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Restatement of Previously Issued Financial Statements | 12 Months Ended
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Dec. 31, 2023
Accounting Changes and Error Corrections [Abstract] |
Restatement of Previously Issued Financial Statements | 3. Restatement of Previously Issued Financial Statements After the issuance of the audited consolidated financial statements as of and for the year ended December 31, 2022, the Company identified certain prior period misstatements in relation to the Company’s consolidated financial statements. Description of Misstatement Adjustments (a) Media Library, Consolidated Statement of Cash Flows Impact As part of the Company’s operations, it spends a significant amount of resources on developing media library content that is made available to its subscribers. Historically, the Company has classified amounts spent to produce media content as investing cash outflows. However, the Company revisited the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 920, Entertainment-Broadcasters (“ASC 920”) and ASC Topic 926, Entertainment-Films (“ASC 926”) and determined that the nature of the media library costs is consistent with the capitalizable costs described in ASC 920 and 926 and, therefore, applying this guidance to the Company’s media library costs is appropriate. This guidance requires these costs to be classified as operating cash outflows rather than investing cash outflows. Therefore, the Company determined the prior year presentation was incorrect resulting in a $9.8 million overstatement of net cash used in investing activities and corresponding understatement of net cash provided by operating activities for periods ended March 31, 2022 through September 30, 2023. (b) Line of Credit, Consolidated Statement of Cash Flows Impact In August 2022, the Company obtained a new line of credit for which the first draw occurred in September 2022 in the amount of $7.5 million. In October 2022, the outstanding balance was paid off with no amount outstanding. Shortly thereafter, in November 2022 and December 2022, respectively, the Company drew down $2.7 million and an additional $6.3 million, resulting in an outstanding total balance of $9.0 million as of December 31, 2022. In the Company’s consolidated statement of cash flows for the year ended December 31, 2022, the Company presented the borrowings and payments on a net basis, resulting in $9.0 million presented as “Proceeds from borrowings under revolving line of credit". However, GAAP required companies to present the gross borrowings and payments for cash flow presentation purposes. Therefore, the Company should have presented proceeds from borrowings under revolving line of credit of $16.5 million and included $7.5 million in the Repayment of debt line item. The misstatement did not have any impact on the net cash provided by financing activities on the consolidated statement of cash flows, or any impact on the consolidated statement of operations, or consolidated balance sheet as of or for the year ended December 31, 2022. (c) Equity Method Investment In September 2016, the Company purchased a 10% equity ownership interest in an entity called Telomeron, Inc. (“Telomeron”), wherein the parent company of Telomeron, Exagon Industries Limited (“Exagon”) contributed intellectual property with an agreed upon value of $100.0 million and the Company paid Exagon $10.0 million in exchange for the 10% equity ownership interest. The Company’s historical accounting conclusion was that the ownership interest represented an investment in equity securities rather than an equity method investment. However, the Company revisited the original conclusion and concluded that the Company had the ability to exercise influence over Telomeron and therefore, should have been accounted for and disclosed as an equity method investment from inception. As Telomeron holds certain contributed technology from its parent that