Ladies and gentlemen, thank you for standing by. Welcome to the Gaiam 2014 Third 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, this call is being recorded Monday, November 10, 2014. And I would now like to turn the conference over to Norberto Aja, Investor Relations. Please proceed.

Thank you, operator, and good afternoon everyone. Thank you for participating in Gaiam's 2014 third 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. 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 10K and 10-Q. Gaiam assumes no obligation to publicly update or revise any forward-looking statements. Today's call, November 10, 2014 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, Jirka.

Thank you, Norberto, and good afternoon, everyone. So revenue for the third quarter which ended September 30, increased to $41.3 million, a 14.2% from the third quarter of 2013. Gross profit increased to $18 million, a 300 basis point margin improvement. Operating loss improved 26% to $1.9 million including a $2.4 million loss from Gaiam TV unit. During the quarter, we secured placement of another 1600 new branded store-within-stores which is a nice addition to our existing 15,000 store-within-stores. We added 8 foot store-within-store display for Gaiam products to all Kohl's 1100 doors. Kohl’s will also become a launch partner for Gaiam branded yoga apparel in March next year. And Lynn will expand on this in detail to get over all of our retail partner initiatives. Our video subscription unit keeps progressing nicely during the quarter. Gaiam TV revenue grew 107% driven by library of over 6500 videos. And over 90% of all these videos are available exclusively on Gaiam TV for streaming to virtually all devices connected to internet. Recently, we launched a new feature for our subscribers that will provide an unlimited secure download and will allow subscribers to keep the content on their devices to watch offline as long their subscription remain active. We are also in the final stage of our new language support software that will allow streaming language voice over are subtitled worldwide as selected without duplicating our video files. And as we mentioned last night, our Board of Directors have approved the separation of Gaiam TV from Gaiam branded product business as we remain on track to file this transaction following our 2014 audit. And in summer, we are creating great momentum across our business units to take this momentum into 2015 and beyond. We believe that we can look for strong 2015 as revenue grows about 20%. And I would like to turn the call over to Steve to give you some color on financials. Steve?

Thank you, Jirka. I’ll spend a few minutes reviewing the financial results and offering additional perspective on the performance for the third quarter. Let me begin by reminding everyone that the results we reported earlier today and that we will discuss on this call do not include any contributions from Gaiam Vivendi Entertainment or GVE, our former non-Gaiam branded entertainment media business, nor do they include contributions from our direct response television marketing operations as we made a strategic decision to discontinue that business in the fourth quarter of 2013. As a result, we now report both of these businesses as discontinued operations in all figures reflected only are continuing operations. Beginning with the income statement. Net revenue for the third quarter of 2014 was $41.3 million, an increase of approximately $5.2 million or 14.2% compared to net revenue of $36.1 million in the prior year period. Net revenue for our business segment increased by 1% or $0.2 million to $23.6 million, while the direct-to-consumer segment net revenue increased 38% or $4.9 million to $17.7 million, compared to the third quarter of fiscal 2013. As a reminder, our business segment is comprised of our sales to domestic and international retailers including store-within-store presentations. New customer and customer expansion offset weaker than expected sales at our largest retailer after their well-publicized security breach and our decision to focus on the Gaiam brand and transition away from a third-party branded equipment license. Lynn will provide more detail on these impacts in a few moments. Our direct to consumer segment is comprised of our branded e-commerce, catalog, and travel businesses, as well as our Gaiam TV subscription service. This segment continues to demonstrate healthy growth in both our Gaiam TV and travel businesses. Gross profit for the 2014 third quarter improved to $18…

Thanks, Steve. Overall our third quarter results were in line with our expectations. As I discussed on prior calls, we began the year with the four-thronged growth strategy for the Gaiam brand. Expand our stores-within-stores placement, grow overall placement for our SPRI brand, invest in product innovation and refine and improve our ecommerce presence, as well as our corporate initiatives to invest in our subscription business Gaiam TV. On the call today, I am going to offer a brief review of the quarter followed by a deeper dive on a few of the major steps we took during the quarter that further our strategic execution. During the fourth quarter, we had many successes partially muted by continued slow sales at our largest customer. The difficulties at our largest customer began in first quarter after a widely publicized data breach and have continued through the year. Additionally, we made two strategic decisions to change our business model and our business segment. Our first decision was to move away from media aggregation to media distribution and our media category management role. This decision which we began implementing in late 2013 and continued to implement during early 2014 affected our revenue but not our margin and we had a positive impact on our working capital. Second, we determined it was in our long-term best interest to focus on our owned brands, so we dropped a third-party license in favor our SPRI brand. Together, these events had an approximate $2 million impact on revenue in the quarter and an approximate $5 million impact year-to-date. The structural decisions I just mentioned will have a positive impact on the P&L and working capital going forward. As I stated on the last call, we accelerated our repositioning of our direct business and will circulate over $1 million…

