Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 11, 2016 | Jun. 30, 2015 | |
Entity Registrant Name | JOINT Corp | ||
Entity Central Index Key | 1,612,630 | ||
Trading Symbol | jynt | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Common Stock, Shares Outstanding (in shares) | 12,584,336 | ||
Entity Public Float | $ 38.6 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 16,792,850 | $ 20,796,783 |
Restricted cash | 385,282 | 224,576 |
Accounts receivable, net | 743,239 | 704,905 |
Income taxes receivable | 70,981 | 395,814 |
Notes receivable - current portion | 60,908 | 27,528 |
Deferred franchise costs - current portion | 605,850 | 622,800 |
Prepaid expenses and other current assets | 366,033 | 375,925 |
Total current assets | 19,025,143 | 23,148,331 |
Property and equipment, net | 7,138,746 | 1,134,452 |
Notes receivable, net of current portion and reserve | 15,823 | 31,741 |
Deferred franchise costs, net of current portion | $ 1,534,700 | 2,574,450 |
Deferred tax asset | 208,800 | |
Intangible assets, net | $ 2,542,269 | 153,000 |
Goodwill | 2,466,937 | 636,104 |
Deposits and other assets | 638,710 | 585,150 |
Total assets | 33,362,328 | 28,472,028 |
Current liabilities: | ||
Accounts payable | 1,996,971 | 1,178,987 |
Accrued expenses | 375,529 | 92,418 |
Co-op funds liability | 201,078 | 186,604 |
Payroll liabilities | 1,493,375 | $ 617,944 |
Notes payable - current portion | 451,850 | |
Deferred rent - current portion | 334,560 | $ 93,398 |
Deferred revenue - current portion | 2,579,423 | 1,957,500 |
Other current liabilities | 54,596 | 50,735 |
Total current liabilities | 7,487,382 | $ 4,177,586 |
Notes payable, net of current portion | 130,000 | |
Deferred rent, net of current portion | 457,290 | $ 451,766 |
Deferred revenue, net of current portion | 4,369,702 | 7,915,918 |
Other liabilities | 238,648 | 299,405 |
Total liabilities | 12,683,022 | 12,844,675 |
Commitments and contingencies | $ 0 | $ 0 |
Stockholders' equity: | ||
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of December 31, 2015, and December 31, 2014 | ||
Common stock, $0.001 par value; 20,000,000 shares authorized, 13,070,180 shares issued and 12,536,180 shares outstanding as of December 31, 2015 and 10,196,510 shares issued and 9,662,510 outstanding as of December 31, 2014 | $ 13,070 | $ 10,197 |
Additional paid-in capital | 35,267,376 | 21,420,975 |
Treasury stock (534,000 shares as of December 31, 2015 and December 31, 2014, at cost) | (791,638) | (791,638) |
Accumulated deficit | (13,809,502) | (5,012,181) |
Total stockholders' equity | 20,679,306 | 15,627,353 |
Total liabilties and stockholders' equity | $ 33,362,328 | $ 28,472,028 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Series A Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Series A Preferred Stock, shares authorized (in shares) | 50,000 | 50,000 |
Series A Preferred Stock, shares issued (in shares) | 0 | 0 |
Series A Preferred Stock, shares outstanding (in shares) | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common Stock, shares issued (in shares) | 13,070,180 | 10,196,510 |
Common Stock, shares outstandig (in shares) | 12,536,180 | 9,662,510 |
Treasury Stock, shares (in shares) | 534,000 | 534,000 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | ||
Royalty fees | $ 4,515,203 | $ 3,194,286 |
Franchise fees | 2,471,259 | $ 1,933,500 |
Revenues and management fees from company clinics | 3,651,273 | |
Advertising fund revenue | 1,191,124 | $ 459,493 |
IT related income and software fees | 808,070 | 840,825 |
Regional developer fees | 866,802 | 478,500 |
Other revenues | 331,700 | 210,058 |
Total revenues | 13,835,431 | 7,116,662 |
Cost of revenues: | ||
Franchise cost of revenues | 2,642,451 | 2,081,382 |
IT cost of revenues | 177,462 | 264,440 |
Total cost of revenues | 2,819,913 | 2,345,822 |
Selling and marketing expenses | 3,691,782 | 1,117,163 |
Depreciation and amortization | 1,268,955 | 210,123 |
General and administrative expenses | 15,371,223 | 5,070,263 |
Total selling, general and administrative expenses | 20,331,960 | 6,397,549 |
Loss from operations | (9,316,442) | $ (1,626,709) |
Other income (expense): | ||
Bargain purchase gain | 261,147 | |
Other income (expense), net | 22,119 | $ (64,075) |
Total other income (expense) | 283,266 | (64,075) |
Loss before income tax (expense) benefit | (9,033,176) | (1,690,784) |
Income tax (expense) benefit | 235,855 | (1,340,436) |
Net loss and comprehensive loss | $ (8,797,321) | $ (3,031,220) |
Loss per share: | ||
Basic and diluted loss per share (in dollars per share) | $ (0.88) | $ (0.56) |
Weighted average shares (in shares) | 10,042,001 | 5,451,851 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Balances (in shares) at Dec. 31, 2013 | 25,000 | 5,340,000 | ||||
Balances at Dec. 31, 2013 | $ 25 | $ 5,340 | $ 1,546,373 | $ (791,638) | $ (1,980,961) | $ (1,220,861) |
Stock-based compensation expense | 101,830 | 101,830 | ||||
Stock Issued During Period, Shares, New Issues | 3,450,000 | |||||
Issuance of common stock - IPO, net of offering costs of $2,647,396 | $ 3,450 | 19,774,154 | 19,777,604 | |||
Issuance of vested restricted stock (in shares) | 71,510 | |||||
Issuance of vested restricted stock | $ 72 | (72) | ||||
Conversion of preferred stock to common stock (in shares) | (25,000) | 1,335,000 | ||||
Conversion of preferred stock to common stock | $ (25) | $ 1,335 | (1,310) | |||
Net loss | (3,031,220) | (3,031,220) | ||||
Balances (in shares) at Dec. 31, 2014 | 10,196,510 | |||||
Balances at Dec. 31, 2014 | $ 10,197 | 21,420,975 | (791,638) | (5,012,181) | $ 15,627,353 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | ||||||
Stock-based compensation expense | 825,145 | $ 825,145 | ||||
Stock Issued During Period, Shares, New Issues | 2,613,636 | |||||
Issuance of common stock - IPO, net of offering costs of $2,647,396 | $ 2,614 | 13,020,981 | 13,023,595 | |||
Issuance of vested restricted stock (in shares) | 259,589 | |||||
Issuance of vested restricted stock | $ 260 | (260) | ||||
Net loss | (8,797,321) | (8,797,321) | ||||
Balances (in shares) at Dec. 31, 2015 | 13,070,180 | |||||
Balances at Dec. 31, 2015 | $ 13,070 | 35,267,376 | $ (791,638) | $ (13,809,502) | $ 20,679,306 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 445 | 445 | ||||
Stock Issued During Period, Value, Stock Options Exercised | $ 534 | $ 534 |
Consolidated Statements of Cha6
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Parentheticals) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Common Stock [Member] | ||
IPO, net offering costs | $ 1,351,403 | $ 2,761,325 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (8,797,321) | $ (3,031,220) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Provision for bad debts | 61,629 | $ 102,782 |
Regional developer fees recognized upon acquisition of development rights | (254,250) | |
Regional developer fees recognized upon termination of regional developer agreements | (282,750) | |
Net franchise fees recognized upon termination of franchise agreements | (521,350) | |
Notes receivable issued for payment of transfer fees | (59,850) | |
Depreciation and amortization | 1,268,955 | $ 210,123 |
(Gain) loss on sale of property and equipment | (11,500) | 10,127 |
Deferred income taxes | 40,800 | $ 1,758,100 |
Bargain purchase gain | (261,147) | |
Stock based compensation expense | 825,145 | $ 101,830 |
Changes in operating assets and liabilties, net of effects from acquisitions: | ||
Restricted cash | (160,706) | (165,790) |
Accounts receivable | (99,963) | (369,532) |
Income taxes receivable | 324,833 | (395,814) |
Prepaid expenses and other current assets | 9,892 | (352,196) |
Deferred franchise costs | 127,550 | $ (20,400) |
Deposits and other assets | (39,235) | |
Accounts payable | (291,480) | $ 952,230 |
Accrued expenses | 165,602 | 92,418 |
Co-op funds liability | 14,474 | 132,471 |
Payroll liabilities | 875,431 | 489,574 |
Other liabilities | (105,973) | (25,447) |
Deferred rent | $ 246,686 | 545,164 |
Income taxes payable | (419,297) | |
Deferred revenue | $ 128,049 | (52,568) |
Net cash used in operating activities | (6,796,479) | (437,445) |
Cash flows from investing activities: | ||
Cash paid for acquisitions | (4,925,525) | $ (900,000) |
Reacquisition and termination of regional developer rights | $ (1,075,500) | |
Advances for reacquisition and termination of regional developer rights | $ (507,500) | |
Purchase of property and equipment | $ (4,065,946) | (659,305) |
Proceeds received on sale of property and equipment | 11,500 | 2,500 |
Payments received on notes receivable | 42,388 | 4,179 |
Net cash used in investing activities | $ (10,013,083) | (2,060,126) |
Cash flows from financing activities: | ||
Proceeds from Issuance Initial Public Offering | $ 22,425,000 | |
Proceeds from issuance of common stock - follow-on public offering | $ 14,374,998 | |
Offering costs paid | (1,351,403) | $ (2,647,396) |
Proceeds from exercise of stock options | 534 | |
Repayments on note payable | (218,500) | |
Net cash provided by financing activities | 12,805,629 | $ 19,777,604 |
Net (decrease) increase in cash | (4,003,933) | 17,280,033 |
Cash at beginning of year | 20,796,783 | 3,516,750 |
Cash at end of year | $ 16,792,850 | $ 20,796,783 |
Supplemental Disclosure of Non-
Supplemental Disclosure of Non-cash Activity | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Cash Flow, Supplemental Disclosures [Text Block] | Supplemental disclosure of cash flow information: During the year ended December 31, 2015 and 2014, cash paid for income taxes was $0 and $420,250, respectively. During the year ended December 31, 2015 and 2014, cash paid for interest was $2,344 and $0, respectively. Supplemental disclosure of non-cash activity: In connection with our acquisitions of franchises during the year ended December 31, 2015, we acquired $1,504,169 of property and equipment, intangible assets of $1,942,180, goodwill of $1,830,833, favorable leases of $521,825, assumed unfavorable leases of $49,077, deferred revenue associated with membership packages paid in advance of $106,908, and a deferred tax liability of $168,000 in exchange for $4,925,525 in cash and an aggregate amount of $800,350 in notes payable to the sellers. Additionally, at the time of these transactions, we carried deferred revenue of $1,005,500, representing franchise fees collected upon the execution of franchise agreements, and deferred costs of $493,500, related to our acquisition of undeveloped franchises. In accordance with ASC-952-605, we netted these amounts against the aggregate purchase price of the acquisitions (Note 2). In connection with our reacquisition and termination of regional developer rights during the year ended December 31, 2015, we had deferred revenue of $914,000, representing license fees collected upon the execution of the regional developer agreements. In accordance with ASC-952-605, we netted these amounts against the aggregate purchase price of the acquisitions (Note 6). As of December 31, 2015, we had property and equipment purchases of $1,109,464 and $117,509 which were included in accounts payable and accrued expenses respectively. During the year ended December 31, 2014, warrants were issued for services in connection with the Company's initial public offering of $113,929. During the year December 31, 2014 $25 of preferred stock was converted to common stock. As of December 31, 2014, we recorded a deposit of $507,500 for the reacquisition and termination of regional developer rights, which were paid in advance. During the year ended December 31, 2015, upon the effective date of the agreement, we reclassified $507,500 from deposits to intangible assets. During the year ended December 31, 2014, warrants were issued for services in connection with the Company's initial public offering of $113,929. During the year December 31, 2014 $25 of preferred stock was converted to common stock. |
Note 1 - Nature of Operations a