does not have a recognized carrying value, the Company’s cost of the investment exceeds its proportionate share of the net assets by $10.0 million. Management of the Company determined that the excess basis allocated to amortizable assets should have been recognized on a straight-line basis over the estimated 20-year life of the contributed technology at a rate of $0.5 million per year. The accumulated impact of the misstatement as o f December 31, 2021 was an overstatement of the equity method investment by $2.6 million and a corresponding understatement of the accumulated deficit. During the year ended December 31, 2022, equity method investment losses should have been $0.5 million with a corresponding decrease to the equity method investment. (d) BioWell Noncontrolling Interest The Company holds a 51% controlling equity ownership in Bio-Well, LLC ("BioWell"), an entity that sells certain goods and services to customers and has had activity since 2015. The Company has historically consolidated the results of BioWell; however, the Company did not appropriately record, present or disclose a noncontrolling interest in relation to the 49% portion of BioWell not controlled by the Company within either the consolidated statement of operations or the consolidated balance sheet. The noncontrolling interest that should have been presented on the consolidated balance sheet as of December 31, 2021 and December 31, 2022 was $0.8 million and $1.1 million, respectively. The portion of the Company’s net income attributable to noncontrolling interest holders for the year ended December 31, 2022 was $0.3 million. The following tables represent the restated consolidated balance sheet, consolidated statements of operations, changes in equity and cash flows for the year ended December 31, 2022. These tables also present a reconciliation from the prior period as previously reported to the restated amounts. GAIA, INC. Consolidated Balance Sheet
|  | As of December 31, 2022 |  |
(in thousands) |  | As Previously Reported |  |  | Adjustment |  |  | Reference |  | As Restated |  |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Real estate, investment and other assets, net |  |  | 30,979 |  |  |  | (3,125 | ) |  | (c) |  |  | 27,854 |  | (1)
Total assets |  | $ | 138,303 |  |  | $ | (3,125 | ) |  |  |  | $ | 135,178 |  |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Accumulated deficit |  |  | (75,198 | ) |  |  | (4,195 | ) |  | (c) (d) |  |  | (79,393 | ) |
Total Gaia, Inc. shareholders’ equity |  |  | 88,984 |  |  |  | (4,195 | ) |  |  |  |  | 84,789 |  |
Noncontrolling interests |  |  | — |  |  |  | 1,070 |  |  | (d) |  |  | 1,070 |  |
Total equity |  |  | 88,984 |  |  |  | (3,125 | ) |  |  |  |  | 85,859 |  |
Total liabilities and equity |  | $ | 138,303 |  |  | $ | (3,125 | ) |  |  |  | $ | 135,178 |  |
(1) To conform with current period presentation in our consolidated balance sheets for the periods ended December 31, 2023 and 2022, we made certain reclassification adjustments as further described within Note 2, including adjusting the equity method investment portion of real estate, investment and other assets, net into a separate line item, equity method investment. GAIA, INC. Consolidated Statement of Operations
|  | Year Ended December 31, 2022 |  |
(in thousands, except per share data) |  | As Previously Reported |  |  | Adjustment |  |  | Reference |  | As Restated |  |
Equity method investment loss |  | $ | - |  |  | $ | (500 | ) |  | (c) |  | $ | (500 | ) | (1)
Net loss before income taxes |  |  | (2,533 | ) |  |  | (500 | ) |  |  |  |  | (3,033 | ) |
Net loss from continuing operations |  |  | (2,735 | ) |  |  | (500 | ) |  |  |  |  | (3,235 | ) |
Net loss |  | $ | (3,095 | ) |  | $ | (500 | ) |  |  |  | $ | (3,595 | ) |
Net income attributable to noncontrolling interests |  | $ | — |  |  | $ | 296 |  |  | (d) |  | $ | 296 |  |
Net loss attributable to common shareholders |  | $ | (3,095 | ) |  | $ | (796 | ) |  | (d) |  | $ | (3,891 | ) |
