Gaia, Inc. (GAIA) Q4 2014 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to Gaiam’s Fourth Quarter 2014 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, this call is being recorded Thursday, March 12, 2015. I’d now like to turn the conference over to Norberto Aja, Investor Relations. Please go ahead.

Thank you, operator, and good afternoon everyone. Thank you for participating in Gaiam's 2014 Fourth Quarter and Full-year 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. Before we get started however, I would like to take a minute 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 in this call today are forward-looking statements and involve risks and uncertainties including, but not limited to general business conditions, integration of acquisitions, timely development of new businesses, 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 announcement, and in the Company's filings with the Securities and Exchange Commission including the Company's reports on Form 10-K and Form 10-Q. Gaiam assumes no obligation to publicly update or revise any forward-looking statements. Today's call taking place on March 12, 2015 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. So the revenue for the fourth quarter which ended December 2014 increased 9.1% to $55.4 million. The growth was actually 15% if we exclude our decision to focus on the Gaiam brand and not renew the Reebok license. Gross margin increased 260 basis points to 45.1% and operating expenses declined 540 basis points to 40.6%. Without excluding the previous year one-time, the improvement was actually [2520] basis points. Operating income for the quarter improved $14.3 million to $2.5 million. For the full year, revenue increased 7.2% to $166.7 million. Excluding the discontinuation of Reebok, revenue growth was 12.4% which came in the top of 22% revenue growth in the previous year. We expect about 17% to 18% revenue growth in 2015 even after planned $5.7 million of revenue loss due to the elimination of the most of our catalog circulation in this coming year. Gross margin for the year increased 330 basis points and expenses declined 80 basis points or 750 basis points without adjusting for previous year one times. Operating loss for 2014 improved $16.6 million to $5.1 million, which includes $8.8 million loss from Gaiam TV. During the year, we grew the number of our branded store-within-store presentation by 2500 to about 17,000. That includes a new 8 foot store-within-store display of Gaiam products at Kohl's at all of the 1170 doors. Also on April 25, Kohl's will launch our new Yoga Apparel line. We're also seeing good momentum in Gaiam TV. Recently we eclipsed above the 100,000 subscriber mark, with about a quarter of the member being International. Gaiam TV has grown the subscribers in about 100 countries. With the general launch on Xbox International, Gaiam TV is now available on virtually all devices connected to the internet. In January, we launched a category first technology called Gaiam TV Unplugged, which enables subscribers to download and view any of our content offline. We see this as expanding our effectiveness by empowering people with limited bandwidth or those who are traveling or who are beyond Internet connection. And if you download it, the downloaded content will render it unusable, if you are still paying for the subscription. In January, we also launched the Gaiam TV on Comcast offering content on a subscription basis to about 23 million US households bringing our cable reach to about 28 million in the US, which includes our partnership with Verizon FiOS. And thanks to about a $1 million of extra marketing cost during the Comcast launch in the first quarter, we expect to reach profitability on this Gaiam TV in about 2.5 months which is about a month early than our original plan. On February 20 this year, we filed Form 10 registration statement with SEC in connection with this previously announced separation of Gaiam TV into a separate public company. This proposed tax-free spin off will occur through distribution of all Gaiam TV stock to Gaiam shareholders. We’re currently thinking to effect this separation on September 30 of 2015. We’re very excited by the opportunities for both Gaiam Brand and Gaiam TV. I look forward to a very productive year. You’ll start to see this result in the second quarter when the additional expenses from the first quarter port disruption delay and as well the Gaiam TV launch is behind us. And now I’d like to turn the call over to Steve to give you some more color on the financials. Steve?

