United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
|
|
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172023
OR
|
|
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 000-27517
GAIA, INC.INC.
(Exact name of registrant as specified in its charter)
| 84-1113527 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
833 WEST SOUTH BOULDER ROAD,
LOUISVILLE COLORADO , COLORADO 80027
(Address of principal executive offices)
(303) (303) 222-3600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A Common Stock | GAIA | NASDAQ Global Market |
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 Yes☒ NO 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 Yes☒ NO No☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer |
|
Non-accelerated filer |
| Smaller reporting company |
|
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class | Outstanding at | |
Class A Common Stock ($ |
| |
Class B Common Stock ($ | 5,400,000 |
FORM 10-Q
INDEX
Item 1. | 3 | |
4 | ||
5 | ||
6 | ||
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 | 7 | |
Notes to interim condensed consolidated financial statements |
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
Item 3. |
| |
Item 4. |
| |
| ||
Item |
| |
Item |
| |
Item 2. |
| 17 |
Item 3. | 17 | |
Item 4. | 17 | |
Item 5. | 17 | |
Item 6. | 18 | |
19 |
PART I—FINANCIAL INFORMATION
Item 1.Financial StatementsStatements (Unaudited)
Unaudited Interim Condensed Consolidated Financial Statements
We have prepared our unaudited interim condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. CertainWhile certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to these rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited interim condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly, in all material respects, our consolidated financial position as of September 30, 2017,2023, the interim results of operations for the three and nine months ended September 30, 20172023 and 2016,2022, and cash flows for the nine months ended September 30, 20172023 and 2016.2022. Operating results for the three and nine-month periodsnine months ended September 30, 20172023 and 2022 are not necessarily indicative of the results that may be expected for a full year or any future interim period. These interim statements have not been audited. The balance sheet as of December 31, 20162022 was derived from our audited consolidated financial statements included in our annual reportAnnual Report on Form 10-K. The interim condensed consolidated financial statements contained herein should be read in conjunction with our audited consolidated financial statements, including the notes thereto, for the year ended December 31, 2016.2022.
GAIA, INC.
Condensed Consolidated Balance Sheets
|
| September 30, |
|
| December 31, |
| ||
(in thousands, except share and per share data) |
| 2023 |
|
| 2022 |
| ||
|
| (unaudited) |
| |||||
ASSETS |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash |
| $ | 11,229 |
|
| $ | 11,562 |
|
Accounts receivable |
|
| 3,829 |
|
|
| 2,955 |
|
Prepaid expenses and other current assets |
|
| 4,132 |
|
|
| 2,656 |
|
Total current assets |
|
| 19,190 |
|
|
| 17,173 |
|
Media library, software and equipment, net |
|
| 50,481 |
|
|
| 51,115 |
|
Right-of-use lease asset, net |
|
| 6,492 |
|
|
| 7,093 |
|
Real estate, investment and other assets, net |
|
| 30,296 |
|
|
| 30,979 |
|
Goodwill |
|
| 31,943 |
|
|
| 31,943 |
|
Total assets |
| $ | 138,402 |
|
| $ | 138,303 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Accounts payable, accrued and other liabilities |
| $ | 14,051 |
|
| $ | 12,355 |
|
Short-term debt and lease liability |
|
| 9,920 |
|
|
| 894 |
|
Deferred revenue |
|
| 15,334 |
|
|
| 14,124 |
|
Total current liabilities |
|
| 39,305 |
|
|
| 27,373 |
|
Long-term debt, net |
|
| 5,842 |
|
|
| 14,958 |
|
Long-term lease liability |
|
| 5,911 |
|
|
| 6,489 |
|
Deferred taxes |
|
| 499 |
|
|
| 499 |
|
Total liabilities |
|
| 51,557 |
|
|
| 49,319 |
|
Shareholders’ equity: |
|
|
|
|
|
| ||
Class A common stock, $0.0001 par value, 150,000,000 shares |
|
| 1 |
|
|
| 1 |
|
Class B common stock, $0.0001 par value, 50,000,000 shares |
|
| 1 |
|
|
| 1 |
|
Additional paid-in capital |
|
| 165,490 |
|
|
| 164,180 |
|
Accumulated deficit |
|
| (78,647 | ) |
|
| (75,198 | ) |
Total shareholders’ equity |
|
| 86,845 |
|
|
| 88,984 |
|
Total liabilities and shareholders’ equity |
| $ | 138,402 |
|
| $ | 138,303 |
|
The year-end condensed consolidated balance sheets
|
| September 30, |
|
| December 31, |
| ||
(in thousands, except share and per share data) |
| 2017 |
|
| 2016 |
| ||
|
| (unaudited) |
|
|
|
|
| |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
| $ | 30,107 |
|
| $ | 54,027 |
|
Accounts receivable |
|
| 836 |
|
|
| 554 |
|
Prepaid expenses and other current assets |
|
| 2,505 |
|
|
| 1,303 |
|
Total current assets |
|
| 33,448 |
|
|
| 55,884 |
|
|
|
|
|
|
|
|
|
|
Building and land, net |
|
| 17,055 |
|
|
| 16,896 |
|
Media library, software and equipment, net |
|
| 18,722 |
|
|
| 12,861 |
|
Goodwill |
|
| 10,609 |
|
|
| 10,609 |
|
Investments and other assets |
|
| 11,000 |
|
|
| 10,946 |
|
Total assets |
| $ | 90,834 |
|
| $ | 107,196 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ | 6,318 |
|
| $ | 6,672 |
|
Deferred revenue |
|
| 3,253 |
|
|
| 2,434 |
|
Total current liabilities |
|
| 9,571 |
|
|
| 9,106 |
|
Deferred taxes |
|
| — |
|
|
| 553 |
|
Contingencies |
|
|
|
|
|
|
|
|
Equity |
|
| 81,263 |
|
|
| 97,537 |
|
Total liabilities and equity |
| $ | 90,834 |
|
| $ | 107,196 |
|
sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. See accompanying notes to the interim condensed consolidated financial statements.
4
GAIA, INC.
