Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). YES ☒ 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.

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:

We have prepared our unaudited interim condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. 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, ~~2019,~~2020, the interim results of operations for the three and nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, and cash flows for the nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019. Operating results for the three and nine ~~month periods~~months ended September 30, 2020 and 2019 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, ~~2018~~2019 was derived from our audited consolidated financial statements included in our Annual 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, ~~2018.~~2019.

	September 30,			December 31,			September 30,			December 31,
(in thousands, except share and per share data)	2019			2018			2020			2019
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash	$	11,647		$	29,964		$	8,721		$	11,494
Accounts receivable		2,075			1,334			2,358			2,310
Prepaid expenses and other current assets		3,362			3,192			2,043			2,443
Total current assets		17,084			34,490			13,122			16,247
Building and land, net		22,836			21,688			24,653			22,681
Media library, software and equipment, net		35,588			27,623			39,084			36,921
Goodwill		17,289			10,609			17,289			17,289
Investments and other assets		13,680			12,741			12,647			13,034
Total assets	$	106,477		$	107,151		$	106,795		$	106,172
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued and other liabilities	$	10,127		$	7,993		$	8,385		$	10,594
Deferred revenue		6,521			5,029			12,556			8,025
Total current liabilities		16,648			13,022			20,941			18,619
Long-term debt		18,399			12,500
Long-term debt and other liabilities, net								12,127			18,433
Deferred taxes		206			164			276			206
Total liabilities		35,253			25,686			33,344			37,258
Equity:
Gaia, Inc. shareholders’ equity:
Class A common stock, $.0001 par value, 150,000,000 shares authorized, 12,984,971 and 12,500,139 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		1			1
Class B common stock, $.0001 par value, 50,000,000 shares authorized, 5,400,000 shares issued and outstanding at September 30, 2019 and December 31, 2018		1			1
Class A common stock, $.0001 par value, 150,000,000 shares authorized, 13,782,951 and 13,023,231 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively								1			1
Class B common stock, $.0001 par value, 50,000,000 shares authorized, 5,400,000 shares issued and outstanding at September 30, 2020 and December 31, 2019								1			1
Additional paid-in capital		144,763			139,666			149,593			145,265
Accumulated deficit		(73,541	)		(58,203	)		(76,144	)		(76,353	)
Total equity		71,224			81,465			73,451			68,914
Total liabilities and equity	$	106,477		$	107,151		$	106,795		$	106,172

See accompanying notes to the interim condensed consolidated financial statements.

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands, except per share data)	2019			2018			2019			2018			2020		2019				2020			2019
	(unaudited)						(unaudited)						(unaudited)						(unaudited)
Revenues, net	$	13,660		$	10,942		$	39,291		$	30,080		$	17,537		$	13,660		$	48,201			$	39,291
Cost of revenues		1,801			1,386			5,186			3,857			2,264			1,801			6,248				5,186
Gross profit		11,859			9,556			34,105			26,223			15,273			11,859			41,953				34,105
Expenses:
Selling and operating		14,319			18,618			44,214			47,096			13,479			14,319			42,354				44,214
Corporate, general and administration		1,440			1,454			4,526			4,205			1,426			1,440			4,716				4,526
Total operating expenses		15,759			20,072			48,740			51,301			14,905			15,759			47,070				48,740
Loss from operations		(3,900	)		(10,516	)		(14,635	)		(25,078	)
Income (loss) from operations														368			(3,900	)		(5,117	)			(14,635	)
Interest and other income (expense), net		(241	)		120			(400	)		297			5,946			(241	)		5,395				(400	)
Loss before income taxes		(4,141	)		(10,396	)		(15,035	)		(24,781	)
Income tax expense (benefit)		3			—			45			(1,826	)
Loss from continuing operations		(4,144	)		(10,396	)		(15,080	)		(22,955	)
Income (loss) from discontinued operations		—			67			(258	)		242
Net loss	$	(4,144	)	$	(10,329	)	$	(15,338	)	$	(22,713	)
Income (loss) per share-basic and diluted:
Income (loss) before income taxes														6,314			(4,141	)		278				(15,035	)
Provision for income taxes														—			3			69				45
Income (loss) from continuing operations														6,314			(4,144	)		209				(15,080	)
Loss from discontinued operations														—			—			—				(258	)
Net income (loss)													$	6,314		$	(4,144	)	$	209			$	(15,338	)

Earnings per share:
Basic:
Continuing operations	$	(0.23	)	$	(0.58	)	$	(0.83	)	$	(1.34	)	$	0.33		$	(0.23	)	$	0.01			$	(0.83	)
Discontinued operations		—			—			(0.01	)		0.01			—			—			—				(0.01	)
Basic and diluted net loss per share	$	(0.23	)	$	(0.58	)	$	(0.84	)	$	(1.33	)
Basic earnings per share													$	0.33		$	(0.23	)	$	0.01			$	(0.84	)
Diluted:
Continuing operations													$	0.32		$	(0.23	)	$	0.01			$	(0.83	)
Discontinued operations														—			—			—				(0.01	)
Diluted earnings per share													$	0.32		$	(0.23	)	$	0.01			$	(0.84	)
Weighted-average shares outstanding:
Basic and diluted		18,375			17,890			18,070			17,048
Basic														19,183			18,375			18,834				18,070
Diluted														19,737			18,375			19,442				18,070

See accompanying notes to the interim condensed consolidated financial statements.

