

OTHER PRODUCTS AND ACCESSORIES

We also plan to market a number of replacement products, accessories, and consumable products, and supplies that have the potential to generate additional ongoing, recurring revenues for AeroGrow. These products are being designed to work interchangeably with any of our "Smart Garden" systems and include:

PRE-PACKAGED TOMATO, LETTUCE, HERB, AND FLOWER SEED KITS

These seed kits include pre-seeded germination grow pods with bio-domes to facilitate germination and specialized plant-specific nutrients. Retail price points are projected to range from $9.99 to $14.99. Potential future seed kits include a variety of "concept" salad kits such as Oriental, Caesar and Mediterranean salad kits, Master Gardener kits enabling the growing and transplanting from cuttings, seasonal flower kits, a variety of children's gardens, science kits, etc.

We also plan to introduce a water reservoir as an after-market attachment that will hold sufficient water to enable plants to remain healthy without the user having to add water for about 3 weeks, making the unit "vacation friendly."

AeroGrow also plans to offer "a la carte" nutrients, replacement light bulbs, and seed germination pods to consumers.

LONG-TERM PRODUCT DEVELOPMENT PLANS

We believe that substantial markets may exist for a number of additional products. We intend to evaluate these future product developments through consumer and market research. Among potential future products, in early stages of development, are:

AEROGROW'S DECORATOR OFFICE "SMART GARDEN"

AeroGrow is developing a small, low-cost product designed specifically for use in offices and work stations as a means to introduce into the workplace decorative, fragrant living flowers that require minimal care.

THE PROFESSIONAL AEROGROW "SMART GARDEN" SYSTEM

We are considering incorporating our patented Aeroponic MIST technology into a professional growing system, designed for larger-scale, economical gardening for small businesses, florists, restaurants, large families and gardening enthusiasts who want to grow larger quantities of vegetables, herbs and flowers. We are also considering the use of this technology for inclusion in new home construction.

FUTURE POTENTIAL PRODUCTS

We plan to research consumer interest levels in: a solar-powered system for outdoor use; educational units specifically designed for use in schools; and tiered "farm" units that will contain a number of AeroGrow "Smart Garden" systems designed to produce a larger quantity of crops.

MARKETS

Based on our informal marketing research, we believe that our "Smart Garden" systems, at their projected price points, are likely to appeal to a broad spectrum of the population in the U.S. and major international markets, including Europe, Japan and China. We believe that our products will appeal to at least four major market segments both nationally and internationally. These include: (1) experienced gardeners; (2) novice gardeners and gardener "want-to-be's;" (3) those interested in cooking and healthy eating; and, (4) the office and home decor markets. Further, based on discussions with distributors and others, we believe that our "Smart Garden" systems also present opportunities in specialized markets, such as the toy, education, gift, and hydroponic hobbyist markets.

AEROGROW'S CONSUMER MARKET SEGMENTS

THE GARDENER MARKET

The gardening market in the U.S. is large, arguably the #1 hobby in America (A University of Vermont Study). Gardeners spend billions of dollars each year for the fun, satisfaction and rewards of growing their own vegetables, herbs and flowers. It is estimated that in 2001 approximately 85 million households participated in gardening activities. Approximately 23 million Americans grew vegetables in their gardens, or almost one of four households; approximately 11 million households grew herbs; and approximately 57 million households purchased seeds and bulbs each year (Source: National Gardening Association's 2002 Consumer Gardening Study conducted by Harris Interactive).

Our research indicates that our "Smart Garden" indoor garden systems and aftermarket consumable products, have the potential to offer those already engaged in gardening, whether expert or novice gardeners, a number of major benefits not readily available through traditional gardening methods. These include:

o The ability to grow fresh herbs, lettuces, vegetables, tomatoes and flowers year-round, regardless of indoor light levels or seasonal weather conditions;

o The ability to easily get a head start on the outdoor growing season by starting plants indoors during colder months and then transplanting them outdoors at the onset of the outdoor growing season;

o The ability to use stem cuttings from desirable plants, roses, shrubs, and trees to propagate multiple reproductions of the desired plants;

o The reasonable assurance that crops will grow successfully by significantly reducing potential obstacles; i.e., uncertain weather, garden pests, etc.;

o The ease of growing in contrast to the toil associated with gardening, i.e., preparing the soil, planting, watering, weeding, thinning, continual monitoring, etc.

