Form 8-K GAIA, INC For: Aug 08
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): August 8, 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)
Registrant’s telephone number, including area code: (303) 222-3600
GAIAM, Inc.
(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 August 8, 2016, Gaia, Inc. issued a press release announcing results for its quarter ended June 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 Registrant’s 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 August 8, 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 Tarell | |
| Name: | Paul Tarell | |
| Title: | Chief Financial Officer | |
Date: August 8, 2016
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release issued by Gaia on August 8, 2016. | |
Exhibit 99.1
Gaia Reports Second Quarter 2016 Results
BOULDER, CO, August 8, 2016 — Gaia, Inc. (NASDAQ: GAIA), a conscious media company, reported financial results for the second quarter ended June 30, 2016.
In July, Gaia completed the sale of its branded consumer product business to Sequential Brands Group, Inc. (NASDAQ: SQBG) and its operating partner Fit For Life LLC. Gross consideration was $167 million, subject to closing costs and standard post-closing adjustments, including net working capital, which is currently scheduled to be finalized by the end of the third quarter. In May, Gaia sold its 51.4% interest in Natural Habitat, Inc. to Lindblad Expeditions Holdings, Inc. (NASDAQ: LIND) for $12.8 million.
From the $120-125 million of expected combined gains realized from these transactions, Gaia’s net operating loss carryforwards shall offset approximately $85-90 million.
The company used the majority of the proceeds to conduct a share repurchase tender offer and acquired 9,637,000 shares of its common stock and 840,000 vested stock options at a fixed price of $7.75 per share. The remaining proceeds will be used to fund the continuing growth and development of the company’s business, as well as general corporate purposes. After the tender, Gaia has approximately 15 million shares outstanding.
“Completing these transactions, following dispositions of our solar energy and DVD distribution businesses, were the final steps on our path to focus on a subscription video streaming business,” said Jirka Rysavy, Gaia’s Chairman and CEO. “We believe these transactions truly unlocked shareholder value. The tender offer price was set at a 34% premium of the year-to-date average trading price of our stock. Because of my belief in the tremendous upside potential for the Gaia business model, I did not participate in the tender for any of my ownership interest, which stands at 38% today, and after eight years I have returned to the CEO position. We now look forward to leveraging our strong balance sheet to enhance subscriber growth across the globe, while developing new content categories to guide our members’ conscious lives.”
Gaia is a global streaming video service and online community delivering curated, commercial-free, conscious media to subscribers across the world. Over 90% of the company’s over 7,000 titles are exclusively available for streaming on Gaia through most devices connected to the Internet. 80% of subscriber views across 120 countries are generated by content produced or owned by Gaia.
In July, Gaia changed its corporate name to Gaia, Inc. (from Gaiam, Inc.) and continues to trade on the NASDAQ under its “GAIA” ticker.
Second Quarter 2016 Financial Results
Reported results are from continuing operations, excluding the results of GAIAM’s branded consumer products business and Natural Habitat for all periods presented, except for certain costs related to disposition that continue for second and third quarter. While the branded business sale closed on July 1, 2016, the assets and liabilities are reported as assets available for sale as of June 30, 2016 and December 31, 2015, and the financial results are reported as discontinued operations for all periods presented.
Gaia’s subscriber count at the end of the second quarter of 2016 grew 45% to 170,000 compared to 117,000 at the end of the second quarter of 2015.
1
Revenues in the second quarter of 2016 from streaming increased 40% and total revenue increased 28% to $4.2 million from $3.3 million in the same quarter a year-ago due to continued subscriber growth.
Gross profit in the second quarter increased 33% to $3.5 million compared to $2.6 million in the year-ago quarter. Gross margin increased 318 basis points to 82.2% from 79.0% in the second quarter of 2015. The increase in gross margin was due to the leverage gained on Gaia’s costs of streaming due to higher volumes.
Net loss in the second quarter, including one-time costs from both dispositions recorded in the period, was $2.4 million, or $(0.10) per share, compared to a loss of $1.1 million, or $(0.05) per share, in the year ago quarter.
At June 30, 2016, Gaia had $6.2 million in cash and no debt.
Conference Call
Gaia is hosting a conference call today, August 8, 2016, beginning at 5:00 p.m. ET (3:00 p.m. MT). The conference call dial-in numbers are (877) 545-1403 or (719) 325-4747 for international callers, passcode 9361924. 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 today’s conference call, a replay will be available until August 22, 2016 by dialing (877) 870-5176 or (858) 384-5517 for international callers, passcode 9361924.
About Gaia
Gaia is a global digital video streaming service and online community that provides curated conscious media content to its subscribers in 120 countries. Over 90% of its 7,000 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, Gaia’s ability to successfully finalize the sale of its branded consumer product business, the level of participation in Gaia’s issuer tender offer, the results from operations of Gaia’s other businesses, 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
Cody Slach
Liolios Investor Relations
(949) 574-3860
2
GAIA, INC.
Condensed consolidated statements of operations
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
| (in thousands, except per share data) |
2016 | 2015 | 2016 | 2015 | ||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Net revenues |
||||||||||||||||
| Streaming |
$ | 3,610 | $ | 2,585 | $ | 6,839 | $ | 5,115 | ||||||||
| DVD Subscription and other |
588 | 700 | 1,189 | 1,276 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total net revenues |
4,198 | 3,285 | 8,028 | 6,391 | ||||||||||||
| Cost of revenues |
||||||||||||||||
| Streaming |
667 | 603 | 1,316 | 1,177 | ||||||||||||
| DVD Subscription and other |
80 | 86 | 144 | 176 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total cost of revenues |
747 | 689 | 1,460 | 1,353 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
3,451 | 2,596 | 6,568 | 5,038 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expenses (1): |
||||||||||||||||
| Selling and operating |
4,992 | 3,176 | 10,847 | 7,486 | ||||||||||||
| Corporate, general and administration |
1,426 | 1,322 | 2,776 | 2,285 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
6,418 | 4,498 | 13,623 | 9,771 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss from operations |
(2,967 | ) | (1,902 | ) | (7,055 | ) | (4,733 | ) | ||||||||
| Interest and other expense, net |
(117 | ) | (58 | ) | (153 | ) | (265 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loss before income taxes |
(3,084 | ) | (1,960 | ) | (7,208 | ) | (4,998 | ) | ||||||||
| Income tax expense |
1 | — | 2 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss from continuing operations (1) |
(3,085 | ) | (1,960 | ) | (7,210 | ) | (4,998 | ) | ||||||||
| Income (loss) from discontinued operations, net of tax |
646 | 843 | (2,854 | ) | (11 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss |
$ | (2,439 | ) | $ | (1,117 | ) | $ | (10,064 | ) | $ | (5,009 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net (loss) income per share —basic and diluted: |
||||||||||||||||
| From continuing operations |
$ | (0.13 | ) | $ | (0.08 | ) | $ | (0.29 | ) | $ | (0.20 | ) | ||||
| From discontinued operations |
$ | 0.03 | $ | 0.03 | $ | (0.12 | ) | $ | (0.00 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net loss per share. |
$ | (0.10 | ) | $ | (0.05 | ) | $ | (0.41 | ) | $ | (0.20 | ) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted-average shares outstanding: |
||||||||||||||||
| Basic |
24,580 | 24,511 | 24,555 | 24,501 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted |
24,580 | 24,610 | 24,555 | 24,501 | ||||||||||||
| (1) | Expenses during the three and six months ended June 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. We expect certain of these costs to continue through the three months ending September 30, 2016. |
3