Gaia, Inc. Shareholders

(unaudited)

(in thousands, except shares)

Total
Equity

Accumulated
Deficit

Common
Stock
Amount

Additional
Paid-in
Capital

Common
Stock
Shares

Balance at January 1, 2018

$
76,152

$
(24,410
)

$
2

$
100,560

15,169,961

Offering of Class A common stock

37,128

—

—

37,128

2,683,333

Issuance of Gaia, Inc. common stock
   for stock option exercises and
   share-based compensation,
   net of tax

493

—

—

493

30,252

Net loss

(6,035
)

(6,035
)

—

—

—

Balance at March 31, 2018

$
107,738

$
(30,445
)

$
2

$
138,181

17,883,546

Issuance of Gaia, Inc. common stock
   for stock option exercises and
   share-based compensation,
   net of tax

539

—

—

539

16,593

Net loss

(6,349
)

(6,349
)

—

—

—

Balance at June 30, 2018

$
101,928

$
(36,794
)

$
2

$
138,720

17,900,139

Share-based compensation,
   net of tax

434

—

—

434

—

Net loss

(10,329
)

(10,329
)

—

—

—

Balance at September 30, 2018

$
92,033

$
(47,123
)

$
2

$
139,154

17,900,139

Balance at January 1, 2019

$
81,465

$
(58,203
)

$
2

$
139,666

17,900,139

Share-based compensation,
   net of tax

594

—

—

594

—

Net loss

(6,726
)

(6,726
)

—

—

—

Balance at March 31, 2019

$
75,333

$
(64,929
)

$
2

$
140,260

17,900,139

Share-based compensation,
   net of tax

515

—

—

515

—

Issuance of Gaia, Inc. common stock
   for asset acquisition and business combination

3,500

—

—

3,500

484,832

Net loss

(4,468
)

(4,468
)

—

—

—

Balance at June 30, 2019

$
74,880

$
(69,397
)

$
2

$
144,275

18,384,971

Share-based compensation,
   net of tax

488

—

—

488

—

Net loss

(4,144
)

(4,144
)

—

—

—

Balance at September 30, 2019

$
71,224

$
(73,541
)

$
2

$
144,763

18,384,971

				Gaia, Inc. Shareholders
				(unaudited)
(in thousands, except shares)	Total Equity			Accumulated Deficit			Common Stock Amount		Additional Paid-in Capital		Common Stock Shares
Balance at January 1, 2019	$	81,465		$	(58,203	)	$	2	$	139,666		17,900,139
Issuance of Gaia, Inc. common stock for stock option exercises and share-based compensation		594			—			—		594		—
Net loss		(6,726	)		(6,726	)		—		—		—
Balance at March 31, 2019	$	75,333		$	(64,929	)	$	2	$	140,260	$	17,900,139
Issuance of Gaia, Inc. common stock for stock option exercises and share-based compensation		515			—			—		515		—
Issuance of Gaia, Inc. common stock asset acquisition and business combination		3,500			—			—		3,500		484,832
Net loss		(4,468	)		(4,468	)		—		—		—
Balance at June 30, 2019	$	74,880		$	(69,397	)	$	2	$	144,275		18,384,971
Issuance of Gaia, Inc. common stock for stock option exercises and share-based compensation		488			—			—		488		—
Net loss		(4,144	)		(4,144	)		—		—		—
Balance at September 30, 2019	$	71,224		$	(73,541	)	$	2	$	144,763		18,384,971

Balance at January 1, 2020	$	68,914		$	(76,353	)	$	2	$	145,265		18,423,231
Issuance of Gaia, Inc. common stock for RSU releases, employee stock purchase plan, stock option exercises and share-based compensation		585			—			—		585		335,712
Net loss		(3,580	)		(3,580	)		—		—		—
Balance at March 31, 2020	$	65,919		$	(79,933	)	$	2	$	145,850	$	18,758,943
Issuance of Gaia, Inc. common stock for stock option exercises and share-based compensation		410			—			—		410		26,920
Issuance of Gaia, Inc. common stock for note conversion and business combination		2,929			—			—		2,929		386,887
Net loss		(2,525	)		(2,525	)		—		—		—
Balance at June 30, 2020	$	66,733		$	(82,458	)	$	2	$	149,189		19,172,750
Issuance of Gaia, Inc. common stock for employee stock purchase plan, stock option exercises and share-based compensation		404			—			—		404		10,201
Net income		6,314			6,314			—		—		—
Balance at September 30, 2020	$	73,451		$	(76,144	)	$	2	$	149,593		19,182,951

See accompanying notes to the interim condensed consolidated financial statements.

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands)	2019			2018			2020			2019
	(unaudited)						(unaudited)
Operating activities:
Net loss	$	(15,338	)	$	(22,713	)
(Income) loss from discontinued operations		258			(242	)
Loss from continuing operations		(15,080	)		(22,955	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Net income (loss)							$	209		$	(15,338	)
Loss from discontinued operations								—			258
Income (loss) from continuing operations								209			(15,080	)
Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization		6,849			5,045			9,026			6,849
Share-based compensation expense		1,597			1,138			1,864			1,597
Gain on sale of real estate								(6,125	)		—
Changes in operating assets and liabilities:
Accounts receivable		(741	)		(428	)		(204	)		(741	)
Prepaid expenses and other assets		(685	)		(787	)		517			(685	)
Accounts payable and accrued liabilities		1,572			3,392			(2,621	)		1,572
Deferred revenue		492			1,211			4,531			492
Net cash used in operating activities - continuing operations		(5,996	)		(13,384	)
Net cash provided by (used in) operating activities - continuing operations								7,197			(5,996	)
Net cash provided by operating activities - discontinued operations		76			242			—			76
Net cash used in operating activities		(5,920	)		(13,142	)
Net cash provided by (used in) operating activities								7,197			(5,920	)
Investing activities:
Acquisitions, net of cash acquired, and purchases of intangible assets		(1,575	)		—			—			(1,575	)
Proceeds from sale of real estate								13,150			—
Additions to media library, property and equipment		(14,914	)		(13,753	)		(10,369	)		(14,914	)
Net cash used in investing activities		(16,489	)		(13,753	)
Net cash provided by (used in) investing activities								2,781			(16,489	)
Financing activities:
Repayments on line of credit		(12,500	)		(12,500	)
Proceeds from issuance of term mortgage, net of issuance costs		16,592			—
Repayment of debt								(17,000	)		(12,500	)
Proceeds from issuance of debt, net of issuance costs								4,000			16,592
Proceeds from the issuance of common stock		—			37,430			249			—
Net cash provided by financing activities		4,092			24,930
Net cash provided by (used in) financing activities								(12,751	)		4,092
Net decrease in cash		(18,317	)		(1,965	)		(2,773	)		(18,317	)
Cash at beginning of period		29,964			32,778			11,494			29,964
Cash at end of period	$	11,647		$	30,813		$	8,721		$	11,647

