United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the Fiscal Quarter Ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Commission File Number 0-27517
GAIAM, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1113527
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
360 INTERLOCKEN BLVD., SUITE 300
BROOMFIELD, COLORADO 80021
(Address of principal executive offices)
(303) 222-3600
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Class Shares outstanding as of May 8, 2001
- ---------------------- ------------------------------------
Class A Common Stock 5,962,550
($.0001 par value)
Class B Common Stock 5,400,000
($.0001 par value)
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 2001
and December 31, 2000 3
Consolidated Statements of Income for the three
months ended March 31, 2001 and 2000 4
Consolidated Statement of Cash Flows for the three
months ended March 31, 2001 and 2000 5
Notes to Interim Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
This report may contain forward-looking statements that involve risks and
uncertainties. When used in this discussion, the words "anticipate," "believe,"
"plan," "estimate," "expect," "strive," "future," "intend" and similar
expressions as they relate to Gaiam or its management are intended to identify
such forward-looking statements. Gaiam's actual results could differ materially
from the results anticipated in these forward-looking statements as a result of
certain factors set forth under "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Market Risk" and elsewhere in
this report. Risks and uncertainties that could cause actual results to differ
include, without limitation, competition, loss of key personnel, pricing, brand
reputation, growth of e-commerce, acquisitions, 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, future internet related
taxes, control of Gaiam by its founder, fluctuations in quarterly operating
results, limited experience in operating retail stores, consumer trends,
customer interest in our products, general economic conditions, the effect of
government regulation and other risks and uncertainties included in Gaiam's
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
management's view only as of the date of this report. We undertake no
obligation to update any forward-looking information.
2
GAIAM, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
Assets 2001 2000
-----------------------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 6,374,022 $ 8,578,668
Accounts receivable, net 8,407,739 8,472,828
Accounts and notes receivable, other 755,110 1,097,390
Inventory, less allowances 10,332,540 6,361,046
Deferred advertising costs 1,587,663 1,625,285
Other current assets 1,492,794 1,307,416
-----------------------------
Total current assets 28,949,868 27,442,633
Property and equipment, net 15,098,313 10,797,501
Capitalized production costs, net 2,634,363 2,656,666
Video library, net 4,555,481 4,631,140
Goodwill, net 6,032,943 2,379,861
Deferred tax assets 1,285,132 146,132
Other assets 562,004 450,409
-----------------------------
Total assets $59,118,104 $48,504,342
=============================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $11,150,709 $ 8,091,569
Accrued liabilities 4,416,092 2,109,036
Accrued royalties 1,136,738 867,667
Income taxes payable 591,832 790,267
Capital lease obligations, current 160,705 147,649
Other current liabilities 181,888 167,349
-----------------------------
Total current liabilities 17,637,964 12,173,537
Capital lease obligations, long-term 260,614 270,171
Deferred tax liability 412,001 412,001
Long-term debt 6,518,887 5,500,000
-----------------------------
Total long-term liabilities 7,191,502 6,182,172
Minority interest 6,120,513 6,037,868
Redeemable Class A preferred stock
in subsidiary 6,000,000 6,000,000
Stockholders' equity:
Class A common stock, $.0001 par value,
150,000,000 shares authorized, 5,958,505
and 5,473,184 shares issued and
outstanding at March 31, 2001 and
December 31, 2000, respectively 596 547
Class B common stock, $.0001 par value,
50,000,000 shares authorized, 5,400,000
issued and outstanding at March 31, 2001
and December 31, 2000, respectively 540 540
Additional paid-in capital 15,486,392 11,865,734
Deferred compensation (405,201) (422,826)
Retained earnings 7,085,798 6,666,770
-----------------------------
Total stockholders' equity 22,168,125 18,110,765
-----------------------------
Total liabilities and stockholders' equity $59,118,104 $48,504,342
=============================
See accompanying notes.
3
GAIAM, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
March 31,
2001 2000
-------------------------------
Net revenue $17,671,513 $12,558,437
Cost of goods sold 6,847,590 4,922,311
------------------------------
Gross profit 10,823,923 7,636,126
Expenses:
Selling and operating 8,538,352 6,063,790
Corporate, general and administration 1,550,206 1,115,977
-------------------- ---------
Total expenses 10,088,558 7,179,767
-------------------------------
Income from operations 735,365 456,359
Other income (expense) 184,615 (76,295)
Interest expense (116,917) (46,650)
------------------------------
Total other income (expense) 67,698 (122,945)
------------------------------
Income before income taxes and minority
interest 803,063 333,414
Provision for income taxes 301,390 125,130
Minority interest in net income of
consolidated subsidiary, net of tax 82,645 4,992
------------------------------
Net income $ 419,028 $ 203,292
==============================
Net income per share:
Basic $ 0.04 $ 0.02
Diluted $ 0.04 $ 0.02
Shares used in computing net income per share:
Basic 11,205,844 10,846,460
Diluted 11,563,172 11,504,973
See accompanying notes.