Thank you, Jirka. I’ll spend a few minutes reviewing the financial results, and offering additional perspective on the performance for the fourth quarter and full-year 2014 results. In light of the anticipated spin-off of Gaiam TV, and the changes in our business over the past 18 months including the sale of our non-Gaiam branded entertainment media business, and the closure of our direct response television operations last year, we’ve updated our segment reporting in the fourth quarter. Our new segments are Gaiam Brand and Gaiam TV. The Gaiam Brand segment includes all of our Yoga Fitness and Wellness products, and media distributed through our website, retail network and catalogs including the catalog operations of our Eco Travel business. The Gaiam TV segment includes our global digital video subscription service which operates under the name Gaiam TV. All figures reflect only our continuing operations from these business units. Beginning with the income statement, net revenue for the quarter increased $4.6 million or 9.1% to $55.4 million compared to net revenue of $50.8 million in the prior-year period. We’re pleased with the growth in revenue over the prior year, especially after considering our planned operating changes including our pivot away from catalog advertising, not renewing our Reebok license, and a data breach at our largest customer. Lynn will discuss these business changes in a little more detail. Net revenue for the Gaiam Brand increased by 8.2% or $4 million to $52.7 million for the fourth quarter of 2014. Gross profit for the fourth quarter improved to $25 million or 41.5% of net revenue compared to gross profit of $21.6 million or 42.5% of net revenue in Q4 of 2013. The 260 basis points improvement was largely driven by a shift in our Gaiam Brand segment toward higher margin products, a result of the decision I mentioned earlier to not renew our Reebok license and growth in our higher margin Gaiam TV segment. Operating expenses for the quarter amounted to 40.7% of net revenue compared to 65.8% of net revenue in the fourth quarter of 2013. Excluding the $10.1 million of non-recurring charges in the prior-year period, operating expenses declined 540 basis points compared to Q4 2013 primarily reflecting a reduced focus on catalog circulation. Moving down the income statement, operating income increased $14.3 million to $2.5 million for Q4 2014 comparing favorably to an operating loss of $11.9 million in Q4 of 2013. Excluding charges related to restructuring or repositioning, operating income would have increased $4.3 million from an operating loss of $1.8 million in the fourth quarter of 2013. We recognized income tax expenses of $0.7 million during the quarter related to our majority-owned subsidiaries compared to $22.5 million expense that included a $23.2 million charge we recorded in Q4 of 2013 to provide a valuation allowance against our net operating losses. Although fully reserved on the balance sheet, our deferred tax assets remain available to offset future income tax liabilities, and we continue to record a valuation allowance against our deferred tax assets. Looking at the bottom line, income from continuing operations was $1.2 million or $0.03 per share excluding the loss from discontinued operations of $3.3 million or $0.13 per share. The loss from discontinued operations includes an accrual related to our ongoing litigation with Cinedigm Corp over issues related to the sale of our non-branded home entertainment DVD distribution business in 2013. We are asserting our legal positions vigorously. And given that this process is complex and could go on throughout the year and beyond, we’ve booked a reserve in contemplation of anticipated legal, and professional expenses, and other factors. Any future comment from the company about the litigation will be restricted to our SEC filings. Net loss for the 2014 fourth quarter was $2.4 million or $0.10 per share compared to a net loss of $30.4 million or a $1.29 per share for the fourth quarter of 2013. The net loss for the fourth quarter of 2013 included a loss from discontinued operations of$ 4.9 million or $0.21 per share. Regarding Gaiam TV, our fourth-quarter operating losses for Gaiam TV improved significantly to $2.3 million compared to $4.5 million in Q4 of 2013. On a full-year basis, net revenue was a $166.7 million, an increase of approximately $11.2 million or 7.2% compared to net revenue of a $155.5 million in fiscal 2013. Excluding the Reebok products discontinued during the year, revenue growth was approximately 12% year-over-year. Gross profit for the full year improved to $75.5 million or 45.3% of net revenue compared to gross profit of $65.3 million or 42% of net revenue in 2013. While operating expenses were 48.3% of net revenue in the full-year 2014 compared to 55.9% of net revenue in full-year 2013. Operating loss for the year in 2014 was $5.1 million compared to $21.6 million for last year including non-recurring items in both periods. In 2014, we spent approximately $700,000 in preparation to spin-off Gaiam TV. We also made a number of investments this year in anticipation of future business growth. We hired external and internal resources to design, market and produce the apparel line that we’ll launch this spring in Kohl's. We added a team of developers to improve our websites and expand our digital engagement with our customers, and we expensed all remaining catalog amounts. Including the spin-off costs, these investments added approximately $2 million of additional operating expenses for the year. Income tax expense of$ 1.4 million for the full-year of 2014 compared to income tax expense of $26 million in full-year 2013 to $23.2 million of which was related to a tax valuation allowance against the net operating losses of our wholly-owned subsidiaries. As of December 31, our gross NOLs were approximately $69 million for federal and $35 million for state. Net loss for full-year 2014 was $9.9 million or a loss of $0.41 per share compared to a net loss of $22.8 million or a loss of $0.99 per share for 2013. Taking a look at the balance sheet. We ended the year with total cash of $15.8 million and no debt. Our current ratio at December 31, 2014 was 2.2. This metric continues to reflect the health of our balance sheet and our ability to fund our growth. Inventory turns improved to 4.5 times in 2014 from 4.3 times in 2013. Overall, we are pleased with our performance in the fourth quarter and on a full-year basis including the improved profitability for the Gaiam Brand and a doubling in the average number of subscribers for Gaiam TV. We’re excited about our initiatives to launch new products that will help us to grow our business, and drive increased value to our shareholders and remain confident that our business strategy, product offerings and financial position will result in future revenue growth and profitability. We’ve the financial flexibility to invest in our repositioned Yoga Fitness and Wellness strategies. With that, I’d now like to turn the call over to Lynn who will provide some additional detail on our business, after which we'll open the call for questions. Lynn?