Condensed consolidated statementsConsolidated Statements of operationsOperations
|
| For the Three Months Ended September 30, |
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2017 |
|
| 2016 |
| 2017 |
|
| 2016 |
| ||||
|
| (unaudited) |
| (unaudited) |
| ||||||||||
Net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Streaming |
| $ | 7,025 |
|
| $ | 3,802 |
| $ | 18,290 |
|
| $ | 10,641 |
|
DVD subscription and other |
|
| 497 |
|
|
| 660 |
|
| 1,574 |
|
|
| 1,849 |
|
Total net revenues |
|
| 7,522 |
|
|
| 4,462 |
|
| 19,864 |
|
|
| 12,490 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Streaming |
|
| 958 |
|
|
| 636 |
|
| 2,541 |
|
|
| 1,952 |
|
DVD subscription and other |
|
| 79 |
|
|
| 65 |
|
| 225 |
|
|
| 209 |
|
Total cost of revenues |
|
| 1,037 |
|
|
| 701 |
|
| 2,766 |
|
|
| 2,161 |
|
Gross profit |
|
| 6,485 |
|
|
| 3,761 |
|
| 17,098 |
|
|
| 10,329 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and operating |
|
| 10,784 |
|
|
| 6,536 |
|
| 31,812 |
|
|
| 17,383 |
|
Corporate, general and administration |
|
| 1,528 |
|
|
| 1,439 |
|
| 4,321 |
|
|
| 4,215 |
|
Total operating expenses |
|
| 12,312 |
|
|
| 7,975 |
|
| 36,133 |
|
|
| 21,598 |
|
Loss from operations |
|
| (5,827 | ) |
|
| (4,214 | ) |
| (19,035 | ) |
|
| (11,269 | ) |
Interest and other (expense) income, net |
|
| 62 |
|
|
| 20 |
|
| 150 |
|
|
| (133 | ) |
Loss before income taxes |
|
| (5,765 | ) |
|
| (4,194 | ) |
| (18,885 | ) |
|
| (11,402 | ) |
Income tax benefit |
|
| (131 | ) |
|
| (4,043 | ) |
| (760 | ) |
|
| (4,041 | ) |
Loss from continuing operations |
|
| (5,634 | ) |
|
| (151 | ) |
| (18,125 | ) |
|
| (7,361 | ) |
Income from discontinued operations, net of tax |
|
| 429 |
|
|
| 100,595 |
|
| 429 |
|
|
| 97,741 |
|
Net Income (loss) |
| $ | (5,205 | ) |
| $ | 100,444 |
| $ | (17,696 | ) |
| $ | 90,380 |
|
Income (loss) per share—basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
| $ | (0.37 | ) |
| $ | (0.01 | ) | $ | (1.20 | ) |
| $ | (0.34 | ) |
Discontinued operations |
|
| 0.03 |
|
|
| 6.65 |
|
| 0.03 |
|
|
| 4.56 |
|
Basic and diluted net income (loss) per share |
| $ | (0.34 | ) |
| $ | 6.64 |
| $ | (1.17 | ) |
| $ | 4.22 |
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
| 15,161 |
|
|
| 15,138 |
|
| 15,157 |
|
|
| 21,417 |
|
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
| (unaudited) |
|
| (unaudited) |
| ||||||||||
Revenues, net |
| $ | 20,223 |
|
| $ | 19,907 |
|
| $ | 59,709 |
|
| $ | 62,458 |
|
Cost of revenues |
|
| 2,983 |
|
|
| 2,648 |
|
|
| 8,595 |
|
|
| 8,312 |
|
Gross profit |
|
| 17,240 |
|
|
| 17,259 |
|
|
| 51,114 |
|
|
| 54,146 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling and operating |
|
| 16,254 |
|
|
| 15,543 |
|
|
| 49,462 |
|
|
| 48,197 |
|
Corporate, general and administration |
|
| 1,433 |
|
|
| 2,019 |
|
|
| 4,726 |
|
|
| 5,598 |
|
Acquisition costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 49 |
|
Total operating expenses |
|
| 17,687 |
|
|
| 17,562 |
|
|
| 54,188 |
|
|
| 53,844 |
|
Income (loss) from operations |
|
| (447 | ) |
|
| (303 | ) |
|
| (3,074 | ) |
|
| 302 |
|
Interest and other expense, net |
|
| (141 | ) |
|
| (65 | ) |
|
| (375 | ) |
|
| (175 | ) |
SEC settlement |
|
| — |
|
|
| (2,000 | ) |
|
| — |
|
|
| (2,000 | ) |
Loss before income taxes |
|
| (588 | ) |
|
| (2,368 | ) |
|
| (3,449 | ) |
|
| (1,873 | ) |
Provision for (benefit from) income taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Loss from continuing operations |
|
| (588 | ) |
|
| (2,368 | ) |
|
| (3,449 | ) |
|
| (1,873 | ) |
Loss from discontinued operations |
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (300 | ) |
Net loss |
| $ | (588 | ) |
| $ | (2,375 | ) |
| $ | (3,449 | ) |
| $ | (2,173 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| $ | (0.03 | ) |
| $ | (0.11 | ) |
| $ | (0.16 | ) |
| $ | (0.09 | ) |
Discontinued operations |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | (0.01 | ) |
Basic earnings (loss) per share |
| $ | (0.03 | ) |
| $ | (0.11 | ) |
| $ | (0.16 | ) |
| $ | (0.10 | ) |
Diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| $ | (0.03 | ) |
| $ | (0.11 | ) |
| $ | (0.16 | ) |
| $ | (0.09 | ) |
Discontinued operations |
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | (0.01 | ) |
Diluted earnings (loss) per share |
| $ | (0.03 | ) |
| $ | (0.11 | ) |
| $ | (0.16 | ) |
| $ | (0.10 | ) |
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic |
|
| 21,154 |
|
|
| 20,806 |
|
|
| 20,951 |
|
|
| 20,686 |
|
Diluted |
|
| 21,154 |
|
|
| 20,806 |
|
|
| 20,951 |
|
|
| 20,686 |
|
See accompanying notes to the interim condensed consolidated financial statements.
5
GAIA, INC.
Condensed consolidated statementsConsolidated Statements of cash flowsChanges in Shareholders’ Equity
|
| (unaudited) |
| |||||||||||||||||
(in thousands, except shares) |
| Total Shareholders’ |
|
| Accumulated |
|
| Common |
|
| Additional |
|
| Common |
| |||||
Balance at January 1, 2022 |
| $ | 90,215 |
|
| $ | (72,103 | ) |
| $ | 2 |
|
| $ | 162,316 |
|
|
| 20,461,337 |
|
Issuance of Gaia, Inc. common stock for RSU releases and share-based compensation |
|
| 540 |
|
|
| — |
|
|
| — |
|
|
| 540 |
|
|
| 313,823 |
|
Net income |
|
| 86 |
|
|
| 86 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Balance at March 31, 2022 |
| $ | 90,841 |
|
| $ | (72,017 | ) |
| $ | 2 |
|
| $ | 162,856 |
|
|
| 20,775,160 |
|
Issuance of Gaia, Inc. common stock for RSU releases, employee stock purchase plan, stock option exercises and share-based compensation |
|
| 433 |
|
|
| — |
|
|
| — |
|
|
| 433 |
|
|
| 31,026 |
|
Net Income |
|
| 116 |
|
|
| 116 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Balance at June 30, 2022 |
| $ | 91,390 |
|
| $ | (71,901 | ) |
| $ | 2 |
|
| $ | 163,289 |
|
|
| 20,806,186 |
|
Share-based compensation |
|
| 337 |
|
|
| — |
|
|
| — |
|
|
| 337 |
|
|
| — |
|
Net loss |
|
| (2,375 | ) |
|
| (2,375 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Balance at September 30, 2022 |
| $ | 89,352 |
|
| $ | (74,276 | ) |
| $ | 2 |
|
| $ | 163,626 |
|
|
| 20,806,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at January 1, 2023 |
| $ | 88,984 |
|
| $ | (75,198 | ) |
| $ | 2 |
|
| $ | 164,180 |
|
|
| 20,806,186 |
|
Issuance of Gaia, Inc. common stock for RSU releases and share-based compensation |
|
| 104 |
|
|
| — |
|
|
| — |
|
|
| 104 |
|
|
| 19,606 |
|
Net loss |
|
| (1,143 | ) |
|
| (1,143 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Balance at March 31, 2023 |
| $ | 87,945 |
|
| $ | (76,341 | ) |
| $ | 2 |
|
| $ | 164,284 |
|
|
| 20,825,792 |
|
Issuance of Gaia, Inc. common stock for media library acquisition |
|
| 669 |
|
|
| — |
|
|
| — |
|
|
| 669 |
|
|
| 272,980 |
|
Issuance of Gaia, Inc. common stock for RSU releases, employee stock purchase plan, and share-based compensation |
|
| 481 |
|
|
| — |
|
|
| — |
|
|
| 481 |
|
|
| 55,653 |
|
Net loss |
|
| (1,718 | ) |
|
| (1,718 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Balance at June 30, 2023 |
| $ | 87,377 |
|
| $ | (78,059 | ) |
| $ | 2 |
|
| $ | 165,434 |
|
|
| 21,154,425 |
|
Share-based compensation |
|
| 56 |
|
|
| — |
|
|
| — |
|
|
| 56 |
|
|
| — |
|
Net loss |
|
| (588 | ) |
|
| (588 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
Balance at September 30, 2023 |
| $ | 86,845 |
|
| $ | (78,647 | ) |
| $ | 2 |
|
| $ | 165,490 |
|
|
| 21,154,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Nine Months Ended September 30, |
| |||||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
|
| (unaudited) |
| |||||
Operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | (17,696 | ) |
| $ | 90,380 |
|
Income from discontinued operations |
|
| (429 | ) |
|
| (97,741 | ) |
Loss from continuing operations |
|
| (18,125 | ) |
|
| (7,361 | ) |
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 3,452 |
|
|
| 2,757 |
|
Share-based compensation expense |
|
| 1,254 |
|
|
| 381 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
| (282 | ) |
|
| (211 | ) |
Prepaid expenses and other assets |
|
| (1,254 | ) |
|
| (584 | ) |
Accounts payable and accrued liabilities |
|
| (820 | ) |
|
| 329 |
|
Deferred revenue |
|
| 819 |
|
|
| 540 |
|
Net cash used in operating activities – continuing operations |
|
| (14,956 | ) |
|
| (4,149 | ) |
Net cash used in operating activities – discontinued operations |
|
| 429 |
|
|
| (4,849 | ) |
Net cash used in operating activities |
|
| (14,527 | ) |
|
| (8,998 | ) |
Investing activities: |
|
|
|
|
|
|
|
|
Additions to media library, property and equipment |
|
| (9,472 | ) |
|
| (4,484 | ) |
Purchase of investment |
|
| — |
|
|
| (10,020 | ) |
Net cash used in investing activities—continuing operations |
|
| (9,472 | ) |
|
| (14,504 | ) |
Net cash provided by investing activities—discontinued operations |
|
| — |
|
|
| 161,808 |
|
Net cash provided by (used in) investing activities |
|
| (9,472 | ) |
|
| 147,304 |
|
Financing activities: |
|
|
|
|
|
|
|
|
Proceeds from the issuance of stock |
|
| 79 |
|
|
| 994 |
|
Repurchases of stock |
|
| — |
|
|
| (76,168 | ) |
Drawdowns on line of credit |
|
| — |
|
|
| 3,000 |
|
Repayments on line of credit |
|
| — |
|
|
| (3,000 | ) |
Dividends paid to noncontrolling interest |
|
| — |
|
|
| (1,944 | ) |
Net cash provided by (used in) financing activities |
|
| 79 |
|
|
| (77,118 | ) |
Net increase (decrease) in cash |
|
| (23,920 | ) |
|
| 61,188 |
|
Cash at beginning of period |
|
| 54,027 |
|
|
| 1,266 |
|
Cash at end of period |
| $ | 30,107 |
|
| $ | 62,454 |
|
See accompanying notes to the interim condensed consolidated financial statements.