4
GAIAM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the Three Months
Ended March 31,
2001 2000
---------------------------------
Operating activities
Net income $ 419,028 $ 203,292
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation 846,832 185,070
Amortization 148,738 102,357
Stock compensation 17,625 -
Minority interest in consolidated subsidiary 82,645 4,992
Deferred tax expense - 13,891
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable 311,406 840,603
Inventory (1,601,314) (1,347,842)
Deferred advertising costs 146,269 240,324
Capitalized production costs 22,303 (196,877)
Other current assets (338,722) (40,774)
Other assets (31,153) 19,662
Accounts payable 1,999,746 2,405,494
Accrued liabilities (661,410) (406,344)
Income taxes payable (188,610) 111,239
---------------------------------
Net cash provided by operating activities 1,173,383 2,135,087
---------------------------------
Investing activities
Purchase of property and equipment (467,656) (3,926,934)
Payments for acquisitions, net of cash acquired (3,400,663) -
---------------------------------
Net cash used in investing activities (3,868,319) (3,926,934)
---------------------------------
Financing activities
Principal payments on capital leases (28,819) (22,405)
Proceeds from issuance of common stock 19,109 -
Net proceeds from borrowings 500,000 -
---------------------------------
Net cash provided by (used in) financing activities 490,290 (22,405)
---------------------------------
Net change in cash and cash equivalents (2,204,646) (1,814,252)
Cash and cash equivalents at beginning of period 8,578,668 3,877,465
---------------------------------
Cash and cash equivalents at end of period $ 6,374,022 $ 2,063,213
=================================
Supplemental cash flow information
Interest paid $ 98,592 $ 48,609
Income taxes paid 490,000 -
See accompanying notes.
5
Gaiam, Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2001
1. Interim Condensed Consolidated Financial Statements
---------------------------------------------------
Organization and Nature of Operations
-------------------------------------
Gaiam, Inc. was incorporated under the laws of the State of Colorado
on July 7, 1988. Gaiam is a multi-channel lifestyle company providing
information, goods and services to customers who value personal
development, healthy living and the environment.
The accompanying consolidated financial statements include the
accounts of Gaiam, its subsidiaries and partnerships in which ownership
is greater than 50% and considered to be under the control of Gaiam. All
material intercompany accounts and transaction balances have been
eliminated in consolidation.
Preparation of Interim Condensed Consolidated Financial Statements
------------------------------------------------------------------
The interim condensed consolidated financial statements included
herein have been prepared by the management of Gaiam pursuant to the
rules and regulations of the United States Securities and Exchange
Commission, and, in the opinion of management, contain all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly Gaiam's consolidated financial position as of March 31, 2001
and the interim results of operations and cash flows for the three months
ended March 31, 2001 and 2000. These interim statements have not been
audited. The balance sheet as of December 31, 2000 was derived from
Gaiam's audited consolidated financial statements included in Gaiam's
annual report on Form 10-K.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principals have been condensed or omitted pursuant to
such rules and regulations. Accounting policies followed by Gaiam are
described in Note 1 to the audited financial statements for the fiscal
year ended December 31, 2000 included in Gaiam's annual report on Form
10-K. The consolidated financial statements contained herein should be
read in conjunction with the audited financial statements, including the
notes thereto, for the year ended December 31, 2000.
The consolidated financial position, results of operations and cash
flows for the interim periods disclosed within this report are not
necessarily indicative of future financial results.
6
Gaiam, Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2001
Use of Estimates
----------------
The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements.
Actual results could differ from those estimates.
Adoption of Accounting Standards
--------------------------------
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities, as
amended by Statements 137 and 138 in June 1999 and June 2000,
respectively. SFAS No. 133 was effective for Gaiam's fiscal year
beginning on January 1, 2001. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in
current earnings or other comprehensive income, depending on whether a
derivative is designed as part of a hedge transaction and, if it is, the
type of hedge transaction. The adoption of SFAS No. 133, effective
January 1, 2001, did not have any impact on Gaiam's consolidated
financial statements.
Reclassifications
-----------------
Certain reclassifications have been made to the 2000 financial
statements to conform with 2001 presentation.