In interviews we have conducted, gardeners have expressed enthusiasm for our "Smart Garden" products at the proposed price points.

THE "WANT-TO-BE" GARDENER MARKET

We believe that a large segment of the population have an interest in gardening but lack the knowledge, confidence, available space, equipment, and/or time to garden. We believe if these barriers to successful gardening

can be overcome, many of these "Want-To-Be" gardeners would enter and further expand the gardening market. Current barriers to be overcome include:

o The ongoing time commitment to planting and maintaining the ongoing garden (tilling, hoeing, weeding, pest control, etc.), which is a deterrent for many, including working singles or dual member working families;

o Insufficient space available for a garden, which excludes apartment, high-rise, and condo dwellers;

o The physical work often associated with gardening, which can be a significant barrier to people of advanced years or those with limited mobility or health issues;

o The expense involved in buying or acquiring the necessary equipment to garden, i.e., shovels, hoes, soil amendments, hoses, trellises, etc;

o The knowledge and level of expertise to deal with the numerous unpredictable factors that may lead to an unsuccessful gardening experience for even seasoned gardeners, including:

o Unpredictable weather conditions, temperature variances, early or late frost, too much or too little rain, or similar impediments.;

o Garden pests such as cutworms, moles, bugs, rabbits, squirrels, deer, and birds that may require the use of chemical pesticides to control;

o Proper soil preparation, amendment and maintenance, including the weeding, tilling and the optimal fertilization required by specific plant varieties at their various stages of growth.

In interviews, "want-to-be" gardeners have expressed enthusiasm for the features, benefits, and price points of the products we plan to offer. Many of these same consumers, when testing the gardens in their homes, have been satisfied by the results achieved and the ease-of-use of our "Smart Garden" systems.

OFFICE AND HOME DECOR MARKET

Flowers are frequently used to brighten the decor of homes and offices around the world. Until now, it has not been possible to readily grow flowers in offices or indoor home environments due to a lack of sufficient light and the growing knowledge needed. As a result, cut flowers, which are expensive, short-lived, and require ongoing maintenance, are often used.

Our "Smart Garden" systems enable colorful, fragrant flowers, to be grown indoors year-round, easily and conveniently, thus, potentially creating an entirely new market for home and office decor. Flowers grown with our "Smart Garden" systems will, with minimal care and maintenance, last for months, and can then be quickly re-grown. Flowers can be grown in a wide variety of indoor locations, including kitchen and bathroom countertops, as well as living rooms, bedrooms, family rooms, offices, work stations, waiting rooms, and lobbies. Because of their relatively low cost and ease of maintenance, professional plant caretakers may be motivated to include our "Smart Garden" systems among their traditional plant options, offering another potential market opportunity.

MARKET FOR HEALTHY EATING AND GOURMET COOKING

AeroGrow "Smart Gardens" are capable of growing renewable harvests of fresh culinary herbs and vine-ripened produce year-round. Interviews with consumers having an interest in cooking with fresh herbs and vegetables, as well as those interested in eating healthy, pesticide-free foods, indicate that a large potential market exists for a product that will grow healthy, pesticide-free herbs and vegetables year-round in the kitchen. Consumers in this market include:

o Those interested in cooking who would appreciate the convenience and satisfaction of having a plentiful, ongoing supply of fresh-cut herbs, such as basil, cilantro, parsley, chives, mint, sage, oregano, etc., readily at hand to flavor soups, salads, and any other dishes. Our "Smart Garden" systems ensure the convenient availability of fresh herbs and spices when needed for food preparation, and avoid both the expense of buying costly fresh herbs, and the waste involved in having the unused portion spoil.

o Those appreciating the distinctive texture and taste of freshly picked, vine-ripened lettuces, tomatoes and other vegetables but who are now forced to rely on days or often weeks-old supermarket produce.

o Those interested in healthy, pesticide-free foods for themselves and their families, reflecting both the rapidly growing interest in naturally and organically grown foods, and the increasing number, who for health or weight concerns, include salads and fresh vegetables as part of their families' diets.

