UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20142016

or

For the transition period fromto

Commission File Number 000-27517

GAIAM,GAIA, INC.

Exact name of registrant as specified in its charter)

833 WEST SOUTH BOULDER ROAD

LOUISVILLE, CO 80027

(Address of principal executive offices, including zip code)

(303) 222-3600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ¨☐    NO  x☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES  ¨☐    NO  x☒

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 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  x☒    NO  ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x☒    No  ¨☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)    YES  ¨☐    NO  x☒

The aggregate market value of the voting common equity held by non-affiliates of the registrant was approximately $136,603,630$114,280,000 as of June 30, 2014,2016, based upon the closing price on the NASDAQ Global Market on that date. The registrant does not have non-voting common equity.

As of February 27, 2015, 19,089,00821, 2017, 9,752,531 shares of the registrant’s Class A common stock and 5,400,000 shares of the registrant’s Class B common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

NoneThe following documents (or portions thereof) are incorporated by reference into the Parts of this Form 10-K noted:

Part III incorporates by reference from the definitive proxy statement for the registrant’s 2017 Annual Meeting of Shareholders to be filed with the Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Form.

GAIAM,GAIA, INC.

Annual Report on Form 10-K

For the Fiscal Year Ended December 31, 20142016

INDEX

PART I

PART I

Our Business

Since its start in 1996,Gaia, Inc., previously known as Gaiam, has grown to becomeInc., was incorporated under the laws of the State of Colorado on July 7, 1988 and operates a leader in the markets for yoga, fitness and wellness products and content. Gaiam brands include Gaiam, focused on yoga and fitness; Gaiam Restore, focused on wellness; SPRI by Gaiam, focused on fitness; and Gaiam TV, our global digital video subscription service.

We developservice and market yoga and fitness accessories, apparel, and media under Gaiam’s brands. These products are sold primarily through major national retailers in the United States, Canada, Europe, and other countries, with placement in over 38,000 retail doors worldwide. We also sell our products through our digital partners, websites and ecommerce channels. Our products and services are targeted to all levels of yoga and fitness enthusiasts, including professionals. We believeon-line community that consumers are attracted to our products because of their design, functional characteristics, and our unique brand heritage. Our accessories include yoga mats, bags, straps and blocks, media content including digital media and apps, restorative and massage accessories such as rollers, resistance cords and balance balls, and various other offerings. Our comprehensive line of apparel includes pants, shorts, tops and jackets designed around yoga.

Gaiam TV, our digital subscription service, provides our members access to approximately 7,000 video titles, 90% of which are available exclusively to subscribers for digital streaming on virtually any Internet-connected device anytime, anywhere.

On February 20, 2015, our wholly-owned subsidiary Gaia, Inc. (“Gaiam TV”) filed a registration statement on Form 10 in connection with the previously announced proposed separation of the Gaiam TV segment from the Gaiam Brand segment into two separate publicly traded companies. The proposed tax-free spin-off will occur through a distribution to Gaiam, Inc.’s shareholders of all the stock of Gaiam TV. Gaiam TV will hold all of the assets and liabilities of the Gaiam TV segment. The Gaiam Brand segment will remain with Gaiam, Inc. after the distribution. The completion of the separation is subject to satisfaction of several conditions. Furthermore, our board of directors has the right and ability, in its sole discretion, to abandon the proposed separation at any time before the distribution date. As a result, there can be no assurance that the separation will occur.

Our Heritage

Our heritage dates back to 1984 when our founder and Chairman, Jirka Rysavy, emigrated from Czechoslovakia to Boulder, CO and founded natural-food store concept Crystal Market (later Wild Oats), recycled-office products company Corporate Express (which was sold with $4.5 billion in revenues, and is now Staples), and Gaiam.

Gaiam has developed a reputation for quality and innovation that has helped elevate the practice and visibility of yoga, fitness and wellness and positively changed the way consumers interact and look at the world. Our long history and experience gives us a unique authenticity in the market.

Our Values

Gaiam adheres to values that are aligned with our customers’ loyalty to our brands, above and beyond their appreciation for the quality, design and effectiveness of our products. Authenticity and commitment to our core values are at the center of what we strive to achieve.

We also have a strong sense of corporate citizenship and contribution to our communities. We strive to respect our environment, to promote diversity and fulfillment among our employees, to coach talent and support those in need when and where we are able to.

Our Brands

Our brands reflect our commitment to designing innovative, high quality and affordable products that enhance our customers’ enjoyment of their yoga, fitness and wellness practices.

Gaiam is our main brand for yoga, fitness and wellness accessories, apparel, and media. Launched with our company’s founding, Gaiam started with yoga videos and apparel in the late 1990s, and has since expanded to include a full line of apparel, yoga mats, yoga mat bags, yoga blocks and straps, yoga and fitness props, balance balls, bags, and various other accessories. The brand addresses the needs of all levels of yoga practitioners with a high-quality and stylish product assortment. We have successfully leveraged the brand’s authenticity and heritage into wellness and active sitting products, including our balance ball chair, and fitness kits. We actively research and test new product concepts under the Gaiam brand, and have the ability to create new sub-brands like Gaiam Restore when the opportunity is significant.

Gaiam Restore is about empowering tools to get our customers back to their healthiest, most flexible selves. We launched the Restore sub-brand in 2012, when we recognized growing consumer interest in self-care. The Restore line helps enhance athletic performance, improve flexibility, boost range of motion and combat muscle soreness. The product line consists of foam rollers, foot rollers, massage kits, stretch cords and straps, pressure point massagers, hand and grip therapy accessories, trigger point massagers and various other products and accessories. Our substantial Restore product set enables us to provide a complete store-within-store experience to our retail partners, giving their customers a trusted source for both general and condition-specific wellness products.

SPRI by Gaiam is a leading manufacturer and distributor of professional fitness accessories, which we acquired in 2008. Founded over 30 years ago, SPRI first pioneered rubber resistance exercise products and has since expanded into many other categories of fitness equipment. Through its network of fitness professionals and advisors, SPRI has remained on the cutting edge of today’s exercise trends including our recent release of SPRI CrossTrain, a line of accessories for functional cross training. We are expanding our educational content through the recently redesigned SPRI.com, in addition to growing live course programming. These efforts support and educate the market on the effective use of our products, in addition to influencing new trends. Historically, we marketed SPRI products through professional channels, trainers and gyms, and through specialty fitness retail stores. In 2012, we began to market the products through our extensive network of sporting goods and select mass market retailers.

Gaiam TV is a global subscription video streaming service with approximately 7,000 titles focused on yoga, health and longevity, seeking truth, spiritual growth and conscious films & series. Its content caters to a unique and underserved subscriber base andbase. Our digital content library of over 7,700 titles is available to our subscribers across virtually any Internet connected deviceon most Internet-connected devices anytime, anywhere commercial free.  The subscription also allows the downloading and viewing of files from the library without being actively connected to the internet. SubscribersOur subscribers have unlimited access to a vast library of inspiring films, personal growth related content, cutting edge documentaries, interviews, yoga classes, transformation related content, and more – 90% of which is exclusively available exclusively to our subscribers for digital streaming.

Our Products

We have a long history of technical innovation and product development, with over 22 patents and 2 patents pending and hundreds of new product introductions since our start in 1996. Our employees’ passion and intimacy with yoga, fitness and wellness provides a significant advantage that will help drive our Company to new levels.

Examples of our current products include:

Our mission is to create a transformational network that empowers a global conscious community. Content on our network is currently curated into three channels, Yoga, Transformation and Seeking Truth, and delivered directly to our subscribers through our streaming platform. We curate programming for these channels by producing content in our in-house production studios with a staff of media professionals. This produced and owned content currently represents about 80% of total views. We complement our produced and owned content through long term, predominately exclusive, licensing agreements.

Our StrategyContent Channels

We seekFrom the beginning, we have focused on establishing exclusive rights to generate sustainableunique content through in house productions, licensing and profitablestrategic content acquisitions.  Today, our network includes the following channels:

Yoga – Through our Yoga channel, our subscribers enjoy unlimited access to streaming yoga, Eastern arts, and other movement-based classes. Currently, we are one of the world’s largest providers of streaming yoga classes.  Blending ancient philosophy with modern technology, our classes on Eastern arts like T’ai Chi, Qigong, Ayurveda and more encourage the holistic integration of body, mind and spirit.

Transformation – Through our Transformation channel, we feature a wealth of content in the niche areas of alternative health, spiritual growth and expanded consciousness.  Our original and licensed content empowers subscribers to live stronger, healthier, more productive and enlightened lives.

Seeking Truth – As an alternative to mainstream media, our Seeking Truth channel provides new and enlightening perspectives for today’s changing world.  Through thought-provoking questions like who are we and why are we here, and topics that include ancient wisdom and metaphysics, we go beyond the boundaries of mainstream media, and encourage our viewers to find empowerment through knowledge and awareness.  Through this channel, our subscribers have access to top names in the genre who conduct exclusive interviews and presentations not found anywhere else.

The Streaming Video Market and Gaia

The consumption of streaming video is expanding rapidly with more and more people augmenting their use of, or replacing broadcast television with streaming video to watch their favorite content on services like Netflix, Amazon Prime, Hulu Plus, HBO Now and Gaia. The streaming video market includes various free, ad-supported and subscription service offerings focused on various genres, including films, broadcast and original series, fitness and educational content.

Gaia’s position in the streaming video landscape is firmly supported by leveragingits wide variety of exclusive and unique content, which provides a complementary offering to other mostly entertainment-based streaming video services.  Our original content is developed and produced in-house in our leadership positionproduction studios near Boulder, Colorado.  Over 90% of our content is available for streaming exclusively on Gaia to most Internet-connected devices.  By offering exclusive and brand awarenessunique content over a streaming service, we believe we will be able to significantly expand our business intarget subscriber base. Gaia believes the following ways:current size of our potential target market represents approximately 7% of the global population with access to broadband.

Competitive Strengths

Streamline and Focus Our Business –During 2013, we sold our non-Gaiam branded entertainment media distribution operations, discontinued our direct response television marketing operations, and sold virtually all our investment in RGSE in order to restructure our business around our yoga, fitness, and wellness operations as well as Gaiam TV. We believe that maintaining focuswe differentiate ourselves from our competition and discipline will be critical as we seekhave been able to grow our leadership positionbusiness through the following demonstrated competitive strengths:

Exclusive Content and brands within these markets.Ubiquitous Access – We have amassed a library of unique content for which we hold exclusive worldwide streaming distribution rights and have established exclusive relationships with certain key talent in our areas of focus.  Over 90% of our titles are available to our subscribers for streaming on virtually any Internet-connected device exclusively on Gaia.

ExtendGaia Unplugged – We are able to leverage our content licensing and ownership advantage to enable “subscriber download” as part of our subscription.  A Gaia subscription allows subscribers to download and view titles in our library without being actively connected to the Internet as long as they remain a paying subscriber.

Proprietary and Curated Content – Proprietary and curated content lies at the core of our business model.  Our Brand Into New Categories –Gaiam enjoys strong national brand awareness,media offerings introduce customers to us and help establish us as an authority in the conscious media market.  Our in-house produced and owned content represents approximately 80% of our subscribers’ viewing time.  Our licensed content has initial terms ranging from 3 to 20 years.  With the growth in demand for digital rights, we believeexpect that we have successfully demonstratedour large library of produced and acquired content combined with our internal production capabilities will be a key driver in our ability to move into complementarygrow efficiently and adjacent product categories. For example,act as a hedge against the rising costs of digital rights.

International Rights – The strength of our Gaiam Restore product line representedproprietary content library created by our original content production strategy and our unique approach to content licensing have provided us with a step outsidelibrary of yoga, and has grown considerably since its launch in 2012. Similarly, our SPRI CrossTrain product line was a natural evolution of the SPRI brand, and is now carried in major sporting goods retailers in the US.

We are currently launching a line of Gaiam-branded yoga apparelniche content to which we hold exclusive worldwide distribution rights that we expect will give us accessbelieve would be difficult to acquire in today’s market.  By obtaining these rights, we have created a significant barrier to entry for competitors in our content niches and have given ourselves the large and growing athletic apparel market.potential to reach a worldwide subscriber base with no additional licensing costs.  Based on viewership, approximately 90% or our library is available worldwide.