2. Mergers and Acquisitions
------------------------
On January 29, 2001, Gaiam completed its merger with Real Goods
Trading Corporation. In the tax-free stock-for-stock transaction, Real
Goods shareholders received one share of Gaiam Class A common stock in
exchange for each ten shares of Real Goods stock owned. The merger was
accounted for using the purchase method.
On January 5, 2001 and February 1, 2001, respectively, Gaiam acquired
all of the stock of Earthlings, Inc. and Self Care, Inc. (companies under
common ownership with the Chief Executive Officer of Gaiam) at his
company's net investment cost plus transaction expenses. As these
companies were under common control, the purchase was accounted for using
historical costs. Therefore, the difference between the purchase price
and the value of net assets acquired was accounted for as a reduction to
additional paid-in capital, similar to a pooling transaction. Total
combined purchase price for both companies was $3,848,014.
7
Gaiam, Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2001
3. Stockholders' Equity
--------------------
During the first quarter of 2001, Gaiam agreed to issue approximately
481,424 shares of Class A common stock in conjunction with its merger
with Real Goods, and issued 3,897 shares of Class A common stock upon
exercise of options granted under the 1999 Long-Term Incentive Plan.
4. Earnings per Share
------------------
Basic earnings per share exclude any dilutive effects of options,
warrants, and dilutive securities. Basic earnings per share is computed
using the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed using the weighted
average number of common and common stock equivalent shares outstanding
during the period. Common equivalent shares are excluded from the
computation if their effect is antidilutive. All earnings per share
amounts for all period have been presented and conform to the Statement
No. 128 requirements.
The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended
March 31,
2001 2000
-------------- ------------
Net income $ 419,028 $ 203,292
============== ============
Denominator:
Weighted average shares for basic
earnings per share 11,205,844 10,846,460
Effect of Dilutive Securities:
Weighted average of common stock,
stock options, warrants and
convertible debentures 357,328 658,513
-------------- ------------
Denominator for diluted earnings per share 11,563,172 11,504,973
============== ============
Net income per share - basic $ 0.04 $ 0.02
Net income per share - diluted $ 0.04 $ 0.02
8
Gaiam, Inc.
Notes to Interim Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2001
5. Subsequent Events
-----------------
During April 2001, Gaiam entered into new credit agreements with Wells
Fargo Bank West N.A. These agreements increase Gaiam's borrowing
capacity from $6.5 million to $14.9 million. Under a revolving line of
credit Gaiam has availability of up to $10 million with a maturity date
of June 30, 2003, and under a term loan Gaiam may borrow up to $4.9
million, with a maturity of July 1, 2006. Borrowings under these
agreements bear interest at the lower of prime rate less 50 basis points
or LIBOR plus 275 basis points. These borrowings are secured by a pledge
of Gaiam's assets, and contain various financial covenants, including
prohibiting the payment of cash dividends to Gaiam's shareholders and
requiring the maintenance of certain financial ratios.
6. Segment Information
-------------------
Gaiam has two business segments: Direct to Consumer and Business to
Business; both of which sell products, services and information produced
or purchased from other suppliers. Although the customer bases do not
overlap to any significant extent, the production, purchase and delivery
processes overlap in some areas. Gaiam does not accumulate the balance
sheet by segment for purposes of management review.
Each of the two segments qualifies as such because each is more than
10% of combined revenue. Financial information for Gaiam's business
segments was as follows (contribution margin as used below is net sales,
less cost of goods sold and direct expenses):
For the Three Months Ended March 31,
2001 2000
----------------- ------------------
Net revenue:
Direct to consumer $ 10,536,386 $ 9,809,655
Business to business 7,135,127 $ 2,748,782
----------------- ------------------
Consolidated net revenue 17,671,513 12,558,437
Contribution margin:
Direct to consumer 97,736 44,376
Business to business 637,629 411,983
----------------- ------------------
Consolidated contribution margin 735,365 456,359
Reconciliation of contribution margin to net income:
Other income (expense) 67,698 (122,945)
Income tax expense 301,390 125,130
Minority interest expense 82,645 4,992
----------------- ------------------
Net income $ 419,028 $ 203,292
================= ==================
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of Gaiam's financial condition and
results of operations should be read in conjunction with the condensed
consolidated financial statements included elsewhere in this document.
Three months ended March 31, 2001 compared to three months ended March 31, 2000
- -------------------------------------------------------------------------------
Revenues increased 40.7% to $17.7 million for the three months ended March
31, 2001 from $12.6 million during the three months ended March 31, 2000.
