Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management'sDiscussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are forward looking statements that involve risks and uncertainties. When used in this discussion, we intend the words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "future," "hope," "intend," "may," "might," "objective," "ongoing," "plan," "potential," "predict," "project," "should," "strive," "target," "will," "would" and similar expressions as they relate to us to identify such forward-looking statements. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of certain factors set forth under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Form 10-Q and under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.

Risks and uncertainties that could cause actual results to differ include, without limitation: our ability to attract new members and retain existing members; our ability to compete effectively, including for customer engagement with different modes of entertainment; maintenance and expansion of device platforms for streaming; fluctuation in customer usage of our service; fluctuations in quarterly operating results; service disruptions; production risks; general economic conditions; future losses; loss of key personnel; price changes; brand reputation; acquisitions; new initiatives we undertake; security and information systems; legal liability for website content; failure of third parties to provide adequate service; future internet-related taxes; our founder's control of us; litigation; consumer trends; the effect of government regulation and programs; the impact of public health threats; and other risks and uncertainties included in our filings with the SEC. We caution you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect our views only as of the date of this report. We undertake no obligation to update any forward-looking information.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this report. This section is designed to provide information that will assist readers in understanding our Unaudited Consolidated Financial Statements, changes in certain items in those statements from year to year, the primary factors that caused those changes and how certain accounting principles, policies and estimates affect the Consolidated Financial Statements.

Overview and Outlook

We operate a global digital video subscription service with a library of over 10,000 titles, with live communications and live events with a growing selection of titles available in Spanish, German and French that caters to a unique, underserved member base. Our digital content is available to our members on most internet-connected devices anytime, anywhere, commercial-free. Through our online

Gaia subscription service our members have unlimited access to a library of inspiring films, cutting edge documentaries, interviews, yoga classes, transformation related content, live events, and more - 90% of which is exclusively available to our members for digital streaming on most internet-connected devices. Gaia's position in the streaming video landscape is firmly supported by its wide variety of exclusive and unique content, which provides a complementary offering to other entertainment-based streaming video services. Our original content is developed and produced in-house in our lifestyle campus near Boulder, Colorado. By offering exclusive and unique content through our streaming service, we believe we will be able to significantly expand our target member base.

Our available content is currently focused on yoga, transformation, alternative healing, seeking truth and conscious films. This content is specifically targeted to a unique member base that is interested in alternative content provided by mainstream media. We have grown these content options both organically through our own productions and through strategic acquisitions or licensing. In addition, through our investments in our streaming video technology and our user interface, we have expanded the many ways our subscription member base can access our unique library of media titles.

Our core strategy is to grow our subscription business domestically and internationally by expanding our unique and exclusive content library, enhancing our user interface, extending our streaming service to new internet-connected devices as they are developed and creating a conscious community built around our content.

We are a Colorado corporation. Our principal and executive office is located at 833 West South Boulder Road, Louisville, Colorado 80027-2452. Our telephone number at that address is (303) 222-3600.

Results of Operations

The table below summarizes certain detail of our financial results for the periods indicated:

The following table sets forth certain financial data as a percentage of revenues, net for the periods indicated:

Three months ended September 30, 2025 compared to three months ended September 30, 2024

Revenues, net. Revenues increased $3.0 million, or 14%, to $25.0 million during the three months ended September 30, 2025, compared to $22.0 million during the three months ended September 30, 2024. The increase was primarily driven by improvements in Average Revenue Per User ("ARPU") due to the increase in subscription prices as well as an increase in member count.

Cost of revenues. Cost of revenues increased $0.3 million or 9.7% to $3.4 million during the three months ended September 30, 2025, compared to $3.1 million during the three months ended September 30, 2024, which primarily relates to the increase in revenues and

revenue mix. Gross profit margin increased during the three months ended September 30, 2025 to 86.4% from 86.1% for the three months ended September 30, 2024 primarily due to improvements in ARPU.

Selling and operating expenses. Selling and operating expenses increased $2.5 million, or 13.8%, to $20.6 million during the three months ended September 30, 2025, compared to $18.1 million for the three months ended September 30, 2024, driven primarily by an increase in marketing expense. As a percentage of net revenues, selling and operating expenses decreased to 82.4% for the three months ended September 30, 2025 compared to 82.2% for the three months ended September 30, 2024.