Note 1 - Nature of Operations and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | Note 1: Nature of Operations and Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of The Joint Corp. and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”), which was dormant for all periods presented. All significant intercompany accounts and transactions between The Joint Corp. and its subsidiary have been eliminated in consolidation. Certain balances were reclassified from selling and marketing expenses and general and administrative expenses to IT cost of revenues for the year ended December 31, 2014 to conform to current year presentation. Comprehensive Loss Net loss and comprehensive loss are the same for the years ended December 31, 2015 and 2014. Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010. Its principal business purposes are owning, operating, managing and franchising chiropractic clinics, selling regional developer rights and supporting the operations of owned, managed and franchised chiropractic clinics at locations throughout the United States of America. The franchising of chiropractic clinics is regulated by the Federal Trade Commission and various state authorities. The following table summarizes the number of clinics in operation under franchise agreements or that are company-owned or managed for the years ended December 31, 2015 and 2014: Year Ended Franchised clinics: 2015 2014 Clinics open at beginning of period 242 175 Opened during the period 54 73 Acquired during the period (24 ) (4 ) Closed during the period (7 ) (2 ) Clinics in operation at the end of the period 265 242 Year Ended Company-owned or managed clinics: 2015 2014 Clinics open at beginning of period 4 - Opened during the period 21 - Acquired during the period 24 4 Closed during the period (2 ) - Clinics in operation at the end of the period 47 4 Total clinics in operation at the end of the period 312 246 Clinics licenses sold but not yet developed 168 268 Variable Interest Entities An entity deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a variable interest entity (“VIE”) is required to consolidate the VIE in its financial statements. An entity is deemed to be the primary beneficiary of a VIE if it has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE. Investments where the Company does not hold the controlling interest and are not the primary beneficiary are accounted for under the equity method. Certain states in which the Company manages clinics, regulate the practice of chiropractic care and require that chiropractic services be provided by legal entities organized under state laws as professional corporations or PCs. Such PCs are VIEs. In these states, the Company has entered into management services agreements with PCs under which the Company provides on an exclusive basis, all non-clinical services of the chiropractic practice. The Company has analyzed its relationship with the PCs and has determined that the Company does not have the power to direct the activities of the PCs. As such, the activity of the PCs is not included in the Company’s consolidated financial statements Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and credit quality of, the financial institutions with which it invests. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. The Company has invested substantially all of the proceeds of its public offerings in short-term bank deposits. The Company had no cash equivalents as of December 31, 2015 and 2014. Restricted Cash Restricted cash relates to cash franchisees and corporate clinics contribute to the Company’s National Marketing Fund and cash franchisees provide to various voluntary regional Co-Op Marketing Funds. Cash contributed by franchisees to the National Marketing Fund is to be used in accordance with the Franchise Disclosure Document with a focus on regional and national marketing and advertising. Concentrations of Credit Risk From time to time the Company grants credit in the normal course of business to franchisees related to the collection of royalties, and other operating revenues. The Company periodically performs credit analysis and monitors the financial condition of the franchisees to reduce credit risk. As of December 31, 2015 and 2014, three PC entities, and six franchisees represented 31% and 56%, respectively, of outstanding accounts receivable. The Company did not have any franchisees that represented greater than 10% of our revenues during the years ended December 31, 2015 and 2014. Accounts Receivable Accounts receivable represent amounts due from franchisees for initial franchise fees, royalty fees and marketing and advertising expenses and amounts due from PCs for which we perform management services for the repayment of working capital advances. The Company considers a reserve for doubtful accounts based on the creditworthiness of the franchisee or named entity. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on specific identification and historical performance that the Company tracks on an ongoing basis. The losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. As of December 31, 2015 and 2014, the Company had an allowance for doubtful accounts of $142,661 and $81,032, respectively. Deferred Franchise Costs Deferred franchise costs represent commissions that are paid in conjunction with the sale of a franchise and are expensed when the respective revenue is recognized, which is generally upon the opening of a clinic. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of three to seven years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the assets. Maintenance and repairs are charged to expense as incurred; major renewals and improvements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. Software Developed The Company capitalizes certain software development costs. These capitalized costs are primarily related to proprietary software used by clinics for operations and by the Company for the management of operations. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct, are capitalized as assets in progress until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Software developed is recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal use software is amortized on a straight line basis over its estimated useful life, generally 5 years. Intangible Assets Intangible assets consist primarily of re-acquired franchise rights and customer relationships. The Company amortizes the fair value of re-acquired franchise rights over the remaining contractual terms of the re-acquired franchise rights at the time of the acquisition, which range from six to eight years. The fair value of customer relationships is amortized over their estimated useful life of two years. Goodwill Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions discussed in Note 2. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. As required, the Company performs an annual impairment test of goodwill as of the first day of the fourth quarter or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. No impairments of goodwill were recorded for the years ended December 31, 2015 and 2014. Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to estimated undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. No impairments of long-lived assets were recorded for the years ended December 31, 2015 and 2014. Advertising Fund The Company has established an advertising fund for national/regional marketing and advertising of services offered by its clinics. The monthly marketing fee was increased to 2% in January 2015. The Company segregates the marketing funds collected which are included in restricted cash on its consolidated balance sheets. As amounts are expended from the fund, the Company recognizes advertising fund revenue and a related expense. Amounts collected in excess of marketing expenditures are included in restricted cash on the Company’s consolidated balance sheets. Co-Op Marketing Funds Some franchises have established regional Co-Ops for advertising within their local and regional markets. The Company maintains a custodial relationship under which the marketing funds collected are segregated and used for the purposes specified by the Co-Ops’ officers. The marketing funds are included in restricted cash on the Company’s consolidated balance sheets. Deferred Rent The Company leases office space for its corporate offices and company-owned and managed clinics under operating leases, which may include rent holidays and rent escalation clauses. It recognizes rent holiday periods and scheduled rent increases on a straight-line basis over the term of the lease. The Company records tenant improvement allowances as deferred rent and amortizes the allowance over the term of the lease, as a reduction to rent expense. Revenue Recognition The Company generates revenue through initial franchise fees, regional developer fees, royalties, advertising fund revenue, IT related income, and computer software fees, and from its company-owned and managed clinics. Franchise Fees. During the year ended December 31, 2015, we terminated 33 franchise licenses that were in default of various obligations under their respective franchise agreements. In conjunction with these terminations, during the year ended December 31, 2015, we recognized $957,000 of revenue and $435,650 of costs, which were previously deferred. Regional Developer Fees Revenues and Management Fees from Company Clinics. Royalties. IT Related Income and Software Fees. Advertising Costs The Company incurs advertising costs in addition to those included in the advertising fund. The Company’s policy is to expense all operating advertising costs as incurred. Advertising expenses for years ended December 31, 2015 and 2014 were $1,525,687 and $145,492, respectively. Income Taxes The Company accounts for income taxes in accordance with ASC 740 that requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to depreciation of property and equipment and treatment of revenue for franchise fees and regional developer fees collected. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertainty in income taxes by recognizing the tax benefit or expense from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits and expenses recognized in the condensed consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. At December 31, 2015 and 2014, the Company maintained a liability for income taxes for uncertain tax positions of approximately $66,000 and $122,000, respectively, of which $33,000 and $30,000, respectively, represent penalties and interest and are recorded in the “other liabilities” section of the accompanying consolidated balance sheets. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. The Company’s tax returns for tax years subject to examination by tax authorities include 2011 through the current period for state and 2012 through the current period for federal reporting purposes. Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is computed by giving effect to all potentially dilutive common shares including preferred stock, restricted stock, and stock options. Year Ended 2015 2014 Net loss $ (8,797,321 ) $ (3,031,220 ) Weighted average common shares outstanding - basic 10,042,001 5,451,851 Effect of dilutive securities: Stock options - - Weighted average common shares outstanding - diluted 10,042,001 5,451,851 Basic and diluted loss per share $ (0.88 ) $ (0.56 ) The following table summarizes the potential shares of common stock that were excluded from diluted net loss per share, because the effect of including these potential shares was anti-dilutive: Year Ended 2015 2014 Unvested restricted stock 339,288 590,868 Stock options 477,459 314,775 Warrants 90,000 90,000 Stock-Based Compensation The Company accounts for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. The Company determines the estimated grant-date fair value of restricted shares using quoted market prices and the grant-date fair value of stock options using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Prior to the IPO the grant date fair value was determined by the Board of Directors. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the period of service using the straight-line method. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Items subject to significant estimates and assumptions include the allowance for doubtful accounts, share-based compensation arrangements, fair value of stock options, useful lives and realizability of long-lived assets, classification of deferred revenue and deferred franchise costs, uncertain tax positions, realizability of deferred tax assets, impairment of goodwill and intangible assets and purchase price allocations. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard becomes effective for us on January 1, 2018. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor have we determined the effect of the standard on its ongoing financial reporting. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern: Disclosures about an Entity’s Ability to Continue as a Going Concern.” The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter. The Company is currently evaluating the effect of adoption of this standard, if any, on its consolidated financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is not expected to have a material impact on the Company’s consolidated financial statements. In April 2015, FASB issued ASU No. 2015-05, “Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” The guidance provides clarification on whether a cloud computing arrangement includes a software license. If a software license is included, the customer should account for the license consistent with its accounting of other software licenses. If a software license is not included, the arrangement should be accounted for as a service contract. The update is effective for reporting periods beginning after December 15, 2015. The Company is currently evaluating the effect of adoption of this standard, if any, on its consolidated financial position, results of operations or cash flows. In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” The update requires than an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount as if the accounting had been completed at the acquisition date. The adjustments related to previous reporting periods since the acquisition date must be disclosed by income statement line item either on the face of the income statement or in the notes. The Company adopted this ASU during the third quarter of 2015. Accordingly, the Company applied the amendments in this update to the measurement period adjustments made during the year and disclosed the adjustments in Note 2. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 470): Balance Sheet Classification of Deferred Taxes.” The update eliminates the requirement to separate deferred income tax assets and liabilities into current and noncurrent amounts within a classified balance sheet. Under ASU 2015-17, the presentation of deferred income taxes is simplified, as all deferred income tax assets and liabilities are to be classified as noncurrent. The existing requirement that deferred income tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected by ASU 2015-17. The Company has adopted the guidance under ASU 2015-17 retrospectively and prior periods were retrospectively adjusted. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10),” Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is not permitted. The Company is currently evaluating the effect of adoption of this standard, if any, on its consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The changes require that substantially all operating leases be recognized as assets and liabilities on our balance sheet, which is a significant departure from the current standard, which classifies operating leases as off balance sheet transactions and accounts for only the current year operating lease expense in the statement of operations. The right to use the leased property is to be capitalized as an asset and the expected lease payments over the life of the lease will be accounted for as a liability. The effective date is for fiscal years beginning after December 31, 2018. While we have not quantified the impact this proposed standard would have on our financial statements, if our current operating leases are instead recognized on the balance sheet, it will result in a significant increase in the |
Note 2 - Acquisitions
Note 2 - Acquisitions | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Business Combination Disclosure [Text Block] | Note 2: Acquisitions Franchises acquired during 2014 During 2014, the Company acquired substantially all the assets and certain liabilities of six franchises including franchises that manage four clinics operating in Los Angeles County, for a purchase price of $900,000 which was paid in cash. The Company is operating four of the acquired franchises as managed company clinics and has terminated the two remaining franchises. On January 1, 2015, the Company acquired an additional three undeveloped franchises. This resulted in a net deferred revenue adjustment of $41,100 to the net purchase price. No additional consideration was paid on January 1, 2015. The remaining $858,900 was accounted for as the total consideration paid for the acquired franchises. The purchase price allocation for these acquisitions is complete. The following summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date: Property and equipment $ 297,630 Intangible assets 153,000 Goodwill 636,104 Total assets acquired 1,086,734 Unfavorable leases (227,834 ) Net assets acquired $ 858,900 Intangible assets consist of reacquired franchise rights of $81,000 and customer relationships of $72,000 and will be amortized over their estimated useful lives of seven years and two years, respectively. Unfavorable leases consist of leases with rents that are in excess of market value. This liability will be amortized over the lives of the associated leases. Goodwill recorded in connection with this acquisition was attributable to the workforce of the clinics and synergies expected to arise from cost savings opportunities. All of the recorded goodwill is tax-deductible. The Company has retrospectively adjusted the consolidated balance sheet as of December 31, 2014 related to adjustments to the purchase price allocation of the above acquisition. The impacts are adjustments to deferred franchise costs, goodwill and deferred revenue, with no changes to total net assets. There were no impacts on the consolidated statements of operations or cash flows for any prior periods as a result of these adjustments. The balance sheet impacts are as follows: December 31, 2014 As reported As revised Deferred franchise costs - current portion $ 668,700 $ 622,800 Goodwill $ 677,204 $ 636,104 Deferred revenue - current portion $ 2,044,500 $ 1,957,500 Franchises acquired during 2015 During the year ended December 31, 2015, the Company continued to execute its growth strategy and entered into a series of unrelated transactions with existing franchisees to re-acquire an aggregate of 24 developed and 35 undeveloped franchises throughout Arizona, California, and New York for an aggregate purchase price of $5,725,875, subject to certain adjustments, consisting of cash of $4,925,525 and notes payable of $800,350. Of the 24 developed franchises, the Company is operating 22 as company-owned or managed clinics and has closed the remaining two clinics. The 35 undeveloped franchises have been terminated and the Company may relocate them. At the time these transactions were consummated, the Company carried a deferred revenue balance of $1,005,500, representing franchise fees collected upon the execution of the franchise agreements, and deferred franchise costs of $493,500, related to undeveloped franchises. The Company accounted for the franchise rights associated with the undeveloped franchise as a cancellation, and the respective deferred revenue and deferred franchise costs were netted against the aggregate purchase price. The remaining $5,213,875 was accounted for as consideration paid for the acquired franchises. Additionally, in January 2015, in connection with the default by a franchisee under its franchise agreement, the Company assumed substantially all of the assets of a clinic in Tempe, Arizona in exchange for $25,000. The Company has accounted for this as a business combination. The Company completed its valuation of the fair value of the assets acquired, including intangible assets, in September 2015. Because the net assets acquired exceeded the consideration paid, the Company recognized a bargain purchase gain of $233,804 during the year ended December 31, 2015. The Company also recognized a bargain purchase gain of $27,343 related to the acquisition of two developed clinics and seven undeveloped units in San Diego, California. Total bargain purchase gain for the year ended December 31, 2015 was $261,147. The Company incurred $393,069 of transaction costs related to these acquisitions for the year ended December 31, 2015 which are included in general and administrative expenses in the accompanying statements of operations. Purchase Price Allocation The purchase price allocations for these acquisitions are complete with the exception of the acquisition completed on December 29, 2015. For that transaction the balances are preliminary and subject to further adjustment upon finalization of the opening balance sheet. The following summarizes the aggregate fair values of the assets acquired and liabilities assumed during 2015 as of the acquisition date: Property and equipment $ 1,504,169 Intangible assets 1,942,180 Favorable leases 521,825 Goodwill 1,830,833 Total assets acquired 5,799,007 Unfavorable leases (49,077 ) Deferred membership revenue (106,908 ) Net assets acquired 5,643,022 Deferred tax liability (168,000 ) Bargain purchase gain (261,147 ) Net purchase price $ 5,213,875 Intangible assets in the table above consist of reacquired franchise rights of $1,458,667 and customer relationships of $483,514, and will be amortized over their estimated useful lives ranging from six to eight years and two years, respectively. The estimates of the fair value of the assets or rights acquired and liabilities assumed at the date of the applicable acquisition are subject to adjustment during the measurement period (up to one year from the particular acquisition date). The primary areas of the accounting for the acquisitions that are not yet finalized relate to the fair value of certain tangible and intangible assets acquired, residual goodwill and any related tax impact. The fair value of these net assets acquired are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. While the Company believes that such preliminary estimates provide a reasonable basis for estimating the fair value of assets acquired and liabilities assumed, it evaluates any necessary information prior to finalization of the fair value. During the measurement period, the Company will adjust assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the revised estimated values of those assets or liabilities as of that date. The effect of measurement period adjustments to the estimated fair value is reflected as if the adjustments had been completed on the acquisition date. The impact of all changes that do not qualify as measurement period adjustments are included in current period earnings. If the actual results differ from the estimates and judgments used in these fair values, the amounts recorded in the condensed consolidated financial statements could be subject to a possible impairment of the intangible assets or goodwill, or require acceleration of the amortization expense of intangible assets in subsequent periods. During the year ended December 31, 2015, the Company made certain measurement period adjustments related to several acquisitions consummated during the year. Property and equipment was decreased by $128,900, intangible assets increased by $317,959, favorable leases increased by $455,279, deferred membership revenue increased by $10,393, deferred tax liability increased by $168,000 and bargain purchase gain decreased by $123,067 with the resulting offset to goodwill of $609,798. Goodwill recorded in connection with these acquisitions was attributable to the workforce of the clinics and synergies expected to arise from cost savings opportunities. All of the recorded goodwill is tax-deductible. Pro Forma Results of Operations (Unaudited) The following table summarizes selected unaudited pro forma condensed consolidated statements of operations data for the years ended December 31, 2015 and 2014 as if the acquisitions had been completed on January 1, 2014. Pro Forma for the Year 2015 2014 Revenues, net $ 15,083,156 $ 10,566,763 Net loss $ (9,927,271 ) $ (4,518,553 ) This selected unaudited pro forma consolidated financial data is included only for the purpose of illustration and does not necessarily indicate what the operating results would have been if the acquisitions had been completed on that date. Moreover, this information is not indicative of what the Company’s future operating results will be. The information for 2014 and 2015 prior to the acquisitions is included based on prior accounting records maintained by the acquired companies. In some cases, accounting policies differed materially from accounting policies adopted by the Company following the acquisitions. For 2015, this information includes actual data recorded in its financial statements for the period subsequent to the date of the acquisitions. The Company’s consolidated statement of operations for the year ended December 31, 2015 includes net revenue and net loss of $3,651,139 and $(3,443,459), respectively, attributable to the 2015 acquisitions. As the 2014 acquisition occurred on the last day of the period, there were no net revenues or income attributable to the acquisition. The pro forma amounts included in the table above reflect the application of accounting policies and adjustment of the results of the clinics to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied from January 1, 2014, together with the consequential tax impacts. |
Note 3 - Notes Receivable
Note 3 - Notes Receivable | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 3: Notes Receivable Effective July 2012, the Company sold a company-owned clinic, including the license agreement, equipment, and customer base, in exchange for a $90,000 unsecured promissory note. The note bears interest at 6% per annum for fifty-four months and requires monthly principal and interest payments over forty-two months, beginning August 2013 and maturing January 2017. Effective July 2015, the Company entered into two license transfer agreements, in exchange for $10,000 and $29,925 in separate unsecured promissory notes. The non-interest bearing notes require monthly principal payments over 24 months, beginning on September 1, 2015 and maturing on August 1, 2017. Effective July 2015, the Company entered into a license transfer agreement, in exchange for $29,925 in an unsecured promissory note. The note bears interest at 4.0% per annum, and requires monthly principal payments over 12 months, beginning on August 1, 2015 and maturing on July 1, 2016. The outstanding balance of the notes as of December 31, 2015 and 2014 were $76,731 and $59,269, respectively. |
Note 4 - Property and Equipment