GAIA, INC.
Condensed Consolidated Statements of Cash Flows
|
| For the Nine Months Ended September 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
|
| (unaudited) |
| |||||
Operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (3,449 | ) |
| $ | (2,173 | ) |
Loss from discontinued operations |
|
| — |
|
|
| 300 |
|
Loss from continuing operations |
|
| (3,449 | ) |
|
| (1,873 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 12,702 |
|
|
| 12,009 |
|
Share-based compensation expense |
|
| 599 |
|
|
| 1,267 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
| ||
Accounts receivable |
|
| (874 | ) |
|
| (393 | ) |
Prepaid expenses and other assets |
|
| (1,821 | ) |
|
| (752 | ) |
Accounts payable and accrued liabilities |
|
| 1,714 |
|
|
| (1,612 | ) |
Deferred revenue |
|
| 1,210 |
|
|
| (273 | ) |
Net cash provided by operating activities - continuing operations |
|
| 10,081 |
|
|
| 8,373 |
|
Net cash used in operating activities - discontinued operations |
|
| — |
|
|
| (300 | ) |
Net cash provided by operating activities |
|
| 10,081 |
|
|
| 8,073 |
|
Investing activities: |
|
|
|
|
|
| ||
Additions to media library, software and equipment |
|
| (10,371 | ) |
|
| (14,056 | ) |
Acquisitions, net of cash acquired, and purchase of intangible assets |
|
| — |
|
|
| (847 | ) |
Net cash used in investing activities |
|
| (10,371 | ) |
|
| (14,903 | ) |
Financing activities: |
|
|
|
|
|
| ||
Repayment of debt |
|
| (19,985 | ) |
|
| (141 | ) |
Proceeds from short-term borrowings |
|
| 19,900 |
|
|
| 7,500 |
|
Proceeds from the issuance of common stock |
|
| 42 |
|
|
| 43 |
|
Net cash provided by (used in) financing activities |
|
| (43 | ) |
|
| 7,402 |
|
Net change in cash |
|
| (333 | ) |
|
| 572 |
|
Cash at beginning of period |
|
| 11,562 |
|
|
| 10,269 |
|
Cash at end of period |
| $ | 11,229 |
|
| $ | 10,841 |
|
Supplemental cash flow information |
|
|
|
|
|
| ||
Interest paid |
| $ | 394 |
|
| $ | 201 |
|
Value of shares issued for acquisition of content added to Media Library |
| $ | 669 |
|
|
| — |
|
See accompanying notes to the interim condensed consolidated financial statements.
7
Notes to interim condensed consolidatedconsolidated financial statements
References in this report to “we”, “us”, “our” or “Gaia” refer to Gaia, Inc. and its consolidated subsidiaries, unless we indicate otherwise. All textual currency references are expressed in thousands of U.S. dollars (unless otherwise indicated).
1. Organization, Nature of Operations, and Principles of Consolidation
Gaia, Inc., was incorporated under the laws of the State of Colorado in 1988 and (“Gaia,” “we” or “us”) operates a global digital video subscription service and on-line community that caters to a unique and underserved subscribermember base. Our digital content library includes over 10,000 titles, with a growing selection of over 8,000 titles is available to our subscribers on most Internet-connected devices anytime, anywhere, commercial free.in Spanish, German and French. Our subscribersmembers have unlimited access to athis vast library of inspiring films, cutting edge documentaries, interviews, yoga classes, transformation relatedtransformation-related content and more – 90%88% of which is exclusively available to our subscribersmembers for digital streaming.streaming on most internet-connected devices anytime, anywhere, commercial free.
Our mission is to create a transformational network that empowers a global conscious community. Content on our network is currently organized into four primary channels—Yoga, Transformation, Alternative Healing, and Seeking Truth—and delivered directly to our subscribersmembers through our streaming platform and currently curated into three channels: Yoga, Transformation and Seeking Truth.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 over 80%comprises approximately 75% of total views on Gaia.our members’ viewing time. We complement our produced and owned content through long term predominately exclusive, licensing agreements.
We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”), and they include our accounts and those of our subsidiaries. Intercompany transactions and balances have been eliminated. The unaudited condensed consolidated financial position, results of operations and cash flows for the interim periods disclosed in this report are not necessarily indicative of future financial results.
There have been no material changes in our significant accounting policies as discloseddescribed in our Annual reportReport on Form 10-K for the year ended December 31, 2016.2022.
Use of Estimates and Reclassifications
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and disclosures. Although we base these estimates on our best knowledge of current events and actions that we may undertake in the future, actual results may be different from the estimates. We have made certain reclassifications to prior period amounts to conform to the current period presentations.
Discontinued Operations
Accounting Pronouncements AdoptedYoga International historically had a line of business focused on one-time transactional course sales. With the launch of a premium membership tier that includes this content, this line of business was discontinued in 2017
In March 2016,2022 as the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-09, Improvementscontractual commitments related to Employee Share-Based Payment Accounting, which amends Topic 718, Compensation – Stock Compensation. ASU No. 2016-09 simplifies several aspectsthis line of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equitybusiness lapsed. There are no other assets or liabilities associated with this revenue stream. As this represents a strategic shift with a major effect on our operations and classification on the statement of cash flows. ASU No. 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. We adopted this guidance effective January 1, 2017. The adoption impact on the consolidated condensed balance sheet was a cumulative-effect adjustment of $0.2 million, increasing opening retained earnings and decreasing paid-in capital.
Recent Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment, to simplify financial reporting by eliminating the need to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under ASU 2017-04, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, up to the amount of goodwill allocated to that reporting unit. The new guidance effectively eliminates “Step 2” from the previous goodwill impairment test. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. Weresults, we have not determined if we will adopt the new guidance early, but do not expect the adoption of ASU 2017-04 to have a significant impact onpresented the results of our goodwill impairment testing.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lesseeoperations related to record a ROU asset and a lease liabilitywinding up this line of business as discontinued operations on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the patternaccompanying condensed consolidated statement of expense recognitionoperations in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Based on our preliminary assessment, we do not expect the new standard to have a material impact on our reported financial position or results2022.
2. Revenue Recognition
Revenues consist primarily of operations.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The standard superseded most previous revenue recognition rules, and will become effective for us in the first quarter of 2018. The core principle of the standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. Our revenue transactions typically consist of a single, distinct, fixed-price performance obligation that is delivered to the customer at a single point in time, or over a subscription period. The Company will adopt ASU 2014-09 in the first quarter of 2018 using the modified retrospective approach. Because the Company's primary source of revenues are from subscription fees whichpaid by our members. We present revenues net of taxes collected from members. Members are billed in advance and revenues are recognized ratably over eachthe subscription term. Deferred revenue consists of subscription fees collected from members that have not been earned and is recognized ratably over the remaining term of the subscription. We recognize revenue on a net basis for relationships where our partners have the primary relationship, including billing and service delivery, with the member. Payments made to partners to assist in promoting our service on their platforms are expensed as marketing expenses in the period weincurred. We do not expect the impact onallow access to our consolidated financial statementsservice to be material.