Thanks, Steve. Our vision for Gaiam is to be a driving force in making Yoga Fitness and Wellness accessible to everyone. Our strategies and results during the year and the fourth quarter reflect the progress we are making in realigning our business around this vision. I'll now give a little color on the year-end results and then review our progress on our four key initiatives for 2014, and discuss our opportunities for 2015 and beyond. Our revenue for 2014 was in line with our expectations. Comp sales from our top 25 accounts not including our largest customer or any new customers were up 17% for the year, which shows the strength of the brand and our categories. These results were on top of the 20+ percent comp growth in 2013. However, our overall revenues were muted by several strategic moves that were critical to our renewed focus on our brand vision and overall operating income. In order to focus on our brand, our first decision was to not renew the Reebok license. While we are able to offset that revenue going forward with our own brands, revenues from Reebok branded product declined $6.8 million during the year as we made the transition. The second decision was to pivot our catalog-driven direct-to-consumer business to a digital-centric consumer-engagement strategy for the Gaiam and SPRI brands. We decreased circulation of catalogs which reduced revenues by $2.4 million in 2014. Third, we changed the way we operate our media sales. We moved from an aggregator model to a distribution model, where we do not take ownership of the inventory and only book our distribution fee. This lowered revenue for the year by$ 1.5 million, but improved our margins and working capital. Finally, our revenues were affected by our largest customer which suffered a data breach resulting in reduced customer accounts and lower sales. Our number one strategy in 2014 was to grow our store-within-store for Gaiam and Gaiam Restore. We celebrated growth in these core brands of 27% for the year and 45% for the quarter. We drove these results by improving our brand positioning, product development, and retail distribution. We expanded our Gaiam Restore line with several new product launches including new items for Active Sitting. We added 1170 doors with store-within-store sets at Kohl's in the third quarter. This type of partnership will help Kohl's achieve its publicly stated goal of becoming a wellness destination. Our second strategy was to grow our store-within-store presence for SPRI, which grew 76% for the quarter and 52% for the year. This growth was fuelled by adding SPRI store-within-stores at Myer and at Target in the fall, as well as anniversarying our line of SPRI Cross Train at The Sports Authority. Between Gaiam and SPRI, we added over 2500 doors to our strategic store-within-store platform, which will bring our total to over 17,000 doors. Our focus on innovation was our third strategy for 2014. That has been and always will be a key strategy for us. Our biggest win for this year was our Yoga Apparel line. As we looked at our brand, we recognized a clear white space opportunity for a mid-market Yoga Apparel line that provides a compelling consumer option for well-designed, yet affordable yoga apparel. According to research firm SportsOneSource, the Yoga apparel category grew by 45% during 2013. With the success of our first significant retail launch partner, Kohl's, we forecast apparel to drive $15 million to $20 million of incremental revenue in 2015. Our final strategy for 2014 was to pivot our direct-to-consumer business. Over the past year, we discussed our goal of transitioning our direct-to-consumer business from its previous catalog-based model to a digital-centric model focused on consumer engagement for our mobile and social platform. During 2014, we all but ended our catalog activities and incurred appropriate expenses. Going forward, we’ll produce only a limited catalog run. As a result, our direct-to-consumer business will be smaller in 2015 than it was last year, potentially impacting revenue by $7 million, but improving operating margin by $3 million. As the retail market continues to involve, we recognize that it is key for us to have direct relationships with consumers, where we can tell our full brand story and connect in meaningful, and engaging ways. To that end, we relaunched spri.com and gaiampro.com, and are working on relaunching [gaiams.com] in mid 2015. Our new sites are focused on a consumer-engagement strategy that aligns with our stated vision. We also invested in the app space through our acquisition of Yoga Studio, the number one Yoga app in Apple’s US App Store. Through the Yoga Studio app, we’re increasing our direct link to the 800,000 people who have downloaded the Yoga Studio app. This acquisition gives us new insights into consumer habits and opportunities to market Gaiam products and content, which will help drive long-term brand loyalty. I’d now like to discuss our key strategies to continue our growth in 2015 and beyond. Our first and largest initiative will be building our Yoga Apparel business. We’re excited about our upcoming April 25 launch with Kohl's, the number one preferred destination among female apparel shoppers according to recent research. We worked with Kohl's on a comprehensive marketing campaign, branded fixtures, and great aisle placement next to Nike. We’ve expanded our bench strength in apparel by hiring the former head of design for Athleta. This expanded team will help us grow the assortment and release new apparel lines in 2016. Our second focus is on Wellness. We entered this category years ago with our Balance Ball Chair. In 2011, we launched the Gaiam Restore brand and have since followed up with our new SPRI Dynamic Recovery and Active Therapy lines which launched in 2012 and 2013 respectively. Together these brands offer wellness solutions to consumer with a variety of needs. We’ve applied our product development and merchandising capabilities to the categories, and now offer full 4 foot store-within-store sets of each of our wellness brand, something which many of our competitors