SPECIALTY MARKETS: INCLUDING GIFT, TOY, EDUCATION, AND HYDROPONIC GARDENING

In addition to the markets described above, our market research and consumer feedback indicate that a number of specialized markets potentially exist for our "Smart Garden" systems, which include:

THE TOY MARKET

We believe that our indoor "Smart Garden" systems will appeal to children because of the novelty of the indoor garden, its simplicity and ease of operation, and the "magic" of seeing the plants and roots as they grow.

THE EDUCATION MARKET

AeroGrow's "Smart Garden" systems present the unique opportunity to experience seed germination and root growth visually. Teachers and students will have the ability to isolate and change factors pertaining to growth, such as nutrients, light, temperature, etc., and closely study the resulting differences in growth. Because of these factors, we believe that our products could be used in schools to educate students in the basics of botany and plant growth.

THE GIFT MARKET

Many people we have interviewed have expressed interest in giving the products to friends or relatives as gifts. The Company believes that the uniqueness, fun, entertainment, decorative and practical value of our "Smart Garden" systems, along with their attractive retail price points, will make them attractive gift items.

THE HYDROPONIC ENTHUSIAST MARKETS

With more than 400 hydroponic stores and suppliers in the U.S., hydroponic specialty stores provide an additional channel of distribution for our products. We believe hydroponic enthusiasts will find our products to be novel and advantageous.

INTERNATIONAL MARKET OPPORTUNITIES

We believe that a sizeable market will exist for AeroGrow's "Smart Garden" systems throughout the developed world, especially in large cities with dense populations where the ability to garden is limited (Japan, Europe, etc.). Following the launch and establishment of our product line in the U.S., we plan to expand distribution internationally through the development of exclusive distribution and marketing partnerships in many large countries.

Our plan is to partner with successful companies that possess both direct and retail marketing experience. Partnerships are most likely to take the form of exclusive distributor or licensing agreements tied to performance criteria. Currently, we are exploring opportunities in a number of countries.

MARKETING AND SALES STRATEGY

We plan to introduce two versions of our "Smart Gardens" (Basic and Delux) in the United States in the second quarter of 2005 via a limited regional test-marketing program, to be followed by a national product launch in the third and fourth quarters of 2005. International expansion is planned once our product line has been successfully launched and established in the U.S.

Our marketing strategy is to launch the Basic AeroGrow "Smart Garden" through a direct marketing program, and the Deluxe AeroGrow "Smart Garden" through distribution to major retail channels. Our proposed direct marketing activities include a national Public Relations rollout, 60-second TV spots and infomercials, home shopping networks, and print and web-based advertising. Our rollout plan is designed to create widespread awareness of our "Smart Garden" systems as well as generate direct sales in key target markets, including the experienced gardener market, the gardener "want-to-be" market, the healthy eating and gourmet cooking markets, and the office and home decor markets.

We also intend to expand distribution of the product line into major retail channels. Our management has extensive experience in both direct-to-consumer marketing and in marketing through major retail channels. On a combined basis, our management team has brought to market more than 200 products employing similar marketing and distribution strategies.

Our marketing strategy is summarized below:

MARKETING RESEARCH

AeroGrow has conducted an independent market research study, consisting of more than 50 individual consumer interviews and six focus groups among different target markets to help determine the potential market size for, and interest in its "Smart Garden" systems. This research was intended to identify:

o Specific market segments that are most receptive to our products;

o The potential size of these markets;

o Optimum means of reaching and motivating consumers in each target market; and,

o Product interest and purchasing receptivity at various price points.