2. Discontinued Operations
On May 4, 2016, we sold our 51.4% equity interest in Natural Habitat, Inc., our eco-travel subsidiary, in exchange for $12.9 million, and recognizedprovided as part of a gain of $10.3 million as disclosed in our Current Report on Form 8-K filed May 10, 2016.
On July 1, 2016, we sold the assets and liabilitiesbundle by any of our Gaiam Brand business in exchange for a gross purchase price of $167 million, subject to closing expenses and post-closing adjustments, as disclosed in our Current Reports on Form 8-K filed May 10, 2016 and July 8, 2016. Our Gaiam Brand business previously constituted the majority of our consolidated revenues and expenses, and consisted of Gaiam branded yoga, fitness and wellness consumer products.partners.
The Gaiam Brand business and our interest in our eco-travel subsidiary constituted all the assets and liabilities of our Gaiam Brand segment. The assets and liabilities, operating results, and cash flows of our Gaiam Brand segment are presented as discontinued operations, separate from our continuing operations, for applicable periods presented in these interim condensed consolidated financial statements and footnotes, unless otherwise indicated.
Income from discontinued operations for the three and nine months ended September 30, 2017, as reported on our condensed consolidated statements of operations, is comprised of an income tax benefit of $0.4 million.
The income from discontinued operations for the three and nine months ended September 30, 2016 , as reported on our condensed consolidated statements of operations, were comprised of the following amounts:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||
(in thousands) |
| 2016 |
|
| 2016 |
| ||
Net revenue |
| $ | — |
|
| $ | 52,627 |
|
Cost of goods sold |
|
| — |
|
|
| 32,975 |
|
Gross profit |
|
| — |
|
|
| 19,652 |
|
Operating expenses |
|
| 1,042 |
|
|
| 33,641 |
|
Loss from operations |
|
| (1,042 | ) |
|
| (13,989 | ) |
Other income (expense) |
|
| — |
|
|
| 234 |
|
Loss before income taxes |
|
| (1,042 | ) |
|
| (13,755 | ) |
Income tax benefit |
|
| (4,989 | ) |
|
| (4,831 | ) |
Loss from discontinued operations attributable to the non-controlling interest, net of tax |
|
| — |
|
|
| (310 | ) |
Income (loss) from the operation of discontinued operations |
|
| 3,947 |
|
|
| (9,234 | ) |
Gain on sale of Gaiam Brand segment, net of tax |
|
| 100,388 |
|
|
| 110,715 |
|
Write-off of assets impacted by, but not included in sale |
|
| 3,740 |
|
|
| 3,740 |
|
Income from discontinued operations, net of tax |
| $ | 100,595 |
|
| $ | 97,741 |
|
3. Equity and Share-Based Compensation
During the first nine months of 2017, we issued 1,059 shares of our Class A common stock under our 2009 Long-Term Incentive Plan to our independent directors, in lieu of cash compensation, for services rendered in 2017. We valued the shares issued to our independent directors at estimated fair value based on the closing price of our shares on the date the shares were issued, which by policy is the last trading day of each quarter in which the services were rendered.
During the first nine months of 20172023 and 2016,2022, we recognized $1.3 millionapproximately $599 and $0.4 million$1,267, respectively, of associated stockshare-based compensation expense. Total share-based compensation expense is reported in selling and operating expenses and corporate, general and administration expenses on our condensed consolidated statements of operations. There were 14,300no options exercised during the first nine months of 2017,2023 or 2022.
4. Goodwill and Other Intangible Assets
There were no changes in goodwill for the period from December 31, 2022 through September 30, 2023.
8
The following table represents our other intangible assets by major asset class as of the dates indicated, which are included in Real estate, investment and other assets, net on the accompanying condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.
(in thousands) |
| September 30, 2023 |
|
| December 31, 2022 |
| ||
Amortizable Intangible Assets |
|
|
|
|
|
| ||
Customer relationships |
| $ | 2,000 |
|
| $ | 2,000 |
|
Tradenames |
|
| 270 |
|
|
| 270 |
|
Accumulated amortization |
|
| (1,004 | ) |
|
| (579 | ) |
|
| $ | 1,266 |
|
| $ | 1,691 |
|
|
|
|
|
|
|
| ||
Unamortized Intangible Assets |
|
|
|
|
|
| ||
Domain names |
| $ | 563 |
|
| $ | 563 |
|
Our amortizable assets are expected to be amortized on a straight-line basis over 48 months. Amortization expense was $142 for the three months ended September 30, 2023 and 2022 and $425 for the nine months ended September 30, 2023 and 2022. Future amortization of our amortizable intangible assets as of September 30, 2023 is expected to be as follows:
(in thousands) |
|
|
| |
2023 (remaining) |
| $ | 142 |
|
2024 |
|
| 568 |
|
2025 |
|
| 556 |
|
|
| $ | 1,266 |
|
5. Debt
On September 9, 2020, Boulder Road sold a 50% undivided interest in a portion of our corporate campus to Westside Boulder, LLC (Westside). Boulder Road retained a 50% undivided interest in the property as well as full ownership of our studio and production facilities. Boulder Road received consideration of $13.2 million in the transaction.
On December 28, 2020, Boulder Road and Westside entered into a loan agreement with First Interstate Bank, as lender, providing for a mortgage loan in the principal amount of $13.0 million. The mortgage bears interest at a fixed rate of 3.75% per annum, matures on December 28, 2025, is secured by a deed of trust on our corporate campus, a portion of which is owned by Boulder Road and Westside as tenants-in-common and the remainder of which is owned by Boulder Road. Westside and Boulder Road each received 50% of the loan proceeds and are each responsible for 50% of the monthly installments. Gaia guaranteed payment of the mortgage. The mortgage is subject to certain financial covenants related to the underlying property.
On August 25, 2022 (the Closing Date), Gaia, as borrower, and certain subsidiaries, as guarantors, entered into a Credit and Security Agreement (the Credit Agreement) with KeyBank National Association (KeyBank). The Credit Agreement provides for a revolving credit facility in an aggregate amount of up to $10.0 million with a sublimit of $1.0 million available for issuances of letters of credit. Borrowings under the Credit Agreement are available for working capital and general corporate purposes, but not to fund any permitted acquisitions or other investments. As of September 30, 2023, $9.0 million was drawn under the Credit Agreement, which is included in Short-term debt and lease liability on the accompanying condensed consolidated balance sheets.
Loans made, or letters of credit issued, under the Credit Agreement mature on August 25, 2025 and are secured (subject to permitted liens and other exceptions) by a first priority lien on all business assets, including intellectual property, of Gaia and the subsidiary guarantors.
Any advance under the Credit Agreement shall bear interest at the Daily Simple SOFR rate (subject to a floor of 0.00%), plus, the SOFR Index Adjustment of 0.10%, plus a margin of 2.00%; provided, that, during the existence of a Benchmark Unavailability Period or a SOFR Unavailability Period, advances shall bear interest at the Base Rate, which is a fluctuating interest rate per annum equal to the highest of (i) the Federal Funds Rate plus 0.50%, (ii) KeyBank’s “prime rate,” (iii) SOFR and (iv) 3.00%, plus, in each instance, a margin of 1.00%.
The aggregate outstanding amount of advances under the Credit Agreement is required to be $0 for at least 30 consecutive days during the period commencing on the 12-month anniversary of the Closing Date and ending on the 24-month anniversary of the Closing Date. The company expects this requirement to be satisfied during fourth quarter 2023.
The Credit Agreement contains customary affirmative and negative covenants (each with customary exceptions), including limitations on the Company’s ability to incur liens or debt, make investments, pay dividends, enter into transactions with its affiliates and engage in certain fundamental changes. Additionally, the Credit Agreement requires Gaia to maintain a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00 and to not permit the Leverage Ratio to exceed 1.50 to 1.00 for any computation period.
9
Maturities on long-term debt, net proceedsare:
(in thousands) |
|
|
| |
2023 (remaining) |
| $ | 9,038 |
|
2024 |
|
| 156 |
|
2025 |
|
| 5,801 |
|
|
| $ | 14,995 |
|
6. Leases
In connection with the sale of $0.1 million.a portion of our corporate campus as further discussed in Note 5, we leased the property pursuant to a master lease for an initial term extending through September 30, 2030, with two five-year extensions. We record the right to use the underlying asset for the operating lease term as an asset and our obligation to make lease payments as a liability, based on the present value of the lease payments over the initial lease term. On commencement of the lease, we recorded a right-of-use asset and operating lease liability of $8,800.