Loss per share: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations (attributable to common shareholders) |  | $ | (0.13 | ) |  | $ | (0.04 | ) |  |  |  | $ | (0.17 | ) |
Basic loss per share |  | $ | (0.15 | ) |  | $ | (0.04 | ) |  |  |  | $ | (0.19 | ) |
Diluted |  |  |  |  |  |  |  |  |  |  |  |
Continuing operations (attributable to common shareholders) |  | $ | (0.13 | ) |  | $ | (0.04 | ) |  |  |  | $ | (0.17 | ) |
Diluted loss per share |  | $ | (0.15 | ) |  | $ | (0.04 | ) |  |  |  | $ | (0.19 | ) |
(1) To conform with current period presentation in our consolidated statement of operations for the periods ended December 31, 2023 and 2022, we made certain reclassification adjustments as further described within Note 2, including adjusting the equity method investment loss portion of interest and other expense, net into a separate line item, equity method investment loss. GAIA, INC. Consolidated Statement of Changes in Equity
(in thousands, except shares) |  | Common Stock Shares |  |  | Accumulated Deficit |  |  | Common Stock Amount |  |  | Additional Paid-in Capital |  |  | Non-controlling interests |  |  | Total Equity |  |  | Reference
As Previously Reported |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2022 |  |  | 20,461,337 |  |  | $ | (72,103 | ) |  | $ | 2 |  |  | $ | 162,316 |  |  | $ | — |  |  | $ | 90,215 |  |  |
Net loss |  |  | — |  |  |  | (3,095 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,095 | ) |  |
Balance at December 31, 2022 |  |  | 20,806,186 |  |  | $ | (75,198 | ) |  | $ | 2 |  |  | $ | 164,180 |  |  | $ | — |  |  | $ | 88,984 |  |  |
Adjustment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2022 |  |  | — |  |  | $ | (3,399 | ) |  | $ | — |  |  | $ | — |  |  | $ | 774 |  |  | $ | (2,625 | ) |  | (c) (d)
Net (loss) income |  |  | — |  |  |  | (796 | ) |  |  | — |  |  |  | — |  |  |  | 296 |  |  |  | (500 | ) |  | (c) (d)
Balance at December 31, 2022 |  |  | — |  |  | $ | (4,195 | ) |  | $ | — |  |  | $ | — |  |  | $ | 1,070 |  |  | $ | (3,125 | ) |  |
As Restated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2022 |  |  | 20,461,337 |  |  | $ | (75,502 | ) |  | $ | 2 |  |  | $ | 162,316 |  |  | $ | 774 |  |  | $ | 87,590 |  |  |
Net (loss) income |  |  | — |  |  |  | (3,891 | ) |  |  | — |  |  |  | — |  |  |  | 296 |  |  |  | (3,595 | ) |  |
Balance at December 31, 2022 |  |  | 20,806,186 |  |  | $ | (79,393 | ) |  | $ | 2 |  |  | $ | 164,180 |  |  | $ | 1,070 |  |  | $ | 85,859 |  |  |
GAIA, INC. Consolidated Statement of Cash Flows
|  | Years ended December 31, 2022 |
(in thousands) |  | As Previously Reported |  |  | Adjustment |  |  | Reference |  | As Restated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (3,095 | ) |  | $ | (500 | ) |  | (c) |  | $ | (3,595 | )
Loss from continuing operations |  |  | (2,735 | ) |  |  | (500 | ) |  |  |  |  | (3,235 | )
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |  |  |  |  |  |  |  |  |
Equity method investment losses |  |  | — |  |  |  | 500 |  |  | (c) |  |  | 500 |
Additions to media library |  |  | — |  |  |  | (9,840 | ) |  | (a) |  |  | (9,840 | )
Net cash provided by operating activities - continuing operations |  |  | 11,880 |  |  |  | (9,840 | ) |  |  |  |  | 2,040 |
Net cash provided by operating activities |  |  | 11,520 |  |  |  | (9,840 | ) |  |  |  |  | 1,680 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |
Additions to property and equipment |  |  | (18,257 | ) |  |  | 9,840 |  |  | (a) |  |  | (8,417 | )
Net cash used in investing activities |  |  | (19,104 | ) |  |  | 9,840 |  |  |  |  |  | (9,264 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |
Proceeds from short-term borrowings |  |  | 9,000 |  |  |  | 7,500 |  |  | (b) |  |  | 16,500 |
Repayment of debt |  |  | (166 | ) |  |  | (7,500 | ) |  | (b) |  |  | (7,666 | )
Net cash provided by financing activities |  |  | 8,877 |  |  |  | — |  |  |  |  |  | 8,877 |

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