We believe that our research has demonstrated significant consumer interest in our proposed products at the planned retail price points. Research also indicates that our "Smart Garden" systems have the potential to be marketed directly to the consumer, as well as through traditional retail distribution channels, including specialty retailers, cataloguers and mass-market retailers.

AeroGrow plans to continue to improve its products and marketing methods through an ongoing marketing research program, which is scheduled to include additional focus groups, individual interviews, a product beta-tester program, consumer councils, and feedback through our customer service program.

REGIONAL MARKETING ROLLOUT

During the second quarter 2005, we intend to test our advertising and sales communications as well as our internal and external systems (direct sales, order processing, upsells, promotional matrix, multi-pay programs, customer service, shipping, etc.) to assure their effectiveness and cost-efficiency prior to our national product launch. As planned, testing activities will be conducted in a number of markets in a variety of geographic locations. Also during this phase, we intend on presenting the Deluxe AeroGrow `Smart Garden" to strategically selected retail candidates for initial in-store product distribution opportunities.

PUBLIC RELATIONS LAUNCH

As a prelude to our national product launch, we plan a major Public Relations program. Our purpose is to announce to the news media, gardening and food columnists, and the public that our "Smart Garden" systems have now made it possible for anyone, with or without prior gardening experience, to garden indoors, year-round, simply, easily, and cost-effectively.

Our public relations campaign will be designed to gain broad exposure for AeroGrow and our "Smart Garden" systems through news stories in print, on radio and TV, and in articles in food and gardening sections of newspapers, in food and garden magazines, on the internet, and elsewhere. The AeroGrow "Smart Garden" systems will be sent to selected major food and gardening editors, other recognized gardening and cooking authorities, and celebrities, to inform and educate them about our firm, its scientific breakthroughs, and new product line.

NATIONAL DIRECT-TO-CONSUMER MARKETING ROLLOUT

Direct-to-consumer marketing is the selling of products directly to consumers via various channels (print, TV, Web, mail, phone, etc.). In direct marketing, we receive the full retail selling price for our products, which yield higher gross profit margins than do sales made at wholesale prices. We plan to offer our "Smart Garden" products directly to consumers by means of 60-second TV and radio commercials, infomercials, magazine and newspaper advertising, internet marketing, and our web site.

Our direct marketing program will enable us to build a dynamic database of customer names and their interests, which provides the opportunity to create targeted aftermarket product and related sales to these customers, thus, generating a highly profitable recurring revenue stream. We plan to offer these customers opportunities to purchase additional "Smart Garden" systems as well as our "consumable" products, including seed pods, time-release nutrient tablets, replacement light bulbs, and a variety of pre-packaged growing kits, including the "Salad Bar," "Herb Garden," "Veggie Patch," "Tomato Factory," "Flower Garden" and "Rose Garden." We plan to market a fee-based membership program to consumers, whereby members enroll for a fee, and are then, at regular intervals, sent a different grow kit which includes seed pods and time-release nutrient tablets, as well as a periodic newsletter providing gardening tips, recipes, and growing contests.

RETAILERS, CATALOG COMPANIES, AND OTHER DISTRIBUTORS

We plan to expand the distribution of our "Smart Garden" systems and aftermarket products to additional channels including TV shopping networks, catalog companies and specialty and mass retailers.

TV SHOPPING NETWORKS

We plan to sell select our "Smart Garden" systems through television shopping networks such as QVC and the Home Shopping Network. Much like an infomercial, this highly visible and successful specialty sales channel allows in-depth demonstrations of the Company's products along with a description of their capabilities and benefits.

CATALOGUE COMPANIES

We plan to expand distribution of our product line through major catalogue merchants, such as The Sharper Image, Brookstone, William Sonoma, Chef's Catalog, Gardener's Supply Company, Smith & Hawkins, etc. Appearances in these catalogues will further expand awareness and lend additional credibility to our products. Our aftermarket companion products may also be offered through these merchants.