See accompanying notes to the interim condensed consolidated financial statements.

References in this report to “we”, “us”, “our” or “Gaia” refer to Gaia, Inc. and its consolidated subsidiaries, unless we indicate otherwise.

Gaia, Inc. was incorporated under the laws of the State of Colorado inon July 7, 1988, and operates a global digital video subscription service and on-line community that caters to a unique and underserved ~~subscriber~~member base. Our digital content library ~~consists of~~includes approximately 8,000 ~~English language~~ titles, ~~as well as~~with a growing selection of titles available in Spanish, German orand French. Our ~~subscribers~~members have unlimited access to athis vast library of inspiring films, cutting edge documentaries, interviews, yoga classes, ~~transformation related~~transformation-related content, and more – ~~90%~~85% of which is exclusively available to our ~~subscribers~~members for digital streaming on most internet-connected devices anytime, anywhere, ~~commercial-free.~~commercial free.

Our mission is to create a transformational network that empowers a global conscious community. Content on our network is currently curated into ~~four channels:~~4 primary channels— Yoga, Transformation, Alternative Healing, and Seeking ~~Truth,~~Truth— and delivered directly to our ~~subscribers~~members through our streaming platform. We ~~expand~~develop programming for these channels ~~primarily~~ by producing content in our in-house production studios with a staff of media professionals. ~~Content~~This produced ~~for~~ and owned ~~by us~~content currently represents ~~about~~over 80% of ~~total~~our viewership. ~~In addition, we~~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, other than the adoption of accounting pronouncements below, as compared to the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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.

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 lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases must be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The new standard did not have a material impact on our reported financial position or results of operations in the three and nine months ended September 30, 2019.

In March 2019, the FASB issued ASU 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials, in order to align the accounting for production costs of an episodic television series with the accounting for production costs of films by removing the content distinction for capitalization. ASU 2019-02 also requires reassessing estimates of the use of a film in a film group and accounting for any changes prospectively. In addition, ASU 2019-02 requires testing films and program material license agreements for impairment at a film group level when the films or license agreements are predominantly monetized with other films and license agreements. ~~ASU 2019-02 is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted.~~ We ~~are evaluating~~adopted the new standard on January 1, 2020 with no material impact onto our reported financial position ~~and~~or results of operations ~~but do not believe it will have a material impact on either.~~

In the first quarter of 2019, we reclassified our legacy DVD subscription club as a discontinued operation and have presented the related operations in discontinued operations on the accompanying statement of operations. There were no assets or liabilities associated with this club in the ~~condensed consolidated balance sheets.~~three and nine months ended September 30, 2020.

Revenues consist primarily of subscription fees paid by our ~~customers.~~members. We present revenues net of taxes collected from ~~customers. Subscribers~~members. Members are billed in advance and revenues are recognized ratably over the subscription term. Deferred ~~revenues consist~~revenue consists of subscription fees collected from ~~customers~~members that have not been earned and ~~are~~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 ~~subscriber.~~member. Payments made to partners to assist in promoting our service on their platforms are expensed as marketing expenses in the period incurred. We do not allow access to our service to be provided as part of a bundle by any of our partners.

In June 2019, we issued 404,891 shares of Class A common stock as part of the consideration for an acquisition of a complementary streaming platform focused on Alternative Healing. If the acquired platform maintains profitability and achieves a specific subscriber growth threshold as of June 30, 2020, we may issue up to 139,665 additional shares of Class A common stock as additional consideration. We also issued 79,941 shares of Class A common stock as part of the consideration to acquire over 450 titles of original content that has been integrated into our Alternative Healing channel.

In June 2020, we issued 139,617 shares of Class A common stock as additional consideration for an earnout based on the acquired platform maintaining profitability and exceeding the upper threshold of a member growth target as of June 30, 2020.

During the first nine months of ~~2019~~2020 and ~~2018,~~2019, we recognized approximately ~~$1,597,000~~$1,864,000 and ~~$1,138,000,~~$1,597,000, respectively, of share-based compensation expense. This included $715,000 in additional expense for the shares issued in June 2020 noted above. 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. During the first nine months of ~~2018,~~ ~~45,800~~2020, 32,200 options were exercised with net proceeds of ~~$258,000. No~~$181,000. NaN options were exercised during the first nine months of 2019.

~~The following table sets forth~~There were 0 changes in goodwill for the period from December 31, ~~2018~~2019 through September 30, ~~2019:~~2020.