Gaiam's internal growth rate was 21%, fueled primarily by the growth in sales of
Gaiam's proprietary products.
Gross profit, which consists of revenues less cost of sales (primarily
merchandise acquisition costs and in-bound freight) increased 41.7% to $10.8
million for the first quarter of 2001 from $7.6 million during the same period
in 2000. As a percentage of revenue, gross profit increased to 61.3% in 2001
from 60.8% in 2000. This increase in gross profit percentage was also primarily
the result of Gaiam's continuing efforts to increase the number of proprietary
products offered, on which Gaiam has better margins than other products.
Selling and operating expenses, which consist primarily of sales and
marketing costs, commission and fulfillment expenses, increased 40.8%,
consistent with the revenue increase of 40.7%, to $8.5 million for the three
months ended March 31, 2001 from $6.1 million for the same period in 2000. As a
percentage of revenues, selling and operating expenses were 48.3% for the
comparable periods in both 2001 and 2000.
Corporate, general and administrative expenses increased to $1.6 million
during the first quarter of 2001, from $1.1 million during 2000, primarily as a
result of Gaiam's growth. As a percentage of revenues, general and
administrative expenses decreased to 8.8% in 2001 from 8.9% in 2000.
Operating income, as a result of the factors described above, increased
61.1% to $735,365 for the three months ended March 31, 2001, from $456,359 for
the comparable period in 2000.
Gaiam recorded $67,698 in other income for the three months ended March
31, 2001 compared to $122,945 in other expense for the three month ended March
31, 2000.
Minority interest in net income of consolidated subsidiaries was $82,645
during the first quarter of 2001, compared to $4,992 during the first quarter of
2000.
Income tax provision increased to $301,390 for the three months ended
March 31, 2001 from $125,130 for the comparable period in 2000. The effective
tax rate on pre-tax income for both periods was 37.5%.
10
Net income, as a result of the factors described above, increased 106.1%
to $419,028 for the three months ended March 31, 2001, from $203,292 for the
three months ended March 31, 2000.
Three months ended March 31, 2000 compared to three months ended March 31, 1999
- -------------------------------------------------------------------------------
Revenues increased 32.3% to $12.6 million for the three months ended March
31, 2000 from $9.5 million during the three months ended March 31, 1999.
Gaiam's internal growth rate was 26% for the first quarter of 2000, fueled
primarily by the growth of its e-commerce business.
Gross profit, which consists of revenues less costs of sales, increased
35.4% to $7.6 million for the first quarter of 2000 from $5.6 million during the
same period in 1999. As a percentage of revenue, gross profit increased to
60.8% in 2000 from 59.4% in 1999. This increase in gross profit percentage was
primarily attributable to increases in the sales of proprietary or private-
labeled branded products, on which Gaiam has better margins than other products.
Selling and operating expenses, increased 32.5%, corresponding to the
revenue increase, to $6.1 million for the three months ended March 31, 2000 from
$4.6 million for the same period in 1999. As a percentage of revenues, selling
and operating expenses increased to 48.3% in 2000 from 48.2% in 1999.
Corporate, general and administrative expenses increased to $1.1 million
for the first quarter of 2000, compared to $953,565 for the corresponding period
in 1999. As a percentage of revenues, general and administrative expenses
decreased to 8.9% in 2000 from 10.0% in 1999.
Operating income, as a result of the factors described above, increased
316.2% to $456,359 for the three months ended March 31, 2000 from $109,661 for
the three months ended March 31, 1999.
Gaiam recorded $76,295 in other expense during the first quarter of 2000,
compared to other income of $147,748 for the comparable period in 1999. During
1999, Gaiam recognized a gain on the sale of its marketable securities of
$223,014. Interest expense declined to $46,650 for the three months ended March
31, 2000 from $95,126 for the three months ended March 31, 1999, due to a
reduction in debt levels.
Minority interest in net income increased to $4,992 for the three months
ended March 31, 2000 from a negative $4,253 for the same period in 1999.
Income tax provision of $125,130 for the three months ended March 31, 2000
as compared to a provision of $60,369 for the three months ended March 31, 1999.
11
Net income, as a result of the factors described above, increased 91.5% to
$203,292 for the three months ended March 31, 2000 from $106,167 for the
comparable period in 1999.