MASS MARKET MAJOR RETAILERS

At a time deemed advantageous, we plan to expand distribution to major retail channels. These may include mass retailers such as Wal-Mart, Target, K-Mart, Costco, Sam's etc., home improvement centers such as Home Depot, Lowe's, Hardware Stores, etc., and some of the more than 40,000 specialty gardening, florist, landscape and nursery stores in the U.S.

MARKETING INTERNATIONALLY

In addition to sales from international markets arising directly via phone, internet and other referrals, we intend to establish a number of international distributors. Our goal is to partner with successful distribution companies that possess both direct and retail marketing experience. These partnerships are most likely to take the form of exclusive distributor or licensing agreements tied to performance criteria. Currently, opportunities are being explored in a number of these countries.

FUTURE GROWTH STRATEGIES

Depending on the success of our initial product launch, we see potential future revenue growth from several areas, including:

o The development of a broader line of consumer indoor gardening products, which we plan to market through the same distribution channels. This includes development and sales of new "Smart Garden" growing systems having different features, benefits, styles, designs and price points, as well as a variety of seed kits, seedpods, lighting systems, accessories, and related gardening and home decor products.

o The development of a line of larger commercial products based on our patent-filed technologies, targeted toward the restaurant industry (for restaurateurs wanting to offer fresh vine ripened herbs grown on their premises), and the commercial indoor gardening (greenhouse) industry.

o These products and others that we may develop may be sold through existing distribution channels, or through newly developed channels, such as an AeroGrow-developed catalog offered to existing customers and new prospects. We also plan to utilize database marketing to offer new and existing products to the customer list which will be built from our direct-to-the-consumer marketing activities. As planned, this database will include purchasing histories and demographics that will enable AeroGrow to target its future product development, marketing and sales activities to the specific needs and interests of its customers.

o AeroGrow plans to replicate and/or modify and apply these long-term strategies in international markets as appropriate.

     Name              Age    Position(s)
     ----              ---    -----------

Michael Bissonnette     56    Chief Executive Officer, President and Director

Jerry L. Gutterman      62    Chief Financial Officer , Secretary and Director

Randy Seffren           47    Chief Marketing Officer

Frederic Wiedemann      56    Vice President Human Resources & Special Projects

Richard A. Kranitz      61    Director

MICHAEL BISSONNETTE has served as Chief Executive Officer, President and a director of the Company from its inception in July 2002 to present.
Concurrently, he has served as Chief Executive Officer, President and a director of our former parent, Mentor Capital Consultants, Inc., from its founding in January 1998 to the present. Over the last 25 years, Mr. Bissonnette has been founder and Chief Executive Officer of three multi-million dollar consumer product companies, two of which became sizeable national and international corporations, specializing in the funding, development and marketing of breakthrough, technology-based consumer products. His ventures have raised more than $25 million both privately and publicly to help fund their growth and development. He has taken two of his companies public and has negotiated the multi-million dollar acquisition of a third company. Mr. Bissonnette's extensive consumer marketing experience encompasses retail sales distribution and direct-to-the-consumer marketing, including direct mail, radio, television and long form infomercials. He brings hands-on skill in the use of broadcast media having conceived, developed and produced numerous successful radio and television commercials.

JERRY L. GUTTERMAN has been Chief Financial Officer, Secretary and a director of the Company from inception in July 2002 to present. Concurrently, he has served as Chief Financial Officer, Secretary and a director of our former parent, Mentor Capital Consultants, Inc., from January 2002 to the present. Mr. Gutterman has more than 30 years of senior management experience. From January 1995 to December 2001 he was the principal of J.L Gutterman & Associates, a consulting firm. He has been Chief Executive Officer of a $15 million dollar international consumer security products company, the Chief Financial Officer of a $23 million dollar international consumer electronics company (which he was instrumental in taking public), and Director of Operations and Chief Financial Officer of a $36 million dollar national home health care retailer of medical products and services. Prior to that, Mr. Gutterman was the Treasurer and Controller of a $90 million dollar retailer. Mr. Gutterman is a certified public accountant licensed in California. He was awarded a Bachelor of Science degree by the University of California at Los Angeles in 1965.