The following table represents our other intangible assets by major asset class as of the dates indicated, which are included in Investments and ~~Other Assets~~other assets on the accompanying condensed consolidated balance sheet:

The customer related intangible assets ~~are~~were being amortized on a straight-line basis over 12 ~~months.~~months and were fully amortized as of June 30, 2020. Amortization expense was ~~$138,000 and $183,000~~$229,000 for the ~~three and~~ nine months ended September 30, ~~2019, respectively. Amortization expense for the remainder of 2019 is expected to be $138,000.~~2020.

On April 26, 2019, we replaced the line of credit of our wholly owned subsidiary Boulder Road LLC (“Boulder Road”) with a $17.0 million mortgage with BDS III Mortgage Capital B LLC, as ~~lender. The mortgage bears~~lender, on the office campus that houses our headquarters.

On September 9, 2020, Boulder Road sold a 50% undivided interest atin a ~~fixed spread over LIBOR, matures on May 1,~~

~~2022,~~portion of the campus to Westside Boulder, LLC. 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 $13.15 million in the transaction. Simultaneously with the closing of the sale, Boulder Road used the sale proceeds, along with the proceeds of a ~~two year extension option, is~~$4 million loan to Gaia from an affiliate of Westside Boulder, to repay all outstanding amounts secured by ~~our corporate campus~~the mortgage. The $4 million promissory note is unsecured, bears the same interest as the retired mortgage at 5.75% per annum, and is ~~guaranteed by~~due on the earlier of January 3, 2022 or the date on which the owners of the property finance it through the incurrence of mortgage debt. We recorded a gain on the sale of $6.1 million which is included in Interest and other income (expense), net on the accompanying condensed consolidated statements of operations.

In connection with the transaction, Boulder Road leased the property pursuant to a master lease for a term extending through September 30, 2030, with two five-year extensions. Gaia ~~with no recourse against other assets. The current interest rate is 5.78%.~~guaranteed Boulder Road’s ~~financial statements are included within our consolidated financial statements; however, Boulder Road’s assets and credit are only available~~obligations under the master lease. See Note 6 for further discussion related to ~~pay its own debts and obligations and are not available to satisfy~~ the ~~debts or obligations of any other entity.~~accounting for the master lease.

In June 2019, one of our wholly owned subsidiaries issued a $1.45 million secured convertible promissory note as part of the consideration for the platform acquisition discussed in Note 3. This note ~~is secured by the assets acquired by the subsidiary, bears interest at 2% per annum and is due and payable on January 2, 2021. The promissory note is convertible~~was converted into ~~208,589~~206,542 shares of Class A common stock ~~at the election of the holder at any time prior to maturity. No payments are due prior to maturity.~~in June 2020 and cancelled.

Also in June 2019, one of our wholly owned subsidiaries issued a $300,000 secured convertible promissory note as part of the consideration for the acquisition of a library of original content discussed in Note 3. This note ~~is secured by the library acquired by the subsidiary, bears interest at 2% per annum and is due and payable on January 2, 2021. The promissory note is convertible~~was converted into ~~41,145~~40,728 shares of Class A common stock ~~at the election of the holder at any time prior to maturity. No payments are due prior to maturity.~~in June 2020 and cancelled.

As discussed in Note 5, we entered into an operating lease in connection with the sale of a portion of our corporate campus. 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.

Because the rate implicit in the lease is not readily determinable, we use 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:

Operating lease expense is recognized on a straight-line basis over the lease term. Future amortization of our lease liability as of September 30, 2020 was as follows:

Basic ~~net loss~~earnings per share is computed ~~by dividing the net loss by~~using 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 all~~Potential shares of common stock ~~underlying~~consist of incremental shares issuable upon the assumed exercise of stock options and vesting of restricted stock units ~~and convertible notes payable, to~~utilizing the ~~extent dilutive. Basic and diluted net loss~~treasury stock method. The computation of earnings per share is as follows:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
(in thousands, except per share data)	2020		2019			2020		2019
	(unaudited)					(unaudited)
Basic earnings per share:
Net income (loss)	$	6,314	$	(4,144	)	$	209	$	(15,338	)
Shares used in computation:
Weighted-average common stock outstanding		19,183		18,375			18,834		18,070
Basic earnings per share	$	0.33	$	(0.23	)	$	0.01	$	(0.84	)

Diluted earnings per share:
Net income (loss)	$	6,314	$	(4,144	)	$	209	$	(15,338	)
Shares used in computation:
Weighted-average common stock outstanding		19,183		18,375			18,834		18,070
Common stock equivalents		554		—			608		—
Weighted-average number of shares		19,737		18,375			19,442		18,070
Diluted earnings per share	$	0.32	$	(0.23	)	$	0.01	$	(0.84	)

Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the ~~same for the three and nine months ended September 30, 2019 and 2018, respectively,~~diluted calculation as ~~the~~their inclusion ~~of all underlying common shares~~ would have been anti-dilutive. The following table summarizes the potential share of common stock excluded from the diluted calculation:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018			2020		2019		2020		2019
Current:
Federal	$	—	$	—	$	—	$	—		$	—	$	—	$	—	$	—
State		—		—		—		—			—		—		—		—
Total current		—		—		—		—			—		—		—		—
Deferred:
Federal		3		—		45		(1,818	)		—		3		69		45
State		—		—		—		(8	)		—		—		—		—
Total deferred		3		—		45		(1,826	)		—		3		69		45
Total income tax expense (benefit)	$	3	$	—	$	45	$	(1,826	)
Total income tax expense										$	—	$	3	$	69	$	45

~~The income tax benefit recorded during 2018 is a result of our historical alternative minimum tax payments becoming fully refundable in 2018.~~ The income tax expense recorded in ~~2019~~2020 is a result of the amortization of goodwill over 15 years for tax purposes. Periodically, we perform assessments of the realization of our net deferred tax assets considering all available evidence, both positive and negative. Based on our historical operating losses, combined with our plans to continue to invest in our revenue growth and ~~generate losses through 2019,~~content library we have a full valuation allowance on our deferred tax ~~assets.~~assets as of September 30, 2020. As of September 30, ~~2019,~~2020, our net operating loss carryforwards on a gross basis were ~~$90.8~~$99.4 million and ~~$25.6~~$26.8 million for federal and state, respectively.

