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): November 3, 2016
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 Boulder Road,
Louisville, CO 80027-2452
(Address of Principal Executive Offices; Zip Code)
Registrants 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)) |
Section 2 Financial Information
Item 2.02 Results of Operations and Financial Condition
On November 3, 2016, Gaia, Inc. issued a press release announcing results for its quarter ended September 30, 2016. A copy of the press release is attached as Exhibit 99.1.
This Current Report on Form 8-K and the earnings press release attached hereto are being furnished by Gaia pursuant to Item 2.02 Results of Operations and Financial Condition. In accordance with General Instruction B.2 of Form 8-K, the information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. In addition, this information shall not be deemed incorporated by reference into any of the Registrants filings with the Securities and Exchange Commission, except as shall be expressly set forth by specific reference in any such filing.
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description of Exhibit | |
99.1 | Press Release issued by Gaia on November 3, 2016. |
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 C. Tarell | |
Name: Paul C. Tarell | ||
Title: Chief Financial Officer |
Date: November 3, 2016
Exhibit 99.1
Gaia Reports Third Quarter 2016 Results
BOULDER, CO, November 3, 2016 Gaia, Inc. (NASDAQ: GAIA), a conscious media company, reported financial results for the third quarter ended September 30, 2016.
During the third quarter, Gaia completed the sale of its branded consumer product business and recognized a $114.5 million pre-tax gain. In the second quarter Gaia also sold its 51.4% interest in Natural Habitat, which was acquired for $0.6 million, for $12.8 million.
Gaia used the majority of the proceeds to conduct a share repurchase tender offer. Gaia acquired 9,637,000 shares of its common stock and 840,000 vested stock options at $7.75 per share. The remaining proceeds will be used to fund the continuing growth and development of Gaias business, as well as general corporate purposes. As of September 30, 2016, Gaia had 15.1 million shares outstanding, $62.5 million in cash, no debt, and an unencumbered 13 acre, 150,000 sq. ft. fully leased campus.
Third Quarter 2016 Financial Results
Reported results are from continuing operations and exclude the results of the branded consumer product business and Natural Habitat for all periods presented, except for certain disposition and separation costs that continued in the third quarter and costs associated with transition services, which ended on September 30, 2016.
Total revenues in the third quarter of 2016 increased 27% to $4.5 million from $3.5 million in the same quarter a year ago due to 35% growth in streaming revenue. Gaias paying subscriber count at the end of the third quarter grew 46% to 180,000 compared to 123,000 at the end of the third quarter of 2015.
Gross profit in the third quarter increased 30% to $3.8 million compared to $2.9 million in the year-ago quarter. Gross margin increased 170 basis points to 84.3% from 82.6% in the third quarter of 2015. The increase in gross margin was due to leverage on the cost of streaming due to higher volumes and increased revenues.
Total expenses in the third quarter were $8.0 million compared to $3.5 million in the year-ago quarter. The increase was primarily due to $4.2 million in additional selling and operating expenses associated with increased marketing and re-branding of Gaia, an increase in headcount, cost of business separation activities, and the cost of transition services.
Net loss from continuing operations in the third quarter was $(0.2) million or $(0.01) per share, compared to $(0.7) million or $(0.03) per share in the year-ago quarter.
Our results for the third quarter were ahead of our expectations, said Jirka Rysavy, Gaias Chairman and CEO. We exceeded our subscriber growth target, successfully completed the sale of the branded business and the tender offer, increased our geographic reach to 130 countries and expanded our library to approximately 7,500 titles. We expect to build on this momentum during the fourth quarter and reach about 200,000 paid subscribers by the end of the year.
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Conference Call
Gaia is hosting a conference call today, November 3, 2016, beginning at 4:30 p.m. ET (2:30 p.m. MT). The conference call dial-in numbers are (877) 741-4251 or (719) 325-4783 for international callers, passcode 9218871. Questions will be reserved for analysts and investors. If you have any difficulty connecting with the conference call, please contact Liolios at (949) 574-3860. Following the completion of todays conference call, a replay will be available until November 17, 2016 by dialing (844) 512-2921 or (412) 317-6671 for international callers, passcode 9218871.
About Gaia
Gaia is a global digital video streaming service and online community that provides curated conscious media content to its subscribers in 130 countries. Over 90% of its 7,500 titles are available for streaming exclusively on Gaia through most devices connected to the Internet and 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, history of operating losses, general economic conditions, competition, changing consumer preferences, acquisitions, new initiatives undertaken by us, and other risks and uncertainties included in Gaias 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
Liolios Investor Relations
(949) 574-3860
GAIA@liolios.com
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GAIA, INC.
