United States
Securities and Exchange Commission
Washington, D.C. 20549
Form
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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.
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).
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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class |
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Outstanding at July 28, 2023 |
Class A Common Stock ($0.0001 par value) |
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Class B Common Stock ($0.0001 par value) |
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GAIA, INC.
FORM 10-Q
INDEX
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Item 1. |
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Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 |
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Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 |
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Notes to interim condensed consolidated financial statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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19 |
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (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. While 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, 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 June 30, 2023, the interim results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. Operating results for the three and six months ended June 30, 2023 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, 2022 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, 2022.
3
GAIA, INC.
Condensed Consolidated Balance Sheets
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June 30, |
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December 31, |
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(in thousands, except share and per share data) |
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2023 |
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2022 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
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$ |
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$ |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Media library, software and equipment, net |
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Right-of-use lease asset, net |
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Real estate, investment and other assets, net |
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Goodwill |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable, accrued and other liabilities |
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$ |
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$ |
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Short-term debt and lease liability |
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Deferred revenue |
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Total current liabilities |
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Long-term debt, net |
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Long-term lease liability |
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Deferred taxes |
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Total liabilities |
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Shareholders' equity: |
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Class A common stock, $ |
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Class B common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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The year-end condensed consolidated balance 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 Statements of Operations
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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(in thousands, except per share data) |
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2023 |
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2022 |
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2023 |
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2022 |
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(unaudited) |
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(unaudited) |
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Revenues, net |
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$ |
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$ |
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$ |
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$ |
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Cost of revenues |
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Gross profit |
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Expenses: |
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Selling and operating |
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Corporate, general and administration |
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Acquisition costs |
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— |
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— |
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— |
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Total operating expenses |
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Income (loss) from operations |
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Interest and other expense, net |
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( |
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( |
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( |
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( |
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Income (loss) before income taxes |
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( |
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( |
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Provision for (benefit from) income taxes |
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— |
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— |
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— |
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— |
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Income (loss) from continuing operations |
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( |
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( |
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Income (loss) from discontinued operations |
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— |
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( |
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— |
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( |
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Net income (loss) |
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$ |
( |
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$ |
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$ |
( |
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$ |
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Earnings (loss) per share: |
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Basic |
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Continuing operations |
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$ |
( |
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$ |
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$ |
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$ |
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Discontinued operations |
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$ |
— |
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$ |
( |
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$ |
— |
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$ |
( |
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Basic earnings (loss) per share |
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$ |
( |
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$ |
— |
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$ |
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$ |
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Diluted |
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Continuing operations |
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$ |
( |
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$ |
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$ |
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$ |
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Discontinued operations |
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$ |
— |
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$ |
( |
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$ |
— |
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$ |
( |
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Diluted earnings (loss) per share |
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$ |
( |
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$ |
— |
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$ |
( |
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$ |
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Weighted-average shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to the interim condensed consolidated financial statements.
5
GAIA, INC.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
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(unaudited) |
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(in thousands, except shares) |
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Total Shareholders' |
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Accumulated |
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Common |
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Additional |
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Common |
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Balance at January 1, 2022 |
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$ |
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$ |
( |
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$ |
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$ |
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'Issuance of Gaia, Inc. common stock for RSU releases and share-based compensation |
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— |
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— |
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Net income |
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— |
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— |
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— |
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Balance at March 31, 2022 |
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$ |
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$ |
( |
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$ |
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$ |
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Issuance of Gaia, Inc. common stock for RSU releases, employee stock purchase plan, stock option exercises and share-based compensation |
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— |
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— |
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Net Income |
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— |
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— |
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— |
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Balance at June 30, 2022 |
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$ |
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$ |
( |
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$ |
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$ |
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Balance at January 1, 2023 |
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$ |
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$ |
( |
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$ |
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$ |
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Issuance of Gaia, Inc. common stock for RSU releases and share-based compensation |
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— |
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— |
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Net loss |
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( |
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( |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
( |
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$ |
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$ |
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Issuance of Gaia, Inc. common stock for media library acquisition |
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— |
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— |
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Issuance of Gaia, Inc. common stock for RSU releases, employee stock purchase plan, and share-based compensation |
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— |
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— |
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Net loss |
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( |
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( |
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— |
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— |
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— |
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Balance at June 30, 2023 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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See accompanying notes to the interim condensed consolidated financial statements.