From time to time, we are involved in legal proceedings that we consider to be in the normal course of business. We record accruals for losses related to those matters against us that we consider to be probable and that can be reasonably estimated. 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, ~~2019~~2020 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.

This report contains forward-looking statements that involve risks and uncertainties. When used in this discussion, we intend the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “strive,” “future,” “intend”, “will” and similar expressions as they relate to us to identify such forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-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” and elsewhere in this Form 10-Q and under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Risks and uncertainties that could cause actual results to differ include, without limitation, general economic conditions, ongoing losses, competition, loss of key personnel, pricing, brand reputation, acquisitions, new initiatives we undertake, security and information systems, legal liability for website content, failure of third parties to provide adequate service, future internet-related taxes, our founder’s control of us, litigation, fluctuations in quarterly operating results, consumer trends, the effect of government regulation and programs, the impact of 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. 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 in understanding our condensed consolidated financial statements, changes in certain items in those statements from period to period, the primary factors that caused those changes and how certain accounting principles, policies and estimates affect the condensed consolidated financial statements.

We operate a global digital video subscription service with a library of approximately 8,000 ~~English-language~~ titles, ~~as well as~~with a growing selection of titles available in Spanish, German and French, ~~which~~that caters to a unique, underserved ~~subscriber~~member base. Our digital content is available to our ~~subscribers~~members on most internet-connected devices anytime, anywhere, commercial-free. Through our online Gaia subscription service our ~~subscribers~~members have unlimited access to a library of inspiring films, ~~cutting-edge~~cutting edge documentaries, interviews, yoga classes, transformation related content, and ~~more; all~~more – 85% of which is exclusively available to our ~~subscribers~~members for digital streaming on most internet-connected devices. ~~A subscription also allows our subscribers to download files from our library and view them later when they are not actively connected to the internet.~~

Gaia’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. ~~Most of our~~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 on Gaia.~~ By offering exclusive and unique content through our streaming service, we believe we will be able to significantly expand our ~~subscriber~~target member 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 ~~customer~~member 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 investments in our streaming video technology and our user interface, we have expanded the many ways our ~~subscribers~~member 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-connected devices as they are developed and creating a conscious community built around our content.

Our focus for 2019 was on disciplined investment in our product, content library and member acquisition efforts to allow us to reduce the cash used in operations meaningfully over the year, with a continued focus on driving sustainable growth into the future. We reduced cash used in operations over 88% from 2018 to 2019 and generated cash flows from operations in the fourth quarter of 2019. We continued this trend in 2020, generating $7.2 million in cash flows from operations, an improvement of $13.1 million or 222% from the year ago period. We also generated net income and positive net cash flows in the third quarter of 2020 as planned. We are now focused on continuing to generate net income and cash while also growing revenues.

In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, or COVID-19, as a pandemic, which continues to spread throughout the United States and the world. The full impact that COVID-19 will have on our ~~content.~~business will depend on a number of factors such as the duration and extent of COVID-19, the effect of governmental actions, changes in consumer

behavior, responses of our third-party business partners that offer our content through their platforms, and general economic activity, as described in Part II, Item 1A “Risk Factors” in this Form 10-Q.

In the second half of March 2020 continuing through July 2020, we saw an increase in demand for our content from both current and potential members, which has 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. Beginning in August 2020, we began to see the online paid media advertising market start to return to historical norms with a corresponding effect on the cost of our online advertising efforts.

We reported net ~~losses~~income of ~~$15.3~~$0.2 million and ~~$22.7~~net loss of $15.3 million for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

We are a Colorado corporation. Our principal and executive office is located at 833 West South Boulder Road, Louisville, CO 80027-2452. Our telephone number at that address is (303) 222-3600. We maintain a website at www.gaia.com. The website address has been included only as a textual reference. Our website and the information contained on it, or connected to it, are not incorporated by reference into this Form 10-Q. We are a “smaller reporting company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and have elected to take advantage of certain ~~of the~~ scaled ~~disclosure~~disclosures available to smaller reporting companies.

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)

2019

2018

2019

2018

Revenues, net

$
13,660

$
10,942

$
39,291

$
30,080

Cost of revenues

1,801

1,386

5,186

3,857

Gross profit

86.8
%

87.3
%

86.8
%

87.2
%
Selling and operating expenses

14,319

18,618

44,214

47,096

Corporate, general and administration expenses

1,440

1,454

4,526

4,205

Loss from operations

(3,900
)

(10,516
)

(14,635
)

(25,078
)
Interest and other income (expense), net

(241
)

120

(400
)

297

Loss before income taxes

(4,141
)

(10,396
)

(15,035
)

(24,781
)
Income tax expense (benefit)

3

—

45

(1,826
)
Loss from continuing operations

(4,144
)

(10,396
)

(15,080
)

(22,955
)
Income (loss) from discontinued operations

—

67

(258
)

242

Net loss

$
(4,144
)

$
(10,329
)

$
(15,338
)