[Operator Instructions] And our first question is from the line of George Kelly from Craig Hallum Capital Group. Please proceed. George Kelly – Craig-Hallum Capital Group: Hi, guys. Really nice quarter. But, just a couple of questions. First, Steve, can you, you mentioned that revenues by segment, can you go through that again?

Sure. The net revenue the business segment increased to $23.6 million, in the direct-to-consumer to $17.7 million. George Kelly – Craig-Hallum Capital Group: Okay, okay. And then, Lynn, you talked a lot about the new apparel launch, upcoming next year, wondering could you – so if we look at to sort of late 2015 and even 2016, what does apparel bring to the other categories, the core business you operate now? Does it gets you exposure at retailers that you currently don’t have or you are currently not sold because you have a fuller suite of products nor can you kind of talk about the growth you expect in the core business that apparel will bring?

Sure, well, first of all, it’s yoga apparel, George and we want to make sure that we said that. But what we see it doing is creating true destination for the yoga consumer. Now the retailer can hold together yoga apparel with yoga accessories under the Gaiam brand which as you know, we have terrific brand recognition in yoga and we are the top rated brand in yoga accessories and one of the top three recognized brands for apparel as well. George Kelly – Craig-Hallum Capital Group: Okay, okay. And…

And George, I also believe that will bring on the opportunity now that we are into apparel to bring on department stores which is shown through our launch with Kohl’s, but additional department stores as well. George Kelly – Craig-Hallum Capital Group: Okay and the launch with Kohl’s is that exclusive for an amount of – period of time?

For 2015, it is. George Kelly – Craig-Hallum Capital Group: Okay, okay. And then on the TV side, can you go through some of the metrics you’ve given before like conversion in number of subscribers any of that stuff?

Yes, they pretty much remained the same, it’s about conversions, it’s kind of high 70s, now it really changed kind of holding steady, I said revenue grew 107%. We – as we did – do audit preparing for the split; we kind of changed a little bit of our reporting to basically report same as Netflix does, because we assumed investors in that sector would kind of used to that reporting. So, we changed a little bit how it’s run. How it is recognized of defer revenue and stuff. So, effectively, last year based on the audit we just finished, that’s about $5.4 million for 2013 to current rate is about $11 million as of October and we have – the gross margin has kind of increasing pretty steadily as it grows. The fixed expenses had less impact and we also start to report would pick all contribution margins similar as Netflix does. But, when we talk about in this call and yet to explain what’s there, but it puts us to be comparable to Netflix. George Kelly – Craig-Hallum Capital Group: Okay, okay. Thank you very much.

Thanks, George.

Our next question is from the line of Robert Routh from National Alliance Capital Markets. Please proceed. Robert Routh – National Alliance Capital Markets: Hey, good afternoon. Thanks for taking my questions. Good quarter. First question is, given the – of apparel with Kohl’s and it’s exclusive for a year in 2015 and is that for brick and mortar or does that also include home shopping, because I have seen is though you have a great audience with either QBC or HSN for your apparel line and obviously you have the relationships. I am wondering because any chance you’d be getting through distribution in those areas or you have to wait after 2015 to do that?

I think, right now, we are probably waiting till 2016 for that kind of a launch. But we also have our own line that we sell directly to the consumer on our website which is our high-end sole line and we certainly have that opportunity to go out into the home shopping channel with. Robert Routh – National Alliance Capital Markets: Great, great. Okay, and then, a couple more from me, last week announced results and on the call they hinted that they are going to start their own branded channels, kind of an OTT model globally due to the initial deal they do with Alibaba. And I was wondering if given you guys manage our belief their health and wellness library, is there is any chance for you guys to work together and bring the expanded distribution for Gaiam TV in other areas around the world, given what you have in the proprietary nature of that and what you are looking to do. Is there any possibility that something with that could happen?