cannot achieve. As a result of our work, Wellness product revenues grew 32% in 2014. We'll continue marketing our assortment of Wellness products through our existing and new retail channels. Third, we plan to expand our demographic appeal. We know from Yoga Journal that there are 24 million active Yoga participants, and another 80 million people that would like to try yoga if it were more accessible. Of that 80 million 47% are men. To attract them, we’re releasing a slate of yoga accessories, and media content aimed at improving athletic performance. Our Yoga for Athlete media series features NBA All-Star, Kevin Love, and former NFL All-Pro running back, and Heisman Trophy winner Eddie George. We’re adding two more titles featuring the Miami Marlins two-time MLB All-Star Giancarlo Stanton, and New England Revolution and U.S. Men’s National Team soccer player, Jermaine Jones. This spring launch will reflect our full multi-channel capabilities spanning retail and online. You’ll see advertising on major online media outlets including ESPN, USA Today, SLAMonline and stack.com. Also online, we’ll launch a new website GameOnYoga.com that will offer these products to athletes seeking new ways to achieve higher performance. In retail, we'll launch a 60 store test at DICK's Sporting Goods. As well as with our Wellness line, we’ll leverage our distribution network to place compelling, branded, store-within-store sets in major retail outlets. We’re also preparing to launch Kids Yoga accessories and media in the fall using a similar targeted strategy. We expect to leverage our Apparel and our new Men’s and Kid’s Yoga lines to open new retail channels including department stores, children stores, drug and grocery. Our fourth and final focus for the year will be on growing our International business. International represents 6% of our revenues and we believe there is a huge opportunity to address the Yoga, Fitness and Wellness business abroad, and to do so as successfully as we’ve addressed it in here in the US. During 2014, we launched in Whole Foods and then 320 doors with Tesco, both in the UK. We’re in active discussions with these and other retailers to continue expanding our footprint. We recently reorganized to put a higher priority on this initiative. Between new product, Apparel and Men’s and Kid’s Yoga and distribution initiatives including International and new targeted distribution channels, we see great opportunity for the company this year. We had some challenges in 2014 mainly with our largest customer and our decision to drop certain third-party licenses. However, we’ve demonstrated that the opportunities in our brand with product solutions, digital content and distribution are more than enough to offset those challenges and drive growth in the years to come. With that in mind, I also wanted to take a minute to address the situation taking place at many of the ports along the West Coast. Well our business is sensitive to these types of disruptions as most of our inventory moves through these ports. We were able to utilize existing domestic inventory during the fourth quarter to soften the impact of the port slowdown. Not all inventory is perfectly suited for each customer, so we incurred some expense in reworking our domestic inventory. In spite of the situation, having arrived at a resolution the potential for backlogs going forward will shift $7 million of revenue from the first to second quarter causing first quarter to be flat with last year from a revenue perspective, and second quarter to have unusually high growth. In addition, we are aware of some in-stock issues with a major customer of ours and are working closely with that customer to resolve those issues. We expect to reach normalized in-stock levels there in Q2. And before I close, I want to point out new segment reporting which reports the Gaiam Brand and Gaiam TV separately, with Gaiam Brand representing all of our activities outside of Gaiam TV. During the last two years, Gaiam Brand segment revenue has grown $33 million or 27% to a $157 million. In 2012, the segment generated a negative contribution margin of $1.8 million and in 2014, we generated a contribution margin of $6.6 million or a gain of $8.4 million. Put in another way, we improved revenue by $33 million with an incremental contribution margin of 25% including the cost to launch our Apparel business that we incurred in 2014. I believe these results demonstrate the scalability of our model as well as the benefit of our work over the last two years. Looking ahead, excluding the negative impact of our reduced catalog circulation, in the near-term we expect the Gaiam Brand segment revenues to grow approximately 20% in 2015, and to generate incremental margin in the 15% to 25% range. With the low end of that range resulting from additional costs we may incur to expand our Apparel and International businesses. This incremental margin will materialize beginning in the second quarter of 2015 as our in-stocks improve and our apparel launches. In closing, as I hope you agree, our vision and strategies are based on a careful analysis indicating that our market will continue to show healthy growth. When it comes to yoga, Gaiam is the most recognized brand in non-apparel yoga products by twofold, and second most recognized overall yoga brand. Our business is driven by our focus on Yoga Fitness and Wellness as this is our heritage and our authenticity. We’re creating a true destination for the Yoga consumer that will incorporate all their needs from easy-to-use apps, engaging subscription content, affordable yoga clothing, along with our broad selection of Yoga Fitness and Wellness accessories. In partnership with Gaiam, our retail partners can offer their customers a unified, branded assortment of yoga apparels, accessories, and media content that no other brand can offer. All of this gives us confidence that we’ll be able to grow our business and drive strong top line and bottom line growth in 2015. This concludes our prepared remarks, so I'd like to turn the call back to the operator for questions. [Ash]?