Because the rate implicit in the lease is not readily determinable, we used our incremental borrowing rate to determine the present value of lease payments. Information related to our right-of-use asset and related lease liability were as follows:
|
|
|
| September 30, |
|
| December 31, |
| ||
(in thousands) |
| Balance Sheet Classification |
| 2023 |
|
| 2022 |
| ||
Right-of-use asset |
| Right-of-use lease asset, net |
| $ | 6,492 |
|
| $ | 7,093 |
|
|
|
|
|
|
|
|
|
| ||
Operating lease liability (current) |
| Accounts payable, accrued and other liabilities |
| $ | 767 |
|
| $ | 745 |
|
Operating lease liability (non-current) |
| Long-term lease liability |
|
| 5,911 |
|
|
| 6,489 |
|
|
|
| $ | 6,678 |
|
| $ | 7,234 |
|
|
| For the Three Months Ended September 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Cash paid for operating lease liabilities |
| $ | 250 |
|
| $ | 250 |
|
|
| For the Nine Months Ended September 30, |
| |||||
(in thousands) |
| 2023 |
|
| 2022 |
| ||
Cash paid for operating lease liabilities |
| $ | 750 |
|
| $ | 750 |
|
Operating lease expense is recognized on a straight-line basis over the lease term. Future amortization of our lease liability as of September 30, 2023 is expected to be:
(in thousands) |
|
|
| |
2023 (remaining) |
| $ | 250 |
|
2024 |
|
| 1,008 |
|
2025 |
|
| 1,035 |
|
2026 |
|
| 1,064 |
|
2027 |
|
| 1,093 |
|
Thereafter |
|
| 3,160 |
|
Future lease payments, gross |
|
| 7,610 |
|
Less: Imputed interest |
|
| (932 | ) |
Operating lease liability |
| $ | 6,678 |
|
7. Earnings Per Share
4. Net Loss per Share
Basic net lossearnings per share is computed by dividing the net loss byusing the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to allperiod (“common stock equivalents”). Common stock equivalents consist of incremental shares issuable upon the assumed exercise of stock options and vesting of restricted stock units utilizing the treasury stock method.
10
The weighted-average diluted shares outstanding computation is:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
| (unaudited) |
|
| (unaudited) |
| ||||||||||
Weighted-average common stock outstanding |
|
| 21,154 |
|
|
| 20,806 |
|
|
| 20,951 |
|
|
| 20,686 |
|
Common stock equivalents |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Weighted-average number of shares |
|
| 21,154 |
|
|
| 20,806 |
|
|
| 20,951 |
|
|
| 20,686 |
|
Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential shares of common stock underlying stock options and restricted stock units, toexcluded from the extent dilutive. Basic and diluted net loss per share were the same for the three and nine months ended September 30, 2017 and 2016 respectively, as the inclusion of all underlying common shares would have been anti-dilutive.calculation:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
| (unaudited) |
|
| (unaudited) |
| ||||||||||
Common stock equivalents excluded due to net loss |
|
| 67 |
|
|
| 6 |
|
|
| 57 |
|
|
| 97 |
|
Employee stock options and RSUs |
|
| 598 |
|
|
| 976 |
|
|
| 497 |
|
|
| 672 |
|
|
|
| 665 |
|
|
| 982 |
|
|
| 554 |
|
|
| 769 |
|
5.
8. Income Taxes
Periodically, we perform assessments of the realization of our net deferred tax assets considering all available evidence, both positive and negative. With the sale of the Gaiam Brand business in 2016, we utilized the majority ofBased on our deferred tax assets to offset the associated gains from the sale and released the valuation allowance we had in place. During 2017, we determined the historical operating losses, generated by the business, combined with our plans to continue to invest in our revenue growth and generate losses for the next few years, indicatedcontent library, we have a full valuation allowance on our deferred tax assets was appropriate.as of September 30, 2023. As of September 30, 2017,2023, our gross net operating loss carryforwards on a gross basis were $16.7 million$80,490 and $0.8 million$26,416 for federal and state, respectively. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a stimulus bill which was in response to economic consequences of the COVID-19 pandemic. The CARES Act provided an employee retention credit, which is a refundable tax credit against certain employment taxes. During the quarter ended September 30, 2023, we recorded $1,750 related to the employee retention credit in Selling and operating expenses in the condensed consolidated statements of operations with a related receivable balance from the United States government related to the CARES Act, which is recorded in Prepaid expenses and other current assets on our condensed consolidated balance sheets.
9. Non-income Taxes
6.The Company is subject to tax examinations for Value Added Taxes (VAT). A number of these examinations are ongoing and, in certain cases, have resulted in assessments from taxing authorities. Where a VAT liability with respect to a jurisdiction is probable and can be reliably estimated, the Company accrues for these matters in corporate, general, and administration expenses in the condensed consolidated statements of operations. Future developments relating to the foregoing could result in adjustments to these accruals.
10. Contingencies
From time to time, we are involved in legal proceedings that we consider to be in the normal course of business. Claimed amounts 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 for losses related to those matters against us that we consider to be probable and that can be reasonably estimated. 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 accrued amounts, if any. Based on available information, in the opinion of management, settlements, arbitration awards and final judgments, if any, that are considered probable of being rendered against us in litigation or arbitration in existence at September 30, 2017,2023 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.
11. Subsequent Events
Class A Common Stock Offering
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This report contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are forward looking statements that involve risks and uncertainties. When used in this discussion, we intend the words “anticipate,” “believe,” “plan,“contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “strive,” “future,“target,” “intend”, “will”“will,” “would” 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-looking statements as a result of certain factors set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk”Operations” and elsewhere in this Form 10-Q.10-Q and under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Risks and uncertainties that could cause actual results to differ include, without limitation,limitation: our ability to attract new members and retain existing members; our ability to compete effectively, including for customer engagement with different modes of entertainment; maintenance and expansion of devise platforms for streaming; fluctuation in customer usage of our service; fluctuations in quarterly operating results; service disruptions; production risks; general economic conditions, ongoing losses, competition,conditions; future losses; loss of key personnel, pricing,personnel; price changes; brand reputation, acquisitions, availability of capital,reputation; acquisitions; new initiatives we undertake,undertake; security and information systems,systems; legal liability for website content,content; failure of third parties to provide adequate service,service; future Internet-related taxes,internet-related taxes; our founder’s control of us, litigation, fluctuations in quarterly operating results,us; litigation; consumer trends,trends; the effect of government regulation and programsprograms; the impact of public health threats, including the coronavirus (COVID-19) pandemic and our response to it; and other risks and uncertainties included in our filings with the Securities and Exchange Commission.SEC. 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 condensed 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 condensed consolidated financial statements, changes in certain items in those statements from periodyear to period,year, the primary factors that caused those changes and how certain accounting principles, policies and estimates affect the condensed consolidated financial statements.
Overview and Outlook
We operate a global digital video subscription service with a library of over 8,00010,000 titles, with a growing selection of titles available in Spanish, German and French that caters to a unique, and underserved subscribermember base. Our digital content is available to our subscribersmembers on most Internet-connectedinternet-connected devices anytime, anywhere, commercial free.commercial-free. Through our online Gaia subscription service our subscribersmembers have unlimited access to a vast library of inspiring films, cutting edge documentaries, interviews, yoga classes, transformation related content, and more. A subscription also allowsmore – 88% of which is exclusively available to our subscribers to download and view files from our library without being actively connected to the Internet.members for digital streaming on most internet-connected devices.
Consumption of streaming video is expanding rapidly as more and more people augment their use of, or replace broadcast television and turn to, streaming video to watch their favorite content on services like Netflix, Amazon Prime, Hulu Plus, HBO Now and Gaia. OurGaia’s position in the streaming video landscape is firmly supported by its wide variety of exclusive and unique content, which provides a complementary offering to other entertainment-based streaming video services. Our original content is developed and produced in-house in our production studios near Boulder, Colorado. Over 90% of our content is available for streaming exclusively through a subscription to Gaia. By offering exclusive and unique content through our streaming service, we believe we will be able to significantly expand our target subscribermember base.
Our available content is currently focused on yoga, transformation, alternative healing, seeking truth and conscious films. This content is specifically targeted to a unique customermember base that 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 addition, through our investments in our streaming video technology and our user interface, we have expanded the many ways our subscription customermember base can access our unique library of media titles.
Our core strategy is to grow our subscription business domestically and internationally by expanding our unique and exclusive content library, enhancing our user interface, extending our streaming service to new Internet-connectedinternet-connected devices as they are developed and creating a conscious community built around our content.
