Gaiam (GAIA)

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product and service offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires on October 22, 2009.  The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At March 31, 2009, we had no amounts outstanding under this agreement; however, $0.5 million was reserved for outstanding letters of credit.  We believe we have complied with all of the financial covenants under this credit agreement.

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires in October  2009.  The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At December 31, 2008, we had no amounts outstanding under this agreement; however, $1.4 million was reserved for outstanding letters of credit.  We believe we have complied with all of the financial covenants under this credit agreement.

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Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires in October  2009.  The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At December 31, 2008, we had no amounts outstanding under this agreement; however, $1.4 million was reserved for outstanding letters of credit.  We believe we have complied with all of the financial covenants under this credit agreement.

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Liquidity and Capital Resources

Our capital needs
arise from working capital required to fund operations, capital expenditures
related to acquisition and development of media content, development of our
Internet and community platforms and new products, acquisitions of new
businesses, replacements, expansions and improvements to our infrastructure,
and future growth. These capital requirements depend on numerous factors,
including the rate of market acceptance of our product offerings, the ability
to expand our customer base, the cost of ongoing upgrades to our product
offerings, the level of expenditures for sales and marketing, the level of
investment in distribution systems and facilities and other factors. The timing
and amount of these capital requirements are variable and we cannot accurately
predict them. Additionally, we will continue to pursue opportunities to expand
our media libraries, evaluate possible investments in businesses, products and
technologies, and increase our sales and marketing programs and brand
promotions as needed.

We have a revolving line
of credit agreement with a financial institution that expires in October 
2009.  The credit agreement permits
borrowings up to the lesser of $15 million or our borrowing base which is
calculated based upon the collateral value of our accounts receivable,
inventory, and certain property and equipment. Borrowings under this agreement
bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275
basis points. Borrowings are secured by a pledge of certain of our assets, and
the agreement contains various financial covenants, including those requiring
compliance with certain financial ratios. At December 31, 2008, we had no
amounts outstanding under this agreement; however, $1.4 million was reserved
for outstanding letters of credit.  We
believe we have complied with all of the financial covenants under this credit
agreement.

24

Liquidity and Capital Resources

Our capital needs
arise from working capital required to fund operations, capital expenditures
related to acquisition and development of media content, development of our
Internet and community platforms and new products, acquisitions of new
businesses, replacements, expansions and improvements to our infrastructure,
and future growth. These capital requirements depend on numerous factors,
including the rate of market acceptance of our product offerings, the ability
to expand our customer base, the cost of ongoing upgrades to our product
offerings, the level of expenditures for sales and marketing, the level of
investment in distribution systems and facilities and other factors. The timing
and amount of these capital requirements are variable and we cannot accurately
predict them. Additionally, we will continue to pursue opportunities to expand
our media libraries, evaluate possible investments in businesses, products and
technologies, and increase our sales and marketing programs and brand
promotions as needed.

We have a revolving line
of credit agreement with a financial institution that expires in October 
2009.  The credit agreement permits
borrowings up to the lesser of $15 million or our borrowing base which is
calculated based upon the collateral value of our accounts receivable,
inventory, and certain property and equipment. Borrowings under this agreement
bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275
basis points. Borrowings are secured by a pledge of certain of our assets, and
the agreement contains various financial covenants, including those requiring
compliance with certain financial ratios. At December 31, 2008, we had no
amounts outstanding under this agreement; however, $1.4 million was reserved
for outstanding letters of credit.  We
believe we have complied with all of the financial covenants under this credit
agreement.

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Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires on October 22, 2009.  The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At September 30, 2008, we had no amounts outstanding under this agreement; however, $1.2 million was reserved for outstanding letters of credit.  We believe we have complied with all of the financial covenants under this credit agreement.

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Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales

14

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires on October 22, 2009.  The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBOR plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At March 31, 2008, we had no amounts outstanding under this agreement; however, $1.0 million was reserved for outstanding letters of credit.  We believe we have complied with all of the financial covenants under this credit agreement.

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires on October 22, 2009. The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBO plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At December 31, 2007, we had no amounts outstanding under this agreement; however, $1.2 million was reserved for outstanding letters of credit. We believe we have complied with all of the financial covenants under this credit agreement.

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development of our Internet and community platforms and new products, acquisitions of new businesses, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our product offerings, the ability to expand our customer base, the cost of ongoing upgrades to our product offerings, the level of expenditures for sales and marketing, the level of investment in distribution systems and facilities and other factors. The timing and amount of these capital requirements are variable and we cannot accurately predict them. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses, products and technologies, and increase our sales and marketing programs and brand promotions as needed.

We have a revolving line of credit agreement with a financial institution that expires on October 22, 2009.  The credit agreement permits borrowings up to the lesser of $15 million or our borrowing base which is calculated based upon the collateral value of our accounts receivable, inventory, and certain property and equipment. Borrowings under this agreement bear interest at the lower of prime rate less 75 basis points or LIBO plus 275 basis points. Borrowings are secured by a pledge of certain of our assets, and the agreement contains various financial covenants, including those requiring compliance with certain financial ratios. At December 31, 2007, we had no amounts outstanding under this agreement; however, $1.2 million was reserved for outstanding letters of credit.  We believe we have complied with all of the financial covenants under this credit agreement.

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Liquidity
and Capital Resources

Our capital needs
arise from working capital required to fund operations, capital expenditures
related to acquisition and development of media content, development of our
Internet and community platforms and new products, acquisitions of new
businesses, replacements, expansions and improvements to our infrastructure,
and future growth. These capital requirements depend on numerous factors,
including the rate of market acceptance of our product offerings, the ability
to expand our customer base, the cost of ongoing upgrades to our product
offerings, the level of expenditures for sales and marketing, the level of
investment in distribution systems and facilities and other factors. The timing
and amount of these capital requirements are variable and we cannot accurately
predict them. Additionally, we will continue to pursue opportunities to expand
our media libraries, evaluate possible investments in businesses, products and
technologies, and increase our sales and marketing programs and brand
promotions as needed.

We
have a revolving line of credit agreement with a financial institution that
expires on October 22, 2009.  The
credit agreement permits borrowings up to the lesser of $15 million or our
borrowing base which is calculated based upon the collateral value of our
accounts receivable, inventory, and certain property and equipment. Borrowings
under this agreement bear interest at the lower of prime rate less 75 basis
points or LIBO plus 275 basis points. Borrowings are secured by a pledge of
certain of our assets, and the agreement contains various financial covenants,
including those requiring compliance with certain financial ratios. At December 31,
2007, we had no amounts outstanding under this agreement; however, $1.2 million
was reserved for outstanding letters of credit. 
We believe we have complied with all of the financial covenants under
this credit agreement.

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