$
(22,713
)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands, except per share data)	2020			2019			2020			2019
Revenues, net	$	17,537		$	13,660		$	48,201		$	39,291
Cost of revenues		2,264			1,801			6,248			5,186
Gross margin		87.1	%		86.8	%		87.0	%		86.8	%
Selling and operating		13,479			14,319			42,354			44,214
Corporate, general and administration		1,426			1,440			4,716			4,526
Income (loss) from operations		368			(3,900	)		(5,117	)		(14,635	)
Interest and other income (expense), net		5,946			(241	)		5,395			(400	)
Income (loss) before income taxes		6,314			(4,141	)		278			(15,035	)
Provision for income taxes		—			3			69			45
Income (loss) from continuing operations		6,314			(4,144	)		209			(15,080	)
Income (loss) from discontinued operations		—			—			—			(258	)
Net income (loss)	$	6,314		$	(4,144	)	$	209		$	(15,338	)

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,						For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues, net		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues		13.2	%		12.7	%		13.2	%		12.8	%		12.9	%		13.2	%		13.0	%		13.2	%
Gross profit		86.8	%		87.3	%		86.8	%		87.2	%		87.1	%		86.8	%		87.0	%		86.8	%
Expenses:
Selling and operating		104.8	%		170.2	%		112.5	%		156.6	%		76.9	%		104.8	%		87.9	%		112.5	%
Corporate, general and administration		10.5	%		13.3	%		11.5	%		14.0	%		8.1	%		10.5	%		9.8	%		11.5	%
Total expenses		115.4	%		183.4	%		124.0	%		170.5	%
Loss from operations		(28.6	)%		(96.1	)%		(37.2	)%		(83.4	)%
Total operating expenses														85.0	%		115.4	%		97.7	%		124.0	%
Income (loss) from operations														2.1	%		(28.6	)%		(10.6	)%		(37.2	)%
Interest and other income (expense), net		(1.8	)%		1.1	%		(1.0	)%		1.0	%		33.9	%		(1.8	)%		11.2	%		(1.0	)%
Loss before income taxes		(30.3	)%		(95.0	)%		(38.3	)%		(82.4	)%
Income tax expense (benefit)		0.0	%		—	%		0.1	%		(6.1	)%
Loss from continuing operations		(30.3	)%		(95.0	)%		(38.4	)%		(76.3	)%
Income (loss) before income taxes														36.0	%		(30.3	)%		0.6	%		(38.3	)%
Provision for income taxes														—	%		0.0	%		0.1	%		0.1	%
Income (loss) from continuing operations														36.0	%		(30.3	)%		0.4	%		(38.4	)%
Income (loss) from discontinued operations		0.0	%		0.6	%		(0.7	)%		0.8	%		—	%		—	%		—	%		(0.7	)%
Net loss		(30.3	)%		(94.4	)%		(39.0	)%		(75.5	)%
Net income (loss)														36.0	%		(30.3	)%		0.4	%		(39.0	)%

Three months ended September 30, ~~2019~~2020 compared to three months ended September 30, ~~2018~~2019

Revenues, net. Revenues increased ~~$2.8~~$3.8 million, or ~~25.7%~~27.7%, to $17.5 million during the third quarter of 2020, compared to $13.7 million during the third quarter of ~~2019,~~2019. The increase was primarily driven by an increase in both members and average monthly revenue per member compared to ~~$10.9~~the year-earlier period. Revenues were not significantly impacted by inflation.

Cost of revenues. Cost of revenues increased $0.5 million, or 27.8%, to $2.3 million during the third quarter of ~~2018. The increase was primarily driven by the 16% increase in paying subscribers over the year-earlier period, as well as increases in our average revenue per subscriber.~~

~~Cost of revenues. Cost of revenues increased $0.4 million, or 28.6%, to~~2020, from $1.8 million during the third quarter of 2019 from $1.4 million during the third quarter of 2018 and, as a percentage of net revenues, increased to 13.2% during the third quarter of 2019 from 12.7% during the third quarter of 2018 primarily due to amortization from our increased content investment over the past twelve months.

~~Selling and operating expenses. Selling and operating expenses decreased $4.3 million, or 23.1%, to $14.3 million during the third quarter of 2019 from $18.6 million during the third quarter of 2018~~ and, as a percentage of net revenues, decreased to ~~104.8%~~12.9% during the third quarter of 2020 from 13.2% during the third quarter of 2019 ~~from 170.2% during the third quarter of 2018~~ primarily due to ~~our continued discipline in reducing our customer acquisition spending both as a percentage of revenue~~increased revenues.

~~Corporate, general~~operating expenses. Selling and ~~administration~~operating expenses~~. Corporate, general and administration~~ decreased ~~$14 thousand,~~$0.8 million, or 1%5.6%, to ~~$1.4~~$13.5 million during the third quarter of ~~2019 compared to~~2020 from $14.3 million during the ~~same period~~third quarter of ~~2018~~2019 and, as a percentage of net revenues, decreased to 76.9% during the third quarter of 2020 from 104.8% during the third quarter of 2019. The decrease was primarily driven by operating expense efficiencies overall as we continued to reduce our operating expense base through disciplined expense management.

Corporate, general and administration expenses. Corporate, general and administration expenses were flat at $1.4 million for both periods and, as a percentage of net revenues, decreased to 8.1% during the third quarter of 2020 from 10.5% during the third quarter of 2019 as a result of increased revenues.

Interest and other income (expense), net. Interest and other income (expense), net reflect the $6.1 million gain from ~~13.3%~~the sale of a portion of our corporate campus during the third quarter of ~~2018, due~~2020 and the corresponding reduction in interest expense as we used the proceeds in September 2020 to ~~increased revenues in 2019 and disciplined expense management.~~repay $13.0 million of debt that had an interest rate of 5.75%.

Net ~~loss~~income. As a result of the above factors net income increased to $6.3 million, or $0.33 per share, during the third quarter of 2020 compared to a net loss ~~decreased to~~of $4.1 million, or $0.23 per share, during the third quarter of ~~2019 compared to~~2019. Excluding the gain from the sale of a portion of our corporate campus, net ~~loss of $10.3~~income was $0.2 million or ~~$0.58~~$0.01 per share during the third quarter of ~~2018.~~2020.