Condensed consolidated statements of operations
For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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(in thousands, except per share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Net revenues |
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Streaming |
$ | 3,802 | $ | 2,818 | $ | 10,641 | $ | 7,933 | ||||||||
DVD Subscription and other |
660 | 683 | 1,849 | 1,959 | ||||||||||||
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Total net revenues |
4,462 | 3,501 | 12,490 | 9,892 | ||||||||||||
Cost of revenues |
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Streaming |
636 | 529 | 1,952 | 1,706 | ||||||||||||
DVD Subscription and other |
65 | 79 | 209 | 255 | ||||||||||||
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Total cost of revenues |
701 | 608 | 2,161 | 1,961 | ||||||||||||
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Gross profit |
3,761 | 2,893 | 10,329 | 7,931 | ||||||||||||
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Expenses (1): |
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Selling and operating |
6,536 | 2,249 | 17,383 | 9,735 | ||||||||||||
Corporate, general and administration |
1,439 | 1,286 | 4,215 | 3,571 | ||||||||||||
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Total expenses |
7,975 | 3,535 | 21,598 | 13,306 | ||||||||||||
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Loss from operations |
(4,214 | ) | (642 | ) | (11,269 | ) | (5,375 | ) | ||||||||
Interest and other income (expense), net |
20 | (18 | ) | (133 | ) | (282 | ) | |||||||||
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Loss before income taxes |
(4,194 | ) | (660 | ) | (11,402 | ) | (5,657 | ) | ||||||||
Income tax expense (benefit) |
(4,043 | ) | | (4,041 | ) | | ||||||||||
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Net loss from continuing operations |
(151 | ) | (660 | ) | (7,361 | ) | (5,657 | ) | ||||||||
Income (loss) from discontinued operations, net of tax |
100,595 | (8,154 | ) | 97,741 | (8,165 | ) | ||||||||||
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Net income (loss) |
$ | 100,444 | $ | (8,814 | ) | $ | 90,380 | $ | (13,822 | ) | ||||||
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Net income (loss) per share basic and diluted: |
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From continuing operations |
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.34 | ) | $ | (0.23 | ) | ||||
From discontinued operations |
$ | 6.65 | $ | (0.33 | ) | $ | 4.56 | $ | (0.33 | ) | ||||||
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Net income (loss) per share. |
$ | 6.64 | $ | (0.36 | ) | $ | 4.22 | $ | (0.56 | ) | ||||||
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Weighted-average shares outstanding: |
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Basic |
15,138 | 24,517 | 21,417 | 24,507 | ||||||||||||
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Diluted |
15,138 | 24,517 | 21,417 | 24,507 |
(1) | Expenses during the nine months ended September 30, 2016 include one-time expenses associated with the sale of Natural Habitat, the sale of the branded consumer products business, the planned (and now cancelled) spin-off of our subscription business and certain other costs associated with these business that are not allowed to be classified as discontinued operations. |
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GAIA, INC.
Condensed consolidated balance sheets
(in thousands) | September 30, 2016 |
December 31, 2015 |
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(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: |
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Cash |
$ | 62,454 | $ | 1,266 | ||||
Accounts receivable |
604 | 465 | ||||||
Prepaid expenses and other current assets |
1,485 | 729 | ||||||
Current assets of discontinued operations |
| 68,860 | ||||||
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Total current assets |
64,543 | 71,320 | ||||||
Property, equipment, and media library, net |
28,550 | 29,524 | ||||||
Goodwill and other intangibles, net |
10,680 | 10,816 | ||||||
Investments and other assets |
10,882 | 1,549 | ||||||
Noncurrent assets of discontinued operations |
| 15,333 | ||||||
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Total assets |
$ | 114,655 | $ | 128,542 | ||||
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LIABILITIES AND EQUITY | ||||||||
Current liabilities: |
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Accounts payable and accrued liabilities |
$ | 6,410 | $ | 6,081 | ||||
Deferred revenue |
1,994 | 1,454 | ||||||
Current liabilities of discontinued operations including income taxes payable |
3,690 | 32,214 | ||||||
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Total current liabilities |
12,094 | 39,749 | ||||||
Deferred taxes |
1,285 | | ||||||
Commitments and contingencies |
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Gaia, Inc. shareholders equity |
101,276 | 83,940 | ||||||
Noncontrolling interest |
| 4,853 | ||||||
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Total equity |
101,276 | 88,793 | ||||||
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Total liabilities and equity |
$ | 114,655 | $ | 128,542 | ||||
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