Ladies and gentlemen thank you for standing by. And welcome to the Gaiam Incorporated Fourth Quarter Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, today’s conference is being recorded Monday, March 17, 2014. I would now like to turn the conference over to Mr. Norberto Aja with JCIR. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Thank you for participating Gaiam’s 2013 fourth quarter conference call. Joining me today on the call are Gaiam’s Chairman, Jirka Rysavy, Gaiam’s CEO, Lynn Powers and Steve Thomas, Gaiam’s CFO. Following some prepared remarks, we will open the call for your questions. But before we get started, I would like to take a minute or two to read the Safe-Harbor language. The following constitutes the Safe Harbor statement of the Private Securities Litigation Reform Act of 1995. Except for historic information contained herein, the matters discussed on this call today are forward-looking statements and involve risks and uncertainties including, but not limited to general business conditions, integration of acquisitions, the timely development of new business, the impact of competition and other risk details from time-to-time as described in the SEC reports. The risks and uncertainties associated with the forward-looking statements are described in today’s news announcement and in the company’s filings with the Securities and Exchange Commission including the company’s reports on Form 10-K and 10-Q. Gaiam assumes no obligation to publicly update or revise any forward-looking statements. Today’s call includes non-GAAP financial measures within the meaning of the SEC Regulation G, when required a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today’s press release as well as the company’s website. With that, I would now like to turn the call over to Gaiam’s Chairman, Jirka Rysavy. Please go ahead.

Thank you, Norberto and good afternoon everyone. During the fourth quarter of 2013, we sold our non-branded entertainment media distribution business and discontinued our direct response television operation. As a result, we now report this business as discontinued operation and we have reclassified our financial results for all the prior periods. 2013 revenue from discontinued operation were $50.3 million. Net of discontinued operation, our revenue for 2013 increased $28.2 million or 22.2% to $155.5 million. The organic growth was 21.7%. Revenue for the company business segment grew 22.5% to $103.4 million and direct to consumer segment revenue increased 21.5% to $52 million. At the end of the year, we took $11 million of non-recurring charges primarily related to restructuring and repositioning of the company after the sale of the entertainment unit and discontinuance of the DRTV business. These charges included $7.1 million in non-cash impairment, $2.5 million in severance costs, and $1.4 million in transaction-related and other expenses. Since the sales of entertainment distribution and discontinuation of DRTV, we eliminated about $5 million of operating costs most mainly payroll and system expenses. Where this [ph] exclusion of Gaiam TV losses brings the pro forma year to about $3 million of operating profit compared to about $4.2 million operating loss in for 2012. During the year we recorded a gain of about $27 million from monetizing the majority of our Real Goods Solar Holdings and we used this $11 million of non-recurring charges and losses from Gaiam TV and potentially small portion of our NOLs to offset all the taxes on the gain. We founded Real Goods Solar as our subsidiary in 1999 calling the unit Gaiam Energy Tech until its IPO. At December 31, we had cash of $32 million and no debt, pretty nice comparison to our net debt…

Thank you, Jirka. I will spend a few minutes reviewing the financial results in greater detail and offering additional perspective on the performance for the year. Let me begin by highlighting that the results we reported earlier today and that we will discuss on this call do not include any contributions from GVE, our former non-Gaiam branded entertainment media business, nor do they include contributions from our discontinued direct response television marketing operations. Both business segments are reflected as discontinued operations in the current year and all comparable reporting periods. As a result of the foregoing, the company needs to reassess the value as deferred tax assets which could result in a GAAP non-cash valuation allowance between zero and $23 million, reflecting the current total GAAP value of the deferred tax assets at the end of the year. The company has not yet completed its tax planning and audit for the quarter and year ended December 31, 2013 at the time of this call. So the results reported below are preliminary and subject to assessing the need for a GAAP tax valuation allowance. When completed, the company will file its Form 10-K with the Securities and Exchange Commission by March 31, 2014. Beginning with the income statement. Consolidated net revenue for the year increased $28.2 million or 22.2% to $155.5 million with our business segment revenue increasing $19 million or 22.5% to $103.4 million, and our direct to consumer segment revenue increasing $9.2 million or 21.5% to $52.1 million. On an annual basis, gross profit margin was 42% of net revenue compared to 44.4% in the comparable year ago period as we experienced stronger growth in our lower margin fitness accessory business than in our higher-margin media business. Total operating expenses for 2013 increased to 55.9% of net revenue from…