The full impact that the COVID-19 pandemic will have on our content.
We reported losses from continuingbusiness, operations and financial results will depend on a number of $18.1 million and $7.4 millionevolving factors that we may not be able to accurately predict. See Item 1A “Risk Factors” of our Annual Report on Form 10-K for the nine monthsyear ended September 30, 2017December 31, 2022 for additional discussion regarding risks related to the COVID-19 pandemic.
Commencing during the second half of March 2020 and 2016, respectively.continuing through July 2020, we saw an increase in demand for our content from both current and potential members. This created a positive trend in existing member retention, costs to acquire new members, and the corresponding revenue and cash flow impacts from these higher volumes. This trend dissipated beginning in August 2020,
12
when we saw the online paid media advertising market start to return to historical norms with a corresponding effect on the cost of our online advertising efforts. With the rollout of privacy changes affecting a large number of mobile consumers during the summer of 2021 we saw an increase in the costs of our online advertising efforts which reduced the number of new members we add each period with our allocated marketing spend. In addition, in the period of March through October 2022, we lost about 40% of the members we added during the COVID-19 lockdowns in 2020 and 2021.
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 reference into this Form 10-Q.
The table below summarizes certain detail of our financial results for the periods indicated:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Streaming revenues |
| $ | 7,025 |
|
| $ | 3,802 |
|
| $ | 18,290 |
|
| $ | 10,641 |
|
DVD subscription and other revenues |
|
| 497 |
|
|
| 660 |
|
|
| 1,574 |
|
|
| 1,849 |
|
Cost of streaming |
|
| 958 |
|
|
| 636 |
|
|
| 2,541 |
|
|
| 1,952 |
|
Cost of DVD subscription and other |
|
| 79 |
|
|
| 65 |
|
|
| 225 |
|
|
| 209 |
|
Selling and operating |
|
| 10,784 |
|
|
| 6,536 |
|
|
| 31,812 |
|
|
| 17,383 |
|
Corporate, general and administration |
|
| 1,528 |
|
|
| 1,439 |
|
|
| 4,321 |
|
|
| 4,215 |
|
Loss from operations |
|
| (5,827 | ) |
|
| (4,214 | ) |
|
| (19,035 | ) |
|
| (11,269 | ) |
Interest and other income (expense) |
|
| 62 |
|
|
| 20 |
|
|
| 150 |
|
|
| (133 | ) |
Loss before taxes |
|
| (5,765 | ) |
|
| (4,194 | ) |
|
| (18,885 | ) |
|
| (11,402 | ) |
Income tax benefit |
|
| (131 | ) |
|
| (4,043 | ) |
|
| (760 | ) |
|
| (4,041 | ) |
Loss from continuing operations |
|
| (5,634 | ) |
|
| (151 | ) |
|
| (18,125 | ) |
|
| (7,361 | ) |
Income from discontinued operations, net of tax |
|
| 429 |
|
|
| 100,595 |
|
|
| 429 |
|
|
| 97,741 |
|
Net loss |
| $ | (5,205 | ) |
| $ | 100,444 |
|
| $ | (17,696 | ) |
| $ | 90,380 |
|
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands, except per share data) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Revenues, net |
| $ | 20,223 |
|
| $ | 19,907 |
|
| $ | 59,709 |
|
| $ | 62,458 |
|
Cost of revenues |
|
| 2,983 |
|
|
| 2,648 |
|
|
| 8,595 |
|
|
| 8,312 |
|
Gross profit margin |
|
| 85.2 | % |
|
| 86.7 | % |
|
| 85.6 | % |
|
| 86.7 | % |
Selling and operating |
|
| 16,254 |
|
|
| 15,543 |
|
|
| 49,462 |
|
|
| 48,197 |
|
Corporate, general and administration |
|
| 1,433 |
|
|
| 2,019 |
|
|
| 4,726 |
|
|
| 5,598 |
|
Acquisition costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 49 |
|
Total operating expenses |
|
| 17,687 |
|
|
| 17,562 |
|
|
| 54,188 |
|
|
| 53,844 |
|
Income (loss) from operations |
|
| (447 | ) |
|
| (303 | ) |
|
| (3,074 | ) |
|
| 302 |
|
Interest and other expense, net |
|
| (141 | ) |
|
| (65 | ) |
|
| (375 | ) |
|
| (175 | ) |
SEC settlement |
|
| — |
|
|
| (2,000 | ) |
|
| — |
|
|
| (2,000 | ) |
Loss before income taxes |
|
| (588 | ) |
|
| (2,368 | ) |
|
| (3,449 | ) |
|
| (1,873 | ) |
Provision for (benefit from) income taxes |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Loss from continuing operations |
|
| (588 | ) |
|
| (2,368 | ) |
|
| (3,449 | ) |
|
| (1,873 | ) |
Loss from discontinued operations |
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (300 | ) |
Net loss |
| $ | (588 | ) |
| $ | (2,375 | ) |
| $ | (3,449 | ) |
| $ | (2,173 | ) |
The following table sets forth certain financial data as a percentage of revenue for the periods indicated:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Revenues, net |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
Cost of revenues |
|
| 14.8 | % |
|
| 13.3 | % |
|
| 14.4 | % |
|
| 13.3 | % |
Gross profit |
|
| 85.2 | % |
|
| 86.7 | % |
|
| 85.6 | % |
|
| 86.7 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling and operating |
|
| 80.4 | % |
|
| 78.1 | % |
|
| 82.8 | % |
|
| 77.2 | % |
Corporate, general and administration |
|
| 7.1 | % |
|
| 10.1 | % |
|
| 7.9 | % |
|
| 9.0 | % |
Acquisition costs |
|
| — | % |
|
| — | % |
|
| — | % |
|
| 0.1 | % |
Total operating expenses |
|
| 87.5 | % |
|
| 88.2 | % |
|
| 90.8 | % |
|
| 86.2 | % |
Income (loss) from operations |
|
| (2.2 | )% |
|
| (1.5 | )% |
|
| (5.1 | )% |
|
| 0.5 | % |
Interest and other expense, net |
|
| (0.7 | )% |
|
| (0.3 | )% |
|
| (0.6 | )% |
|
| (0.3 | )% |
SEC settlement |
|
| — | % |
|
| (10.0 | )% |
|
| — | % |
|
| (3.2 | )% |
Loss before income taxes |
|
| (2.9 | )% |
|
| (11.9 | )% |
|
| (5.8 | )% |
|
| (3.0 | )% |
Provision for (benefit from) income taxes |
|
| — | % |
|
| — | % |
|
| — | % |
|
| — | % |
Loss from continuing operations |
|
| (2.9 | )% |
|
| (11.9 | )% |
|
| (5.8 | )% |
|
| (3.0 | )% |
Loss from discontinued operations |
|
| — | % |
|
| (0.0 | )% |
|
| — | % |
|
| (0.5 | )% |
Net loss |
|
| (2.9 | )% |
|
| (11.9 | )% |
|
| (5.8 | )% |
|
| (3.5 | )% |
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
Net revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Streaming |
|
| 93.4 | % |
|
| 85.2 | % |
|
| 92.1 | % |
|
| 85.2 | % |
DVD subscription and other |
|
| 6.6 | % |
|
| 14.8 | % |
|
| 7.9 | % |
|
| 14.8 | % |
Total net revenues |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
|
| 100.0 | % |
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of streaming |
|
| 12.8 | % |
|
| 14.3 | % |
|
| 12.8 | % |
|
| 15.6 | % |
Cost of DVD subscription and other |
|
| 1.0 | % |
|
| 1.4 | % |
|
| 1.1 | % |
|
| 1.7 | % |
Total cost of revenues |
|
| 13.8 | % |
|
| 15.7 | % |
|
| 13.9 | % |
|
| 17.3 | % |
Gross profit |
|
| 86.2 | % |
|
| 84.3 | % |
|
| 86.1 | % |
|
| 82.7 | % |
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and operating |
|
| 143.4 | % |
|
| 146.5 | % |
|
| 160.1 | % |
|
| 139.2 | % |
Corporate, general and administration |
|
| 20.3 | % |
|
| 32.2 | % |
|
| 21.8 | % |
|
| 33.7 | % |
Total expenses |
|
| 163.7 | % |
|
| 178.7 | % |
|
| 181.9 | % |
|
| 172.9 | % |
Loss from operations |
|
| (77.5 | )% |
|
| (94.4 | )% |
|
| (95.8 | )% |
|
| (90.2 | )% |
Interest and other income (expense) |
|
| 0.8 | % |
|
| 0.4 | % |
|
| 0.8 | % |
|
| (1.1 | )% |
Loss before taxes |
|
| (76.7 | )% |
|
| (94.0 | )% |
|
| (95.0 | )% |
|
| (91.3 | )% |
Income tax benefit |
|
| (1.7 | )% |
|
| (90.6 | %) |
|
| (3.8 | )% |
|
| (32.4 | )% |
Loss from continuing operations |
|
| (75.0 | )% |
|
| (3.4 | )% |
|
| (91.1 | )% |
|
| (58.9 | )% |
Income from discontinued operations, net of tax |
|
| 5.7 | % |
|
| 2254.5 | % |
|
| 2.2 | % |
|
| 782.6 | % |
Net loss |
|
| (69.3 | )% |
|
| 2251.1 | % |
|
| (89.0 | )% |
|
| 723.7 | % |
Three months ended September 30, 20172023 compared to three months ended September 30, 20162022
Net revenueRevenues, net. Net revenueRevenues increased $0.3 million, or 1.5%, to $20.2 million during the three months ended September 30, 2023, compared to $19.9 million during the three months ended September 30, 2022. This was primarily driven by an increase in member count.