Nine months ended September 30, ~~2019~~2020 compared to nine months ended September 30, ~~2018~~2019

Revenues, net. Revenues increased ~~$9.2~~$8.9 million, or ~~30.6%~~22.6%, to $48.2 million during the first nine months of 2020, compared to $39.3 million during the first nine months of ~~2019,~~2019. The increase was primarily driven by an increase in both members and average monthly revenue per member compared to ~~$30.1~~the year-earlier period. Revenues were not significantly impacted by inflation.

Cost of revenues. Cost of revenues increased $1.0 million, or 19.2%, to $6.2 million during the first nine months of ~~2018. The increase was primarily driven by the growth in our subscriber base between the two periods.~~

~~Cost of revenues. Cost of revenues increased $1.3 million, or 33.3%, to~~2020, from $5.2 million during the first nine months of 2019 ~~from $3.9 million during the first nine months of 2018~~ and, as a percentage of net revenues, ~~increased~~decreased to 13.0% during the first nine months of 2020 from 13.2% during the first nine months of 2019 ~~from 12.8%~~primarily due to increased revenues.

Selling and operating expenses. Selling and operating expenses decreased $1.8 million, or 4.1%, to $42.4 million during the first nine months of ~~2018 primarily due to amortization~~2020 from ~~our increased content spending over the past twelve months.~~

~~Selling and operating expenses. Selling and operating expenses decreased $2.9 million, or 6.2%, to~~ $44.2 million during the first nine months of 2019, ~~from $47.1 million during the first nine months of 2018,~~ and, as a percentage of net revenues, decreased to 87.9% during the first nine months of 2020 from 112.5% during the first nine months of ~~2019 from 156.6% during the first nine months of 2018~~2019. The decrease was primarily due to operating expense efficiencies overall as we continued to reduce our ~~continued discipline in reducing customer acquisition spending both as a percentage of revenue and on an absolute basis.~~operating expense base through disciplined expense management.

Corporate, general and administration expenses. Corporate, general and administration expenses increased ~~$0.3~~$0.2 million or ~~7.1%~~4.4%, to $4.7 million during the first nine months of 2020 from $4.5 million during the first nine months of 2019 ~~from $4.2 million during the first nine months of 2018~~ and, as a percentage of net revenues, decreased to 9.8% during the first nine months of 2020 from 11.5% during the first nine months of 2019, ~~from 14.0% during the first nine months of 2018,~~ due to increased revenues in ~~2019~~2020.

Interest and ~~increased professional services fees related to~~other income (expense), net. Interest and other income (expense), net reflect the ~~platform acquisition completed in June 2019.~~$6.1 million gain from the sale of a portion of our corporate campus during the third quarter of 2020.

Net ~~loss~~income. As a result of the above factors, net income was $0.2 million, or $0.01 per share, during the first nine months of 2020 compared to a net loss ~~was~~of $15.3 million, or $0.84 per share, during the first nine months of ~~2019 compared to a net loss of $22.7 million, or $1.33 per share, during the first nine months of 2018.~~2019.

Our ~~subscriber~~member base growth ~~exhibits a~~reflects seasonal ~~pattern that reflects~~ variations driven primarily by when consumers typically spend more time indoors and, as a

result, tend to increase their viewing, similar to those of traditional TV and cable networks. ~~Our subscriber~~Historically, our member growth is generally greatest

~~during October~~ in the fourth and first quarters (October through ~~February~~February), and slowest in May through August. ~~As we continue to expand internationally, we expect~~

~~regional~~This drives quarterly variations in our spending on member acquisition efforts but does not drive a corresponding 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.~~net revenue.

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, 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 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 September 30, ~~2019,~~2020, our cash balance was ~~$11.6~~$8.7 million. We estimate that our capital expenditures, including investments in our media library, will total approximately ~~$3.0 million to~~ $4.0 million for the remainder of ~~2019, which~~2020. These planned capital expenditures will be ~~funded through~~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 can scale the planned expenditures based on the available cash ~~balance and operating~~flows from operations as there are no contractual commitments with, or dependencies on, third parties. Since beginning to generate cash flows ~~that~~from operations in October 2019, we have generated $10.6 million in cash flows from operations and we expect to ~~generate in~~continue generating cash for the ~~fourth quarter~~remainder of ~~2019.~~2020.

On April 26, 2019, we replaced the $12.5 million line of credit of our wholly owned subsidiary Boulder Road LLC with a $17.0 million mortgage with BDS III Mortgage Capital B LLC, as lender. ~~The~~This mortgage was paid off in September 2020 and replaced with a $4.0 million unsecured promissory note that bears interest at ~~a fixed spread over LIBOR, matures~~5.75% per annum and is due on ~~May 1,~~the earlier of January 3, 2022 ~~with a two year extension option, is secured by~~or the date on which Boulder Road and Westside Boulder finance their interest in the property that houses our corporate campus and is guaranteed by Gaia with no recourse against other assets. Boulder Road’s financial statements are included within our consolidated financial statements; however, Boulder Road’s assets and credit are only available to pay its own debts and obligations and are not available to satisfy the debts or obligations of any other entity.campus.

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, cash expected to be generated from operations, and potential borrowing capabilities should 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 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.

The following table summarizes our primary sources (uses) of cash during the periods presented:

Operating activities. Cash flows ~~used in~~from operations improved ~~$7.2~~$13.1 million during the first nine months of ~~2019~~2020 compared to the same period in ~~2018.~~2019. The improvement was primarily ~~due to increased revenues and reductions~~driven by disciplined expense management, growth in our ~~spending on customer acquisition~~member base and an increase in ~~2019.~~the number of members electing to pay for their annual membership in advance.