RANDY SEFFREN has been Chief Marketing Officer of the Company since April 2004. Mr. Seffren has 25 years of senior executive level marketing experience with ad agencies, Ogilvy and Mather and Orbis Broadcast, and in direct response marketing as Vice President Marketing with Life Fitness a $150 million dollar company and Executive Vice President with Reebok Home Fitness and Body By Jake a $150 million dollar company. Mr Seffren has introduced over 200 consumer products on a global scale from product development through marketing and communications. He leveraged the direct response marketing of these products through distribution into specialty and mass retail channels. Mr. Seffren has introduced more than 50 unique direct response TV products for Chef Tony, Richard Simmons and others. Some of his Fortune 500 clients included Procter & Gamble, Marriott, Sears, Novartis, Aventis and Johns Hopkins Medicine. He was awarded a Masters of Science Degree in Integrated Marketing from Northwestern in 1979 and a Bachelor of Science Degree from Southern Illinois University in 1978.

FREDERIC WIEDEMANN has been Vice President of Business Development of the Company since April 2003. He was Executive Director of Unifying Fields Foundation from January 1994 to March 2003. Mr. Wiedemann was awarded his Ph.D. degree by Georgia State University in 1983, his M.A. degree by Georgia University in 1980, and his B.A. degree by Swarthmore College in 1971.

RICHARD A. KRANITZ has been a director of the Company since inception in July 2002. He has also served as a director of our largest shareholder, Mentor Capital Consultants, Inc., from January 2002 to the present. He has been an attorney in private practice since 1970, emphasizing securities, banking and business law. Prior to establishing Kranitz & Philipp (formerly the Law Offices of Richard A. Kranitz) in 1984, he was with the Milwaukee law firms of Fretty & Kranitz (1982 to 1983), Habush, Gillick, Habush, Davis, Murphy, Kraemer & Kranitz (1977 to 1978), McKay, Martin & Kranitz (1973-1976) and Reinhart, Boerner, Van Deuren, Norris & Reiselbach, s.c. (1970 to

1973). Mr. Kranitz served as Law Clerk to the Honorable Myron L. Gordon, in the U.S. District Court (E.D. Wisconsin) from 1969 to 1970. He was awarded his J.D. degree by the University of Wisconsin Law School in 1969. Mr. Kranitz has served as a director of the Grafton State Bank from 1990 to present. He served as a venture capital consultant to, and director of, various companies and he has served at various times as a director of various professional, civic or charitable organizations.

All of our directors hold office until the next annual meeting of stockholders and the election and qualification of their successors. Officers are elected annually by our board of directors and serve at the discretion of the board.

See "Principal Stockholders" for information concerning ownership of our common stock by our directors and officers.

MANAGEMENT COMPENSATION

DIRECTORS. Directors currently receive from AeroGrow 10,000 shares of our common stock for each year they serve as Directors.

SUMMARY COMPENSATION TABLE. The following table provides information concerning compensation earned by our Chief Executive Officer for services rendered to AeroGrow, in all capacities, during the fiscal year ended December 31, 2004. Compensation has been reported for the year ended December 31, 2004. We are required to disclose in the table the compensation we paid to our Chief Executive Officer and to any other executive officer of our company who was paid in excess of $100,000. These persons are referred to in this prospectus as "named executive officers." Only our chief executive officer was paid more than $100,000 for the year ended December 31, 2004, and, accordingly, only compensation paid by us to him is included in the table.

                                                     Twelve Months Compensation            All Other
     Name and Principal Positions                Year      Salary ($)   Bonus ($)       Compensation($)
     ----------------------------                ----      ----------   ---------       ---------------
Michael Bissonnette                              2004         134,428      --                   --
     Chief Executive Officer, President,         2003         123,046      --                   --
     and Director                                2002           --         --                   --

OPTION GRANTS IN THE LAST FISCAL YEAR. No options were granted to our Chief Executive Officer, our only named executive officer, for the year ended December 31, 2004.