[Operator Instructions]. And our first question comes from the line of George Kelly with Craig-Hallum Capital Group. You may proceed with your question.

A few questions for you. First for Jirka on the TV business. I am wondering if you could talk about first of all, am I doing the math right that revenue in the fourth quarter was $2.5 million? And then the second question on TV is, can you talk about what you're seeing since Comcast has been live?

What was the first part about fourth quarter revenue?

I was just doing the math on the two new segments, is it $2.5 million in the fourth quarter?

It was a little higher than that. We currently have about a little over $12 million run rate. And to breakeven, we would need a little over $14 million which should happen in June.

So June breakeven, and then just about Comcast. So if you think about 12 months or 18 months from now, what is the revenue mix between monthly subscribers and the stuff that's through these additional sort of sources that are outside of the normal subscription?

Well, there is several multiple subscription because we’ve more than one offering several people, actually a good percentage will take several offering. So the average right now, it's pretty much exactly $10 or between $9.50 or $10 if you take the averages. And it’s kind of there for the last six months, so it doesn’t really change. The Comcast if it grows, dramatically can change if the double subscription would not be there. But it’s hard to predict because the first reporting from Comcast we won’t get till mid March. So for January, we didn’t receive it yet. So we don’t really know what Comcast does.

So your expectations for breakeven in June are just based off of the sort of core subscribers, is that right?

We expect to breakeven by the end of May, June is supposed to be profitable. And based on this [table], we can see on you know this is kind of site volume, we kind of incorporate some from Comcast. But we cannot really know, so we try to be conservative.

And then for Lynn, you mentioned an inventory issue with a big customer. Was that port related or is that something else?

Some of it’s port related. The balance is just they haven't gotten back in stock on certain key items yet.

And then two quick ones for Steve. The first the reserves, what is that amount, did you say that?

No, we did not.

You didn’t disclose that. Okay, will that be in the K?

Yes.

And then, can you talk at all about how that will build there, or any more detail on that?

No. The total discontinued cost was 3.3, which includes you know some cost from you know when we get rid of the inventory from DRTV earlier in the year.