We didn’t have any discussion, but it represent from this current 6500 titles total lines titles we do is what like 20?

Yes, about that. But that’s only for physical distribution for our category management role.

So, it’s cited and they are going to have a big impact why we have to do that and others, but we’d proudly open to explore that but it’s not going to have a big impact, because, as far as the subscription business, we are in a position to become pre-mandatory to all the people like Netflix, HBO Go, Amazon, and we have our libraries pretty much international. So, it’s – we cannot sit nicely to be complementary result of all the players. The things what we recently launched was very unique and then all the other big players who do have is because is they are a lot of question on rights, but since we aren’t all of those styles, so we are 90% of those titles. So we could launch them on this – download that means that if you subscribe, you can download to all videos to in a device as you want and take them when you travel or you go to other country and watch them offline which is not of the big players allowed or have the ability to do for at least right now. So, we don’t really think that, it’s pretty niche business, but we try to be unique in technology and also the fact that we already in about 100 countries and that we can – we are just finishing to source that will allow us to stream voice-over or subtitles in different languages as a separate stream over the existing video stream. So we don’t have to duplicate this tremendous number of terabytes what we have in storage, because each title has about 20 different files. So we can serve different package depends on – the kind of media player you have or the broadband to you or it should have available the moment. So we check every five seconds and so, it’s creates a huge amount of storage. So, you really view all these languages free, it’s really key to have this software going.

But there is no question that’s huge opportunity internationally.

Yes, I mean, we definitely look, – international we believe that our international will be far bigger than our US presence. And so, if any players like Alliance or somebody corporate and this might be definitely open we can see to have corporate as everybody. Robert Routh – National Alliance Capital Markets: Right, okay, that’s our place I think international given your content, you do own all the rights, it’s a lot of the others, but people don’t realize the value of that could be much bigger than domestic given how popular you are popular here that it was 10 years ago, but obviously in other countries it’s even more popular than it is here now. So, along those lines, is there any country in particular where you are not out of the 100, where you are currently available, would you be with a huge opportunity that you are looking to get into with Gaiam TV?

I think, we pretty much are in the big countries, as you can think, there is a total – from the countries we are not into, there is really big meaningful player. It’s more – we don’t have a problem with border lines for us it’s just going to be a language. So we don’t really struggle which border line that Netflix would do for their rights, it’s purely the language support. Robert Routh – National Alliance Capital Markets: Right, right.

We spent so far no marketing dollars anywhere outside of US. And so – but, except we are building this – we have a quite investment right now in this international liaison to site, but it’s effectively the marketing dollars or you can look at that, people find aside, they come inside clearly with their language that even in the US there is lot of people who prefer to watch in their native language than in English. Robert Routh – National Alliance Capital Markets: Right. Great, okay and then one final question, I’ll get back in queue. Could you give how well you’ve done, so obviously if you didn’t have that one-time gain last year, you did just as well this year without that in this quarter. But obviously, historically, the companies has had losses. So you have huge tax NOLs. So can you give us a sense as to what the size of that would be and how we could value that the cash values and then if you have any sense as to how much of that NOLs could go into Gaiam TV and into the regular Gaiam when the company is up if you know that yet in terms of – because it seems like a lot of hidden value and you start making money, you are going to be fantastic, I assume.

There is a total – there is a state on Fed, so the Fed is little over 70 and states are only 38%, Steve, right?

Yes, 36.

36 and so, how much will fall as we kind of – it really depends how we end the year, because there are rules what we have used for. So, how much exactly we’ll get split them we will decide after the audit. But the majority of those or at least most of them would be with the brand and brand will also in January in a short-term income. Robert Routh – National Alliance Capital Markets: Okay, great. Any sense to the cash value of that, because obviously, that’s lower but on a per share it’s like a couple bucks of value just about tax, that’s what I would think.

You can stick to the Federal at 34 roughly. Robert Routh – National Alliance Capital Markets: Okay.

Yes, so, I think, it’s like, it’s purely a question of the time value. So, really, this calculation depends for those, it’s $2 probably north, but it’s probably definitely over $1. Robert Routh – National Alliance Capital Markets: Great, great. Thank you very much.

Thanks, Routh.

Our next question is from the line of Mark Argento from Lake Street Capital Markets. Please proceed. Mark Argento – Lake Street Capital Markets: Yes, hi guys. Good afternoon.