OPTION EXERCISES IN 2004 AND AGGREGATE OPTION VALUES AT DECEMBER 31, 2004. No options have been exercised by our Chief Executive Officer, our only named executive officer, during the year ended December 31, 2004 . As of December 31, 2004, no unexercised options were held by our Chief Executive Officer.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Pursuant to Nevada law, we are required to indemnify any officer, director and affiliated person who was or is a party, or who is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a member, director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a member, director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys fees, and against judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he acted, or failed to act, in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In some instances, a court must approve indemnification

As to indemnification for liabilities arising under the Securities Act of 1933 for directors, officers or persons controlling AeroGrow, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and unenforceable.

SCIENTIFIC ADVISORY BOARD

AeroGrow has organized a world-renowned Scientific Board of Advisors who are experts in Hydroponics and soil-less growing. This Board of Advisors helped us in the development of our revolutionary nutrient delivery system and offers ongoing feedback, testing and guidance us in our development process.

DR. HENRY A. ROBITAILLE, PH.D. Dr. Henry Robitaille is known world wide for his contributions to the science of hydroponics, primarily through his work at the Disney's Future World exhibit, called "The Land," at Epcot Center, and his work on the world-renowned Biosphere project. Dr. Robitaille worked with Disney's Epcot Center for 20 years. As Epcot's Director of Science and Technology and Agricultural Manager for "The Land," Dr. Robitaille was one of the primary individuals responsible for the design and development of Disney's "The Land" exhibit. "The Land" is a 2-acre, working greenhouse, demonstrating cutting edge, "future world" hydroponic plant growing techniques. As the agricultural manager for "The Land", Dr. Robitaille was also responsible for all facets of management of this space age farm and crop production research and demonstration facility. This included all the research and development of new soil-less growing technologies and its ongoing maintenance and troubleshooting. "The Land" receives millions of visitors each year while producing more than 20,000 pounds of vegetables and herbs annually for use in Disney's upscale restaurants. In addition, it provides a valuable research laboratory for new and improved soil-less growing methodologies for leading scientists from around the world, exploring alternative technologies and methods for increasing food production in impoverished regions of the world. Dr. Robitaille was also a consultant involved with the research and development of Biosphere 2 (Biosphere 1 is our earth), the largest enclosed, controlled environment growth and measurement facility available for earth systems research. The Biosphere encloses a complete ecosystem, complete with a rainforest, an ocean with a coral reef, desert, savannah and marshland. Dr. Robitaille has a Ph.D, in Horticulture and Plant Physiology from Michigan State University.

DR. HOWARD RESH, PH.D. Dr. Howard Resh, a Ph.D in Plant Science, is an international leader on soil-less growing technologies. Dr. Resh has written more books about growing plants without soil than anyone in the world, having authored four books and dozens of scientific and popular papers on the subject. His best selling published books include what is considered the "Bible" of soil-less food production, the 500+ page HYDROPONIC FOOD PRODUCTION (now in its 6th edition). Dr. Resh was pictured on the cover of the world's leading magazine for soil-less gardening, "The Growing Edge" (September, 2002), for his work in the design, development and management of a hydroponic greenhouse that grows gourmet food for a CuisinArt hotel, resort and spa complex in Anguilla, BWI. Prior to this, Resh worked for decades as Technical Director and Manager of a variety of vegetable and herb, hydroponic crop production facilities around the world, in the US, Canada, Taiwan, Venezuela and the British West Indies.

MIKE MORTON. Mike Morton is the owner and president of HGI Worldwide, Inc. (Hydro Gardens), an international horticultural nutrient development and greenhouse supply company. For the past 30 years, Mr. Morton has been at the leading edge of hydroponic nutrient development and biological pest control methods. He has directed the construction and installation of major greenhouse projects and indoor growing systems in the United States and internationally. Mr. Morton is also the inventor of several new, cutting edge technologies for accelerated plant growth and seedling production. Since the early 1980's, he has worked jointly with the USDA and many Universities and customers across the U.S. in the research and hands on use of biological pest controls. Mr. Morton is a frequent guest speaker at Universities and Conferences across the country.