And then I didn’t hear anything in the prepared remarks about your [building]. Is that still something you guys are considering selling?

Yeah, no change on that.

No change, so still kind of making progress consolidating your space and that's still on the bench?

Yeah, the space is pretty much, we finished right now. And we still have getting some new tenants in the building over the next two months, so we definitely wait for that because the leases are signed.

So you’ve signed leases. Is all the space been occupied or is there still more lease work to, still more tenants to find?

It's like 97% or 98% occupied [Indiscernible].

Just in the [last], you’ve values change, and do you still think it's like $25 million to $30 million kind of range?

We never kind of thought that's at the $30 million range. We kind of thought it’s kind of you know 20+. But we didn't really do any work based on the valuation from what we did last time.

Our next question comes from the line of Chris Krueger with Lake Street Capital Markets. You may proceed with your question.

I'm actually sitting in for Mark Argento today. A kind of series of questions, first on your new product launches. I know that Kohl's is going to launch on April 25, but can you give us kind of the quarter-to-quarter expectations this year for the various product launches, and when they should appear?

Sure, you’ll see Apparel starting of course in the second quarter along with our Men’s launch, the Athletic Yoga launch. And then in September, we launch with the Children's line.

So it’s different. Okay, then beyond the launch, you know the launch period would you expect to see you know a series of additional new doors and extended shelf space and things like that going forward?

Absolutely, as well as you know we are continuing to expand product initiatives in most all of our retailers. That's an ongoing initiative for us and creating new store-within-stores particularly on the Wellness side. So you'll see those as the year progresses, and we'll announce those as they materialize.

Then at Target, I know the data breach you know caused disruptions about a year ago. Did conditions with Target improve in the second half of the year? And then another part of that question is, in Minneapolis your Target is in the news every day with massive layoffs and kind of cost-cutting moves and various initiatives there. Do you see any impact or benefit or anything from what's occurring there right now?

I think Target is making some very good decisions right now. I think certainly they are impacting their short-term business cycles, but I think over the long-term it's going to be very good for Gaiam. I mean they have announced you know four key initiatives, Style, Wellness, Kids and Baby. And we fit into three of their four key initiatives, so we see huge opportunities with them and have been working closely with senior management on how to make them more of a wellness destination.

I understand you recently had a Men’s Yoga test at DICK’s. Any update on that?

No, that doesn't launch. They wanted to wait until we got the rest of the programming and that does not launch until late March. So we really won’t have results probably till May.

Just a couple of more quick ones. With Kohl's and the apparel launch, is that an exclusive arrangement for six months? Or how does that work and can we see more doors and distribution beyond that?

You won’t see more doors until 2016. We’ve an exclusive for this year with them.

And finally on the TV spin-off, are there any key factors to look forward as far as the timing of the spin-off. And I think I over heard you say September is the expectation? And then are there any cash [needs] for Gaiam TV over the next year?

That's not really the big trigger for the spin-off. It's like we filed with the SEC, we are waiting for the comments. We didn't hear anything back yet. So it depends on the timing on that, but we kind of -- it's not a good idea to spin it in kind of a Wall Street summer, so we expect to do it you know after the summer time. So and it's probably ideal to do it at the end of the quarter, so we don’t have to restate the quarters. So we expect to do it you know on September 30. What was the other part of your question?

Cash needs for Gaiam TV for the next 12 months.

Our Gaiam TV, it’s already separated and filed in Form-10 which is February 20 and its [cash] sort of provided there. So Gaiam TV would not need any more cash to regularly operate. It doesn't mean we might decide to get some, but it doesn't need. Neither Brand or Gaiam TV would need more cash, but it doesn’t mean we wouldn't take the opportunity if it comes.

[Operator Instructions]. And our next question comes from the line of [indiscernible]. You may proceed with your question.

Yes, I guess you touched on this briefly earlier, but I was wondering so Cinedigm has made some serious legal allegations and Gaiam has claimed that you know it actually owes Gaiam $6 million of working capital. So if Gaiam believes on this claim, why is it attempting to delay the working capital arbitration?

We’re not going to comment on a legal question. If there is more question on this one, we're not going to answer them.

You guys won’t touch on anything regarding this claim?

Yes.

There are no further questions at this time. I'll now turn the presentation back to you.

Thank you very much. So we’ve no other question, we’ll hopefully you know talk to you next quarter. Thank you very much.