gaia-8k_20200423.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): April 23, 2020

GAIA, INC.

(Exact Name of Registrant as Specified in its Charter)

Colorado	000-27517	84-1113527
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

833 West South Boulder Road, Louisville, CO 80027-2452
(Address of Principal Executive Offices; Zip Code)

Registrant’s telephone number, including area code: (303) 222-3600

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition.

On April 27, 2020, Gaia issued a press release announcing results for its quarter ended March 31, 2020. A copy of the press release is attached as Exhibit 99.1 to this Current Report.

In accordance with General Instruction B.2 of Form 8-K, the information contained in this Item 2.02 and in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any of the Registrant’s filings under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.

Item 5.07

Submission of Matters to a Vote of Security Holders.

On April 23, 2020, Gaia held its 2020 annual meeting of shareholders. At that meeting, the shareholders elected seven directors for one-year terms. For more information on the meeting, see Gaia’s definitive proxy statement for the 2020 annual meeting of shareholders, filed with the Securities and Exchange Commission on March 9, 2020.

Proposal 1

All nominees for director were elected by the following votes, each to serve until the next annual meeting of shareholders to be held in 2021 or until successors are duly elected and qualified:

					Broker
	For		Withheld		Non-Votes
Jirka Rysavy		57,389,692		4,298,014	—
James Colquhoun		57,386,882		4,300,824	—
Kristin Frank		57,371,300		4,316,406	—
David Maisel		57,384,520		4,303,186	—
Keyur Patel		57,389,120		4,298,586	—
Dae Mellencamp		57,357,425		4,330,281	—
Paul Sutherland		57,368,875		4,318,831	—

Proposal 2

To approve, on a non-binding advisory basis, named executive officer compensation. This proposal was approved.

For				Against				Abstain
	60,909,153				600,636			177,917

Item 9.01

Financial Statements and Exhibits

(d) Exhibits


Exhibit No.		Description of Exhibit

99.1		Press Release issued by Gaia on April 27, 2020
104		Cover Page Interactive Data File

SIGNATURES

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 hereunto duly authorized.

GAIA, INC.

By:  /s/ Paul Tarell
        Name: Paul Tarell
        Title: Chief Financial Officer

Date: April 27, 2020

gaia-ex991_43.htm

Exhibit 99.1

Gaia Reports First Quarter 2020 Results

Positive Adjusted EBITDA and Cash Flow from Operations

BOULDER, CO, April 27, 2020 — Gaia, Inc. (NASDAQ: GAIA), a conscious media and community company, reported financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights vs. Same Year-Ago Quarter

▪

16% increase in revenues to $14.5 million.

▪

Generated positive Adjusted EBITDA, an improvement of $4.1 million.

▪

Generated $2.0 million in cash flow from operations, an improvement of $4.7 million.

“For the second quarter in a row, we generated positive Adjusted EBITDA and cash flow from operations,” said Paul Tarell, Gaia’s CFO. “We remain on track to be free cash flow positive beginning in July, which has been further supported by an uptick in new member growth as a result of the stay-at-home orders that began in mid-March and have continued through April.”

First Quarter 2020 Financial Results

Revenues in the first quarter increased 16% to $14.5 million from $12.5 million in the year-ago quarter. This was primarily due to growth in paying members and an increase in average revenue per member. Paying members increased to 605,100 as of March 31, 2020, which includes the impact of finalizing and implementing price increases in the first quarter. As of April 27^th, Gaia has surpassed 625,000 paying members.

Gross profit in the first quarter increased 16% to $12.6 million compared to $10.9 million in the year-ago quarter. Gross margin declined slightly to 86.9% versus 87.2% in the year-ago quarter primarily due to increased amortization for content released in 2019 but was unchanged from the fourth quarter of 2019.

Total operating expenses in the first quarter declined 8% to $15.9 million from $17.3 million in the year-ago quarter, primarily due to reductions in marketing spend. Customer acquisition costs as a percentage of revenue decreased to 52% in the first quarter of 2020 from 69% in the year-ago quarter.

Net loss in the first quarter improved significantly to $3.6 million, or $(0.19) per share, compared to a net loss of $6.7 million, or $(0.38) per share, in the year-ago quarter.

Adjusted EBITDA also improved significantly to $0.2 million compared to $(3.9) million in the year-ago quarter.

Gaia generated cash from operations of $2.0 million in the first quarter of 2020 compared to cash used of $2.7 million in the year ago quarter, an improvement of $4.7 million.

Gaia’s cash conversion cycle has continued to improve, with overall cash used during the quarter of $1.5 million compared to a use of $7.7 million in the year ago quarter.

As of March 31, 2020, Gaia had $10.0 million in cash compared to $11.5 million as of December 31, 2019.

Conference Call

The company will hold a conference call today at 4:30 p.m. Eastern time to discuss its first quarter 2020 results.

Date: Monday, April 27, 2020

Time: 4:30 p.m. Eastern time (2:30 p.m. Mountain time)

Toll-free dial-in number: (855) 327-6837

International dial-in number: (631) 891-4304

Conference ID: 10009485

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at (949) 574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at www.ir.gaia.com. A telephonic replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through May 11, 2020.