Corporate, general and administration expenses. Corporate, general and administration expenses increased $0.2 million to $2.2 million for three months ended September 30, 2025 from $2.0 million for three months ended September 30, 2024. As a percentage of net revenues, these expenses decreased to 9.0% for the three months ended September 30, 2025 from 9.1% for the three months ended September 30, 2024. The increase was primarily driven by legal fees, contract services, and higher incentive compensation costs, expenses during the three months ended September 30, 2025.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

Revenues, net. Revenues increased $8.3 million, or 12.7%, to $73.5 million during the nine months ended September 30, 2025 compared to $65.2 million during the nine months ended September 30, 2024. The increase was primarily driven by improvements in Average Revenue Per User ("ARPU") due to the increase in prices as well as an increase in member count.

Cost of revenues. Cost of revenues remained flat at $9.6 million during the nine months ended September 30, 2025 and 2024. Gross profit margin increased during the nine months ended September 30, 2025, to 86.9% from 85.3% for the nine months ended September 30, 2024 primarily due to improvements in ARPU.

Selling and operating expenses. Selling and operating expenses increased $7.2 million, or 13.3%, to $61.2 million during the nine months ended September 30, 2025, compared to $54.0 million for the nine months ended September 30, 2024, driven primarily by an increase in marketing expense. As a percentage of net revenues, selling and operating expenses increased to 83.4% for the nine months ended September 30, 2025 compared to 82.8% for the nine months ended September 30, 2024.

Corporate, general and administration expenses. Corporate, general and administration expenses increased $1.4 million, or 25.0% to $7.0 million for the nine months ended September 30, 2025 from $5.6 million for the nine months ended September 30, 2024. As a percentage of net revenues, these expenses decreased to 9.6% for the nine months ended September 30, 2025 from 8.6% for the nine months ended September 30, 2024. The increase was primarily driven by legal fees, contract services, amortization expense, and increases in incentive compensation costs during the nine months ended September 30, 2025.

Seasonality

Our member base reflects seasonal variations driven primarily by periods when consumers typically spend more time indoors and, as a result, tend to increase their viewing, similar to those of traditional TV and cable networks. We have generally experienced the greatest member growth in the fourth and first quarters (October through February), and slowest during May through August. This drives quarterly variations in our spending on member acquisition efforts and the number of net new subscribers we add each quarter but does not result in a corresponding seasonality in net revenue. As we continue to expand internationally, we expect regional seasonality trends to demonstrate more predictable seasonal patterns as our service offering in each market becomes more established and we have a longer history to assess such patterns.

Liquidity and Capital Resources

Our capital needs arise from working capital required to fund operations, capital expenditures related to acquisition and development of media content, development and marketing of our digital platforms, acquisitions of new businesses and other investments, replacements, expansions and improvements to our infrastructure, and future growth. These capital requirements depend on numerous factors, including the rate of market acceptance of our offerings, our ability to expand our customer base, the cost of ongoing upgrades to our offerings, our expenditures for marketing, and other factors. Additionally, we will continue to pursue opportunities to expand our media libraries, evaluate possible investments in businesses and technologies, and increase our marketing programs as needed.

Our budgeted content and capital expenditures for the remainder of 2025 are expected to be between $4.0 million to $6.0 million which we intend to fund with cash flows generated from operations. These planned expenditures will be predominately utilized to expand our content library and build out the capabilities of our digital platforms. The planned expenditures are discretionary and, with our in-house production capabilities, we have the ability to scale expenditures based on the available cash flows from operations. We began to generate positive cash flows from operations in 2020 and have continued to generate cash flows from operations since. We expect to continue generating positive cash flows from operations during the remainder of 2025. We generated approximately $3.9 million in cash flows from operations during the nine months ended September 30, 2025. As of September 30, 2025, our cash balance was $14.2 million.

On August 25, 2022, Gaia, as borrower, and certain subsidiaries, as guarantors, entered into a Credit and Security Agreement with KeyBank National Association ("KeyBank"), as amended by the Second Amendment thereto, dated July 29, 2025 (the "Credit Agreement"). The Credit Agreement provides for a revolving credit facility in an aggregate amount of up to $10 million (which may be increased up to $15 million) with a sublimit of $1 million available for issuances of letters of credit. Borrowings under the Credit Agreement are available for working capital and general corporate purposes and permitted acquisitions. As of September 30, 2025, there were no outstanding borrowings under the Credit Agreement.