13
Cost of revenues. Cost of revenues increased $0.4 million or 15.4% to $3.0 million during the three months ended September 30, 2023, compared to $2.6 million during the three months ended September 30, 2022 related to the increase in revenues and increased content amortization. Gross profit margin decreased during the three months ended September 30, 2023 to 85.2% from 86.7% for the three months ended September 30, 2022 primarily due to increased content amortization related to an overall increase in our investment of our original content offerings.
Selling and operating expenses. Selling and operating expenses increased $0.8 million, or 68.6%5.2%, to $7.5$16.3 million during the three months ended September 30, 2023, compared to $15.5 million for the three months ended September 30, 2022, driven primarily by an increase in marketing spend expenses and tax accruals. These increased expenses are offset by a one-time Employee Retention Tax Credit (ERTC) against payroll tax expense. This ERTC tax credit was recognized upon completion of the filing. As a percentage of net revenues, selling and operating expenses increased to 80.4% for the three months ended September 30, 2023 compared to 78.1% for the three months ended September 30, 2022.
Corporate, general and administration expenses. Corporate, general and administration expenses decreased $0.6 million, or 30.0% to $1.4 million for three months ended September 30, 2023 from $2.0 million for three months ended September 30, 2022, driven primarily by decreases in salary and payroll related expenses. As a percentage of net revenues, these expenses decreased to 7.1% for the three months ended September 30, 2023 from 10.1% for the three months ended September 30, 2022.
Nine months ended September 30, 2023 compared to nine months ended September 30, 2022
Revenues, net. Revenues decreased $2.8 million, or 4.5%, to $59.7 million during the nine months ended September 30, 2023, compared to $62.5 million during the nine months ended September 30, 2022. This was primarily driven by a post-COVID subscriber contraction, experienced industry wide during the second half of 2022, which resulted in decreased revenue and overall member count into 2023. The reversal of this trend began during the first half of 2023, when we started to see member count growth along with revenues. This steady pace of growth culminated in the third quarter of 2017, compared2023, when we started to $4.5 million duringsee a return to the third quarter of 2016. Netpre-contraction revenue from streaming increased $3.2 million, or 84.8%, to $7.0 million during the third quarter of 2017 from $3.8 million during the third quarter of 2016. The increase in streaming revenues was primarily driven by our growth in the number of paying subscribers.levels.
Cost of revenues. Cost of revenues increased $0.3 million, or 47.9%3.6%, to $1.0$8.6 million during the third quarter of 2017,nine months ended September 30, 2023, from $0.7$8.3 million during the third quarter of 2016. Cost of streaming revenuesnine months ended September 30, 2022 due to increased $0.4 million, or 50.6%, to $1.0 millioncontent amortization. Gross profit margin decreased during the third quarter of 2017nine months ended September 30, 2023 to 85.6% from $0.6 million during86.7% for the third quarter of 2016, and as a percentage of streaming revenue, cost of streaming revenue decreased to 13.7% compared to 16.8%nine months ended September 30, 2022 primarily due to the relatively fixed streaming costs offset by our higher volumes and an increase in revenue.decreased revenues.
Selling and operating expenses. Selling and operating expenses increased $4.3$1.3 million, or 65.0%2.7%, to $10.8$49.5 million during the third quarternine months ended September 30, 2023, compared to $48.2 million for the nine months ended September 30, 2022, driven primarily by an increase in marketing spend and tax accruals. These increased expenses are offset by a one-time Employee Retention Tax Credit (ERTC) against payroll tax expense. This ERTC tax credit was recognized upon completion of 2017 from $6.5 million during the third quarter of 2016, and asfiling. As a percentage of net revenue, decreasedrevenues, these expenses increased to 143.4% during82.8% for the third quarter of 2017 from 146.5% duringnine months ended September 30, 2023 compared to 77.2% for the third quarter of 2016. The increase in expenses was primarily due to increased marketing spending for subscriber acquisition due to our planned acceleration in subscriber growth rates. The decrease as a percentage of revenues is due to revenue growth in excess of spend growth in 2017 due to increased marketing efficiencies.nine months ended September 30, 2022.
Corporate, general and administration expenses. Corporate, general and administration expenses increased $0.1decreased $0.9 million or 2.9%,16.1% to $1.5$4.7 million during the third quarter of 2017 from $1.4 million during the third quarter of 2016 and, as a percentage of net revenue, decreased to 20.3% during the third quarter of 2017 from 32.2% during the third quarter of 2016, due primarily to the increase in revenues during 2017.
Income from discontinued operations. The operations of the Gaiam Brand segment and the related gain on disposal are included in income from discontinued operations for the third quarter of 2016.
Net income (loss). As a result of the above factors, net loss was $(5.2) million, or $(0.34) per share, during the third quarter of 2017 compared to a net income of $100.4 million, or $6.64 per share, during the third quarter of 2016.
Nine months ended September 30, 2017 compared to nine months ended September 30, 2016
Net revenue. Net revenue increased $7.42023 compared to $5.6 million or 59.0%, to $19.9 million duringfor the first nine months of 2017, compared to $12.5 million during the first nine months of 2016. Net revenue from streaming increased $7.7 million, or 71.9%, to $18.3 million during the first nine months of 2017 from $10.6 million during the first nine months of 2016. The increase in streaming revenues wasended September 30, 2022, primarily driven by our growthdecreases in the number of paying subscribers.
Cost of revenues. Cost of revenues increased $0.6 million, or 28.0%, to $2.8 million during the first nine months of 2017, from $2.2 million during the first nine months of 2016. Cost of streaming revenues increased $0.5 million, or 30.2%, to $2.5 million during the first nine months of 2017 from $2.0 million during the first nine months of 2016salary and as a percentage of streaming revenue, cost of streaming revenue decreased to 14.0% compared to 18.4% primarily due to relatively fixed streaming costs offset by our higher volumes and an increase in revenue.
Selling and operating expenses. Selling and operating expenses increased $14.4 million, or 83.0%, to $31.8 million during the first nine months of 2017 from $17.4 million during the first nine months of 2016, and aspayroll expenses. As a percentage of net revenue, increasedrevenues, these expenses decreased to 160.1% during7.9% for the first nine months of 2017ended September 30, 2023 from 139.2% during9.0% for the first nine months of 2016. The increase wasended September 30, 2022, driven primarily due to increased marketing spending for subscriber acquisition due to our planned accelerationby a decrease in subscriber growth rates during 2017.revenues.
Corporate, general and administration expenses. Corporate, general and administration expenses increased $0.1 million, or 1.4%, to $4.3 million during the first nine months of 2017 from $4.2 million during the first nine months of 2016 and, as a percentage of net revenue, decreased to 21.8 % during the first nine months of 2017 from 33.7% during the first nine months of 2016, due primarily to the increase in revenues during 2017.Seasonality
Income from discontinued operations. The operations of the Gaiam Brand segment and the related gain on disposal are included in income from discontinued operations for the first nine months of 2016.
Net income (loss). As a result of the above factors, net loss was $(17.7) million, or $(1.17) per share, during the first nine months of 2017 compared to a net income of $90.4 million, or $4.22 per share, during the first nine months of 2016.