Note 4 - Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Property, Plant and Equipment Disclosure [Text Block] | Note 4: Property and Equipment Property and equipment consist of the following: December 31, December 31, Office and computer equipment $ 963,299 $ 209,575 Leasehold improvements 4,672,582 665,961 Software developed 691,827 564,560 Gross property and equipment 6,327,708 1,440,096 Accumulated depreciation (1,098,438 ) (305,644 ) 5,229,270 1,134,452 Construction in progress 1,909,476 - Property and equipment, net $ 7,138,746 $ 1,134,452 Depreciation expense was $792,794 and $210,123 for the years ended December 31, 2015 and 2014, respectively. Construction in progress relates to the ongoing development of company-owned or managed clinics, which are not yet placed in service. |
Note 5 - Fair Value Considerati
Note 5 - Fair Value Consideration | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Fair Value Disclosures [Text Block] | Note 5: Fair Value Consideration The Company’s financial instruments include cash, restricted cash, accounts receivable, notes receivable, accounts payable accrued expenses and notes payable. The carrying amounts of its financial instruments approximate their fair value due to their short maturities. The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. As of December 31, 2015 and 2014, the Company does not have any financial instruments that are measured on a recurring basis as Level 1, 2 or 3. |
Note 6 - Intangible Assets
Note 6 - Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Intangible Assets Disclosure [Text Block] | Note 6: Intangible Assets During the year ended December 31, 2015, the Company entered into several agreements to repurchase regional developer licenses, reacquiring rights in Los Angeles County, San Diego, and Orange County, all located in the state of California, Erie County, Monroe County, Nassau County, Suffolk County, and Albany County, all located in the state of New York, and the regional developer license in New Jersey in exchange for cash consideration of $1,583,000, of which $507,500 was recorded as a cash advance at December 31, 2014. The Company carried a deferred revenue balance associated with these transactions of $914,000, representing license fees collected upon the execution of the regional developer agreements. In accordance with ASC 952-605, the Company accounted for the development rights associated with the unsold or undeveloped franchises as cancellations, and the respective deferred revenue was netted against the aggregate purchase price or recognized as revenue to the extent deferred revenue was in excess of the cash consideration paid. During the year ended December 31, 2015, the revenue recognized as excess deferred regional developer fees totaled $254,250. The remaining balance was accounted for as consideration paid for the reacquired development rights. As the deferred revenue with respect to these regional developer rights had previously been taken into account for income tax purposes, the tax basis in the reacquired development rights is equal to the cash consideration paid. Intangible assets consisted of the following: As of December 31, 2015 Gross Carrying Accumulated Net Carrying Amortized intangible assets: Reacquired franchise rights $ 1,539,667 $ 174,313 $ 1,365,354 Customer relationships 555,513 190,500 365,013 Reacquired development rights 923,250 111,348 811,902 $ 3,018,430 $ 476,161 $ 2,542,269 Unamortized intangible assets: Goodwill 2,466,937 Total intangible assets $ 5,009,206 Amortization expense was $476,161 for the year ended December 31, 2015. There was no amortization expense for the year ended December 31, 2014. Estimated amortization expense for 2016 and subsequent years is as follows: 2016 $ 660,596 2017 470,096 2018 351,006 2019 351,006 2020 351,006 Thereafter 358,559 Total $ 2,542,269 |
Note 7 - Notes Payable
Note 7 - Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | Note 7: Notes Payable Beginning in February, 2015, the Company delivered 12 notes payable totaling $800,350 as a portion of the consideration paid in connection with the Company’s various acquisitions. Interest rates range from 1.5% to 5.25% with maturities through February of 2017. Repayments during the year ended December 31, 2015 totaled $218,500. Maturities of the Company’s notes payable are as follows as of December 31, 2015: 2016 $ 451,850 2017 130,000 Total $ 581,850 |
Note 8 - Equity
Note 8 - Equity | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | Note 8: Equity Public Offerings of Common Stock The Company completed its initial public offering of 3,000,000 shares of common stock at a price to the public of $6.50 per share on November 14, 2014, whereupon it received aggregate net proceeds of approximately $17,065,000 after deducting underwriting discounts, commissions and other offering expenses. The Company’s underwriters exercised their option to purchase 450,000 additional shares of common stock to cover over-allotments on November 18, 2014, pursuant to which it received aggregate net proceeds of approximately $2,710,000, after deducting underwriting discounts, commissions and expenses. Also, in conjunction with the IPO, the Company issued warrants to the underwriters for the purchase of 90,000 shares of common stock, which can be exercised between November 10, 2015 and November 10, 2018 at an exercise price of $8.125 per share. On November 25, 2015 the Company closed its follow-on offering of 2,272,727 shares of our common stock, offered and sold by the Company, at a price to the public of $5.50 per share. On December 30, 2015 the underwriters of the Company’s s public offering of common stock exercised their over-allotment option to purchase an additional 340,909 shares of common stock at a public offering price of $5.50 per share After giving effect to the over-allotment exercise, the total number of shares offered and sold in the Company’s follow-on public offering increased to 2,613,636 shares. With the over-allotment option exercise, the Company received aggregate net proceeds of approximately $13.0 million. Stock Options In November 2012, the Company adopted the 2012 Stock Plan (“2012 Plan”). The 2012 Plan’s purpose is to attract and retain the best available personnel for positions of substantial responsibility, provide incentives and additional ownership opportunities for employees, directors, and consultants, and generally promote the success of the Company’s business. The 2012 Plan permits the Company to grant incentive stock options, non-statutory stock options, restricted stock, stock appreciation rights, performance units and performance shares to employees, directors, and consultants for a period of ten years. On May 15, 2014, the Company adopted the 2014 Stock Plan (“2014 Plan”). The 2014 Plan is designed to supersede and replace the 2012 Plan, effective as of the adoption date and set aside 1,513,000 shares of the Company’s common stock that may be granted under the 2014 Plan. During the year ended December 31, 2014, the Company granted 321,895 stock options to employees and certain non-employee members of its board of directors with exercise prices ranging from $1.20 - $6.50. During the year ended December 31, 2015, the Company granted 240,160 stock options to employees and certain non-employee members of its board of directors with exercise prices ranging from $5.99 - $9.62. The fair value of the Company’s common stock prior to its IPO was estimated by the Board of Directors at or about the time of grant for each share-based award. At each grant, the board considered a number of factors in establishing a value for the Company’s common stock including its EBITDA, assessments of an amount its shareholders would accept in the private sale of the company, discussions with its investment bankers regarding pricing of the Company’s common stock in an initial public offering and the probability of successfully completing an IPO. Although the methods for determining the fair value of the Company’s common stock are not complex, the board’s estimate of the fair value of the common stock did involve subjectivity, especially assessments of value in a private sale and estimates of value in the public stock market. Upon the completion of the Company’s IPO, its stock trading price became the basis of fair value of its common stock used in determining the value of share based awards. To the extent the value of the Company’s share based awards involves a measure of volatility, it will rely upon the volatilities from publicly traded companies with similar business models until its common stock has accumulated enough trading history for it to utilize its own historical volatility. The expected life of the options granted is based on the average of the vesting term and the contractual term of the option. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury 10-year yield curve in effect at the date of the grant. The Company has computed the fair value of all options granted during the years ended December 31, 2015 and 2014, using the following assumptions: Years Ended December 31, 2015 2014 Expected volatility 44% - 50% 43% - 46% Expected dividends None None Expected term (years) 5.5 - 7 5.5 - 7.5 Risk-free rate 1.54% to 2.01% 0.07% - 2.05% Forfeiture rate 20% None The information below summarizes the stock options: Number of Weighted Weighted Weighted Outstanding at December 31, 2013 - - - Granted at market price 321,895 2.04 Exercised - - Cancelled (7,120 ) 1.20 Outstanding at December 31, 2014 314,775 $ 2.23 $ 0.92 9.2 Granted at market price 240,160 8.16 Exercised (445 ) 1.20 Cancelled (77,031 ) 7.88 Outstanding at December 31, 2015 477,459 $ 4.30 $ 2.01 8.7 Exercisable at December 31, 2015 178,856 $ 3.08 $ 1.36 8.2 The intrinsic value of the Company’s stock options outstanding was $1,171,360 at December 31, 2015. For the years ended December 31, 2015 and 2014, stock based compensation expense for stock options was $328,772 and $32,105, respectively. Unrecognized stock-based compensation expense for stock options for the year ended December 31, 2015 was $854,051, which is expected to be recognized ratably over the next 2.48 years. Restricted Stock On January 1, 2014, the Company granted restricted stock awards to executives to earn an aggregate of 567,375 shares of common stock. The restricted stock was granted in two tranches. The first tranche vests over a period of four years from the grant date. The second tranche began vesting upon completion of the Company’s initial public offering on November 14, 2014 over a three year period. The fair market value of the 567,375 shares of restricted stock was valued at $1.20 per share, determined by the Board of Directors, totaling approximately $679,000 to be recognized ratably as the stock is vested. On December 16, 2014, the Company granted restricted stock to an executive to earn 95,000 shares of common stock. These shares vest over a four year period from the grant date. The estimated fair market value of these shares was valued at $6.20 per share, based on the Company’s stock trading price, totaling approximately $589,000 to be recognized ratably as the stock is vested. During 2015, the Company granted restricted stock to two employees to earn 8,000 shares of common stock. These shares vest over a four year period from grant date. The estimated fair market value of these shares was valued at $9.62 per share, based on the Company’s stock trading price, totaling approximately $76,960 to be recognized ratably as the stock is vested. The information below summaries the restricted stock activity: Restricted Stock Awards Shares Outstanding at December 31, 2013 - Restricted stock awards granted 662,375 Awards forfeited or exercised - Outstanding at December 31, 2014 662,375 Restricted stock awards granted 8,000 Awards forfeited or exercised - Outstanding at December 31, 2015 670,375 For the years ended December 31, 2015 and 2014, stock based compensation expense for restricted stock awards was $496,373 and $69,725, respectively. Unrecognized stock based compensation expense for restricted stock awards as of December 31, 2015 was $790,706 to be recognized ratably over 2.51 years. Warrants In conjunction with the IPO, the Company issued warrants to the underwriters for the purchase of 90,000 shares of common stock, which can be exercised between November 10, 2015 and November 10, 2018 at an exercise price of $8.125 per share. For the year ended December 31, 2014, a net cost of $113,929 was recorded against proceeds under additional paid in capital, associated with these awards. The fair value of the warrants was determined using the Black-Scholes option valuation model. The warrants expire on November 10, 2018 and have a remaining contractual life of 2.9 years as of December 31, 2015. The Company has computed the fair value of all warrants granted during the year ended December 31, 2015 and 2014, using the following assumptions: December 31, 2015 2014 Volatility - 33 % Risk-free interest rate - 0.78 % Contractual term (years) - 4.0 The information below summarizes the warrants: Number of Weighted Weighted Intrinsic Outstanding at December 31, 2014 