Unique Subscriber Base – We believe that our brand combined withunique and exclusive content allows us to cater to a favorable competitive environment insubscriber base that traditional media companies have mostly ignored.  We believe this segment ofsubscriber base can be significantly expanded as more and more people enter our niche categories and begin accessing streaming content over the market will become a significant part of our growth in the coming years.Internet.

Additionally, we are increasing our presence in the home and office with active sitting products. The Gaiam Balance Ball chair is a widely recognized product and forms the base of our active sitting strategy. With the continued success of our balance ball chair and the recent news coverage on the health issues associated with sitting for extended periods of time, we are designing a line of active sitting products that will further extend our brand.

Attract New DemographicsUnique Content Strength–We believe that the growing interest in yoga, fitness, and wellnessour unique focus, combined with our content exclusivity, positions us as a complementary service to larger streaming video providers who are primarily entertainment driven.  In addition, this focus has createdallowed an opportunity for us to use our core brand assets to attract men and youth to these disciplines. Historically underrepresented in our disciplines and our customer base, both demographics are now a focus for our marketing and product development efforts. We plan to utilize our expertise in product development, merchandising, and content creation to develop unified sets of product and media content that appeal to men and children, and to sell these products through our existing wide retail distribution network and website.

Extend Our International Distribution Footprint –We believe that Gaiam has the ability to be the global brand for yoga, fitness and wellness by actively pursuing international expansion. International sales represented approximately 6% of our revenues in 2014 and we believe there is significant opportunity to address the yoga, fitness, and wellness market abroad and to do so as successfully asadvantages:

Growth Drivers

These efforts are all grounded in our belief that consumers increasingly seek direct brand interactions, through engaging content and digital interactions. We will continue to develop and evolve better ways to connect with our consumers through our consumer channels and our retail partners.

Build Gaiam TV –Our core Gaiam TV strategy is to grow our streaming subscription business domestically and internationally using the following drivers:

Investment in Streaming Content – We believe that our investment in streaming content leads to more awareness and viewership of our unique content.  This leads to subscriber baseacquisition and revenue growth, allowing us to invest more into our content library and enabling the growth cycle to continue.  By investing in our in-house studios, digital asset management system and digital delivery platforms, we can produce and distribute new digital content at low incremental costs.  With our end-to-end production capabilities

and unique, exclusive, relationships with thought leaders in our areas of focus, we believe we can develop content much more efficiently than our competitors.

Continuous Service Improvements – We have found that incremental improvements in our service and quality enhance our subscriber satisfaction and retention.   In October 2016, we relaunched gaia.com with an entirely new technology stack at its core. The new site was built to optimize the speed and performance of streaming video playback, provide a unique and customized site experience for every subscriber and provide the foundation for our planned expansion into foreign languages. We continue to refine our technology, user interfaces, and delivery infrastructure to improve the customer experience.

Overall Adoption and Growth of Internet TV on Every Screen – Domestically, cable TV subscribers have been declining, while the demand for digital content services accessible on various devices has continued to grow. Gaia is accessible on a broad array of devices, including, but not limited to: Apple TV, iPad, iPhone, Roku, Chromecast, Android devices including phones, tablets and Amazon Fire, laptops, desktop computers and TVs through an HDMI cord.  Through this accessibility, we believe that we enhance the value of our service to subscribers as well as position ourselves for continued growth as Internet and mobile delivery of content becomes more popular.

International Market Expansion – We believe the international streaming segment represents a significant long-term growth opportunity for us as people around the world begin to adopt the viewing behaviors of the US market.  Our exclusive worldwide streaming rights allow us to expand internationally by adding foreign language support to our service without having to invest in local foreign operations.  Today, approximately 30% of our subscribers are outside of the United States.

Complement our Existing Business with Selective Strategic Acquisitions – Our growth strategy is not solely dependent on acquisitions.  However, we will consider strategic acquisitions that complement our existing business, increase our content library, expand our geographical reach, and add to our subscriber base.  We will focus on companies with unique media content, a strong brand identity and subscribers that augment our existing subscriber base.

Marketing

We are building awareness and demand for the Gaia brand through various channels focusing on mobile and video.  Organic search, paid search, digital and social media, email marketing, ambassador marketing, as well as various strategic partnerships make up our continually optimized portfolio of subscriber acquisition and retention tools.  Rejoining subscribers are an important source of subscriber additions, many of which come back to Gaia.com after receiving special communications via email.

We maintain a website at www.gaia.com.  The website address has been included only as a textual reference.  Our website and the information contained on the website, or connected to the website, are not incorporated by reference into this Form 10-K.  We have changed our principal marketing url to www.gaia.com from www.gaiamtv.com, and we will maintain www.gaiamtv.com as a redirect url.

History

We started as a conscious media and products company distributing conscious and non-theatrical media, with a maximum reach of approximately 70,000 retail doors in the United States. Over the past few years, we divested our solar energy business, our DVD distribution business, our Gaiam Branded consumer products business, and our eco-travel subsidiary for combined gains of over $150 million.

We also expanded the number of conscious media titles with our acquisition of the entire content library of Wisdom Television.  Wisdom operated for 20 years as a cable and satellite channel.  Wisdom was the only TV channel that remained dedicated, year after year, to conscious media. With our acquisition of their digital media library we expanded our unique library of content directed at independent and progressive thinkers.

In 2012 we brought our streaming video service out of beta-test status, and focus our efforts on growing our streaming subscription services domestically and internationally by expanding our unique and exclusivestreaming content, library, enhancing our user interface and extending our streaming content to even more Internet-connected devices.

In October 2013, we further expanded the digital yoga content available to our subscribers, and expanded our presence and subscriber base in the yoga community through our acquisition of My Yoga Online, the largest streaming yoga media service in Canada.

In October 2016, we relaunched gaia.com with an entirely new technology stack at its core. The new site was built to new Internet-connected devices as they are developed.

Our content is focused on yoga, healthoptimize the speed and longevity, seeking truth, spiritual growth and conscious films & series. This media content is specifically targeted toperformance of streaming video playback, provide a unique customer base which is interested in alternatives toand customized site experience for every subscriber and provide the content provided by mainstream media. We have been able to grow these content options both organically throughfoundation for our own productions and through strategic acquisitions. In addition, through ourplanned expansion into foreign languages.

These investments in our streaming video technology and our user interface, wesubscription business have been ableinstrumental in our ability to expand the many ways our subscription customer base can access our unique library of media titles.

Complement our Existing Business with Selective Strategic Acquisitions – Our growth strategy is not dependent on acquisitions. However, we will consider acquiring complementary branded businesses that strengthen our market positiongrow by expanding our product offerings, geographical reach or channel distribution. We often retain acquired company’s management to drive front-end business functions, such as creative presentation and marketing, while consolidating operational functions under our existing infrastructure where we can realize economies of scale.

Our Operations

Sales Channels, Product Development and Sourcing

We sell our branded products across various sales channels. We use our direct-to-consumer channel to test products before we distribute them through our retail channel. Because we use a multi-channel approach to our business, we are able to leverage product development costs across all channels of our business.

Our proprietary offerings are designed by our development team and sourced both domestically and internationally. We utilize third- party suppliers that produce our products to our specifications. We design our products to promote and support our customers’ healthy lifestyles. We also screen the environmental and social responsibility of our suppliers. In order to minimize risk, we often identify an alternate supplier for our products in a separate location.

Established Infrastructure

We have a distribution center centrally located near Cincinnati, Ohio. This distribution center provides fulfillment for much of our current domestic business needs and has the capacity to support the growth of our business. The center’s central U.S. location allows us to achieve shipping cost efficiencies to most locations. The center is also located within 30 minutes of several major shipping company hubs. We use a supply chain management system that supports our entire operation, including fulfillment, inventory management, and customer service.

Our Reporting Segments

We have two reportable segments: the Gaiam Brand segment, and the Gaiam TV segment. The Gaiam Brand segment includes all of our yoga, fitness, and wellness product and media distributed through our website, apps, retail network, and catalogs, and also includes our eco-travel business. The Gaiam TV segment includes our global digitalstreaming video subscription service. During 2014, the Gaiam Brand and the Gaiam TV segments represented 94.1% and 5.9% of our net revenues, respectively. Our Gaiam Brand segment is dependent upon a few major customers for a significant portion of its revenues. Sales to our largest customer, Target Corporation (“Target”) accounted for 29.3%, 32.1% and 22.9% of our total net revenue during 2014, 2013, and 2012, respectively. The loss of Target as a customer would have a material adverse effect on our business. No other customer accounted for 10% or more of our total net revenue.

See further information about our reporting segments in Note 14 to the Consolidated Financial Statements.

Our Competition

Our business and brands are benefiting from the convergence of function and fashion in the yoga and fitness apparel, and equipment space. We believe consumer purchase decisions are driven by a need for solution-oriented products and a desire to create a particular lifestyle perception through distinctive aesthetics. A number of highly successful brands including Lululemon, Under Armour, and Nike have recognized and capitalized on this convergence. Primary growth drivers in our business include products that provide a high level of performance or comfort, that exhibit consistent, attractive design characteristics, and are affordable.

The markets for our products are highly competitive. In each of our geographic markets, we face significant competition from numerous competitors, some of which are larger than us and have greater financial, marketing and operational resources with which to compete, and others that are smaller with fewer resources, but that may be deeply entrenched in local markets or have established themselves as niche category leaders. Some of our large wholesale customers also market competitive yoga, fitness and wellness apparel, accessories and equipment under their own private labels. In addition, our direct-to-consumer channels expose us to branded competitors who operate retail stores, as well as competitors who sell product online.

In addition to competing for end-consumer and wholesale market share, we also compete for manufacturing capacity of independent factory groups, primarily in Asia; and for experienced management, staff and suppliers to lead, operate and support our global business processes. Each of these areas of competition requires distinct operational and relationaldemand capabilities and expertise in orderincreasing our library of unique content of transformational media, intended to createawaken and maintain long-term competitive advantages.

Competitive Advantage

We believe our primary competitive advantages are:

We believe our brand is recognized as a leader in our industry. With a long history ininspire viewers around the yoga, fitness and wellness market, our reputation and longevity make us the first choice for many consumers. Our expertise enables us to produce and market unique and innovative products under our core brands using new materials and designs that take advantage of the newest health trends. Our employees leverage their own expertise and that of an external network of experts and advisors to continually research the trends in all of our markets, allowing us to continuously address the evolving needs of our consumers.

Discontinued Operations

In the fourth quarter of 2013, we sold our non-Gaiam-branded entertainment media distribution operations (“GVE”) and discontinued our direct response television marketing operations (“DRTV”). We now report these businesses as discontinued operations, and, accordingly, we have reclassified their financial results for all periods presented to reflect them as such. Unless otherwise noted, discussions in this Form 10-K pertain to our continuing operations.

Our Employees

As of February 27, 2015, we employed approximately 257 full-time and 4 part-time individuals. None of our employees are covered by a collective bargaining agreement.world.

Regulatory Matters

A number of existing and proposed laws restrict disclosure of consumers’ personal information, which may make it more difficult for us to generate additional names for our direct marketing, and restrict our ability to send unsolicited electronic mail or printed materials.mail.  Although we believe we are generally in compliance with current laws and regulations and that these laws and regulations have not had a significant impact on our business to date, it is possible that existing or future regulatory requirements will impose a significant burden on us.

Competition

While our content offering is unique, the market for subscription based content delivered over the Internet is intensely competitive and subject to rapid change.  Many consumers maintain simultaneous relationships with multiple providers and can easily shift spending from one provider to another.  We are a focused provider within the streaming video market that is able to compete by providing exclusive content available on almost any device.  Our principal competitors vary by world geographic region and include multichannel video programming distributors and Internet-based movie and TV content providers, including those that provide legal and illegal (pirated) streaming video content.  We believe that due to the exclusivity of our content, we are positioning ourselves as a complementary service to large general content providers such as television broadcasters, cable television channels, and streaming services such as Netflix, Amazon Prime, Hulu Plus and HBO Now.  Based on internal surveys of our subscribers, a majority of our U.S. subscribers also subscribe to Netflix.