6
GAIA, INC.
Condensed Consolidated Statements of Cash Flows
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For the Six Months Ended June 30, |
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(in thousands) |
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2023 |
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2022 |
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(unaudited) |
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Operating activities: |
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Net income (loss) |
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$ |
( |
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$ |
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Loss from discontinued operations |
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— |
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Income (loss) from continuing operations |
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( |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Share-based compensation expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
) |
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( |
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Prepaid expenses and other assets |
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( |
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( |
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Accounts payable and accrued liabilities |
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( |
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Deferred revenue |
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Net cash provided by operating activities - continuing operations |
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Net cash provided by (used in) operating activities - discontinued operations |
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— |
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( |
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Net cash provided by operating activities |
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Investing activities: |
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Additions to media library, software and equipment |
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( |
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Acquisitions, net of cash acquired, and purchase of intangible assets |
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— |
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( |
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Net cash used in investing activities |
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( |
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( |
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Financing activities: |
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Repayment of debt |
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( |
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( |
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Proceeds from short-term borrowings |
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— |
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Proceeds from the issuance of common stock |
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Net cash used in financing activities |
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( |
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( |
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Net change in cash |
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( |
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( |
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Cash at beginning of period |
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Cash at end of period |
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$ |
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$ |
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Supplemental cash flow information |
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Interest paid |
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$ |
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$ |
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Value of shares issued for acquisition of content added to Media Library |
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$ |
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— |
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See accompanying notes to the interim condensed consolidated financial statements.
7
Notes to 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. 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. (“Gaia,” “we” or “us”) operates a global digital video subscription service and on-line community that caters to a unique and underserved member base. Our digital content library includes over
Our mission is to create a transformational network that empowers a global conscious community. Content on our network is currently organized into
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 described in our Annual Report on Form 10-K for the year ended December 31, 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
Yoga 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 2022 as the contractual commitments related to this line of business lapsed. There are
2. Revenue Recognition
Revenues consist primarily of subscription fees paid by our members. We present revenues net of taxes collected from members. Members are billed in advance and revenues are recognized ratably over the 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 incurred. We do not allow access to our service to be provided as part of a bundle by any of our partners.
3. Equity and Share-Based Compensation
During the first six months of 2023 and 2022, we recognized approximately $
4. Goodwill and Other Intangible Assets
There were
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 June 30, 2023 and December 31, 2022.
(in thousands) |
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June 30, 2023 |
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December 31, 2022 |
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Amortizable Intangible Assets |
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Customer relationships |
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$ |
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$ |
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Tradenames |
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Accumulated amortization |
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( |
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( |
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$ |
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$ |
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Unamortized Intangible Assets |
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Domain names |
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$ |
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$ |
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Our amortizable assets are expected to be amortized on a
(in thousands) |
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2023 (remaining) |
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$ |
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2024 |
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2025 |
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$ |
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5. Debt
On September 9, 2020, Boulder Road sold a
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 $
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 $
Loans made, or letters of credit issued, under the Credit Agreement mature on
Any advance under the Credit Agreement shall bear interest at the Daily Simple SOFR rate (subject to a floor of
The aggregate outstanding amount of advances under the Credit Agreement is required to be $
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
9
Maturities on long-term debt, net are:
(in thousands) |
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2023 (remaining) |
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$ |
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2024 |
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2025 |
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$ |
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6. Leases
In connection with the sale of a portion of our corporate campus as further discussed in Note 5,
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:
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June 30, |
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December 31, |
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(in thousands) |
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Balance Sheet Classification |
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2023 |
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2022 |
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Right-of-use lease asset, net |
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$ |
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$ |
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Operating lease liability (current) |
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$ |
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$ |
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Operating lease liability (non-current) |
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$ |
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$ |
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For the Three Months Ended June 30, |
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(in thousands) |
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2023 |
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2022 |
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Cash paid for operating lease liabilities |
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$ |
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$ |
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For the Six Months Ended June 30, |
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(in thousands) |
|
2023 |
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|
2022 |
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Cash paid for operating lease liabilities |
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$ |
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|
$ |
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Operating lease expense is recognized on a straight-line basis over the lease term. Future amortization of our lease liability as of June 30, 2023 is expected to be:
(in thousands) |
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