Hi, Mark. Mark Argento – Lake Street Capital Markets: Hi, first question, back on the yoga apparel line with Kohl’s, do they plan any kind of launch marketing around rolling out the line or the active line? It sounds like, you quote from their Analyst Day that they are wanting to be kind of thought of and known as a destination for this type of product. Any point on terms of really launch marketing to kind of kick this off?

Absolutely, Mark and we are still working on that with them. But, we have plans to incorporate our media, our apparel and our accessories and the launch as well as they are doing some pretty incredible fixturing really create that destination for the consumer to find everything yoga in one place. And it will be Gaiam branded. Mark Argento – Lake Street Capital Markets: Okay, good. And then how expansive is the line on launch?

Well, it will create enough of a presence in their store from a fixturing and branding that you will definitely know there in the yoga apparel business. Mark Argento – Lake Street Capital Markets: Got it. And then, you had mentioned, I think, 20, is it late 2015 or 2016 Gaiam sole will higher end products, maybe walk us through the time into that and then the distribution or retail channel that that might go through?

Well, right now, it’s just direct-to-consumers who are ecommerce site. We expect to try to take that into the studios would be our primary placement or first primary placement and then some of our top sporting goods account is again at the higher end. And we hope to launch that sometime in late 2015 or early 2016. Mark Argento – Lake Street Capital Markets: Got it and then how long, as you had mentioned that you’d hired an executive, I think you said here name was Nancy Taylor. How long has Nancy been with you guys and she had any direct impact in terms of the product or maybe talk a little bit about her role?

Her role will be VP, it’s a newly created role, VP of Apparel Design and she had no impact yet because she is just going to be starting with us at the beginning of the year. She spent nine years at Athleta. Really been the creation of their design looks, so, we are thrilled that we have brought her on board and now that she can really help take both the Gaiam line and the Gaiam sole line to the next level. Mark Argento – Lake Street Capital Markets: Great, it sounds like you get higher there. And then, shifting over to some of the media, since I know you had acquired the Yoga Studio app in the quarter. Any, ideas in terms of rollout or expanding your leveraging that kind of any in out purchases or marketing opportunities or how do you think about using that asset going forward?

We’ll definitely be doing in app purchases. We think that’s a huge opportunity. We also want to get it on the android devices and make it more international and then to launch, some additional practices, whether that practice might e-meditation or mindfulness, Polaris, let the different opportunities now with that platform is built for us to leverage it into other practices. Mark Argento – Lake Street Capital Markets: Right and then, Steve or Jirka, in terms of margins, given forward gross margins, what’s your expectation as apparel starts to hit the mix in terms of margins, I think you guys have been running in the low 40s going forward, is that a good level?

It’s definitely, there is a margin mix. So you have – the Gaiam TV for example, we have the margin is going to be high 80s where the clothing is going to be…

More 40s.

Mark Argento – Lake Street Capital Markets: And then, in terms of the Gaiam TV spin-off, so will that be a tax free spin to shareholders or how you are thinking about proceeding with that?

I think the current thinking is, to have a tax-free dividend. Mark Argento – Lake Street Capital Markets: Okay. So basically, it’s not for publicly traded company, it’s created in the stock as dividend to existing Gaiam holders, is in other words?

It’s kind of, yes, as you dividend the shares on that unit which is separate companies, so you dividend to a share and registers in time. Mark Argento – Lake Street Capital Markets: Got you. Great, nice quarter. Thank you.

Thanks Mark.

[Operator Instructions] Our next question is from the line of George Kelly, Craig Hallum and Capital Group. Please proceed. George Kelly – Craig-Hallum Capital Group: Hi, guys. Just one quick follow-up, wondering what you are seeing from Target in the fourth quarter so far?

About the same as we’ve been seeing in previous quarters. So, still a little bit – it’s pretty flat to be very honest. George Kelly – Craig-Hallum Capital Group: Okay, all right. That does it. Thanks.

Yes, it’s kind of actually, if you think in our largest customer being flat then we are still saying we are going to have a 20% growth means, the rest of the business to be growing well over that. George Kelly – Craig-Hallum Capital Group: Yes, that’s excellent. Okay, thank you.

Thank you.

There are no further questions from the phone lines.

So we would want to thank you everyone for being with us.

Thanks.

Bye.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you.