Seasonality

Our member growth exhibits a seasonal pattern that reflects variations when consumers buy Internet-connected devices and, as a result, tend to increase their viewing, similar to those of traditional TV and cable networks.  Our member growth is generally collect sales taxes only on salesgreatest in the fourth and first quarter (October through March), and slowest in the May through August period.  As we expand internationally, we expect regional seasonality trends to residents of statesdemonstrate more predictable seasonal patterns as our service offering in whicheach market becomes more established and we have nexus. Currently,a longer history to assess such patterns.

Employees

As of February 24, 2017, we collect sales taxeshad approximately 114 employees, all of which are full-time employees.  None of our employees are covered by a collective bargaining agreement.

Intellectual Property and Other Proprietary Rights

We regard our trademarks, service marks, copyrights, domain names, trade secrets, proprietary technologies and similar intellectual property as important to our success.  We use a combination of trademark, copyright and trade

secret laws and confidentiality agreements to protect our proprietary intellectual property.  Our ability to protect and enforce our intellectual property rights is subject to certain risks, and from time to time we encounter disputes over rights and obligations concerning intellectual property.  We cannot provide assurance that we will prevail in any intellectual property disputes.  We have changed our principal marketing url to www.gaia.com from www.gaiamtv.com, and we intend to maintain www.gaiamtv.com as a redirect url.

Discontinued Operations

During the second quarter of 2016, we sold our 51.4% equity interest in Natural Habitat, Inc. (“Natural Habitat”), our eco-travel subsidiary, in exchange for $12.85 million in cash, and recognized a gain of $10.3 million as disclosed in our Current Report on certain sales to residentsForm 8-K filed May 10, 2016.

During the third quarter of California, Colorado, Illinois, New York, New Jersey, Ohio,2016, we sold the assets and Texas. A numberliabilities of legislative proposals have been made atour Gaiam Brand business in exchange for a gross purchase price of $167.0 million, and recognized a gain of $114.5 million before taxes. Our Gaiam Brand business previously constituted the federal, statemajority of our consolidated revenues and local level,expenses, and by foreign governments, that would impose additional taxes onconsisted of Gaiam branded yoga, fitness and wellness consumer products, and content (excluding the streaming rights).

In the fourth quarter of 2013, we sold our non-Gaia-branded entertainment media distribution operations (“GVE”) and discontinued our direct response television marketing operations (“DRTV”). Discontinued operating results for 2014 and 2015 also include legal expenses associated with the sale of goodsour DVD distribution business to Cinedigm.

We report these businesses as discontinued operations, and, services overaccordingly, we have reclassified their financial results for all periods presented to reflect them as such. Unless otherwise noted, discussions in this Form 10-K pertain to our continuing operations.

Business Segments

Through June 30, 2016, we managed our company and aggregated our operational and financial information in two reportable segments, which were aligned based on their products or services.

Following the Internet, and certain states have taken measures to tax Internet-related activities. If legislation is enacted that requires us to collect sales taxes on sales to residents of other states or jurisdictions, our direct to consumer sales channels may be adversely affected. Our business is also subject to a number of other governmental regulations, including the Mail or Telephone Order Merchandise Rule and related regulationssale of the Federal Trade Commission. These regulations prohibit unfair methods of competitionGaiam Brand segment on July 1, 2016, our chief operating decision maker reviews operating results on a consolidated basis and unfair or deceptive acts or practices in connection with mail and telephone order sales and require sellers of mail and telephone order merchandise to conform to certain rules of conduct with respect to shipping dates and shipping delays. We are also subject to regulations of the U.S. Postal Service and various state and local consumer protection agencies relating to matters such as advertising, order solicitation, shipment deadlines and customer refunds and returns. In addition, merchandise that we import is subject to import and customs duties and, in some cases, import quotas.

Seasonality

See the “Quarterly and Seasonal Fluctuations” section of Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for information pertaining to the seasonal aspects of our business.therefore have one reportable segment.

Website and Available Information

Our corporate website at gaiam.comwww.gaia.com provides information about us, our history, goals and philosophy, as well as certain financial reports and corporate press releases. Our gaiam.comwww.gaia.com website also features a library of information and articles on personal development and healthy lifestyles, along with an extensive offering of products, services and media.video content. We believe our website provides us with an opportunity to deepen our relationships with our customers and investors, educate them on a variety of issues, and improve our service. As part of this commitment, we have a link on our corporate website to our Securities and Exchange Commission filings, including our reports on Form 10-K, 10-Q and 8-K and amendments thereto. We make those reports available through our website, free of charge, as soon as reasonably practicable after these reports are filed with the Securities and Exchange Commission.

Additional information about our products and services can be found at SPRI.com and GaiamTV.com. We have included our websites addresseswebsite address only as inactive textual reference, and the information contained on our website is not incorporated by reference into this Form 10-K.

We wish to caution you that there are risks and uncertainties that could cause our actual results to be materially different from those indicated by forward looking statements that we make from time to time in filings with the Securities and Exchange Commission, news releases, reports, proxy statements, registration statementscommunications to shareholders and other written communications as well asand oral forward looking statements made from time to time by our representatives.communications. These risks and uncertainties include those risks described below of which we are presently aware. Historical results are not necessarily an indication of the future results. The risk factors below discuss important factors that could cause our business, financial condition, operating results and cash flows to be materially adversely affected.

If our efforts to attract and retain subscribers are not successful, our business will be adversely affected.

We have experienced significant subscriber growth since we began or subscription business in 2007.  Our ability to continue to attract subscribers will depend in part on our ability to consistently provide our subscribers with a valuable and quality streaming experience.  Furthermore, the relative service levels, content offerings, pricing and related features of our competitors may adversely impact our ability to attract and retain subscribers.  We are competing for screen viewing time with many competing offerings, including multichannel video programming distributors providing free-on-demand content through authenticated Internet applications, Internet-based movie and TV content providers, including both those that provide legal and illegal (or pirated) streaming video content, and streaming video retail stores.  If consumers do not perceive our service offering to be of value, or if we introduce new or adjust existing features or change the mix of content in a manner that is not favorably received by them, we may not be able to attract and retain subscribers.  

In addition, many of our subscribers originate from word-of-mouth advertising from existing subscribers.  If our efforts to satisfy our existing subscribers are not successful, we may not be able to attract new subscribers, and as a result, our ability to maintain and/or grow our business will be adversely affected.  Subscribers cancel our service for many reasons, including a perception that they do not use the service sufficiently, the need to cut household expenses, unsatisfactory availability of content, competitive services providing a better value or experience and customer service issues are not satisfactorily resolved.  We must continually add new subscribers both to replace subscribers who cancel and to grow our business beyond our current subscriber base.  If too many of our subscribers cancel our service, or if we are unable to attract new subscribers in numbers sufficient to sustain and grow our business, our operating results will be adversely affected.  If we are unable to successfully compete with current and new competitors in both retaining our existing subscribers and attracting new subscribers, our business will be adversely affected.  Further, if excessive numbers of subscribers cancel our service, we may be required to incur significantly higher marketing expenditures than we currently anticipate in order to replace these subscribers with new subscribers.

If we are unable to compete effectively, our business will be adversely affected.

The market for streaming content is intensely competitive and subject to rapid change.  New technologies and evolving business models for delivery of streaming content continue to develop at a fast pace.  Through new and existing distribution channels, consumers are afforded various means for consuming streaming content.  The various economic models underlying these differing means of streaming content delivery include subscription, transactional, ad-supported and piracy-based models.  All of these have the potential to capture meaningful segments of the streaming content market.  Several competitors have longer operating histories, larger customer bases, and stronger brand recognition than we do and have significant financial, marketing and other resources.  They may secure better terms from suppliers, adopt more aggressive pricing and devote more resources to technology, and marketing.  New entrants may enter the market with unique service offerings or approaches to providing streaming content and other companies also may enter into business combinations or alliances that strengthen their competitive positions.  If we are unable to successfully or profitably compete with current and new competitors, programs and technologies, our business will be adversely affected, and we may not be able to increase market share and revenues, and achieve profitability.

We could be harmed by data loss or other security breaches.

As a result of our services being Internet-based and the fact that we process, store, and transmit data, including personal information, for our customers, failure to prevent or mitigate data loss or other security breaches, including breaches of our supplier’s technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us, and otherwise harm our business. We use third party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. While we have not experienced past security breaches, there can be no assurance of a similar result in the future. Although we have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third party supplier, such measures cannot provide absolute security.

We have had operating losses, and we cannot assure future profitability.

We reported operating losses of $10.8 million, $9.0 million and $9.8 million for fiscal years 2016, 2015 and 2014, respectively (excluding the results from operations we sold including a pre-tax gain of $124.8 million in 2016).  We cannot assure you that we will operate profitably in future periods and, if we do not, we may not be able to meet any future debt service requirements, working capital requirements, capital expenditure plans, production slate, acquisition plans or other cash needs.  Our inability to meet those needs could have a material adverse effect on our business, financial condition, operating results, liquidity and prospects.

If we are not able to manage change and growth, our business could be adversely affected.

We are expanding our operations internationally, scaling our streaming service to effectively and reliably handle anticipated growth in both subscribers and features related to our service, as well as continuing to provide our Spiritual Cinema Circle monthly DVD subscription offerings for an additional fee.  As we expand internationally, we are managing our business to address varied content offerings, consumer customs and practices, in particular those dealing with e-commerce and Internet video, as well as differing legal and regulatory environments.  As we scale our streaming service, we are developing technology and utilizing third-party Internet-based or “cloud” computing services.  If we are not able to manage the growing complexity of our business, including improving, refining or revising our systems and operational practices related to our streaming operations, our business may be adversely affected.

If our efforts to build unique brand identity and improve subscriber satisfaction and loyalty are not successful, we may not be able to attract or retain subscribers, and our operating results may be adversely affected.

We must continue to build and maintain a unique brand identity.  We believe that a unique brand identity will be important in attracting and retaining subscribers who have a number of choices from which to obtain streaming content.  To build a unique brand identity we believe we must continue to offer content and service features that our subscribers value and enjoy.  We also believe that these must be coupled with effective consumer communications, such as marketing, customer service and public relations.  If our efforts to promote and maintain our brand identity are not successful, our ability to attract and retain subscribers may be adversely affected.  Such a result may adversely affect our operating results.

With respect to our expansion into international markets, we will also need to establish our brand identity in new markets and languages, and to the extent we are not successful, our business in new markets may be adversely impacted.

Changes in our subscriber acquisition sources could adversely affect our marketing expenses and subscriber levels may be adversely affected.

We utilize a broad mix of marketing and public relations programs, including social media websites such as Facebook and Twitter, to promote our service to potential new subscribers.  We may limit or discontinue use or support of certain marketing sources or activities if advertising rates increase or if we become concerned that

subscribers or potential subscribers deem certain marketing practices intrusive or damaging to our brand.  If available marketing channels are limited or curtailed, our ability to attract new subscribers may be adversely affected.

Companies that currently promote our services may cease promoting our services, may determine to compete more directly with our business or enter a similar business, or may decide to exclusively support our competitors.  If we no longer have access to such marketing channels, our marketing efforts may be adversely affected.  If we are unable to maintain or replace our sources of subscribers with similarly effective sources, or if the cost of our existing sources increases, our subscriber levels and marketing expenses may be adversely affected.

We face risks, such as unforeseen costs, and potential liabilities in connection with content we produce, license and/or distribute through our service.

As a distributor of content, we face potential liability for negligence, copyright or trademark infringement or other claims based on the nature and content of materials that we produce, license and/or distribute.  We also may face potential liability for content used in promoting our service, including marketing materials and features on our website such as subscriber reviews.  

We are responsible for production costs and other expenses related to our original content.  We also take on risks associated with this production, such as completion and key talent risk.  To the extent we do not accurately anticipate costs or mitigate risks, or if we become liable for content we produce, license and/or distribute, our business may suffer.  Litigation to defend these claims could be costly and the expenses and damages arising from any liability or unforeseen production risks could harm our results of operations.  We may not be indemnified to cover claims or costs of these types and we may not have insurance coverage for these types of claims.