As described in Note 10, on September 30, 2025, Gaia entered into a cost method investment for $2 million according to ASC 321. The Company has less than 10% ownership and does not have significant influence over the investee as there is no representation on the investee's board of directors, no participation in policy-making decisions, and no material intercompany transactions. The initial valuation of this investment will be made at historical cost and adjusted only for impairment or observable price changes from comparable transactions. No unrealized gain/loss will be recognized unless an observable transaction occurs. The investment will be subject to impairment testing and any permanent declines in value will be recognized in net income.

As described in Note 11, in April 2024, the Company entered into a series of transactions with its subsidiary, Igniton, Inc., a Colorado corporation ("Igniton"), and a third-party entity to purchase a perpetual license for a total of $16.2 million of consideration comprised of $10.2 million of cash and $5.0 million of common stock of Igniton and $1.0 million of the Company's equity security investment in Telomeron (the "License Purchase"). The license allows the Company to utilize the technology developed by the third party. This license is being recorded within the Technology license, net line item on the Condensed Consolidated Balance Sheets. The License Purchase was primarily funded through an equity financing through Igniton, which raised $6.8 million of cash and $5.0 million in Igniton stock issuance from third-party investors.

As described in Note 11, during July 2025, Igniton raised $6.0 million of private common equity financing, including $2.0 million from Gaia, at an implied post-money valuation of approximately $106 million. This valuation is based on the terms of the private financing and does not represent a remeasurement of fair value under GAAP. The Company has approximately two-thirds ownership interest and continues to consolidate Igniton. The proceeds from the financing are expected to be used by Igniton for product launch, general operating expenses and certain capital expenditures to support future growth.

In the normal course of our business, we investigate, evaluate and discuss acquisition, joint venture, minority investment, strategic relationship and other business combination opportunities in our market. For any future investment, acquisition, or joint venture opportunities, we may consider using then-available liquidity, issuing equity securities or incurring indebtedness.

While there can be no assurances, we believe our cash on hand, our cash expected to be generated from operations, our potential additional borrowing capabilities now that we have a history of generating positive operating cash flows, and our potential capital raising capabilities will be sufficient to fund our operations on both a short-term and long-term basis. However, our projected cash needs may change as a result of acquisitions, product development, unforeseen operational difficulties, or other factors.

Class A Common Stock Offering

In February 2025, we entered into an underwriting agreement with Roth Capital Partners, LLC and Lake Street Capital Markets, LLC (the "Underwriters") relating to the offer and sale of 1,600,000 shares of our Class A common stock ($0.0001 par value) (the "Shares"). We sold the Shares to the Underwriters at the public offering price of $5.00 per share, less underwriting discounts and commissions, resulting in net proceeds of $7.0 million. The offering was made pursuant to a registration statement on Form S-3. We provided a 45-day option to the Underwriters to purchase up to an additional 240,000 Shares at $5.00 per share, less underwriting discounts and commissions (the "Over-Allotment Option"). On March 7, 2025, the Underwriters elected to waive the right to exercise the Over-Allotment Option.

Cash Flows

The following table summarizes our sources (uses) of cash during the periods presented:

Three months ended September 30, 2025 compared to three months ended September 30, 2024

Operating activities. Cash flows provided by operations decreased approximately $0.1 million during the three months ended September 30, 2025 compared to the same period in 2024. The decrease was driven by changes in earnings, timing of working capital and changes in other liabilities.

Investing activities.Cash flows used in investing activities increased approximately $2.6 million during the three months ended September 30, 2025 compared to the same period in 2024. The increase was primarily driven by investment purchases during the three months ended September 30, 2025.

Financing activities.Cash flows provided by financing activities increased $4.0 million during the three months ended September 30, 2025 compared to the same period in 2024 due to an equity raise related to Igniton of $3.9 million, net during the three months ended September 30, 2025.

Nine months ended September 30, 2025 compared to nine months ended September 30, 2024

Operating activities. Cash flows provided by operations decreased $0.4 million during the nine months ended September 30, 2025 compared to the same period in 2024.

Investing activities. Cash flows used in investing activities increased approximately $7.5 million during the nine months ended September 30, 2025 compared to the same period in 2024. The increase was primarily driven by a technology license acquired by one of our subsidiaries during the nine months ended September 30, 2024.

Financing activities. Cash flows provided by financing activities increased $4.5 million during the nine months ended September 30, 2025 compared to the same period in 2024 primarily due to proceeds from the issuance of common stock of $7.0 million and proceeds from the sale of Igniton common stock of $3.9 million during the nine months ended September 30, 2025 compared to funding the subsidiary technology license purchase from an equity financing through Igniton of $6.4 million, net in 2024.