Thanks, Steve. Let me begin by announcing that the Board of Directors has agreed to pursue the separation of Gaiam and Gaiam TV into two publicly traded companies. This will allow Gaiam TV to operate more independently and nimbly as well as achieve a higher degree of clarity and transparency in its relationships with customers and investors. During the fourth quarter, we sold our non-Gaiam branded entertainment unit, GVE to Cinedigm generating a strong return on investment for our shareholders. We also decided to close our direct to response television business at the end of 2013. The proposed spin-off represents a final step that will allow Gaiam to present a clear strategic path and define our goals solely around what we believe to be one of the most unique, authentic, well respected and recognized yoga, fitness and well-being brands. I believe that organic revenue growth of 21.7% during the year reflects the strength of our brands. With over $32 million in cash, no debt, and a commitment to prudent expense management, including plans to further reduce corporate and other expenses throughout 2014 in addition to the over $5 million annualized savings already identified in the last 120 days, we have the foundation to focus on a rapid expansion of our operating margin. Looking ahead, this year, we’re pursuing four initiatives to drive organic growth. Our first initiative relates to Gaiam Restore, our line of wellness products. Launched in 2012, Restore addresses the growing consumer demand for preventative, restorative, and stress relieving solutions. Though the Gaiam Restore line is relatively new, it has become one of the top performers at Target. We plan to leverage our broad distribution footprint of 38,000 retail doors to expand placement of Restore. But the demographic need for wellness solution is also creating new distribution opportunities…

(Operator Instructions) And our first question comes from the line of George Kelly with Craig-Hallum Capital Group. George Kelly – Craig-Hallum Capital Group: Hi guys, I guess just to start, you mentioned a couple times that core operating margin – you mentioned that core operating margin in 2013, I forgot the number you gave me but you said going forward it should scale – and we should see some margin expansion. Can you give more details of kind of your expectations for 2014 and maybe what that core operating margin was for 2013?

I don’t think we said anything, we just said that was, if you kind of effect all the changes that would be positive from negative 2012 and we see dramatic expansion in 2014 of operating margin. We didn’t provide any numbers. George Kelly – Craig-Hallum Capital Group: Okay. Just could you give sort of – I mean is it mid-single digit percentage realistically?

We’re not prepared to do guidance. George Kelly – Craig-Hallum Capital Group: And then affecting that would be an investment in Gaiam TV this year, what are your expectations for – are you close to breakeven there or how much do you expect to invest?

Gaiam TV on operating basis lost about $8.5 million in 2013. If we would not separate the business and focus just on operating number than rapid growth especially in the international with growing run rate of about $10 million would be profitable probably by end of the second quarter. But with separating, we plan to invest primarily in international which we already have like 15% of sales with no marketing expenses and following the Netflix who invests a lot, we want to invest in languages and the operating platforms, all the devices are going to (inaudible) pretty much – we pretty much are done with, we have like want to go and so that will probably this, that will take additional six months probably or 6 to 9 months depends how fast we decide to grow. But if we would operate as operating business right now, just let organic growth we’d be profitable by end of the second quarter. The revenue we expect to more than double for in 2014 from the 2013.

(Operator Instructions) Our next question comes from the line of Mark Argento with Lake Street Capital Markets. Mark Argento – Lake Street Capital Markets: I guess my question, around the spin, could you – so you’re planning on this fall and then will all the media assets go into Gaiam TV or you will leave like the fitness DVD business, will that stay with the core Gaiam?

The assets, whatever they were created, so the titles for Gaiam where they are created by the brands they will stay, they would be license to Gaiam TV for the SVOD.

But they would remain with the brand, Mark, and would also be -- continue to be able to be monetized as DVD or digital download through iTunes. Mark Argento – Lake Street Capital Markets: Got you. But then you’d also share – you’d have some type of publishing relationship with Gaiam or Gaiam TV could have that content as part of their platform as well, or how would you do that?

Of course.

Yes, a licensing agreement with them for SVOD. Mark Argento – Lake Street Capital Markets: And then so the core -- remaining core business would really focused on really unlocking the value of the brand, so more in the fitness product side and then would you continue to do the catalogue or what are some of the different avenues you’re seeking to [renew] (ph) the leverage of the brand?

Well, first of all, we will continue with the catalogue for at least the balance of this year that we will start moving marketing dollars away from catalogue circulation and move it more into the website, into certain new product innovation and into social media. We think that’s a better way to connect with the customer over the long term as well as looking at some digital opportunities there. Mark Argento – Lake Street Capital Markets: And last question, in terms of how does your installed base of retail doors look? I don't have the most up-to-date number, are you guys around the 50,000, 55,000 doors or where do you sit today?

When we sold the entertainment business, our doors went to about 38,000 doors. And as I stated in the prepared remarks, we think there is lots of opportunities, it’s not only to grow our business within those 38,000 doors by the new initiatives but also to add some doors on as we expand Gaiam Restore because of what’s happening overall with the drug stores like CVS and Walgreens trying to get into health and wellness.

And our next question comes from the line of Robert Routh with National Alliance Capital Markets.

A few quick questions. Given that you're now separating Gaiam TV from the core business, I guess first is structurally, [indiscernible] spin-off tax for the shareholders, there seems to be an asset back common stock or are you considering using a tracking stock structure in case it doesn't work or you’re not happy with it, and you want to roll it back in? And then just kind of a follow-up to that given that you’re doing this and spokes [ph] in the operations, have you considered talking to any of the distributors on the Gaiam TV side, buy buying the cable companies who you’ve obviously Internet [ph] connection in order to get back to this position, and signing like stars at flat rate deals without pay Gaiam TV x million a year for the right to give it away free for a period of time to those subscribers who subscribe to Internet services or is that an opportunity that you haven't explored as a way to jumpstart kind of interest in -- without spending your money?