We rely upon a number of partners to offer instant streaming of content to various devices.

We currently offer subscribers the ability to receive streaming content through a host of Internet-connected devices, including Internet-enabled TVs, digital video players and mobile devices.  We intend to continue to broaden our capability to instantly stream content to other platforms over time.  If we are not successful in maintaining existing and creating new relationships, or if we encounter technological, content licensing or other impediments to our streaming content, our ability to grow our business could be adversely impacted.  

We have entered into agreements with certain consumer electronics partners, pursuant to which each makes available an “app” for viewing our content on its hardware platform.  Our agreements with our consumer electronics partners are typically between one and three years in duration and our business could be adversely affected if, upon expiration, our partners do not continue to provide access to our service or are unwilling to do so on terms acceptable to us, which terms may include the degree of accessibility and prominence of our service.  

Furthermore, the devices consumers use to access our content are manufactured and sold by entities other than Gaia and the devices’ performance and the connection between these devices and our service may result in consumer dissatisfaction that could result in claims against us or otherwise adversely impact our business.  In addition, technology changes to our streaming functionality may require that partners update their devices.  If partners do not update or otherwise modify their devices, our service and our subscribers’ use and enjoyment could be negatively impacted.

Any significant disruption in our computer systems or those of third parties that we utilize in our operations could result in a loss or degradation of service and could adversely impact our business.

Our reputation and ability to attract, retain and serve our subscribers is dependent upon the reliable performance of our computer systems and those of third parties that we utilize in our operations.  We experience occasional system interruptions and delays that make our websites and services unavailable or slow to respond and prevent us from efficiently providing services to our customers, which may reduce the attractiveness of our services. If we are unable to effectively upgrade our systems and network infrastructure, and take other steps to improve the efficiency of our systems, it could cause system interruptions or delays and adversely affect our operating results.

Our systems may be subject to damage or interruption from adverse weather conditions, natural disasters, terrorist attacks, power loss, telecommunications failures, computer viruses, computer denial of service attacks, or other attempts to harm these systems.  Interruptions in these systems, or to the Internet in general, could make our service unavailable or degraded or otherwise hinder our ability to deliver content to our subscribers.  Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our subscribership service to existing and potential subscribers.

The servers of third parties we use in our operations are vulnerable to computer viruses, physical or electronic break-ins and similar disruptions and periodically experience directed attacks intended to lead to interruptions and delays in our service and operations as well as loss, misuse or theft of data.  Any attempt by hackers to disrupt our service or otherwise access our systems, if successful, could harm our business, be expensive to remedy and damage our reputation.  We have implemented certain systems and processes to thwart hackers and to date, hackers have not had a material impact on our service or systems.  However, this is no assurance that hackers may not be successful in the future.  Our insurance does not cover expenses related to such disruptions or unauthorized access.  Efforts to prevent hackers from disrupting our service or otherwise accessing our systems are expensive to implement and may limit the functionality of or otherwise negatively impact our service offering and systems.  Any significant disruption to our service or access to our systems could result in a loss of subscribers and adversely affect our business and results of operation.

We utilize third-party Internet-based or “cloud” computing services in our business operations.  We also utilize third-party content delivery networks to help us stream content in high volume to our subscribers over the Internet.  Problems with these systems faced by us or our service providers, including technological or business-related disruptions, could adversely impact the experience of our subscribers.

We rely on our proprietary technology to stream content and to manage other aspects of our operations, and the failure of this technology to operate effectively could adversely affect our business.

We continually enhance or modify the technology used for our operations.  We cannot be sure that any enhancements or other modifications we make to our operations will achieve the intended results or otherwise be of value to our subscribers.  Future enhancements and modifications to our technology could consume considerable resources.  If we are unable to maintain and enhance our technology to manage the streaming of content to our subscribers in a timely and efficient manner, or if our technology or that of third parties we utilize in our operations fails or otherwise operates improperly, our ability to retain existing subscribers and to add new subscribers may be impaired.  Also, any harm to our subscribers’ personal computers or other devices caused by software used in our operations could have an adverse effect on our business, results of operations and financial condition.

Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business.

We rely upon the ability of consumers to access our service through the Internet.  To the extent that network operators implement usage-based pricing, including meaningful bandwidth caps, or otherwise try to monetize access to their networks by data providers, we could incur greater operating expenses and our subscriber acquisition and retention could be negatively impacted.  Furthermore, to the extent network operators were to create tiers of Internet access service and either charge us for, or prohibit us from, being available through these tiers, our business could be negatively impacted.

Increases in payment processing fees, changes to operating rules, the acceptance of new types of payment methods or payment fraud could increase our operating expenses and adversely affect our business and results of operations.

Our subscribers pay for our services predominately using credit and debit cards.  Our acceptance of these payment methods requires our payment of certain fees.  From time to time, these fees may increase, either as a result of rate changes by the payment processing companies or as a result of a change in our business practices which increase the fees on a cost-per-transaction basis.  Such increases may adversely affect our results of operations.

We are subject to rules, regulations and practices governing our accepted payment methods.  These rules, regulations and practices could change or be reinterpreted to make it difficult or impossible for us to comply.  If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept these payment methods, and our business and results of operations would be adversely affected.

We accept payment methods other than credit and debit cards.  As our service continues to evolve and expand internationally, we will likely continue to explore accepting various forms of payment, which may have higher fees and costs than our currently accepted payment methods.  If more consumers utilize higher cost payment methods, our payment costs could increase and our results of operations could be adversely impacted.

In addition, we do not obtain signatures from subscribers in connection with their use of payment methods.  To the extent we do not obtain subscribers’ signatures, we may be liable for fraudulent payment transactions, even when the associated financial institution approves payment of the orders.  From time to time, fraudulent payment methods are used to obtain service.  While we do have safeguards in place, we nonetheless experience some fraudulent transactions.  We do not currently carry insurance against the risk of fraudulent payment transactions.  A failure to adequately control fraudulent payment transactions would harm our business and results of operations.

If our trademarks and other proprietary rights are not adequately protected to prevent unauthorized use or appropriation, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected.

We rely and expect to continue to rely on a combination of confidentiality and license agreements with our employees, consultants and third parties with whom we have relationships, as well as trademark, copyright and trade secret protection laws, to protect our proprietary rights.  We may also seek to enforce our proprietary rights through court proceedings.  We may file trademark applications from time to time.  These applications may not be approved, third parties may challenge any trademarks issued to or held by us, third parties may knowingly or unknowingly infringe our trademarks and other proprietary rights, and we may not be able to prevent infringement or misappropriation without substantial expense to us.

We currently hold various domain names, including www.gaia.com and www.gaiamtv.com.  Failure to protect our domain names could adversely affect our reputation and make it more difficult for users to find our website and our service.  We may be unable, without significant cost or at all, to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights.

Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our website, title selection processes and marketing activities.

Our intellectual property rights extend to our technology, business processes and the content on our website.  We use the intellectual property of third parties in marketing and providing our services through contractual and other rights.  From time to time, third parties may allege that we have violated their intellectual property rights.  If we are unable to obtain sufficient rights, successfully defend our use, or develop non-infringing technology and content or otherwise alter our business practices on a timely basis in response to claims of infringement, misappropriation, misuse or other violation of third-party intellectual property rights, our business and competitive position may be adversely affected.  

Many companies devote significant resources to developing patents that could potentially affect many aspects of our business.  There are numerous patents that broadly claim means and methods of conducting business on the Internet.  We have not searched patents relative to our technology.  Defending ourselves against intellectual property claims, whether they are with or without merit or are determined in our favor, will result in costly litigation and diversion of technical and management personnel.  Infringement claims also may result in our inability to use our current website, streaming technology, our recommendation and personalization technology or inability to market our service.  As a result of disputes, we may have to develop non-infringing technology, enter into royalty or licensing agreements, adjust our merchandising or marketing activities or take other actions to resolve the claims.  These actions, if required, may be costly or unavailable on terms acceptable to us.

Piracy of video, including digital and Internet piracy may reduce the gross receipts from the exploitation of our content.

Video piracy is extensive in many parts of the world and is made easier by technological advances and the conversion of video into digital formats.  This trend facilitates the creation, transmission and sharing of high quality unauthorized copies of content on DVDs, Blu-ray discs, and the Internet.  We may have to implement elaborate and costly security and anti-piracy measures, which could result in significant expenses and losses of revenue.  We cannot assure you that security and anti-piracy measures will prevent the piracy of our content.  The proliferation of unauthorized copies of these products could have an adverse effect on our business, because these products could reduce the revenues we receive from our subscription service.

Our online activities are subject to a variety of laws and regulations relating to privacy which, if violated, could subject us to an increased risk of litigation and regulatory actions.

In addition to our websites and applications, we use third-party applications, websites, and social media platforms to promote our service and engage consumers, as well as monitor and collect certain information about users of our service.  There are a variety of laws and regulations governing individual privacy and the protection and use of information collected from such individuals, particularly in relation to an individual’s personally identifiable information (e.g., credit card numbers).  Many foreign countries have adopted similar laws governing individual privacy, some of which are more restrictive than similar U.S. laws.  If our online activities were to violate any applicable current or future laws and regulations, we could be subject to litigation and regulatory actions, including fines and other penalties.

We may be subject to litigation which, if adversely determined, could cause us to incur substantial losses.

From time to time during the normal course of operating our businesses, we are subject to various litigation claims and legal disputes.  Some of the litigation claims may not be covered under our insurance policies, or our insurance carriers may seek to deny coverage.  As a result, we might also be required to incur significant legal fees, which may have a material adverse effect on our financial position.  In addition, because we cannot accurately predict the outcome of any action,dispute, it is possible that, as a result of current and/or future litigation, we will be subject to adverse judgments or settlements that could significantly reduce our earnings or result in losses.

We are preparing to enter into arbitration with Cinedigm Corp. (“Cinedigm”) in connection withmay face legal liability for the sale of a subsidiary to Cinedigm. The outcome of the arbitration process cannot be predicted at this time. The ultimate resolution of the dispute could have a material impact to the Company, see Note 8 to the Consolidated Financial Statements.

Changes in general economic conditions could have a material impactcontent contained on our businesswebsite.

Changes in overall economic conditionsWe could face legal liability for defamation, negligence, copyright, patent or trademark infringement, personal injury or other claims based on the nature and content of materials that impact consumer spending could impact our results of operations. Future economic conditions affecting disposable income such as employment levels, consumer confidence, credit availability, business conditions, stock market volatility, inflation, acts of terrorism, threats of war, and interest and tax rates could reduce consumer spendingwe publish or cause consumers to shift their spending away from our products. If the economic conditions and performance of the retail and media environment worsen, we may experience material adverse impactsdistribute on our business, operating results and financial condition.

Increased competition could impact our financial results

We believe thatwebsite.  If we are held liable for damages for the healthy lifestyles market includes thousands of small, local and regional businesses. Some smaller businesses may be able to more effectively personalize their relationships with customers, thereby gaining a competitive advantage. Although we believe that we do not compete directly with any single company that offers our entire range of merchandise and services, within each category we have competitors and we may face competition from new entrants. Some of our competitors or our potential competitors may have greater financial and marketing resources and greater brand recognition. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with our competitors. Increased competition from these or other competitors could negatively impact our business.

Changing consumer preferences may have an adverse effectcontent on our website, our business

We target consumers who assign high value to personal development, healthy lifestyles, responsible media, and the environment. A decrease may suffer.  Allegations of consumer interest in purchasing goods and services that promote the values we espouse would materially and adversely affect our customer base and sales revenues and, accordingly, our financial prospects. Further, consumer preferences and product trends are difficult to predict. Our future success depends in part on our ability to anticipate and respond to changes in consumer preferences and we may not respond in a timely or commercially appropriate manner to such changes. Failure to anticipate and respond to changing consumer preferences and product trendsimpropriety, even if unfounded, could lead to, among other things, lower sales of our products, increased merchandise returns and lower margins, which couldtherefore have a material adverse effect on our reputation and our business.

Our strategyIf government regulations relating to the Internet or other areas of offering branded productsour business change, we may need to alter the manner in which we conduct our business, or incur greater operating expenses.