Toll-free replay number: (844) 512-2921

International replay number: (412) 317-6671

Replay ID: 9392365

About Gaia

Gaia is a global video streaming service and community that provides curated conscious media in four primary channels—Seeking Truth, Transformation, Alternative Healing and Yoga—to its subscribers in 185 countries with approximately 8,000 titles. Over 90% of its library is exclusive to Gaia, and approximately 80% of the views are generated by content produced or owned by Gaia. For more information about Gaia, visit www.gaia.com.

Forward-Looking Statements

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as “expect,” “believe,” “will,” or comparable terminology or by discussions of strategy. While Gaia believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, operating losses, general economic conditions, competition, changing consumer preferences, acquisitions, new initiatives we undertake, costs of acquiring new subscribers, subscriber retention rates, and other risks and uncertainties included in Gaia’s filings with the Securities and Exchange Commission. Gaia assumes no duty to update any forward-looking statements.

Contacts

Paul Tarell

Gaia, Inc.

(303) 222-3330

Paul.Tarell@gaia.com

Cody Slach

Gateway Investor Relations

(949) 574-3860

GAIA@gatewayir.com

GAIA, INC.

Condensed Consolidated Statements of Operations

	For the Three Months Ended March 31,
(in thousands, except per share data)	2020			2019
	(unaudited)
Revenues, net	$	14,511		$	12,467
Cost of revenues		1,901			1,600
Gross profit		12,610			10,867
Expenses:
Selling and operating		14,458			15,722
Corporate, general and administration		1,417			1,593
Total operating expenses		15,875			17,315
Loss from operations		(3,265	)		(6,448	)
Interest and other income (expense), net		(246	)		37
Loss before income taxes		(3,511	)		(6,411	)
Income tax expense		69			—
Loss from continuing operations		(3,580	)		(6,411	)
Loss from discontinued operations		—			(315	)
Net loss	$	(3,580	)	$	(6,726	)
Loss per share-basic and diluted:
Continuing operations	$	(0.19	)	$	(0.36	)
Discontinued operations		-			(0.02	)
Basic and diluted net loss per share	$	(0.19	)	$	(0.38	)
Weighted-average shares outstanding:
Basic and diluted		18,482			17,890

Adjusted EBITDA*	$	169		$	(3,949	)

* See definition and reconciliation on following page.

GAIA, INC.

Summary of Cash Flows

	For the Three Months Ended March 31,
(in thousands)	2020			2019
	(unaudited)
Net cash provided by (used in):
Operating activities - continuing operations	$	2,006		$	(2,760	)
Operating activities - discontinued operations		—			19
Operating activities		2,006			(2,741	)
Investing activities		(3,601	)		(4,924	)
Financing activities		120			—
Net change in cash	$	(1,475	)	$	(7,665	)

Reconciliation of Loss from Continuing Operations to EBITDA and Adjusted EBITDA

	For the Three Months Ended March 31,
(in thousands)	2020			2019
	(unaudited)
Loss from continuing operations	$	(3,580	)	$	(6,726	)
Interest expense (income), net		246			(37	)
Provision for (benefit from) income taxes		69			—
Depreciation and amortization expense		2,969			2,220
EBITDA		(296	)		(4,543	)
Share-based compensation expense		465			594
Adjusted EBITDA	$	169		$	(3,949	)

EBITDA represents net loss before interest expense, provision for income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to remove share-based compensation expense. EBITDA and Adjusted EBITDA do not represent net income, as that term is defined under GAAP, and should not be considered as an alternative to net income (loss) as an indicator of our operating performance.

Additionally, EBITDA and Adjusted EBITDA are not intended to be measures of free cash flow available for management or discretionary use as such measures do not consider certain cash requirements such as capital expenditures, tax payments and debt service requirements. EBITDA and Adjusted EBITDA as presented herein are not necessarily comparable to similarly titled measures.

GAIA, INC.

Condensed Consolidated Balance Sheets

	March 31,		December 31,
(in thousands, except share and per share data)	2020		2019
	(unaudited)
ASSETS
Current assets:
Cash	$	10,019	$	11,494
Accounts receivable		1,944		2,310
Prepaid expenses and other current assets		2,046		2,443
Total current assets		14,009		16,247
Building and land, net		22,493		22,681
Media library, software and equipment, net		37,924		36,921
Goodwill		17,289		17,289
Investments and other assets		13,148		13,034
Total assets	$	104,863	$	106,172
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued and other liabilities	$	11,274	$	10,594
Deferred revenue		10,677		8,025
Total current liabilities		21,951		18,619
Long-term debt		16,717		18,433
Deferred taxes		276		206
Total liabilities		38,944		37,258
Total equity		65,919		68,914
Total liabilities and equity	$	104,863	$	106,172

Document And Entity Information	Apr. 23, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Apr. 23, 2020
Entity Registrant Name	GAIA, INC.
Entity Central Index Key	0001089872
Entity File Number	000-27517
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-1113527
Entity Address, Address Line One	833 West South Boulder Road
Entity Address, City or Town	Louisville
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80027-2452
City Area Code	303
Local Phone Number	222-3600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Class A Common Stock
Trading Symbol	GAIA
Security Exchange Name	NASDAQ