Seasonality
Our subscribermember base growth reflects seasonal variations driven primarily by periods when consumers typically spend more time indoors and, as a result, tend to increase their viewing, likesimilar to those of traditional TV and cable networks. OurThe effects of the global pandemic have shifted our historical pattern over the past two years, but we have historically experienced the greatest member growth is generally greatest in the fourth and first quarterquarters (October through March)February), and slowest in thegrowth during May through August period.August. This driveshas historically driven quarterly variations in our spending on customermember acquisition efforts and the number of net new subscribers we add each quarter but doeshas not drive ahistorically resulted in corresponding seasonality in net revenue. As we continue to expand internationally, we also expect regional seasonality trends to demonstrate more predictable seasonal patterns as our service offering in each market becomes more established and we have a longer history to assess such patterns.
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 and marketing of our digital platforms, acquisitions of new businesses and other investments,
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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 offerings, our ability to expand our customer base, the cost of ongoing upgrades to our offerings, our level of expenditures for marketing, and other factors. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses and technologies, and increase our marketing programs as needed. At
Our budgeted content and capital expenditures for the remainder of 2023 are expected to be between $3.0 to $4.0 million which we intend to fund with cash flows generated from operations. These planned expenditures will be predominately utilized to expand our content library and build out the capabilities of our digital platforms. The planned expenditures are discretionary and, with our in-house production capabilities, we have the ability to scale expenditures based on the available cash flows from operations. We began to generate positive cash flows from operations in October 2019 and have continued to generate cash flows from operations since. We expect to continue generating positive cash flows from operations during the remainder of 2023. We generated approximately $10.1 million in cash flows from operations during the nine months ended September 30, 2017,2023. As of September 30, 2023, our cash balance was $30.1$11.2 million. We estimate that our
As described in Note 5, during August 2022, we entered into a Credit Agreement with KeyBank, which provides for a revolving credit facility in an aggregate amount of up to $10.0 million. Funds from the Credit Agreement are available for working capital expenditures, including investmentsand general corporate purposes, but not to fund any permitted acquisitions or other investments. As of September 30, 2023, $9.0 million was drawn under the Credit Agreement, which is included in our media library, will total approximately $3.5 million forLong-term debt, net on the remainder of 2017, which will be funded through our available cash balance.accompanying condensed consolidated balance sheets.
Since 2007, we have had an active shelf registration with the Securities and Exchange Commission for 5,000,000 shares of our Class A common stock and to date no shares have been issued under our current shelf registration.
In the normal course of our business, we investigate, evaluate and discuss acquisition, joint venture, minority investment, strategic relationship and other business combination opportunities in our market. For any future investment, acquisition, or joint venture opportunities, we may consider using then-available liquidity, issuing equity securities or incurring indebtedness.
While there can be no assurances, we believe our cash on hand, our cash expected to be generated from operations, cash that could be raised by the saleour $10 million revolving line of credit, our stock, and potential additional borrowing capabilities shouldnow that we have a history of generating positive operating cash flows, and our potential capital raising capabilities will be sufficient to fund our operations on both a short-term and long-term basis. In addition, we own our corporate headquarters and could enter into additional financing or a sale/leaseback transaction to provide additional funds. However, our projected cash needs may change as a result of acquisitions, product development, unforeseen operational difficulties, or other factors.
Class A Common Stock Offering
On October 2, 2023, we entered into an underwriting agreement with Lake Street Capital Markets, LLC (the Underwriter) relating to the offer and sale of 1,855,000 shares of our Class A Common Stock ($0.0001 par value) (the Shares). We had no debt assold the Shares to the Underwriter at the public offering price of September 30, 2017.$2.70 per share less underwriting discounts and commissions, resulting in net proceeds of $4,678. We provided a 30-day option to the Underwriter to purchase up to an additional 278,250 Shares to cover over-allotments. At time of filing, the over-allotment option was not exercised. Proceeds were, and are, expected to be used for general corporate purposes, which may include additions to working capital, financing of capital expenditures, repayment of indebtedness, acquisitions and strategic investment opportunities.
Cash Flows
The following table summarizes our primary sources (uses) of cash during the periods presented:
|
| For the Three Months Ended September 30, |
|
| For the Nine Months Ended September 30, |
| ||||||||||
(in thousands) |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating activities - continuing operations |
| $ | 3,601 |
|
| $ | 1,686 |
|
| $ | 10,081 |
|
| $ | 8,373 |
|
Operating activities - discontinued operations |
|
| — |
|
|
| (7 | ) |
|
| — |
|
|
| (300 | ) |
Operating activities |
|
| 3,601 |
|
|
| 1,679 |
|
|
| 10,081 |
|
|
| 8,073 |
|
Investing activities |
|
| (3,252 | ) |
|
| (4,484 | ) |
|
| (10,371 | ) |
|
| (14,903 | ) |
Financing activities |
|
| 1 |
|
|
| 7,451 |
|
|
| (43 | ) |
|
| 7,402 |
|
Net change in cash |
| $ | 350 |
|
| $ | 4,646 |
|
| $ | (333 | ) |
| $ | 572 |
|
|
| For the Nine Months Ended September 30, |
| |||||
(in thousands) |
| 2017 |
|
| 2016 |
| ||
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities – continuing operations |
| $ | (14,956 | ) |
| $ | (4,149 | ) |
Operating activities – discontinued operations |
|
| 429 |
|
|
| (4,849 | ) |
Operating activities |
|
| (14,527 | ) |
|
| (8,998 | ) |
Investing activities – continuing operations |
|
| (9,472 | ) |
|
| (14,504 | ) |
Investing activities—discontinued operations |
|
| — |
|
|
| 161,808 |
|
Investing activities |
|
| (9,472 | ) |
|
| 147,304 |
|
Financing activities |
|
| 79 |
|
|
| (77,118 | ) |
Net increase (decrease) in cash |
| $ | (23,920 | ) |
| $ | 61,188 |
|
Operating activities – continuing operations. Cash flow from continuingflows provided by operations decreased $10.4increased approximately $2.0 million during the first nine months of 20172023 compared to the same period in 2016.2022. The decreaseincrease was primarily due to increased marketing spend due to accelerated growthdriven by changes in 2017.earnings, timing of working capital, primarily accounts payable and deferred revenues.
Operating15
Investing activities – discontinued operations. Cash flow from discontinued operations increased $5.2flows used in investing activities decreased $4.5 million during the first nine months of 20172023 compared to the same period in 2016 as2022 due primarily to the only activitycost reduction initiatives we completed in 2017 was related to income tax provision adjustments.the first quarter of 2023.
InvestingFinancing activities – continuing operations. Cash flow from investing activities – continuing operations increased $5.0 million during the first nine months of 2017 compared to the same period in 2016 primarily due to increased investment in our media library in 2017 offsetflows provided by an investment made in 2016.
Financing activities. Cash flow from financing activities increased $77.2 million duringwere primarily impacted by borrowing and repayment activities associated with our revolving line of credit.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the first nine monthsSecurities Exchange Act of 2017 compared1934 and are not required to provide the same period in 2016, primarily due to our use of $76.2 million to repurchase 9,636,848 shares of Class A common stock and 842,114 stock options in our issuer tender offer completed in July 2016. information under this item.
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based upon its evaluation as of September 30, 2017,2023, our management has concluded that those disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2017,2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Item 1. Legal Proceedings.
None.
None.
There have been no material changes fromWe incorporate by reference the risk factorsRisk Factors included as previously disclosed under the heading “Risk Factors” inItem 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.2022 that we filed with the SEC on March 6, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
None.
Item 3. Defaults Upon Senior Securities.
None.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
None.17
| Description | |
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31.1* | ||
31.2* | ||
32.1** | ||
32.2** | ||
101.INS | Inline XBRL Instance Document. | |
101.SCH | Inline XBRL Taxonomy Extension | |
101.CAL | Inline XBRL Taxonomy Extension Calculation | |
101.DEF | Inline XBRL Taxonomy Extension Definition | |
101.LAB | Inline XBRL Taxonomy Extension Label | |
101.PRE | Inline XBRL Taxonomy Extension Presentation | |
104 | Cover Page Interactive Data File |
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* Filed herewith
** Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Gaia, Inc. | ||
(Registrant) | ||
| By: | /s/ Jirka Rysavy |
Date | Jirka Rysavy | |
Chief Executive Officer | ||
( | ||
| By: | /s/ |
Date |
| |
Chief Financial Officer | ||
( |
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