The adoption or modification of laws or regulations relating to the Internet or other areas of our business could limit or otherwise adversely affect the manner in which we currently conduct our business.  In addition, the continued growth and development of the market for online commerce may lead to inventory risk and higher costs

An important partmore stringent consumer protection laws, which may impose additional burdens on us. If we are required to comply with new regulations or legislation or new interpretations of our strategy is to feature branded products. These products are sold under our brand names and are manufactured to our specifications. We expect our reliance on branded merchandise to increase. The use of branded merchandise requiresexisting regulations or legislation, this compliance could cause us to incur additional expenses or alter our business model.

The adoption of any laws or regulations that adversely affect the growth, popularity or use of the Internet, including laws impacting Internet neutrality, could decrease the demand for our service and increase our cost of doing business.  If Internet neutrality rules are rejected, broadband Internet access providers may be able to charge web-based services such as ours for priority access to customers, which could result in increased costs and risks relating to the design and purchasea loss of products, including submitting orders earlier and making longer initial purchase commitments.

In addition, the useexisting users, impairment of branded merchandise limits our ability to return unsold productsattract new users, and material adverse effects on our business and opportunities for growth. Additionally, as we expand internationally, government regulation concerning the Internet, and in particular, network neutrality, may be nascent or non-existent.  Within such a regulatory environment,

coupled with potentially significant political and economic power of local network operators, we could experience discriminatory or anti-competitive practices that could impede our growth, cause us to vendors,incur additional expense or otherwise negatively affect our business.

We could be subject to economic, political, regulatory and other risks arising from international operations.

Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic and political risks that may be different from and incremental to those in the United States.  In addition to the risks that we face in the United States, our international operations may involve risks that could adversely affect our business, including the following: the need to adapt our content and user interfaces for specific cultural and language differences, including licensing a certain portion of our content library before we have developed a full appreciation for its performance within a given territory; difficulties and costs associated with staffing and managing foreign operations; management distraction; political or social unrest and economic instability; compliance with U.S. laws, such as the Foreign Corrupt Practices Act, export controls and economic sanctions, and local laws prohibiting corrupt payments to government officials; unexpected changes in regulatory requirements; less favorable foreign intellectual property laws; adverse tax consequences such as those related to repatriation of cash from foreign jurisdictions into the United States, non-income related taxes such as value-added tax or other indirect taxes, changes in tax laws or their interpretations, or the application of judgment in determining our global provision for income taxes and other tax liabilities given inter-company transactions and calculations where the ultimate tax determination is uncertain; fluctuations in currency exchange rates, which can resultcould impact revenues and expenses of our international operations and expose us to foreign currency exchange rate risk; profit repatriation and other restrictions on the transfer of funds; differing payment processing systems as well as consumer use and acceptance of electronic payment methods, such as credit and debit cards; new and different sources of competition; different and more stringent user protection, data protection, privacy and other laws; and availability of reliable broadband connectivity and wide area networks in higher markdowns in order to sell excess inventory. Our commitment to customer service typically results in our keeping a high level of merchandise in stock so we can fill orders quickly. Consequently, we run the risk of having excess inventory, which may also contribute to higher markdowns. targeted areas for expansion.

Our failure to manage any of these risks successfully execute a branded merchandise strategy or to achieve anticipated profit margins on these goods, or a higher than anticipated levelcould harm our international operations and our overall business, and results of overstocks, may materially adversely affect our revenues.operations.

We offermay lose key employees or may be unable to hire qualified employees.

We rely on the continued service and performance of our customers liberal merchandise return policies. senior management, including in particular Jirka Rysavy, our Chairman and the founder of Gaia, Inc.  In our industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel.  Hiring qualified management is difficult due to the limited number of qualified professionals in the industry in which we operate.  Failure to recruit, attract and retain personnel, particularly management personnel, could materially harm our business, financial condition, and results of operations.

We may face quarterly and seasonal fluctuations that could harm our business.

Our consolidated financial statements includerevenues and results of operations have fluctuated in the past, and will likely continue to fluctuate, on a reserve for anticipated merchandise returns, whichquarterly basis.  Such fluctuation is based on historical return rates. It is possiblethe result of a seasonal pattern that actual returns may increasereflects variations when consumers buy Internet-connected devices and, as a result, tend to increase their viewing, similar to those of factors such asgeneral video streaming services.  Our member growth is generally greatest in the introduction of new merchandise, changesfourth and first quarters (October through March), and slowest in merchandise mix or other factors. Any increase in our merchandise returns will correspondingly reduce our revenues and profits.the May through August period.

Acquisitions and new initiatives may harm our financial resultsresults.

We have historically expanded our operations in part through strategic acquisitions and through new initiatives that we generate. We cannot accurately predict the timing, size and success of these efforts. Our acquisition and new initiative strategies involve significant risks that could inhibit our growth and negatively impact our operating results, including the following: our ability to identify suitable acquisition candidates or new initiatives at acceptable prices; our ability to complete the acquisitions of candidates that we identify or develop our new initiatives; our ability to compete effectively for available acquisition opportunities; increases in asking prices by acquisition candidates to levels beyond our financial capability or to levels that would not result in the returns required by our

acquisition criteria; diversion of management’s attention to expansion efforts; unanticipated costs and contingent liabilities associated with acquisitions and new initiatives; failure of acquired businesses or new initiatives to achieve expected results; our failure to retain key customers or personnel of acquired businesses and difficulties entering markets in which we have no or limited experience. In addition, the size, timing and success of any future acquisitions and new initiatives may cause substantial fluctuations in our operating results from quarter to quarter. Consequently, our operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year. These fluctuations could adversely affect the market price of our Class A common stock.results.

The loss of the services of our key personnel could disrupt our business

We depend on the continued services and performance of our senior management and other key personnel, particularly Jirka Rysavy and Lynn Powers, who intends to retire once a replacement is identified and transitioned into Gaiam. A loss of one or more of the members of our senior management or key personnel, without suitable replacements, could severely and negatively impact our operations. Our strategy of allowing the management teams of some acquired companies to continue to exercise significant management responsibility for those companies makes it important that we retain key employees, particularly the sales and creative teams, of the companies we might acquire. Hiring qualified management is difficult due to the limited number of qualified professionals in the industry in which we operate. Failure to attract and retain personnel, particularly management personnel, could materially harm our business, financial condition, and results of operations.

Our founder and chairman, Jirka Rysavy, has voting control over our companycompany.

Mr. Rysavy holds 100% of our 5,400,000 outstanding shares of Class B common stock and also owns 648,682348,682 shares of Class A common stock. The shares of Class B common stock are convertible into shares of Class A common stock at any time. Each share of Class B common stock has ten votes per share, and each share of Class A common stock has one vote per share. Consequently, Mr. Rysavy holds approximately 75%85% of our voting stock and thus, is able to exert substantial influence over us and to control matters requiring approval by our shareholders, including the election of directors, increasing our authorized capital stock, or a merger or sale of substantially all of our assets. As a result of Mr. Rysavy’s control of us, no change of control can occur without Mr. Rysavy’s consent.

Our success depends on the value of our brand

Because of our reliance on sales of proprietary products, our success depends on our brand. Building and maintaining recognition of our brand are important for attracting and expanding our customer base. If the value of our brand were adversely affected, we cannot be certain that we would be able to attract new customers, retain existing customers or encourage repeat purchases, and if the value of our brand were to diminish, our revenues, results of operations and prospects would be adversely affected.

Our future cash flows may not be sufficient to meet our obligations and we may have difficulty obtaining financing

Our cash balance at December 31, 2014 was $15.8 million. We presently do not have any financing arrangements in place to assist us in meeting our obligations. There can be no assurance in the future whether we will generate sufficient cash flow from operations to meet our obligations or whether we would be able to secure financing or other sources of funds, such as from the sale of our shelf registration stock, should the need arise.

Product liability claims against us could result in adverse publicity and potentially significant monetary damages

As a seller of consumer products, we may face product liability claims in the event that use of our products results in injuries. If such injuries or claims of injuries were to occur, we could incur monetary damages and our business could be adversely affected by any resulting negative publicity. The successful assertion of product liability claims against us also could result in potentially significant monetary damages and, if our insurance protection is inadequate to cover these claims, could require us to make significant payments from our own resources.

We are dependent on third party suppliers for the success of our proprietary products

We are dependent on the success of our proprietary products, and we rely on a select group of manufacturers to provide us with sufficient quantities to meet our customers’ demands in a timely manner, produce these products in a humane and safe environment for both their workers and the planet, maintain quality standards consistent with our brand, and meet certain pricing guarantees. Our overseas sourcing arrangements carry risks associated with products manufactured outside of the U.S., including political unrest and trade restrictions, currency fluctuations, transportation difficulties, work stoppages, and other uncertainties. In addition, a number of our suppliers are small companies, and some of these vendors may not have sufficient capital, resources or personnel to maintain or increase their sales to us or to meet our needs for commitments from them. The failure of our suppliers to provide sufficient quantities of our proprietary products could decrease our revenues, increase our costs, and damage our customer service reputation.

We rely on communications and shipping networks to deliver our products

Given our emphasis on customer service, the efficient and uninterrupted operation of order-processing and fulfillment functions is critical to our business. To maintain a high level of customer service, we rely heavily on a number of different outside service providers, such as printers, telecommunications companies and delivery companies. Any interruption in services from our principal outside service providers, including delays or disruptions resulting from labor disputes, power outages, human error, adverse weather conditions or natural disasters, could materially adversely affect our business. In addition, freight carriers must ship products that we source overseas to our distribution center, and a work stoppage or political unrest could adversely affect our ability to fulfill our customer orders.

Information systems upgrades or integrations may disrupt our operations or financial reporting

We continually evaluate and upgrade our management information systems, which are critical to our business. These systems assist in processing orders, managing inventory, purchasing and shipping merchandise on a timely basis, responding to customer service inquiries, and gathering and analyzing operating data by business segment, customer, and stock keeping unit (a specific identifier for each different product). We are required to continually update these systems. Furthermore, if we acquire other companies, we will need to integrate the acquired companies’ systems with ours, a process that could be time-consuming and costly. If our systems cannot accommodate our growth or if they fail, we could incur substantial expenses and our business could be adversely affected.

Additionally, success in e-commerce depends upon our ability to provide a compelling and satisfying shopping experience. To remain competitive, we must continue to enhance and improve the responsiveness, functionality and features of our online technology, and if we are unable to do this, our business could be adversely affected.

A material security breach could cause us to lose sales, damage our reputation or result in liability to us

Our computer servers may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions. We may need to expend significant additional capital and other resources to protect against a security breach or to alleviate problems caused by any breaches. Our relationships with our customers may be adversely affected if the security measures that we use to protect personal information such as credit card numbers are ineffective. We currently rely on security and authentication technology that we license from third parties. We may not succeed in preventing all security breaches and our failure to do so could adversely affect our business.

Our systems may fail or limit user traffic, which would cause us to lose sales

We support a portion of our business through our call center in Louisville, Colorado. Even though we have back up arrangements, we are dependent on our ability to maintain our computer and telecommunications equipment in this center in effective working order and to protect against damage from fire, natural disaster, power loss, telecommunications failure or similar events. In addition, growth of our customer base may strain or exceed the capacity of our computer and telecommunications systems and lead to degradations in performance or systems failure. We have experienced capacity constraints and failure of information systems in the past that have resulted in decreased levels of service delivery or interruptions in service to customers for limited periods of time. Although we continually review and consider upgrades to our technical infrastructure and provide for system redundancies and backup power to limit the likelihood of systems overload or failure, substantial damage to our systems or a systems failure that causes interruptions for a number of days could adversely affect our business. Additionally, if we are unsuccessful in updating and expanding our infrastructure, including our call center, our ability to grow may be constrained.

Government regulation of the Internet and E-commerce is evolving and unfavorable changes could harm our business

We are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet and E-commerce. Such existing and future laws and regulations may impede the growth of the Internet or other online services. These regulations and laws may cover taxation, user privacy, pricing, content, copyrights, distribution, consumer protection, the provision of online payment services and quality of products and services. Many of the fundamental statutes and regulations applicable to our business were established before the adoption and growth of the Internet and e-commerce. There is lack of clarity on how existing laws and regulations governing issues such as property ownership, sales and other taxes and personal privacy apply to the Internet and E-commerce. Unfavorable resolution of these issues may harm our business.