So the first, we’re planning to use the common stock for distribution for the spin-off, we did not consider really seriously tracking stock but we’re still in the process of evaluating it. So it's not the process that’s finalized. So we would in the board meeting probably look at all these options but more the plan right now is to use the common stock in a tax free dividend. The other part, yes, we did talk to, already to pretty much all the majors, the cable companies, so we are talking to them. We already signed and have several thousand subscribers on Verizon FiOS and we’re talking right now with the largest companies but it's not free. We kind of -- the deal’s there, it’s through cable but it's like SVOD service as well which we’re providing the content for. So but it will also work on the -- through the cable providers.

So would it safe to say that with these talks continuing, you could see some more I guess increased distribution and marketing of the Gaiam TV service by these distributors maybe going forward, it could help you guys or is that not safe to say?

No, and yes, we would have the relationship like we have with Verizon right now, with the several large cable companies to distribute our content but it is not free as you mentioned. It is a subscription service, so they do pay per month on their cable or phone bill.

And then as far as the core business, now that, that’s going to be focused on the consumer-products business with the apparel coming in 2015, late ’14, given the focus there and obviously it’s a different investor base that looks at the media assets versus the consumer assets for the most part, but it's also a different valuation methodology as well as the distribution mechanism. I am curious, now that that's going to be, and you talked about getting rid of the DRTV business, are you in any talks with any of the home shopping channels like HSN or QVC because given what you have and the proprietary nature of that, it would seem like a natural fit for one of those companies to have the Gaiam an hour once a week and just sell a lot of the products that you have and all the brands that you currently manage, I am curious as to whether or not that's something you are looking at?

It definitely is. In fact, we are in talk with QVC right now.

And just one another question, obviously you said -- acquisitions as well as organic growth, on the library side, I know you guys have the big library, you own all the rights to it and obviously that doesn’t get fair value in your stock if you don’t realize it’s not on the balance sheet based on what it's worth. But as far as other companies that are out there that do what you do, because there aren’t any companies that do as well as you do with the health and wellness, what's out there? What other libraries are out there that could make sense, is there anything for sale? Do you see anything near-term that you could acquire that could really buttress that business or is it more a matter of you have the cash, just wait and see what happens?

We bought several libraries over the last year or 18 months and mostly we focus on libraries that are of our space, we don’t want to buy anything from the studios. And we clearly will continue to do that. We also, obviously when we made acquisition as we bought like My Yoga online that comes with a pretty good library which we will be exclusive, so we might do some more of those because the multiples are very lucrative if you buy this as a multiple you get library kind of with it and – but for us as a Gaiam TV the production is actually much more important because about two-thirds of all the viewing – of the views in a month are generated by our internally produced content. So the production is much more important to us than actually buying the libraries and we can produce those, the content right now for an average of about $4000 an hour, which is very different to like $4 million an hour what Netflix would do and drives the view percentage much higher because we niche curated content, so people really look for something like that, it's exclusive. So you cannot see in the world and so we try to the position as a complementary service to services like Amazon Prime, Netflix and those because like more than half of our subscribers have Netflix service as well. So the production is going to be long-term or more important than acquisition.

And would that be similar to the deal, I know you guys got the rights to Jillian Michaels right after, over a period of time, I think that happened last year. Are you looking for other personalities in all that or is this just internally produced Gaiam content where you’re trying to develop new stars personalities etc. with the health and wellness [ph] knocking on your door that want to kind of establish a franchise since you guys have the brand already or is it just totally going to be developed internally?

Actually we do both. We look for new emerging talent where we go out and develop that talent and then obviously with our retail footprint of 38,000 doors and our direct relationship with iTunes on the digital side, well known talent also seek this out.

And our next question comes from the line of Ray Rayers [ph] with Abby Ventures.

So how many subscribers do you have on Gaiam TV right now?

Well, the simple method is, you take the revenue and our average subscription is $9.95. It’s little – some subscribers have multiple subscribers to different services that we offer. But I think it's -- I would say, I don’t know right now exactly but I would say 10 million, it’s probably around 80,000.

And what has been your conversion rate from a free trial to the paying subscribers? Has it remained constant from last quarter, has it gone up, down?

It’s increasing pretty steadily for several quarters. We were trying to hit 70s, went to low 70s, now we’re more in kind of mid to high 70s. So it’s growing. So far keeps growing. One point I'm sure we will stop, I am not sure we can practically do more than 80 but -- or 80 low 80s, I don’t know. We had already some weeks when it crossed 80 but I think looking probably like mid to high 70s is probably the number what we would target.

And there appear to be no further questions at this time.

George, do you have more questions since you kind of appeared to be kind of cut off, or if you don’t, we would – please dial in, if not, we would thanks everybody for participation and we will talk to I guess George after this call if he cannot get on the line. So thank you very much.

Thanks everybody.

Ladies and gentlemen that does conclude the conference call for today. We thank you all for your participation. You are now free to disconnect your lines.