Liquidity and Capital Resources
- -------------------------------
Gaiam's capital needs arise from working capital required to fund our
operations, capital expenditures related to expansions and improvements to
Gaiam's infrastructure, development of e-commerce, and funds required in
connection with the acquisitions of new businesses and Gaiam's anticipated
future growth. These capital requirements depend on numerous factors, including
the rate of market acceptance of Gaiam's product offerings, the ability to
expand Gaiam's customer base, the cost of ongoing upgrades to Gaiam's product
offerings, the level of expenditures for sales and marketing, the level of
investment in distribution and other factors. The timing and amount of these
capital requirements cannot accurately be predicted. Additionally, Gaiam
continues to evaluate possible investments in businesses, products and
technologies, and plans to expand sales and marketing programs and conduct more
aggressive brand promotions.
During April 2001, Gaiam entered into new loan agreements with Wells Fargo
increasing Gaiam's borrowing capacity from $6.5 million to $14.9 million. The
new revolving line of credit, which extends through June 30, 2003, allows
borrowings up to $10 million based upon the collateral value of Gaiam's accounts
receivable and inventory held for resale. Wells Fargo has also provided Gaiam
with a term loan in the amount of up to $4.9 million, which matures on July 1,
2006, and allowed a $537,228 term note assumed as part of the Real Goods merger
to remain outstanding. Borrowings under these agreements are secured by a pledge
of Gaiam's assets, and bear interest at the lower of prime rate less 50 basis
points or LIBOR plus 275 basis points. The Wells Fargo credit agreements contain
various financial covenants and also prohibit Gaiam from paying cash dividends
to shareholders.
Gaiam's operating activities provided net cash of $1.2 million and $2.1
million for the three months ended March 31, 2001 and 2000, respectively.
Gaiam's net cash provided by operating activities for 2001 arose primarily from
an increase in cash generated from net income and depreciation and amortization.
Gaiam's net cash provided by operating activities for 2000 arose primarily from
increases in cash generated from income and non-cash expenses, seasonal
reductions in accounts receivable and deferred advertising costs, and an
increase in payables associated with direct-to-consumer web site costs.
Gaiam's investing and acquisition activities used cash of $3.9 million
for both for the three months ended March 31, 2001 and 2000. During the first
quarter of 2001, Gaiam completed its merger with Real Goods Trading Corporation,
and also acquired all of the stock and net assets of Earthlings, Inc. and Self
Care, Inc. for a total combined purchase price for both companies of $3.8
million. The cash used by investing activities in 2000 arose primarily from
costs associated with the direct-to-consumer website, and additional property
and equipment purchases to support Gaiam's increased business volume.
During the three months ended March 31, 2001, Gaiam's financing activities
provided $490,290 million in cash, as borrowing under Gaiam's line of credit
agreement
12
increased $500,000. During the three months ended March 31, 2000, Gaiam's
financing activities used cash of $22,405 for principal payments on capital
leases.
We believe our available cash, cash expected to be generated from
operations, and borrowing capabilities will be sufficient to fund our operations
on both a short-term and long-term basis. However, our projected cash needs may
change as a result of acquisitions, unforeseen operational difficulties or other
factors.
In the normal course of our business, we investigate, evaluate and discuss
acquisition, joint venture, majority and minority investment, strategic
relationship and other business combination opportunities in the Lohas
(Lifestyles of Health and Sustainability) industry. In the event of any future
investment, acquisition or joint venture opportunities, we may consider using
then-available liquidity, issuing equity securities or incurring additional
indebtedness.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We do not believe that any of our financial instruments have significant
risk associated with market sensitivity. We are not exposed to financial market
risks from changes in foreign exchange rates and are only minimally impacted by
changes in interest rates. Borrowing under our bank credit facility are at a
variable rate of interest, and based on the current level of borrowings, we
experience only modest changes in interest expense when market interest rates
change. However, in the future, we may enter into transactions denominated in
non-U.S. currencies or increase the level of our borrowings, which could
increase our exposure to these market risks. We have not used, and currently do
not contemplate using, any derivative financial instruments.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Gaiam is not party to any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
13
None.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
None
b) Reports on Form 8-K.
On February 12, 2001, Gaiam filed a current report on Form 8-K
reporting, under items 2 and 7, the acquisition of Real Goods
Trading Corporation, and incorporating by reference to Gaiam's
registration statement on Form S-4 dated December 6, 2000 certain
financial statements of Real Goods and certain pro forma financial
information.
14
Signatures
In accordance with the requirements of the Securities and Exchange Act, the
registrant caused this report to be signed on its behalf, by the undersigned,
thereunto duly authorized.
Gaiam, Inc.
(Registrant)
May 14, 2001
By: /s/ Jirka Rysavy
Jirka Rysavy
Chief Executive Officer
/s/ Janet Mathews
Janet Mathews
Chief Financial and
Accounting Officer
15