Specifically, the application of indirect taxes (such as sales and use tax, value-added tax (VAT), goods and services tax, business tax and gross receipt tax) to e-commerce businesses such as ours and our customers is a complex and evolving issue. In many cases, it is not clear how existing tax laws and regulations apply to the Internet and E-commerce. In addition, governments are increasingly looking for ways to increase revenues, which has resulted in discussions about tax reform and other legislative action to increase tax revenues, including through indirect taxes. We generally collect sales taxes only on sales to residents of states in which we have nexus. Currently, we collect sales taxes on certain sales to residents of California, Colorado, Illinois, New York, New Jersey, Ohio, and Texas. A number of legislative proposals have been made at the federal, state and local level, and by foreign governments, that would impose additional taxes on the sale of goods and services over the Internet and certain states and other jurisdictions have taken measures to tax Internet-related activities. If legislation is enacted that requires us to collect taxes on sales to residents of other states or jurisdictions, sales in our direct to consumer businesses may be adversely affected. Further, a successful assertion by one or more states or other jurisdictions requiring us to collect taxes where we do not do so could result in substantial tax liabilities, including for past sales, as well as penalties and interest.

We may face legal liability for the content contained on our websites

We could face legal liability for defamation, negligence, copyright, patent or trademark infringement, personal injury or other claims based on the nature and content of materials that we publish or distribute on our websites. If we are held liable for damages for the content on our websites, our business may suffer. Further, one of our goals is for our websites to be trustworthy and dependable providers of information and services. Allegations of impropriety, even if unfounded, could therefore have a material adverse effect on our reputation and our business.

Relying on our centralized fulfillment center could expose us to losing revenue

Prompt and efficient fulfillment of our customers’ orders is critical to our business. Our facility near Cincinnati, Ohio handles a portion of our fulfillment functions and some customer-service related operations, such as returns processing. Many of our orders are filled and shipped from the Cincinnati facility. The balance is shipped by third party fulfillment centers or directly from suppliers. Because we rely on a centralized fulfillment center, our fulfillment functions could be severely impaired in the event of fire, extended adverse weather conditions, transportation difficulties or natural disasters. Because we recognize revenue only when we ship orders, interruption of our shipping could diminish our revenues.

We may face quarterly and seasonal fluctuations that could harm our business

Our revenue and results of operations have fluctuated and will continue to fluctuate on a quarterly basis as a result of a number of factors, including the timing of catalog offerings, timing of orders from retailers, recognition of costs or net sales contributed by new merchandise, fluctuations in response rates, fluctuations in paper, production and postage costs and expenses, merchandise returns, adverse weather conditions that affect distribution or shipping, shifts in the timing of holidays and changes in our merchandise mix. In particular, our net sales and profits have historically been higher during the fourth quarter holiday season. We believe that this seasonality will continue in the future.

Postage and shipping costs may increase and therefore increase our expenses

We ship our products, catalogs, and lifestyle publications to consumers and the cost of shipping is a material expenditure. Postage and shipping prices increase periodically and can be expected to increase in the future. Any inability to secure suitable or commercially favorable prices or other terms for the delivery of our merchandise and catalogs could have a material adverse effect on our financial condition and results of operations.

Our business is subject to reporting requirements that continue to evolve and change, which could continue to require significant compliance effort and resourcesresources.

Because our Class A common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded.  These entities, including the Public Company Accounting Oversight Board, the SecuritiesSEC and Exchange Commission and the NASDAQ, periodically issue new requirements and regulations and legislativeregulations.  Legislative bodies also review and revise applicable laws.  As interpretation and implementation of these laws and rules and promulgation of new regulations continues, we will continue to be required to commit significant financial and managerial resources and incur additional expenses.

Liability relating to environmental matters may impact the value of our real property.

We may be subject to environmental liabilities arising from our ownership of real property. Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.

The presence of hazardous substances on real property owned by us may adversely affect our ability to sell such real property and we may incur substantial remediation costs, thus harming our financial condition. The discovery of material environmental liabilities attached to such real property could adversely affect our results of operations and financial condition.

Any of these events, in combination or individually, could disrupt our business and adversely affect our business, financial condition, results of operations and cash flows.

None.

Our principal executive offices areoffice is located in Louisville, Colorado. Our fulfillment center is located in the Cincinnati, Ohio area. The following table sets forth certain information relating to our primary facilities:

We rentlease to third parties approximately 61,400100,000 square feet of our building space located in Colorado. Our existing fulfillment center lease has renewal options permitting the extension of the lease for up to an additional three years. We believe our facilities arefacility is adequate to meet our current needs and that suitable additional facilities will be available for lease or purchase when, and as, we need them.

From time to time, we are involved in legal proceedings that we consider to be in the normal course of business. Claimed amountsAmounts claimed against us may be substantial but may not bear any reasonable relationship to the merits of the claim or the extent of any real risk of court or arbitral awards. We record accruals that can be reasonably estimated for losses related to those matters against us that we consider to be probable and that can be reasonably estimated.probable. Although it is not feasible to predict the outcome of these matters with certainty, it is reasonably possible that some legal proceedings may be disposed of or decided unfavorably to us and in excess of the amounts currently accrued. Based on available information, inIn the opinion of management, based on available information, settlements, arbitration awards and final judgments, if any, whichthat are considered probable of being rendered against us in litigation or arbitration in existence at December 31, 20142016 and that can be reasonably estimated are either reserved against or would not have a material adverse effect on our financial condition, results of operations or cash flows.

Not applicable.

PART II

Stock Price History

Our Class A common stock is listed on the NASDAQ Global Market under the symbol “GAIA”. On February 27, 2015,21, 2017, we had 5,0113,462 shareholders of record and 19,089,0089,752,531 shares of $.0001 par value Class A common stock outstanding, and we had 5,400,000 shares of $.0001 par value Class B common stock outstanding, held by one shareholder.

The following table sets forth certain sales price data for our Class A common stock for the period indicated:

Issuer Purchases of Registered Equity Securities

None.

(1): We announced a tender offer on May 10, 2016 to purchase in cash up to an aggregate of 12.0 million (i) shares of our issued and outstanding Class A Common Stock at a price of $7.75 per share, or (ii) vested and exercisable options to purchase shares of our Class A Common Stock at a price equal to $7.75 per option (less the exercise price of the option). A total of 9,636,848 shares and 842,114 options were validly tendered and not withdrawn prior to July 1, 2016, which was the expiration date of the offer. We made payments of $74.7 million for the shares and $1.4 million for the options. All repurchased shares were retired and all repurchased options were cancelled effective as of July 1, 2016.

Dividend Policy

No dividends were declared or paid during the years ended December 31, 2014, 20132016 and 2012.2015.

Sales of Unregistered Securities

On September 5, 2014 we issued 115,369 shares of our Class A common stock into escrow as partial payment for an acquisition we completed. The shares were released from escrow on March 5, 2015.

During 2013 we issued 1,055,000 shares of our Class A common stock into escrow as partial payment of an acquisition we completed. These shares were released from escrow in April 2014.

The issuance of the securities described above was exempt from registration under Section 4(a)(2) of the Securities Act because (a) the seller represented in writing that it acquired the securities for its own accounts, for investment purposes only and not with a view to sell them, (b) the issuance was not effected through any general solicitation or general advertising, (c) the seller had such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in Gaiam, Inc., (d) a legend was placed on the stock certificates stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.None.

Equity Compensation Plan Information

The following table summarizes equity compensation plan information for our Class A common stock at December 31, 2014:2016:

We derived the selected consolidated statement of operations data and consolidated cash flow data for the years ended December 31, 2014, 20132016, 2015 and 20122014, and consolidated balance sheet data as of December 31, 20142016 and 20132015 set forth below from our audited consolidated financial statements, which are included elsewhere in this Form 10-K. We derived the selected consolidated statement of operations data and consolidated cash flow data for the years ended December 31, 20112013 and 20102012 and consolidated balance sheet data as of December 31, 2012, 20112014, 2013 and 20102012 set forth below from our audited consolidated financial statements which are not included in this Form 10-K. During 2016 we sold our Gaiam Brand and eco-travel business and during 2013, we sold our non-Gaiam brandednon-Gaia brand entertainment media distribution operations and discontinued our DRTV operations. These businessbusinesses are reported as discontinued operations for all periods presented below.

The historical operating results are not necessarily indicative of the results to be expected for any other period. You should read the data set forth below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes, included elsewhere in this Form 10-K.

		Years ended December 31,
(in thousands, except per share data)		2014				2013 (c)(d)				2012 (b)				2011 (a)				2010 (a)
Consolidated Statements of Operations Data:
Net revenues		$	166,694			$	155,463			$	127,242			$	223,691			$	204,017
Cost of goods sold			91,189				90,155				70,723				144,835				122,917
Gross profit			75,505				65,308				56,519				78,856				81,100
Expenses:
Selling and operating			68,723				64,657				56,292				73,525				64,574
Corporate, general and administration			11,161				11,249				10,400				11,828				10,772
Transaction-related costs			707				76				—				2,393				—
Other general income and expense			—				10,967				—				22,456				—
Total expenses			80,591				86,949				66,692				110,202				75,346
(Loss) Income from operations			(5,086	)			(21,641	)			(10,173	)			(31,346	)			5,754
Interest and other (expense) income			(600	)			2,421				(86	)			(90	)			1,291
Gain on sale of investments			1,480				25,096				—				—				—
Loss from equity method investment			(55	)			—				(18,410	)			—				—
Loss from deconsolidation of subsidiary			—				—				—				(4,550	)			—
(Loss) income before income taxes			(4,261	)			5,876				(28,669	)			(35,986	)			7,045
Income tax expense (benefit)			1,369				25,974				(9,444	)			(10,713	)			2,192
Net (loss) income from continuing operations			(5,630	)			(20,098	)			(19,225	)			(25,273	)			4,853
(Loss) income from discontinued operations, net of tax			(3,327	)			(1,995	)			6,648				3				216
Net (loss) income			(8,957	)			(22,093	)			(12,577	)			(25,270	)			5,069
Net (income) loss attributable to noncontrolling interest			(959	)			(659	)			(305	)			398				(794	)
Net (loss) income attributable to Gaiam, Inc.		$	(9,916	)		$	(22,752	)		$	(12,882	)		$	(24,872	)		$	4,275
Net (loss) income per share attributable to Gaiam, Inc. common shareholders—basic:
From continuing operations		$	(0.27	)		$	(0.90	)		$	(0.86	)		$	(1.08	)		$	0.17
From discontinued operations			(0.14	)			(0.09	)			0.29				0.00				0.01
Basic net (loss) income per share attributable to Gaiam, Inc.		$	(0.41	)		$	(0.99	)		$	(0.57	)		$	(1.08	)		$	0.18
Net (loss) income per share attributable to Gaiam, Inc. common shareholders—diluted:
From continuing operations		$	(0.27	)		$	(0.90	)		$	(0.86	)		$	(1.08	)		$	0.17
From discontinued operations			(0.14	)			(0.09	)			0.29				0.00				0.01
Diluted net (loss) income per share attributable to Gaiam, Inc.		$	(0.41	)		$	(0.99	)		$	(0.57	)		$	(1.08	)		$	0.18
Weighted-average shares outstanding:
Basic			24,228				22,972				22,703				23,126				23,226
Diluted			24,228				22,972				22,703				23,126				23,383
		As of December 31,
(in thousands)		2014				2013 (c)				2012 (b)				2011 (b)				2010 (a)
Consolidated Balance Sheet Data:
Cash		$	15,772			$	32,229			$	9,858			$	14,545			$	28,773
Working capital			39,699				53,674				51,418				62,217				95,006
Total assets			138,632				141,686				197,231				163,290				207,433
Total liabilities			39,073				36,396				78,359				32,116				38,671
Total equity			99,559				105,290				118,872				131,174				168,762

