United States

Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q/A

 

ý           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2005

 

OR

 

o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

Commission File Number 0-27517

 

GAIAM, INC.

(Exact name of registrant as specified in its charter)

 

 

360 INTERLOCKEN BLVD.,

BROOMFIELD, COLORADO 80021

(Address of principal executive offices)

 

(303) 222-3600

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.               YES  ý       NO  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    YES ý  NO o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      YES  o   NO  ý

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 

 

EXPLANATORY NOTE

 

This 10-Q/A is being filed to amend Gaiam’s Consolidated Balance Sheet at September 30, 2005 and Note 2 — Mergers and Acquisitions included in Gaiam’s Notes to the Interim Condensed Consolidated Financial Statements.  These changes were necessitated by a change in the accounting treatment of the GoodTimes Entertainment acquisition.  Gaiam had reflected the transaction as a business combination in accordance with SFAS No. 141.  Based on further review of the requirements of SFAS 141 and the related guidance in EITF 98-3, Gaiam has concluded that it is more appropriate to treat the transaction as an asset acquisition, rather than a business combination.  Accordingly, the balance sheet and footnote have been revised to reflect this treatment.  The remaining information remains unchanged.

 

2

 

GAIAM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share information)

 

		September 30, 2005			December 31, 2004
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	10,247		$	10,439
Accounts receivable, net		20,863			13,914
Income tax and other receivables		3,008			3,000
Inventory, less allowances		21,186			16,503
Prepaid expenses		5,466			1,324
Deferred advertising costs		4,312			2,635
Deferred tax assets		523			1,145
Total current assets		65,605			48,960
Property and equipment, net		7,683			7,857
Investments		15,318			7,865
Capitalized production costs, net		5,161			5,457
Media library, net		30,187			5,427
Intangible assets and goodwill		9,886			9,757
Non-current deferred tax assets		3,883			2,657
Other assets		1,417			307
Total assets		$	139,140		$	88,287
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	11,539		$	12,910
Accrued liabilities		7,673			3,160
Accrued royalties		9,305			538
Income taxes payable		397			864
Total current liabilities		28,914			17,472
Long-term liabilities		989			—
Total liabilities		29,903			17,472
Minority interest		4,487			4,469
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $.0001 par value, 150,000,000 shares authorized, 14,833,555 and 9,411,897 shares issued and outstanding at September 30, 2005 and December 31, 2004, respectively		1			1
Class B common stock, $.0001 par value, 50,000,000 shares authorized, 5,400,000 issued and outstanding at September 30, 2005 and December 31, 2004		1			1
Additional paid-in capital		93,890			54,933
Accumulated other comprehensive income		442			850
Retained earnings		10,416			10,561
Total stockholders’ equity		104,750			66,346
Total liabilities and stockholders’ equity		$	139,140		$	88,287

 

See accompanying notes to the condensed consolidated financial statements

 

3

 

 

Gaiam, Inc.

Notes to Interim Condensed Consolidated Financial Statements

(Unaudited)

September 30, 2005

 

2.             Mergers and Acquisitions

 

In the third quarter of 2005, Gaiam acquired a media catalog business and its customer mailing list.  The total consideration given for these assets was 60,000 shares of Class A common stock, valued at $390 thousand.  The customer mailing list was valued at approximately $160 thousand, and the balance of the purchase price was allocated to goodwill.  Management believes that this media catalog, which is already established in the marketplace, will augment our Internet marketing in the direct to consumer distribution of our own media titles and those purchased from GoodTimes Entertainment.  The operating results of this catalog are included in the results of operations from August 1, 2005.  These results were not significant to the overall consolidated Gaiam operations.

 

On August 4, 2005, Gaiam and its Chairman and Chief Executive Officer, Jirka Rysavy, entered into a series of agreements with Revolution Living, LLC; its founder, Steve Case, and Revolution Living’s LIME Media (“LIME”) subsidiary to establish a multi-faceted strategic relationship.  Under the terms of the Transaction Agreement, Gaiam acquired a minority interest in LIME for approximately $7.5 million.

 

In September 2005, Gaiam acquired the majority of the assets held by GoodTimes Entertainment and certain of its affiliates.  GoodTimes Entertainment’s assets included entertainment programming and home video products distributed through various channels, including television, retailers and the Internet.  The total purchase price consisted of the following (in thousands):

 

Cash		$	34,405
Acquisition, legal and accounting costs		621
Total purchase price		$	35,026

 

Of the total purchase price, Gaiam allocated $25,368 to the acquired media titles and content, and $9,658 to the tangible assets purchased, net of assumed liabilities.  This allocation of the total purchase price of the assets acquired from GoodTimes Entertainment was based on their estimated fair values as of the date of acquisition.  Adjustments to these estimates will be included in the allocation of the purchase price, if the adjustment is determined within the purchase price allocation period of up to twelve months.

 

Gaiam commenced distribution of titles and content acquired in this asset purchase on September 13, 2005, and the results of sales in both the direct to consumer and business segments are included in the consolidated financial statements of Gaiam from this date.

 

4

 

PART II.                OTHER INFORMATION

 

Item 6.                    Exhibits

 

a)             Exhibits

 

Exhibit No.		Description
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 (filed herewith).
31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 (filed herewith).
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

 

5

 

 

Signatures

 

 

In accordance with the requirements of the Securities and Exchange Act, the registrant caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.

 

 

	Gaiam, Inc.
	(Registrant)
	March 16, 2006
	By:	/s/ Janet Mathews
		Janet Mathews
		Chief Financial Officer

 

6