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I have never seen them at Hobby Lobby or Michaels. As Odie1 said, they are reorganizing and not going out of business because (according to the email I received from them) the demand was overwhelming. They are also planning some new products I think.
Although i have heard that they are staying in business, I have read recently that several people placed orders and their money was taken back in March and they still haven't received their product. It would probably be best to try to find them in a store.
On their website they do explain that they are behind from all they orders are expected to ship 4-6 weeks after orders are placed right now.
I LOVE my H2O's. I bought mine at the LSS here.