Stock Performance Graph

The graph below shows, for the five years ended December 31, 2014,2016, the cumulative total return on an investment of $100 in our Class A common stock, assuming the investment was made on December 31, 2009, and also shows the relative stock performances of our Class A common stock commencing with Gaiam’s initial public offering on October 29, 1999 until December 31, 2014.2011. The graph compares such return with that of comparable investments assumed to have been made on the same date in (a) the NASDAQ Stock Market (U.S. Companies) Index and (b) a media peer group, comprised of Martha Stewart Living Omnimedia, Inc.; The Walt Disney Company; and Lions Gate Entertainment Corp.  AlthoughMartha Stewart Living Omnimedia, Inc., which was previously included in our peer group, is not included in our peer group this year because it was acquired by another company in December 2015 and is no longer separately traded. The change in the composition of our peer group has no material effect on the cumulative total return for the assumedon an investment reflects a reinvestment of all dividends on December 31^st of the year in which such dividends are paid, no cash dividends were paid on our common stock except for two dividends we paid in 2010.peer group. Our Class A common stock is quoted by The NASDAQ Stock Market’s Global Market under the trading symbol GAIA.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties. When used in this discussion, we intend the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “strive,” “future,” “intend”, “will” and similar expressions as they relate to us to identify such forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-

lookingforward-looking statements as a result of certain factors set forth under “Risk Factors”,Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and elsewhere in this Form 10-K. Risks and uncertainties that could cause actual results to differ include, without limitation, general economic conditions, ongoing losses, competition, loss of key personnel, pricing, brand reputation, acquisitions, new initiatives we undertake, security and information systems, legal liability for website content, merchandise supply problems, failure of third parties to provide adequate service, reliance on centralized customer service, overstocks and merchandise returns, our reliance on a centralized fulfillment center, increases in postage and shipping costs, E-commerce trends, future Internet related taxes, our founder’s control of us, litigation, fluctuations in quarterly operating results, consumer trends, customer interest in our products, the effect of government regulation and programs and other risks and uncertainties included in our filings with the Securities and Exchange Commission. We caution you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect our views only as of the date of this report. We undertake no obligation to update any forward-looking information.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included elsewhere in this document. This section is designed to provide information that will assist readers in understanding our consolidated financial statements, changes in certain items in those statements from year to year, the primary factors that caused those changes and how certain accounting principles, policies and estimates affect the consolidated financial statements.

Overview and Outlook

During 2014, the information reviewed by our Chief Operating Decision Makers (“CODMS”) has evolved with changes in our organization and new initiatives. These changes include our planned tax-free spin-off of Gaiam TV, and the migration of our legacy catalog business to a mobile-and social-centric digital model.

As of December 31, 2014, we now have two reportable business segments which are aligned based on their products or services: Gaiam Brand and Gaiam TV.

Gaiam Brand Segment

Gaiam is a leader in the markets for yoga, fitness and wellness products and media content. Gaiam brands include Gaiam, focused on yoga and fitness; Gaiam Restore, focused on wellness; SPRI focused on fitness; and our eco-travel business.

We develop and market fitness and yoga accessories, apparel, and media under Gaiam’s brands. These products are sold primarily through major national retailers in the United States, Canada, Europe, and other countries, with placement in over 38,000 retail doors worldwide. We also sell our products through our website and catalogs. Our products and services are targeted to all levels of yoga and fitness enthusiasts, including professionals. We believe that consumers are attracted to our products because of their design, functional characteristics, and our unique brand heritage. Our accessories include yoga mats, bags, straps and blocks, media content including digital media and apps, restorative and massage accessories such as rollers, resistance cords and balance balls, and various other offerings. Our comprehensive line of apparel includes pants, shorts, tops and jackets designed around yoga.

Through our business activities, we seek to position our brand as a trusted source for products that are relevant to our consumers’ active lifestyles. Our broad distribution network includes retail, online, and digital channels. Our business is vertically integrated from product design and content creation through product development and sourcing, to customer service and distribution. This efficient supply chain enables us to provide quality products at competitive prices for all of our brands.

We seek to drive sustainable and profitable growth in this segment by leveraging our brands’ leading market positions and heritage to expand our product offering and distribution channels. We believe that growth in yoga participation, greater awareness of health and wellness, and the success of our retail and online partners is increasing consumer interest in our brands and products, and creates new opportunities for us to expand our offering. Recent examples of our brand extension include the 2012 launch of Gaiam Restore and SPRI Dynamic Recovery brands, our at-home rehabilitative and restorative products, and the 2013 launch of our SPRI Cross Train line of high-intensity fitness accessories. We anticipate launching a yoga apparel line in the spring of 2015.

We recently launched or updated certain websites, evolving our e-commerce experience to focus on engaging customers through digital content, and social and mobile marketing across various devices. With the acquisition of Yoga Studio, the leading yoga app for mobile and tablet devices, in the fourth quarter of 2014, we launched our interactive digital strategy, which we will continue to develop and leverage as a point of brand engagement. We plan to invest in our online branding and digital offerings, develop emerging talent, utilize social media, and sponsor local events. Additionally, we will significantly reduce the circulation of our catalogs going forward as the direct-to-consumer business has shifted online.

Gaiam TV Segment

Gaiam TV isoperate a global digital video subscription service with approximately 7,000over 7,700 titles whichthat caters to ana unique and underserved subscriber base. Gaiam TV’sOur digital content is available to our subscribers on virtually any Internet connected devicemost Internet-connected devices anytime, anywhere commercial free. TheThrough our online Gaia subscription also allowsservice our subscribers to download and view files from the library without being actively connected to the internet. Through Gaiam TV subscriptions, customers have unlimited access to a vast library of inspiring films, personal growth related content, cutting edge documentaries, interviews, yoga classes, transformation related content, and more – 90% of which is exclusively available exclusively to our subscribers for digital streaming.streaming on most Internet-connected devices. A subscription also allows our subscribers to download and view files from our library without being actively connected to the Internet.

TheConsumption of streaming video market is currently booming: in August 2014, 196.5 million Internet users watched online videos in the United States alone, according to comScore. The first quarter of 2014 set a new recordexpanding rapidly with 35.6 billion global online video starts, representing a 43% increase compared to the first quarter of 2013, according to the U.S. Digital Video Benchmark report from Adobe.

Moremore and more people are augmenting their use of, or veering away fromreplacing broadcast television and turning to, streaming video to watch their favorite content on services like Netflix, Amazon Prime, Hulu Plus, HBO GoNow and Gaiam TV.Gaia.

Gaiam TV’sGaia’s position in the streaming video landscape is firmly supported by aits wide variety of exclusive and unique content, which provides a complementary offering to other entertainment-based streaming video services. Gaiam TV’sOur original content is developed and produced in-house in state-of-the-artour production studios near Boulder, Colorado. Over 90% of our content is available for streaming exclusively on Gaia. By offering exclusive and unique content over athrough our streaming service, we believe we will be able to significantly expand our target subscriber base.

Our available content is currently focused on yoga, transformation, seeking truth and conscious films. This content is specifically targeted to a unique customer base which is interested in alternatives and supplements to the content provided by mainstream media. We have grown these content options both organically through our own productions and through strategic acquisitions. In October 2013, Gaiam TV acquired My Yoga Online,addition, through our investments in our streaming video technology and our user interface, we have expanded the largest on-line yoga video streamingmany ways our subscription customer base can access our unique library of media titles.

Our core strategy is to grow our subscription business in Canada. With this acquisition we grewdomestically and internationally by expanding our unique and exclusive content library, enhancing our user interface, extending our streaming service to new Internet-connected devices as they are developed and creating a conscious community built on our content.

We are a Colorado corporation. Our principal and executive office is located at 833 West South Boulder Road, Suite G, Louisville, CO 80027-2452. Our telephone number at that address is (303) 222-3600. We maintain an Internet website at www.gaia.com. The website address has been included only as a textual reference. Our website and the information contained on that website, or connected to that website, are not incorporated by approximately 1,300 video titles and expanded our international subscriber base. We plan to continue investing in international expansion, both in terms of subscribers and content.reference into this Form 10-K.

Gaiam’s Board of Directors previously approved the separationSale of Gaiam TVBrand Segment

In May 2016, we sold our 51.4% interest in Natural Habitat to Lindblad Expeditions Holdings, Inc. (NASDAQ: LIND) for $12.8 million and Gaiam Brand into two separate publicly traded companies. recognized a gain of $10.3 million.

On July 1, 2016, we completed the sale of our branded consumer product business to Sequential Brands Group, Inc. (NASDAQ: SQBG) and its operating partner Fit For Life LLC. Gross consideration was $167 million and we recognized a gain of $114.5 million before taxes.

We currently expectused the separationmajority of the net proceeds to takeconduct a share repurchase tender offer and acquired approximately 9,637,000 shares of our Class A common stock and 840,000 vested stock options at a fixed price of $7.75 per share.

The remaining proceeds will be used to fund the formcontinuing growth and development of a tax-free spin-off to shareholders. Our board of directors has the right and ability, in its sole discretion, to abandon the proposed separation at any time before the distribution date. As a result, there can be no assurance that the separation will occur.our business, as well as general corporate purposes.

Results of Operations

The table below summarizes certain of our results for the periods indicated:

The following table sets forth certain financial data as a percentage of revenue for the periods indicated:

Year Ended December 31, 20142016 Compared to Year Ended December 31, 20132015

Net revenue. Net revenue increased $11.2$3.7 million, or 7.2%28.1%, to $166.7$17.2 million during 2014 from $155.52016, compared to $13.5 million during 2013.2015. Net revenue in our Gaiam Brand segmentfrom streaming increased $7.0$3.9 million, or 4.7%37.1%, to $156.8$14.7 million during 20142016 from $149.8$10.8 million during 2013, due to the addition of a new major customer account and2015. The increase in streaming revenues was primarily driven by 52% growth in our Gaiam Restore and SPRI product lines. Growth in the Gaiam Brand segment was moderatednumber of paying subscribers. Net revenues were not significantly impacted by a few factors. First, revenues from our largest customer declined as the result of a data breach at the customer’s stores. Second, we made a strategic decision early in the year to reduce catalog circulation and focus our direct-to-consumer operations on a consumer engagement digital strategy. Third, the continued contraction in the physical DVD market reduced our media sales. Finally, we decided during the year to not renew a license we held to manufacture fitness accessories under a third-party brand. This decision resulted in lower revenues, but allowed us to focus more on our Gaiam and SPRI brands. Our eco-travel business, which is part of the Gaiam Brand segment, grew during the year as a result of improved economic conditions. Net revenue in our Gaiam TV segment increased $4.3 million,either changing prices or 75.4%, to $9.9 million during 2014 from $5.7 million during 2013 due primarily to subscriber growth at Gaiam TV and revenues from My Yoga Online, which was acquired during the fourth quarter of 2013.inflation.

Cost of goods sold. Cost of goods sold increased $1.0$0.2 million, or 1.1%9.4%, to $91.2$2.8 million during 20142016 from $90.2$2.6 million during 2013.2015. Cost of goods sold in our Gaiam Brand segmentfor streaming increased $0.6$0.3 million, or 13.5%, to $89.8$2.6 million during 20142016 from $89.2$2.3 million during 20132015 and, as a percentage of streaming revenue, decreased to 17.4% compared to 21.0% during 2015 due primarily to an increase in revenue and the lower cost of streaming associated with our higher volumes.

Selling and operating expenses. Selling and operating expenses increased $11.9 million, or 90.8%, to $25.0 million during 2016 from $13.1 million during 2015 and, as a percentage of net revenue, increased to 144.7% during 2016 from 97.2% during 2015. The increase was primarily due to increased marketing spending for subscriber acquisition to drive growth.

Corporate, general and administration expenses. Corporate, general and administration expenses decreased $0.5 million, or 7.3%, to $6.0 million during 2016 from $6.5 million during 2015 and, as a percentage of net revenue, decreased to 57.3%34.9% during 20142016 from 59.5%48.3% during 2013,2015. The decrease was primarily due to the elimination of duplicate costs upon the sale of the Gaiam Brand business on July 1, 2016, offset by increased costs associated with legal and accounting fees.

