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Business Combinations | 12 Months Ended
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Dec. 31, 2022
Business Combinations [Abstract] |
Business Combinations | 4. Business Combinations On December 22, 2021, Gaia, entered into and completed its acquisition of Yoga International pursuant to an Agreement and Plan of Merger (“Merger Agreement”). At closing all of the issued and outstanding shares of Yoga International preferred and common stock were converted into the right to receive an aggregate of $9.1 million in cash plus a total of 1,134,613 shares of Gaia Class A common stock. The initial cash consideration was reduced by $1.5 million to offset Yoga International’s working capital shortfall at closing pursuant to the terms of the Merger Agreement. The determination of the number of shares issued pursuant to the Merger Agreement was based on the ten-day volume weighted average price of Gaia Class A common stock as listed on the Nasdaq Global Market during the ten trading-day period ending on December 16, 2021 (the third trading day before the last business day prior to the date of the Merger Agreement). Half of the shares of Gaia Class A common stock issued were subject to a six-month holdback arrangement and the other half were subject to a holdback until January 1, 2023. Included in the aggregate cash consideration was $1.0 million of deferred cash consideration that was due and payable on March 1, 2022 subject to certain adjustments related to closing liabilities. We paid $0.9 million of this deferred cash consideration in March 2022. These adjustments have been factored into the purchase price summarized below. The acquisition expanded Gaia’s content library by 4,000 hours of content and also added a stand-alone digital yoga subscription service to Gaia’s offerings. With the acquisition, Gaia now has a subscription offering tailored to the unique needs of consumers focused on the lifestyle and philosophy of yoga. The acquisition was accounted for as a business combination and the total purchase price of $17.2 million was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date with the excess recorded as goodwill. The values assigned to the assets acquired and liabilities assumed are based on their fair values. As of December 31, 2022, we have finalized our purchase price allocation, which resulted in measurement period adjustments that increased goodwill by $3.1 million, increased other liabilities by $0.9 million and reduced content library by $2.2 million. The purchase price components are summarized in the following table:
(in thousands) |  | Total |
Fair value of Class A common stock transferred |  | $ | 9,724 |
Cash consideration |  |  | 7,473 |
Total purchase price, as adjusted |  | $ | 17,197 |
The following table presents the final purchase price allocation, as adjusted, recorded in Gaia’s consolidated balance sheet as of December 31, 2022:
(in thousands) |  | Total |
Cash |  | $ | 829 |
Accounts receivable |  |  | 21 |
Prepaid expenses and other current assets |  |  | 248 |
Media library, software and equipment |  |  | 47 |
Intangible assets |  |  | 7,063 |
Goodwill |  |  | 14,654 |
Accounts payable and other liabilities |  |  | (1,889 | )
Deferred tax liability for acquired intangible assets |  |  | (2,079 | )
Deferred revenue |  |  | (1,697 | )
Total purchase price |  | $ | 17,197 |
Identifiable intangible assets are comprised of the following as of December 31, 2022:
(in thousands) |  | Total |  |  | Estimated Life (months) |
Customer relationships |  | $ | 2,000 |  |  |  | 48 |
Content library |  |  | 4,793 |  |  |  | 90 |
Tradenames |  |  | 270 |  |  |  | 48 |
Total intangible assets acquired |  | $ | 7,063 |  |  |  |
Customer relationships consists of the estimated value of future cash flows from current Yoga International members. These relationships are on a month-to-month basis for monthly plans and on an annual basis for annual plans. Content library consists of the fair value of approximately 4,000 hours of original content acquired. Tradenames represent the value of the Yoga International brand. Goodwill generated from this acquisition primarily represents the value that is expected from the increased scale and synergies as a result of the integration of both businesses. Goodwill is not deductible for tax purposes. The estimated fair value of the intangible assets acquired was determined by Gaia. We engaged a third‑party expert to assist with the valuation analysis. The Company used a multi period excess earnings method to value customer relationships, a cost approach to value the content library and a relief from royalty method to value tradenames. The net tangible assets were valued at their respective carrying amounts as of the acquisition date, as we believe that these amounts approximate their current fair values. During the years ended December 31, 2022 and 2021, Gaia incurred costs related to this acquisition of $0.05 million and $0.4 million, respectively, which are included in acquisition costs in the accompanying consolidated statements of operations. The following unaudited pro forma condensed combined financial information gives effect to the acquisition of Yoga International as if it was consummated on January 1, 2021 (the beginning of the comparable prior reporting period). There were no material pro forma adjustments required. This unaudited data is presented for informational purposes only and is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on January 1, 2021. It should not be taken as representative of future results of operations of the combined company. The following table presents the unaudited pro forma condensed combined financial information:
|  | For the Year Ended December 31, |
(in thousands) |  | 2021 |
Revenues |  | $ | 89,488 |
Net income (loss) |  |  | 4,569 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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