90,000 $ 8.13 3.9 - Granted - - - - Outstanding at December 31, 2015 90,000 $ 8.13 2.9 $ - Exercisable at December 31, 2015 90,000 $ 8.13 2.9 $ - Preferred Stock The Company has 50,000 shares authorized as preferred stock. The preferred stock is senior to common stock and each share has the same voting rights as the common stockholders. The liquidation preference is equal to the stated value of the stock plus any dividends declared but unpaid at the time of a liquidation event. The preferred shares are convertible to common stock at the option of the holder at a rate of one share of preferred stock for 53.4 shares of common stock. On November 14, 2014, the holders of the Company’s preferred stock converted all 25,000 outstanding shares of preferred stock to 1,335,000 shares of common stock. Common Stock On November 26, 2012, the Board declared a dividend of 29 shares of the Company’s common stock on each share of common stock outstanding as of December 1, 2012. The stock dividend was effective and payable automatically as of the effective date of the Certificate of Amendment to the Company’s Certificate of Incorporation which was January 9, 2013. The stock dividend has been accounted for as a stock split and retroactively reflected in these consolidated financial statements. On September 16, 2014, the Board declared a second stock dividend of .78 shares of common stock for each share of common stock outstanding as of September 15, 2014. The second stock dividend was effective and payable automatically as of the effective date of the Company’s Amended and Restated Certificate of Incorporation, which was September 17, 2014. This stock dividend has been accounted for as a stock split and retroactively reflected in these consolidated financial statements. On January 9, 2013, a Certificate of Amendment of Certificate of Incorporation was filed with the Delaware Secretary of State. This amendment authorized the Company to increase the number of common stock shares from 150,000 to 4,000,000. A subsequent Certificate of Amendment of Certificate of Incorporation was filed on December 24, 2013, authorizing the Company to increase the number of common stock shares to 4,250,000. An Amended and Restated Certificate of Incorporation was filed on September 17, 2014, authorizing the Company to increase the number of common stock shares to 20,000,000. |
Note 9 - Income Taxes
Note 9 - Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | Note 9: Income Taxes Income tax (benefit) provision reported in the consolidated statements of operations is comprised of the following: December 31, 2015 2014 Current benefit: Federal $ (208,900 ) $ (388,900 ) State, net of state tax credits (67,800 ) (28,800 ) Total current benefit (276,700 ) (417,700 ) Deferred provision: Federal 40,800 1,403,100 State - 355,000 Total deferred provision 40,800 1,758,100 Total income tax (benefit) provision $ (235,900 ) $ 1,340,400 The following are the components of the Company’s net deferred taxes for federal and state income taxes: December 31, 2015 2014 Deferred revenue $ 1,988,200 $ 2,999,300 Deferred franchise costs (664,000 ) (932,900 ) Allowance for doubtful accounts 1,781,000 30,800 Accrued expenses 74,900 197,300 Goodwill 87,000 - Restricted stock compensation (44,100 ) (231,300 ) Nonqualified stock options 109,600 - Deferred rent 209,700 207,000 Net operating loss carryforwards 1,849,100 38,200 Tax Credits 14,200 - Charitable contribution carryover 1,300 400 Asset basis difference related to property and equipment 167,500 (45,400 ) Gross non-current deferred tax asset 5,574,400 2,263,400 Less valuation allowance (5,574,400 ) (2,054,600 ) Net non-current deferred tax asset $ - $ 208,800 At December 31, 2015, the Company has federal and state net operating losses of approximately $4,533,000 and $6,016,000, respectively. These net operating losses are available to offset future taxable income and will begin to expire in 2035 for federal purposes and 2019 for state purposes. The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net loss, compared to the income tax (benefit) provision in the consolidated statements of operations: For the Years Ended December 31, 2015 2014 Amount Percent Amount Percent Expected federal tax benefit $ (3,071,300 ) -34.00 % $ (574,900 ) -34.00 % State tax provision, net of federal benefit (387,500 ) -4.29 % (72,500 ) -4.29 % Effect of increase in valuation allowance 3,519,800 38.97 % 2,054,600 121.52 % Permanent differences (58,800 ) -0.65 % 23,900 1.41 % Non-deductible expenses (46,500 ) -0.51 % (20,900 ) -1.24 % Effect of reduced state rates for deferred (80,100 ) -0.89 % 33,000 1.95 % Other, net (111,500 ) -1.23 % (102,800 ) -6.08 % Total income tax (benefit) provision $ (235,900 ) -2.61 % $ 1,340,400 79.28 % The state tax expense (benefit), penalties and interest stem from uncertain tax positions related to unresolved state apportionment of taxable income. Changes in the Company’s income tax (benefit) provision related primarily to changes in pretax loss during the year ended December 31, 2015, as compared to year ended December 31, 2014, and changes in the effective rate of -2.6% and 79.3%, respectively. The difference is due to a valuation allowance on the Company's deferred tax assets, uncertain tax positions that were recorded during the prior period, the increase in the state income tax rate, and the impact of certain permanent differences on taxable income. For the year ended December 31, 2015 and, 2014, the Company recorded a liability for income taxes for operations and uncertain tax positions of $65,600 and $121,700, respectively, of which $33,000 and $30,000 respectively, represent penalties and interest and are recorded in the “other liabilities” section of the accompanying consolidated balance sheets. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. Management made a determination that the Company was not in compliance with several state and local tax jurisdictions in which the Company was doing business. Accordingly, management undertook to analyze its tax exposures, both income and otherwise, with respect to jurisdictions in which compliance was deemed to be inadequate and has entered into Voluntary Disclosure Agreements (VDAs) with the taxing authorities. The Company’s tax returns for tax years subject to examination by tax authorities include 2012 through the current period for state and federal reporting purposes. The following table sets forth a reconciliation of the beginning and ending amount of uncertain tax benefits during the tax years ended December 31, 2015 and 2014: 2015 2014 Unrecognized tax benefit - January 1 $ 91,700 $ 114,500 Gross increases - tax positions in prior period - - Gross decreases - tax positions in prior period (59,100 ) (22,800 ) Gross increases - tax positions in current period - - Settlements - - Lapse of statute of limitations - - Uncertain tax benefit - December 31 $ 32,600 $ 91,700 |
Note 10 - Related Party Transac
Note 10 - Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Related Party Transactions Disclosure [Text Block] | Note 10: Related Party Transactions The Company entered into consulting and legal agreements with certain common stockholders related to services performed for the operations and transaction related activities of the Company. Amounts paid to or for the benefit of these stockholders was approximately $643,000 and $923,000 for the years ended December 31, 2015 and 2014, respectively. |
Note 11 - Commitments and Conti
Note 11 - Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | Note 11: Commitments and Contingencies Operating Leases The Company leases its corporate office space with 66 monthly payments increasing from $10,500 to $22,000, beginning February 3, 2014, the date it took occupancy of the new office space. During the year ended 2015, the Company assumed 47 additional leases for clinic locations. These leases vary in length from 18 to 124 months and have monthly payments ranging from $1,432 to $13,213. Total rent expense for the years ended December 31, 2015 and 2014 was $1,574,803 and $134,801, respectively. Future minimum annual lease payments are as follows: 2016 $ 2,731,356 2017 2,807,921 2018 2,290,057 2019 1,998,139 2020 1,763,150 Thereafter 8,373,011 Total $ 19,963,634 Litigation In the normal course of business, the Company is party to litigation from time to time. The Company maintains insurance to cover certain actions and believe that resolution of such litigation will not have a material adverse effect on the Company. On July 7, 2015, a group of six current or former franchisees that owned 18 franchise licenses, whose licenses had been terminated by the Company due to defaults in performance, commenced a collective arbitration proceeding in San Diego, California. The claimants’ demand for arbitration asserts claims for breach of contract, promissory fraud, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, wrongful termination of franchise agreements and “wrongful competition” pursuant to unspecified state business practices, unfair competition and franchise statutes. The claimants also seek “a preliminary and permanent injunction prohibiting the Company from seeking to operate corporate clinics within 25 miles of any franchise clinic.” Although commenced in California, the arbitration proceeding has been moved to Arizona, pursuant to the franchise agreements in dispute, which include clauses that make it mandatory for any arbitration proceeding to be conducted in Phoenix, Arizona. Each agreement also requires claims to be arbitrated on an individual, not class-wide basis. The Company does not believe any of the claims, either collectively or individually, have any legal merit and intends to vigorously defend the arbitration proceeding. |
Note 12 - Subsequent Event
Note 12 - Subsequent Event | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | Note 12: Subsequent Events On January 1, 2016, the Company entered into an agreement under which it repurchased the right to develop franchises in San Bernardino and Riverside Counties in California. The total consideration for the transaction was $275,000, all of which was funded from the proceeds of the Company’s offerings of its common stock. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation The accompanying consolidated financial statements include the accounts of The Joint Corp. and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”), which was dormant for all periods presented. All significant intercompany accounts and transactions between The Joint Corp. and its subsidiary have been eliminated in consolidation. Certain balances were reclassified from selling and marketing expenses and general and administrative expenses to IT cost of revenues for the year ended December 31, 2014 to conform to current year presentation. |
Comprehensive Income, Policy [Policy Text Block] | Comprehensive Loss Net loss and comprehensive loss are the same for the years ended December 31, 2015 and 2014. |
Nature of Operations Policy [Policy Text Block] | Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010. Its principal business purposes are owning, operating, managing and franchising chiropractic clinics, selling regional developer rights and supporting the operations of owned, managed and franchised chiropractic clinics at locations throughout the United States of America. The franchising of chiropractic clinics is regulated by the Federal Trade Commission and various state authorities. The following table summarizes the number of clinics in operation under franchise agreements or that are company-owned or managed for the years ended December 31, 2015 and 2014: Year Ended Franchised clinics: 2015 2014 Clinics open at beginning of period 242 175 Opened during the period 54 73 Acquired during the period (24 ) (4 ) Closed during the period (7 ) (2 ) Clinics in operation at the end of the period 265 242 Year Ended Company-owned or managed clinics: 2015 2014 Clinics open at beginning of period 4 - Opened during the period 21 - Acquired during the period 24 4 Closed during the period (2 ) - Clinics in operation at the end of the period 47 4 Total clinics in operation at the end of the period 312 246 Clinics licenses sold but not yet developed 168 268 |