Investing activities. Cash flows ~~used in~~from investing activities ~~increased $2.7~~improved $19.3 million during the first nine months of ~~2019~~2020 compared to the same period in ~~2018~~2019 primarily due to alignment of our content and product investments to our cash flows from operations and revenue growth and the ~~platform acquisition completed~~$13.2 million in ~~June 2019 and ongoing investments in our media library, product enhancements, and~~proceeds from the sale of a portion of our corporate campus. ~~We have completed most of our campus improvements and expect the ongoing investment in the campus to be nominal going into the fourth quarter of 2019 and into 2020.~~

Financing activities. Cash flows ~~provided by~~from financing activities ~~decreased $20.8~~declined $16.8 million during the first nine months of ~~2019~~2020 compared to the same period in ~~2018 primarily due to~~ the ~~net proceeds~~prior year. During 2019, we replaced our $12.5 million line of ~~$37.1~~credit with the $17.0 million ~~from~~mortgage discussed above. The balance of the ~~sale of Class A common stock~~mortgage was repaid in ~~March 2018,~~September 2020, which was partially offset by the ~~replacement of our line of credit with a $17.0~~new $4.0 million ~~mortgage as~~promissory note discussed ~~in Note 5 to the condensed consolidated financial statements in Item 1 of this Form 10-Q.~~above.

We are a smaller reporting company as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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, ~~2019,~~2020, our management has concluded that those disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, ~~2019,~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The disclosure below modifies the risk factors previously disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2019. These risks and uncertainties, along with those previously disclosed, could materially adversely affect our business or financial results.

The global spread of COVID-19 and the various measures to contain it are affecting the macroeconomic environment and while the full impact remain uncertain, our business and results of operations could be materially adversely affected. Gaia has experienced some increase in member growth and utilization as more people stay at home and rely on video content, but the longer-term economic impact is expected to adversely affect consumer spending on discretionary items and may decrease demand for our service. The impact on our business will depend on a number of factors such as the duration and extent of COVID-19, governmental actions, changes in consumer behavior, responses of our third-party business partners that offer our content through their platforms, and general economic activity.

We are ~~a smaller reporting company~~attempting to conduct business as ~~defined~~usual to the extent possible and are complying with the applicable orders issued by the Governor of Colorado. We canceled and postponed live events that were scheduled for March through December and will be limiting in ~~Rule 12b-2~~person capacity for events held at GaiaSphere, our 300-person live event studio located on our campus in Colorado. The loss of revenue and exposure from such events will negatively affect us.

The impact of the ~~Securities Exchange Act~~COVID-19 pandemic may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K, any of ~~1934 and are not required to provide the information under this item.~~which could have a material effect on us.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	GAIA	NASDAQ Global Market


Large accelerated filer	☐	Accelerated filer	☒☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
Emerging growth company	☐

Class		Outstanding at November ~~1, 2019~~6, 2020
Class A Common Stock ($.0001 par value)		~~12,984,971~~13,782,951
Class B Common Stock ($.0001 par value)		5,400,000

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):	3

	Condensed Consolidated Balance Sheets at September 30, ~~2019~~2020 and December 31, ~~2018~~ 2019	4

	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019	5

	Condensed Consolidated Statements of Changes in Equity for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019	6

	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019	7

	Notes to interim condensed consolidated financial statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1113

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1417

Item 4.	Controls and Procedures	1417

PART II—OTHER INFORMATION		1518

Item 1.	Legal Proceedings	1518

Item 1A.	Risk Factors	1518

Item 2.	Unregistered Sales of Equity Securities and ~~the~~ Use of Proceeds	1518

Item 3.	Defaults Upon Senior Securities	1518

Item 4.	Mine Safety Disclosures	1518

Item 5.	Other Information	1518

Item 6.	Exhibits	1619

	SIGNATURES	1720

(in thousands)
2020 (remaining)	$	250
2021		1,001
2022		1,001
2023		1,001
2024		1,001
Thereafter		6,358
Future lease payments, gross		10,612
Less: Imputed interest		(1,800	)
Operating lease liability	$	8,812

(in thousands)
Balance at December 31, 2018	$	10,609
Acquisition		6,680
Balance at September 30, 2019	$	17,289

Exhibit No.		Description
10.1		Purchase and Sale Agreement dated as of September 9, 2020 between Boulder Road LLC and Westside Boulder, LLC (incorporated by reference to Exhibit 10.1 of Gaia’s current report on Form 8-K dated September 9, 2020 and filed on September 10, 2020).

10.2		Master Lease dated as of September 9, 2020, between Boulder Road LLC as lessee and Boulder Road LLC and Westside Boulder, LLC, tenants in common, as lessors (incorporated by reference to Exhibit 10.2 of Gaia’s current report on Form 8-K dated September 9, 2020 and filed on September 20, 2020).

31.1*		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document.

101.SCH		Inline XBRL Taxonomy Extension ~~Schema.~~Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation ~~Linkbase.~~Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition ~~Linkbase.~~Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label ~~Linkbase.~~Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation ~~Linkbase.~~Linkbase Document
104		Cover Page Interactive Data File

		Gaia, Inc.
		(Registrant)

November ~~5, 2019~~9, 2020	By:	/s/ Jirka Rysavy
Date		Jirka Rysavy
		Chief Executive Officer
		(authorized officer)

November ~~5, 2019~~9, 2020	By:	/s/ Paul Tarell
Date		Paul Tarell
		Chief Financial Officer
		(principal financial and accounting officer)