Income (loss) from discontinued operations. The operations of the Gaiam Brand segment are included in income (loss) from discontinued operations. We completed the sale of the Gaiam Brand business and Natural Habitat during 2016, recognizing a shiftgain of $114.5 million, which was offset by transaction costs, taxes and losses from the operation of discontinued operations of $(16.7) million, compared to losses from the operation of discontinued operations of $(2.7) million in product sales mix2015.

Net income (loss). As a result of the above factors, net income (including discontinued operations) was $87.1 million, or $4.39 per share, for 2016 compared to higher margin products, as well as improvementa net loss of $(11.7) million, or $(0.48) per share, for 2015. Net income (loss) was not significantly impacted by either changing prices or inflation.

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Net revenue. Net revenue increased $2.7 million, or 25.2%, to $13.5 million during 2015, compared to $10.8 million during 2014. Net revenue from streaming increased $2.7 million, or 33.7%, to $10.8 million during 2015 from $8.1 million during 2014. The increase in coststreaming revenues was primarily driven by 58% growth in the number of paying subscribers from 2014. Net revenues were not significantly impacted by either changing prices or inflation.

Cost of goods for certain products.sold. Cost of goods sold (exclusiveincreased $0.6 million, or 27.6%, to $2.6 million during 2015 from $2.0 million during 2014. Cost of amortization of video library costs) in our Gaiam TV segmentgoods sold for streaming increased $0.4$0.6 million, or 29.6%, to $1.4$2.3 million during 2015 from $1.7 million during 2014 from $1.0and, as a percentage of streaming revenue, decreased to 21.0% compared to 21.7% during 2014 due primarily to an increase in revenue and the lower cost of streaming associated with our higher volumes.

Selling and operating expenses. Selling and operating expenses decreased $1.8 million, or 12.1%, to $13.1 million during 20132015 from $14.9 million during 2014 and, as a percentage of net revenue, decreased to 14.1%97.2% during 20142015 from 17.5%138.4% during 2013, primarily reflecting subscriber growth and the fixed nature of digital distribution costs.

Selling and operating expenses. Selling and operating expenses increased $4.1 million, or 6.3%, to $68.7 million during 2014 from $64.7 million during 2013 and, as a percentage of net revenue, decreased to 41.3% during 2014 from 41.6% during 2013,2014. The decrease was primarily due to additional investmentsreduced spending on paid subscriber acquisition efforts during 2015 as we focused on optimizing efficiency in our Gaiam TV segment.customer acquisition efforts and operating profitably (excluding transaction costs) during the third quarter of 2015.

Corporate, general and administration expenses. Corporate, general and administration expenses stayed flat at $11.2increased $1.9 million, or 42.2%, to $6.5 million during 2014 and 2013 and, as a percentage of net revenue, decreased to 6.7% during 20142015 from 7.2% during 2013.

Other general expense.During 2013, other general expense was $11.0 million. It was comprised of impairment charges of $7.1 million, restructuring-related termination benefits and future retirement benefits for one of our executive officers totaling $2.5 million, and $1.4 million of transaction-related and other expenses. The asset impairments and termination benefits, other than those for one of our executive officers, are due to the reorganization and refocus of our continuing businesses following the discontinuation of our non-Gaiam-branded entertainment media distribution and direct response television marketing operations.

Transaction-related expense.Transaction-related expense was $0.7 million in 2014 compared to $0.1 million in 2013. These expenses relate to fees associated with the spin-off of our Gaiam TV segment.

Interest and other income (expense), net. Interest and other income (expense), net was an expense of $0.6$4.6 million during 2014 compared to income of $2.4 million during 2013. The income in 2013 resulted primarily from the collection of principal and interest on our loans to RGSE, the carrying values for which had previously been reduced to zero through the recognition of losses from our equity method investment in RGSE.

Gain on sale of investment. Gain on sale of investment of $1.5 million in 2014 represents our gain recognized and net proceeds received from the sale of shares of our investment in RGSE stock and all our investment in Cinedigm stock. The gain of $25.1 million in 2013 represents our gain recognized and net proceeds received from the sale of virtually all of our investment in RGSE’s common stock.

Income tax expense. The company recognized income tax expense during 2014 of $1.4 million related to its majority-owned subsidiaries compared with income tax expense of $26.0 million in 2013. The 2013 tax expense includes a charge of $23.2 million which relates to the establishment of a full valuation allowance against all our deferred tax assets. Because the valuation allowance will remain in place until we return to profitability, we did not record any tax benefit in 2014 associated with our net loss. We continue to be optimistic about our future, and expect to return to operating profitability. When that happens, we expect to reverse the valuation allowance and record the related tax benefit for future use of our net operating loss carryforwards we expect to realize.

Loss from discontinued operations. During 2013, we sold our non-Gaiam branded entertainment division, GVE, and discontinued our DRTV operations. The 2014 loss reflects a reserve of $3.0 million for anticipated legal expenses and related reserves the Company recorded in connection with the upcoming arbitration associated with the sale of GVE and other expenses associated primarily with the wind down of the DRTV operations.

Net income (loss) attributable to Gaiam, Inc. Net loss attributable to Gaiam, Inc. was $9.9 million, or $0.41 per share, during 2014 compared to a loss of $22.8 million, or $0.99 per share, during 2013.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

Net revenue. Net revenue increased $28.3 million, or 22.2%, to $155.5 million during 2013 from $127.2 million during 2012, with organic net revenue growth of $27.6 million or 21.7%. Net revenue in our Gaiam Brand segment increased $26.3 million, or 21.3%, to $149.8 million during 2013 from $123.5 million during 2012, due to better sales performance at our top 25 retailers, which was driven by the launch of our SPRI brand in a key sporting goods account, and a full year of sales of our Gaiam Restore product, which was released in the fourth quarter of 2012. Net revenue in our Gaiam TV segment increased $2.0 million, or 54.1%, to $5.7 million during 2013 from $3.7 million during 2012 due primarily to subscriber growth and partial revenues from My Yoga Online, which was acquired during the fourth quarter of 2013.

Cost of goods sold. Cost of goods sold increased $19.5 million, or 27.6%, to $90.2 million during 2013 from $70.7 million during 2012. Cost of goods sold in our Gaiam Brand segment increased $19.4 million to $89.2 million during 2013 from $69.8 million during 2012 and, as a percentage of net revenue, increased to 59.5%48.3% during 20132015 from 56.5%42.5% during 2012, primarily2014. The majority of the increase was due to a shift in product sales mix toward lower margin linesone-time charges incurred during the first half of product we produce under exclusive arrangements for third parties, and due to growth in our travel business which operates at a lower gross margin. Cost2015 associated with the previously planned separation of goods sold (exclusive of amortization of video library costs) in our Gaiam TVthe Gaia segment increased $0.1 million to $1.0 million during 2013 from $0.9 million during 2012 and, as a percentage of net revenue, decreased to 17.5% during 2013 from 24.3% during 2012, primarily reflecting subscriber growth and the fixed nature of digital distribution costs.Gaiam Brand segment into two separate public companies.

Selling and operating expenses. Selling and operating expenses increased $8.4 million, or 14.9%, to $64.7 million during 2013 from $56.3 million during 2012 and, as a percentage of net revenue, decreased to 41.6% during 2013 from 44.3% during 2012, primarily due to additional investments in our Gaiam TV segment.

Corporate, general and administration expenses. Corporate, general and administration expenses increased $0.8 million to $11.2 million during 2013 from $10.4 million during 2012 and, as a percentage of net revenue, decreased to 7.2% during 2013 from 8.2% during 2012, primarily as a result of increased personnel costs.

Other general expense.Other general expense was $11.0 million during 2013 and zero during 2012. The other general expense during 2013 is comprised of impairment charges of $7.1 million, restructuring-related termination benefits and future retirement benefits for one of our executive officers totaling $2.5 million, and $1.4 million of transaction-related and other expenses. The asset impairments and termination benefits, other than those for one of our executive officers, are due to the reorganization and refocus of our continuing businesses following the discontinuation of our non-Gaiam-branded entertainment media distribution and direct response television marketing operations.

Interest and other income (expense), net. Interest and other income (expense), net was income of $2.4 million during 2013 compared to expense of $0.1 million during 2012. Interest and other income, net during 2013 resulted primarily from the collection of principal and interest on our loans to RGSE, the carrying values for which had previously been reduced to zero through the recognition of losses from our equity method investment in RGSE.

Gain on sale of investment. Gain on sale of investment of $25.1 million during 2013 represents our gain recognized and net proceeds received from the sale of virtually all of our investment in RGSE’s common stock.

Loss from equity method investment. Loss from equity method investment was zero during 2013 and $18.4 million during 2012 and represented our portion of RGSE’s net loss for 2012. Since we no longer have significant influence over RGSE and accordingly have changed the accounting for our investment in RGSE from the equity to the cost method, we no longer recognize our portion of RGSE’s net loss in our financial results.

Income tax expense (benefit). Income tax expense during 2013 was increased primarily by a valuation allowance against our deferred tax assets and by the repatriation of cash from one of our foreign subsidiaries and other permanent differences. Income tax benefit during 2012 was increased primarily due to the reduction of a deferred tax liability related to the carrying value of our equity method investment in RGSE.

Income (loss) from continuingdiscontinued operations. The operations of the Gaiam Brand segment are included in income (loss) from discontinued operations. During 2015, losses from the operation of discontinued operations of $(2.7) million, compared to loss from the operation of discontinued operations of $(0.1) million during 2014.

Net income (loss). As a result of the above factors, loss from continuing operationsnet income (including discontinued operations) was $20.1$(11.7) million, before minority interest, or $0.90$(.48) per share, net of minority interest, during 20132015 compared to a net loss from continuing operations of $19.2$(9.9) million, or $0.86$(0.41) per share, during 2012.

Income from discontinued operations. During 2013, we sold GVE and discontinued our DRTV operations. Accordingly, we reclassified and now report the financial results for these businesses as discontinued operations. Income from discontinued operations decreased $8.6 million during 2013 from $6.6 million during 2012, primarily due to the discontinuance and asset write-off of DRTV.

2014. Net income (loss) attributable to Gaiam, Inc. Net loss attributable to Gaiam, Inc. was $22.8 million,not significantly impacted by either changing prices or $0.99 per share, during 2013 compared to a loss of $12.9 million, or $0.57 per share, during 2012.inflation.

Quarterly and Seasonal Fluctuations

The following tables set forth our unaudited results of operations for each of the quarters in 20142016 and 2013. During 2013, we sold our non-Gaiam-branded entertainment media distribution operations and discontinued our DRTV operations. We now report these businesses as discontinued operations, and, accordingly, we have reclassified their results of operations for all periods presented to reflect them as such.2015. In our opinion, this unaudited financial information includes all adjustments, consisting solely of normal recurring accruals and adjustments, necessary for a fair presentation of the results of operations for the quarters presented. You should read this financial information in conjunction with our consolidated financial statements and related notes included elsewhere in this Form 10-K. The results of operations for any quarter are not necessarily indicative of future results of operations.

		Year 2013 Quarters Ended
(in thousands, except per share data)		March 31				June 30				September 30				December 31 (b)
Net revenue		$	36,679			$	31,897			$	36,128			$	50,759
Gross profit			15,750				13,314				14,693				21,551
Gain on sale of investment (a)			—				16,429				1,975				6,692
(Loss) income from continuing operations			(2,203	)			8,112				(700	)			(25,307	)
Income (loss) from discontinued operations			1,981				(129	)			1,004				(4,851	)
Net (loss) income			(222	)			7,983				304				(30,158	)
Net (loss) income attributable to Gaiam, Inc.			(277	)			7,848				120				(30,444	)
Net (loss) income per share attributable to Gaiam, Inc. common shareholders – diluted:
From continuing operations		$	(0.10	)		$	0.36			$	(0.03	)		$	(1.08	)
From discontinued operations			0.09				(0.01	)			0.04				(0.21	)
Diluted net (loss) income per share attributable to Gaiam, Inc.		$	(0.01	)		$	0.35			$	0.01			$	(1.29	)
Weighted average shares outstanding-diluted			22,732				22,741				22,765				23,668