Consolidation, Variable Interest Entity, Policy [Policy Text Block] | Variable Interest Entities An entity deemed to hold the controlling interest in a voting interest entity or deemed to be the primary beneficiary of a variable interest entity (“VIE”) is required to consolidate the VIE in its financial statements. An entity is deemed to be the primary beneficiary of a VIE if it has both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb the majority of losses of the VIE or the right to receive the majority of benefits from the VIE. Investments where the Company does not hold the controlling interest and are not the primary beneficiary are accounted for under the equity method. Certain states in which the Company manages clinics, regulate the practice of chiropractic care and require that chiropractic services be provided by legal entities organized under state laws as professional corporations or PCs. Such PCs are VIEs. In these states, the Company has entered into management services agreements with PCs under which the Company provides on an exclusive basis, all non-clinical services of the chiropractic practice. The Company has analyzed its relationship with the PCs and has determined that the Company does not have the power to direct the activities of the PCs. As such, the activity of the PCs is not included in the Company’s consolidated financial statements |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and credit quality of, the financial institutions with which it invests. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. The Company has invested substantially all of the proceeds of its public offerings in short-term bank deposits. The Company had no cash equivalents as of December 31, 2015 and 2014. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | Restricted Cash Restricted cash relates to cash franchisees and corporate clinics contribute to the Company’s National Marketing Fund and cash franchisees provide to various voluntary regional Co-Op Marketing Funds. Cash contributed by franchisees to the National Marketing Fund is to be used in accordance with the Franchise Disclosure Document with a focus on regional and national marketing and advertising. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentrations of Credit Risk From time to time the Company grants credit in the normal course of business to franchisees related to the collection of royalties, and other operating revenues. The Company periodically performs credit analysis and monitors the financial condition of the franchisees to reduce credit risk. As of December 31, 2015 and 2014, three PC entities, and six franchisees represented 31% and 56%, respectively, of outstanding accounts receivable. The Company did not have any franchisees that represented greater than 10% of our revenues during the years ended December 31, 2015 and 2014. |
Trade and Other Accounts Receivable, Policy [Policy Text Block] | Accounts Receivable Accounts receivable represent amounts due from franchisees for initial franchise fees, royalty fees and marketing and advertising expenses and amounts due from PCs for which we perform management services for the repayment of working capital advances. The Company considers a reserve for doubtful accounts based on the creditworthiness of the franchisee or named entity. The provision for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses. The allowance is management’s best estimate of uncollectible amounts and is determined based on specific identification and historical performance that the Company tracks on an ongoing basis. The losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. As of December 31, 2015 and 2014, the Company had an allowance for doubtful accounts of $142,661 and $81,032, respectively. |
Revenue Recognition, Services, Commissions [Policy Text Block] | Deferred Franchise Costs Deferred franchise costs represent commissions that are paid in conjunction with the sale of a franchise and are expensed when the respective revenue is recognized, which is generally upon the opening of a clinic. |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of three to seven years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the assets. Maintenance and repairs are charged to expense as incurred; major renewals and improvements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. |
Internal Use Software, Policy [Policy Text Block] | Software Developed The Company capitalizes certain software development costs. These capitalized costs are primarily related to proprietary software used by clinics for operations and by the Company for the management of operations. Costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external costs, if direct, are capitalized as assets in progress until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Software developed is recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal use software is amortized on a straight line basis over its estimated useful life, generally 5 years. |
Intangible Assets, Finite-Lived, Policy [Policy Text Block] | Intangible Assets Intangible assets consist primarily of re-acquired franchise rights and customer relationships. The Company amortizes the fair value of re-acquired franchise rights over the remaining contractual terms of the re-acquired franchise rights at the time of the acquisition, which range from six to eight years. The fair value of customer relationships is amortized over their estimated useful life of two years. |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions discussed in Note 2. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. As required, the Company performs an annual impairment test of goodwill as of the first day of the fourth quarter or more frequently if events or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. No impairments of goodwill were recorded for the years ended December 31, 2015 and 2014. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company looks primarily to estimated undiscounted future cash flows in its assessment of whether or not long-lived assets have been impaired. No impairments of long-lived assets were recorded for the years ended December 31, 2015 and 2014. |
Advertising Fund, Policy [Policy Text Block] | Advertising Fund The Company has established an advertising fund for national/regional marketing and advertising of services offered by its clinics. The monthly marketing fee was increased to 2% in January 2015. The Company segregates the marketing funds collected which are included in restricted cash on its consolidated balance sheets. As amounts are expended from the fund, the Company recognizes advertising fund revenue and a related expense. Amounts collected in excess of marketing expenditures are included in restricted cash on the Company’s consolidated balance sheets. |
Cooperative Advertising Policy [Policy Text Block] | Co-Op Marketing Funds Some franchises have established regional Co-Ops for advertising within their local and regional markets. The Company maintains a custodial relationship under which the marketing funds collected are segregated and used for the purposes specified by the Co-Ops’ officers. The marketing funds are included in restricted cash on the Company’s consolidated balance sheets. |
Lease, Policy [Policy Text Block] | Deferred Rent The Company leases office space for its corporate offices and company-owned and managed clinics under operating leases, which may include rent holidays and rent escalation clauses. It recognizes rent holiday periods and scheduled rent increases on a straight-line basis over the term of the lease. The Company records tenant improvement allowances as deferred rent and amortizes the allowance over the term of the lease, as a reduction to rent expense. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition The Company generates revenue through initial franchise fees, regional developer fees, royalties, advertising fund revenue, IT related income, and computer software fees, and from its company-owned and managed clinics. |
Revenue Recognition, Services, Franchise Fees [Policy Text Block] | Franchise Fees. During the year ended December 31, 2015, we terminated 33 franchise licenses that were in default of various obligations under their respective franchise agreements. In conjunction with these terminations, during the year ended December 31, 2015, we recognized $957,000 of revenue and $435,650 of costs, which were previously deferred. |
Regional Developer Fees, Policy [Policy Text Block] | Regional Developer Fees |
Revenues and Management Fees, Policy [Policy Text Block] | Revenues and Management Fees from Company Clinics. |
Royalties, Policy [Policy Text Block] | Royalties. |
IT Related Income And Software Fees, Policy [Policy Text Block] | IT Related Income and Software Fees. |
Advertising Costs, Policy [Policy Text Block] | Advertising Costs The Company incurs advertising costs in addition to those included in the advertising fund. The Company’s policy is to expense all operating advertising costs as incurred. Advertising expenses for years ended December 31, 2015 and 2014 were $1,525,687 and $145,492, respectively. |
Income Tax, Policy [Policy Text Block] | Income Taxes The Company accounts for income taxes in accordance with ASC 740 that requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate principally to depreciation of property and equipment and treatment of revenue for franchise fees and regional developer fees collected. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertainty in income taxes by recognizing the tax benefit or expense from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits and expenses recognized in the condensed consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. At December 31, 2015 and 2014, the Company maintained a liability for income taxes for uncertain tax positions of approximately $66,000 and $122,000, respectively, of which $33,000 and $30,000, respectively, represent penalties and interest and are recorded in the “other liabilities” section of the accompanying consolidated balance sheets. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. The Company’s tax returns for tax years subject to examination by tax authorities include 2011 through the current period for state and 2012 through the current period for federal reporting purposes. |
Earnings Per Share, Policy [Policy Text Block] | Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per common share is computed by giving effect to all potentially dilutive common shares including preferred stock, restricted stock, and stock options. Year Ended 2015 2014 Net loss $ (8,797,321 ) $ (3,031,220 ) Weighted average common shares outstanding - basic 10,042,001 5,451,851 Effect of dilutive securities: Stock options - - Weighted average common shares outstanding - diluted 10,042,001 5,451,851 Basic and diluted loss per share $ (0.88 ) $ (0.56 ) The following table summarizes the potential shares of common stock that were excluded from diluted net loss per share, because the effect of including these potential shares was anti-dilutive: Year Ended 2015 2014 Unvested restricted stock 339,288 590,868 Stock options 477,459 314,775 Warrants 90,000 90,000 |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-Based Compensation The Company accounts for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. The Company determines the estimated grant-date fair value of restricted shares using quoted market prices and the grant-date fair value of stock options using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Prior to the IPO the grant date fair value was determined by the Board of Directors. Changes to the assumptions could cause significant adjustments to the valuation. The Company recognizes compensation costs ratably over the period of service using the straight-line method. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Items subject to significant estimates and assumptions include the allowance for doubtful accounts, share-based compensation arrangements, fair value of stock options, useful lives and realizability of long-lived assets, classification of deferred revenue and deferred franchise costs, uncertain tax positions, realizability of deferred tax assets, impairment of goodwill and intangible assets and purchase price allocations. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard becomes effective for us on January 1, 2018. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor have we determined the effect of the standard on its ongoing financial reporting. In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern: Disclosures about an Entity’s Ability to Continue as a Going Concern.” The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The new guidance is effective for annual periods ending after December 15, 2016, and interim periods thereafter. The Company is currently evaluating the effect of adoption of this standard, if any, on its consolidated financial position, results of operations or cash flows. In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The update requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. The update requires retrospective application and represents a change in accounting principle. The update is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued. ASU 2015-03 is not expected to have a material impact on the Company’s consolidated financial statements. In April 2015, FASB issued ASU No. 2015-05, “Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” The guidance provides clarification on whether a cloud computing arrangement includes a software license. If a software license is included, the customer should account for the license consistent with its accounting of other software licenses. If a software license is not included, the arrangement should be accounted for as a service contract. The update is effective for reporting periods beginning after December 15, 2015. The Company is currently evaluating the effect of adoption of this standard, if any, on its consolidated financial position, results of operations or cash flows. In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” The update requires than an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, including the cumulative effect of the change in provisional amount as if the accounting had been completed at the acquisition date. The adjustments related to previous reporting periods since the acquisition date must be disclosed by income statement line item either on the face of the income statement or in the notes. The Company adopted this ASU during the third quarter of 2015. Accordingly, the Company applied the amendments in this update to the measurement period adjustments made during the year and disclosed the adjustments in Note 2. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 470): Balance Sheet Classification of Deferred Taxes.” The update eliminates the requirement to separate deferred income tax assets and liabilities into current and noncurrent amounts within a classified balance sheet. Under ASU 2015-17, the presentation of deferred income taxes is simplified, as all deferred income tax assets and liabilities are to be classified as noncurrent. The existing requirement that deferred income tax assets and liabilities of a tax-paying component of an entity be offset and presented as a single amount is not affected by ASU 2015-17. The Company has adopted the guidance under ASU 2015-17 retrospectively and prior periods were retrospectively adjusted. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10),” Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is not permitted. The Company is currently evaluating the effect of adoption of this standard, if any, on its consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The changes require that substantially all operating leases be recognized as assets and liabilities on our balance sheet, which is a significant departure from the current standard, which classifies operating leases as off balance sheet transactions and accounts for only the current year operating lease expense in the statement of operations. The right to use the leased property is to be capitalized as an asset and the expected lease payments over the life of the lease will be accounted for as a liability. The effective date is for fiscal years beginning after December 31, 2018. While we have not quantified the impact this proposed standard would have on our financial statements, if our current operating leases are instead recognized on the balance sheet, it will result in a significant increase in the |
Note 1 - Nature of Operations22
Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Franchisor Disclosure [Table Text Block] | Year Ended Franchised clinics: 2015 2014 Clinics open at beginning of period 242 175 Opened during the period 54 73 Acquired during the period (24 ) (4 ) Closed during the period (7 ) (2 ) Clinics in operation at the end of the period 265 242 Year Ended Company-owned or managed clinics: 2015 2014 Clinics open at beginning of period 4 - Opened during the period 21 - Acquired during the period 24 4 Closed during the period (2 ) - Clinics in operation at the end of the period 47 4 Total clinics in operation at the end of the period 312 246 Clinics licenses sold but not yet developed 168 268 |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Year Ended 2015 2014 Net loss $ (8,797,321 ) $ (3,031,220 ) Weighted average common shares outstanding - basic 10,042,001 5,451,851 Effect of dilutive securities: Stock options - - Weighted average common shares outstanding - diluted 10,042,001 5,451,851 Basic and diluted loss per share $ (0.88 ) $ (0.56 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Year Ended 2015 2014 Unvested restricted stock 339,288 590,868 Stock options 477,459 314,775 Warrants 90,000 90,000 |
Note 2 - Acquisitions (Tables)
Note 2 - Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | Property and equipment $ 297,630 Intangible assets 153,000 Goodwill 636,104 Total assets acquired 1,086,734 Unfavorable leases (227,834 ) Net assets acquired $ 858,900 Property and equipment $ 1,504,169 Intangible assets 1,942,180 Favorable leases 521,825 Goodwill 1,830,833 Total assets acquired 5,799,007 Unfavorable leases (49,077 ) Deferred membership revenue (106,908 ) Net assets acquired 5,643,022 Deferred tax liability (168,000 ) Bargain purchase gain (261,147 ) Net purchase price $ 5,213,875 |
Schedule of Error Corrections and Prior Period Adjustments [Table Text Block] | December 31, 2014 As reported As revised Deferred franchise costs - current portion $ 668,700 $ 622,800 Goodwill $ 677,204 $ 636,104 Deferred revenue - current portion $ 2,044,500 $ 1,957,500 |
Business Acquisition, Pro Forma Information [Table Text Block] | Pro Forma for the Year 2015 2014 Revenues, net $ 15,083,156 $ 10,566,763 Net loss $ (9,927,271 ) $ (4,518,553 ) |
Note 4 - Property and Equipme24
Note 4 - Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Property, Plant and Equipment [Table Text Block] | December 31, December 31, Office and computer equipment $ 963,299 $ 209,575 Leasehold improvements 4,672,582 665,961 Software developed 691,827 564,560 Gross property and equipment 6,327,708 1,440,096 Accumulated depreciation (1,098,438 ) (305,644 ) 5,229,270 1,134,452 Construction in progress 1,909,476 - Property and equipment, net $ 7,138,746 $ 1,134,452 |
Note 6 - Intangible Assets (Tab
Note 6 - Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | As of December 31, 2015 Gross Carrying Accumulated Net Carrying Amortized intangible assets: Reacquired franchise rights $ 1,539,667 $ 174,313 $ 1,365,354 Customer relationships 555,513 190,500 365,013 Reacquired development rights 923,250 111,348 811,902 $ 3,018,430 $ 476,161 $ 2,542,269 Unamortized intangible assets: Goodwill 2,466,937 Total intangible assets $ 5,009,206 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | 2016 $ 660,596 2017 470,096 2018 351,006 2019 351,006 2020 351,006 Thereafter 358,559 Total $ 2,542,269 |
Note 7 - Notes Payable (Tables)
Note 7 - Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Maturities of Long-term Debt [Table Text Block] | 2016 $ 451,850 2017 130,000 Total $ 581,850 |
Note 8 - Equity (Tables)
Note 8 - Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Warrant [Member] | |
Notes Tables | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | December 31, 2015 2014 Volatility - 33 % Risk-free interest rate - 0.78 % Contractual term (years) - 4.0 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | Years Ended December 31, 2015 2014 Expected volatility 44% - 50% 43% - 46% Expected dividends None None Expected term (years) 5.5 - 7 5.5 - 7.5 Risk-free rate 1.54% to 2.01% 0.07% - 2.05% Forfeiture rate 20% None |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of Weighted Weighted Weighted Outstanding at December 31, 2013 - - - Granted at market price 321,895 2.04 Exercised - - Cancelled (7,120 ) 1.20 Outstanding at December 31, 2014 314,775 $ 2.23 $ 0.92 9.2 Granted at market price 240,160 8.16 Exercised (445 ) 1.20 Cancelled (77,031 ) 7.88 Outstanding at December 31, 2015 477,459 $ 4.30 $ 2.01 8.7 Exercisable at December 31, 2015 178,856 $ 3.08 $ 1.36 8.2 |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Restricted Stock Awards Shares Outstanding at December 31, 2013 - Restricted stock awards granted 662,375 Awards forfeited or exercised - Outstanding at December 31, 2014 662,375 Restricted stock awards granted 8,000 Awards forfeited or exercised - Outstanding at December 31, 2015 670,375 |
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | Number of Weighted Weighted Intrinsic Outstanding at December 31, 2014 90,000 $ 8.13 3.9 - Granted - - - - Outstanding at December 31, 2015 90,000 $ 8.13 2.9 $ - Exercisable at December 31, 2015 90,000 $ 8.13 2.9 $ - |
Note 9 - Income Taxes (Tables)
Note 9 - Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | December 31, 2015 2014 Current benefit: Federal $ (208,900 ) $ (388,900 ) State, net of state tax credits (67,800 ) (28,800 ) Total current benefit (276,700 ) (417,700 ) Deferred provision: Federal 40,800 1,403,100 State - 355,000 Total deferred provision 40,800 1,758,100 Total income tax (benefit) provision $ (235,900 ) $ 1,340,400 |
Schedule of Deferred Tax Assets and Liabilities [Table Text Block] | December 31, 2015 2014 Deferred revenue $ 1,988,200 $ 2,999,300 Deferred franchise costs (664,000 ) (932,900 ) Allowance for doubtful accounts 1,781,000 30,800 Accrued expenses 74,900 197,300 Goodwill 87,000 - Restricted stock compensation (44,100 ) (231,300 ) Nonqualified stock options 109,600 - Deferred rent 209,700 207,000 Net operating loss carryforwards 1,849,100 38,200 Tax Credits 14,200 - Charitable contribution carryover 1,300 400 Asset basis difference related to property and equipment 167,500 (45,400 ) Gross non-current deferred tax asset 5,574,400 2,263,400 Less valuation allowance (5,574,400 ) (2,054,600 ) Net non-current deferred tax asset $ - $ 208,800 |
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] | For the Years Ended December 31, 2015 2014 Amount Percent Amount Percent Expected federal tax benefit $ (3,071,300 ) -34.00 % $ (574,900 ) -34.00 % State tax provision, net of federal benefit (387,500 ) -4.29 % (72,500 ) -4.29 % Effect of increase in valuation allowance 3,519,800 38.97 % 2,054,600 121.52 % Permanent differences (58,800 ) -0.65 % 23,900 1.41 % Non-deductible expenses (46,500 ) -0.51 % (20,900 ) -1.24 % Effect of reduced state rates for deferred (80,100 ) -0.89 % 33,000 1.95 % Other, net (111,500 ) -1.23 % (102,800 ) -6.08 % Total income tax (benefit) provision $ (235,900 ) -2.61 % $ 1,340,400 79.28 % |
Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block] | 2015 2014 Unrecognized tax benefit - January 1 $ 91,700 $ 114,500 Gross increases - tax positions in prior period - - Gross decreases - tax positions in prior period (59,100 ) (22,800 ) Gross increases - tax positions in current period - - Settlements - - Lapse of statute of limitations - - Uncertain tax benefit - December 31 $ 32,600 $ 91,700 |
Note 11 - Commitments and Con29
Note 11 - Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Tables | |
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] | 2016 $ 2,731,356 2017 2,807,921 2018 2,290,057 2019 1,998,139 2020 1,763,150 Thereafter 8,373,011 Total $ 19,963,634 |
Supplemental Disclosure of No30
Supplemental Disclosure of Non-cash Activity (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Franchise Fees [Member] | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | $ 1,504,169 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 1,942,180 | |
Goodwill, Acquired During Period | 1,830,833 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Favorable Leases | 521,825 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Unfavorable Leases | 49,077 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Deferred Revenue | 106,908 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | 168,000 | |
Payments to Acquire Businesses, Net of Cash Acquired | 4,925,525 | |
Business Combination, Consideration Transferred, Liabilities Incurred | 800,350 | |
Deferred Revenue | 1,005,500 | |
Deferred Franchise Costs Netted Against Aggregate Purchase Price | 493,500 | |
Regional Developer Fees [Member] | ||
Deferred Revenue | 914,000 | |
Accounts Payable [Member] | ||
Capital Expenditures Incurred but Not yet Paid | 1,109,464 | |
Accrued Expenses [Member] | ||
Capital Expenditures Incurred but Not yet Paid | 117,509 | |
Warrant [Member] | ||
Issuance of Stock and Warrants for Services or Claims | $ 113,929 | |
Income Taxes Paid | 0 | 420,250 |
Interest Paid | 2,344 | 0 |
Payments to Acquire Businesses, Net of Cash Acquired | 4,925,525 | 900,000 |
Conversion of Stock, Amount Converted | 25 | |
Deposit Assets | $ 507,500 | |
Intangible Assets Reclassified from Deposits | $ 507,500 |
Note 1 - Nature of Operations31
Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details Textual) | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2015 | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Three PC Entities [Member] | |||
Number of PC Entities | 3 | ||
Concentration Risk, Percentage | 31.00% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Six Franchisees [Member] | |||
Number of Franchises | 6 | ||
Concentration Risk, Percentage | 56.00% | ||
Minimum [Member] | Franchise Rights [Member] | |||
Finite-Lived Intangible Asset, Useful Life | 6 years | ||
Minimum [Member] | |||
Property, Plant and Equipment, Useful Life | 3 years | ||
Regional Developers, Franchise Fees Collected Upon Sale of Franchise | $ 14,500 | ||
Maximum [Member] | Franchise Rights [Member] | |||
Finite-Lived Intangible Asset, Useful Life | 8 years | ||
Maximum [Member] | |||
Property, Plant and Equipment, Useful Life | 7 years | ||
Regional Developers, Franchise Fees Collected Upon Sale of Franchise | $ 19,950 | ||
Computer Software, Intangible Asset [Member] | |||
Finite-Lived Intangible Asset, Useful Life | 5 years | ||
Customer Relationships [Member] | |||
Finite-Lived Intangible Asset, Useful Life | 2 years | ||
Other Liabilities [Member] | |||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 33,000 | $ 30,000 | |
Allowance for Doubtful Accounts Receivable | $ 142,661 | 81,032 | |
Franchise Monthly Marketing Fee Gross Sales Percentage | 2.00% | 2.00% | |
Number of Franchise Licenses Terminated | 33 | ||
Revenue Recognized in Conjunction with Franchise License Terminations | $ 957,000 | ||
Recognition of Previously Deferred Costs in Conjunction with Franchise License Terminations | 435,650 | ||
Regional Developers License Fee | $ 7,250 | ||
Regional Developers License Fee Current Franchise Fee Percentage | 25.00% | ||
Regional Developers Royalty Sales Generated by Franchises Percentage | 3.00% | ||
Franchise Royalty Gross Sales Percentage | 7.00% | ||
Advertising Expense | $ 1,525,687 | 145,492 | |
Liability for Uncertain Tax Positions, Current | $ 66,000 | 122,000 | |
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 114,500 |
Note 1 - Clinics in Operation U
Note 1 - Clinics in Operation Under Franchise Agreements or Company-owned or Managed (Details) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Franchised Units [Member] | ||||
Clinics open at beginning of period | 242 | 175 | ||
Opened during the period | 54 | 73 | ||
Acquired during the period | (24) | |||
Closed during the period | (7) | (2) | ||
Clinics in operation at the end of the period | 265 | 242 | ||
Acquired during the period | 24 | |||
Total clinics in operation at the end of the period | 242 | 242 | 265 | 242 |
Entity Operated Units [Member] | ||||
Clinics open at beginning of period | 4 | |||
Opened during the period | 21 | |||
Acquired during the period | (24) | |||
Closed during the period | (2) | |||
Clinics in operation at the end of the period | 47 | 4 | ||
Acquired during the period | 24 | |||
Total clinics in operation at the end of the period | 4 | 4 | 47 | 4 |
Clinics open at beginning of period | 246 | |||
Clinics in operation at the end of the period | 312 | 246 | ||
Total clinics in operation at the end of the period | 312 | 246 | 312 | 246 |
Clinics licenses sold but not yet developed | 168 | 268 |
Note 1 - Earnings (Loss) Per Co
Note 1 - Earnings (Loss) Per Common Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Net loss | $ (8,797,321) | $ (3,031,220) |
Weighted average common shares outstanding - basic (in shares) | 10,042,001 | 5,451,851 |
Stock options (in shares) | ||
Weighted average common shares outstanding - diluted (in shares) | 10,042,001 | 5,451,851 |
Basic and diluted loss per share (in dollars per share) | $ (0.88) | $ (0.56) |
Note 1 - Potential Shares of Co
Note 1 - Potential Shares of Common Stock Excluded from Diluted Net Loss Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Restricted Stock [Member] | ||
Anti-dilutive Securities (in shares) | 339,288 | 590,868 |
Employee Stock Option [Member] | ||
Anti-dilutive Securities (in shares) | 477,459 | 314,775 |
Warrant [Member] | ||
Anti-dilutive Securities (in shares) | 90,000 | 90,000 |
Note 2 - Acquisitions (Details
Note 2 - Acquisitions (Details Textual) | Jan. 02, 2015USD ($) | Jan. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
The Joint RRC Corp [Member] | Los Angeles County [Member] | ||||
Number of Franchises Acquired from Franchisee | 4 | |||
The Joint RRC Corp [Member] | Franchise Rights [Member] | ||||
Finite-lived Intangible Assets Acquired | $ 81,000 | |||
Finite-Lived Intangible Asset, Useful Life | 7 years | |||
The Joint RRC Corp [Member] | Customer Relationships [Member] | ||||
Finite-lived Intangible Assets Acquired | $ 72,000 | |||
Finite-Lived Intangible Asset, Useful Life | 2 years | |||
The Joint RRC Corp [Member] | ||||
Number of Franchises Acquired from Franchisee | 6 | |||
Payments to Acquire Businesses, Gross | $ 900,000 | |||
Number of Franchises to Be Operated as Company-owned from Franchisee Acquistion | 4 | |||
Number of Franchises Closed | 2 | |||
Number of Additional Undeveloped Franchises Acquired | 3 | |||
Net Purchase Price, Net Deferred Revenue Adjustment | $ 41,100 | |||
Business Combination, Consideration Transferred, Net of Deferred Revenue and Deferred Franchise Costs | $ 858,900 | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | Tempe, AZ [Member] | ||||
Business Combination, Consideration Transferred | $ 25,000 | |||
Business Combination, Bargain Purchase, Gain Recognized, Amount | $ 233,804 | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | San Diego, CA [Member] | ||||
Number of Developed Franchises Reacquired During Period | 2 | |||
Number of Undeveloped Franchises Reacquired During the Period | 7 | |||
Business Combination, Bargain Purchase, Gain Recognized, Amount | $ 27,343 | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | Franchise Rights [Member] | Minimum [Member] | ||||
Finite-Lived Intangible Asset, Useful Life | 6 years | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | Franchise Rights [Member] | Maximum [Member] | ||||
Finite-Lived Intangible Asset, Useful Life | 8 years | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | Franchise Rights [Member] | ||||
Finite-lived Intangible Assets Acquired | $ 1,458,667 | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | Customer Relationships [Member] | ||||
Finite-lived Intangible Assets Acquired | $ 483,514 | |||
Finite-Lived Intangible Asset, Useful Life | 2 years | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | General and Administrative Expense [Member] | ||||
Business Combination, Acquisition Related Costs | $ 393,069 | |||
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | ||||
Payments to Acquire Businesses, Gross | $ 4,925,525 | |||
Number of Franchises Closed | 2 | |||
Business Combination, Consideration Transferred, Net of Deferred Revenue and Deferred Franchise Costs | $ 5,213,875 | |||
Number of Developed Franchises Reacquired During Period | 24 | |||
Number of Undeveloped Franchises Reacquired During the Period | 35 | |||
Business Combination, Consideration Transferred | $ 5,725,875 | |||
Business Combination, Consideration Transferred, Liabilities Incurred | $ 800,350 | |||
Number of Reacquired Developed Franchises Operated as Company-owned or Managed Clinics | 22 | |||
Number of Reacquired Undeveloped Franchises that Have Been Terminated and May Be Relocated | 35 | |||
Deferred Revenue | $ 1,005,500 | |||
Deferred Franchise Costs | 493,500 | |||
Business Combination, Bargain Purchase, Gain Recognized, Amount | 261,147 | |||
Business Combination, Measurement Period Adjustments, Property and Equipment, Increase (Decrease) | (128,900) | |||
Business Combination, Measurement Period Adjustments, Intangible Assets, Increase (Decrease) | 317,959 | |||
Business Combination, Measurement Period Adjustments, Favor Leases, Increase (Decrease) | 455,279 | |||
Business Combination, Measurement Period Adjustments, Deferred Revenue, Increase (Decrease) | 10,393 | |||
Business Combination, Measurement Period Adjustments, Deferred Tax Liabilities, Increase (Decrease) | 168,000 | |||
Business Combination, Measurement Period Adjustments, Bargain Purchase Gain, Increase (Decrease) | 123,067 | |||
Business Combination, Measurement Period Ajustment, Goodwill, Increase (Decrease) | 609,798 | |||
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual | 3,651,139 | |||
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual | $ 3,443,459 | |||
Franchise Rights [Member] | Minimum [Member] | ||||
Finite-Lived Intangible Asset, Useful Life | 6 years | |||
Franchise Rights [Member] | Maximum [Member] | ||||
Finite-Lived Intangible Asset, Useful Life | 8 years | |||
Customer Relationships [Member] | ||||
Finite-Lived Intangible Asset, Useful Life | 2 years | |||
Business Combination, Bargain Purchase, Gain Recognized, Amount | $ 261,147 |
Note 2 - Assets Acquired and Li
Note 2 - Assets Acquired and Liabilities Assumed (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
The Joint RRC Corp [Member] | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | $ 297,630 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 153,000 | |
Goodwill | 636,104 | |
Total assets acquired | 1,086,734 | |
Unfavorable leases | (227,834) | |
Net assets acquired | 858,900 | |
Business Combination, Consideration Transferred, Net of Deferred Revenue and Deferred Franchise Costs | $ 858,900 | |
Reacquisitions of Franchises Throughout Arizona, California and New York [Member] | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 1,504,169 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 1,942,180 | |
Goodwill | 1,830,833 | |
Total assets acquired | 5,799,007 | |
Unfavorable leases | (49,077) | |
Net assets acquired | 5,643,022 | |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Favorable Leases | 521,825 | |
Deferred membership revenue | (106,908) | |
Deferred tax liability | (168,000) | |
Bargain purchase gain | (261,147) | |
Business Combination, Consideration Transferred, Net of Deferred Revenue and Deferred Franchise Costs | 5,213,875 | |
Goodwill | 2,466,937 | $ 636,104 |
Bargain purchase gain | $ (261,147) |
Note 2 - Balance Sheet Adjustme
Note 2 - Balance Sheet Adjustments Related to Purchase Price Allocation (Details) | Dec. 31, 2014USD ($) |
Scenario, Previously Reported [Member] | |
Deferred franchise costs - current portion | $ 668,700 |
Goodwill | 677,204 |
Deferred revenue - current portion | 2,044,500 |
Restatement Adjustment [Member] | |
Deferred franchise costs - current portion | 622,800 |
Goodwill | 636,104 |
Deferred revenue - current portion | 1,957,500 |
Deferred franchise costs - current portion | 622,800 |
Goodwill | 636,104 |
Deferred revenue - current portion | $ 1,957,500 |
Note 2 - Supplemental Pro Forma
Note 2 - Supplemental Pro Forma Information (Details) - The Joint RRC Corp [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues, net | $ 15,083,156 | $ 10,566,763 |
Net loss | $ (9,927,271) | $ (4,518,553) |
Note 3 - Notes Receivable (Deta
Note 3 - Notes Receivable (Details Textual) - USD ($) | 1 Months Ended | |||
Jul. 31, 2015 | Jul. 31, 2012 | Dec. 31, 2015 | Dec. 31, 2014 | |
Non-interest Bearing Unsecured Promissory Note 1 [Member] | ||||
Notes Receivable, Contractual Term | 2 years | |||
Financing Receivable, Net | $ 10,000 | |||
Non-interest Bearing Unsecured Promissory Note 2 [Member] | ||||
Notes Receivable, Contractual Term | 2 years | |||
Financing Receivable, Net | $ 29,925 | |||
Interest Bearing Unsecured Promissory Note [Member] | ||||
Notes Receivable, Contractual Term | 1 year | |||
Financing Receivable, Net | $ 29,925 | |||
Notes Receivable, Interest Rate | 4.00% | |||
Company-owned Clinic [Member] | ||||
Notes Receivable, Contractual Term | 4 years 180 days | |||
Financing Receivable, Net | $ 90,000 | $ 76,731 | $ 59,269 | |
Notes Receivable, Interest Rate | 6.00% | |||
Notes Receivable, Principal and Interest, Term | 3 years 180 days | |||
Number of License Transfer Agreements | 2 |
Note 4 - Property and Equipme40
Note 4 - Property and Equipment (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Depreciation | $ 792,794 | $ 210,123 |
Note 4 - Property and Equipme41
Note 4 - Property and Equipment (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Office Equipment [Member] | ||
Property and Equipment, Gross | $ 963,299 | $ 209,575 |
Leasehold Improvements [Member] | ||
Property and Equipment, Gross | 4,672,582 | 665,961 |
Software Development [Member] | ||
Property and Equipment, Gross | 691,827 | 564,560 |
Property Plant and Equipment, Excluding Construction in Progress [Member] | ||
Property and Equipment, Net | 5,229,270 | 1,134,452 |
Property and Equipment, Gross | 6,327,708 | 1,440,096 |
Accumulated depreciation | (1,098,438) | (305,644) |
Property and Equipment, Net | 7,138,746 | $ 1,134,452 |
Construction in progress | $ 1,909,476 |
Note 5 - Fair Value Considera42
Note 5 - Fair Value Consideration (Details Textual) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Instruments, Owned, at Fair Value | $ 0 | $ 0 |
Note 6 - Intangible Assets (Det
Note 6 - Intangible Assets (Details Textual) - Regional Developer Rights in Los Angeles County, San Diego, and New Jersey [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Franchises [Member] | ||
Deferred Revenue | $ 914,000 | |
Excess Deferred Regional Fees Revenue Recognized | 254,250 | |
Amortization of Intangible Assets | 476,161 | $ 0 |
Finite-lived Intangible Assets Acquired | $ 1,583,000 | |
Cash Advance to Acquire Intangible Assets | $ 507,500 |
Note 6 - Intangible Assets Acqu
Note 6 - Intangible Assets Acquired (Details) | Dec. 31, 2015USD ($) |
Franchise Rights [Member] | |
Gross Carrying Amount | $ 1,539,667 |
Accumulated Amortization | 174,313 |
Net Carrying Value | 1,365,354 |
Customer Relationships [Member] | |
Gross Carrying Amount | 555,513 |
Accumulated Amortization | 190,500 |
Net Carrying Value | 365,013 |
Development Rights [Member] | |
Gross Carrying Amount | 923,250 |
Accumulated Amortization | 111,348 |
Net Carrying Value | 811,902 |
Gross Carrying Amount | 3,018,430 |
Accumulated Amortization | 476,161 |
Net Carrying Value | 2,542,269 |
Goodwill | 2,466,937 |
Total Intangible assets | $ 5,009,206 |
Note 6 - Estimated Amortization
Note 6 - Estimated Amortization Expense (Details) | Dec. 31, 2015USD ($) |
2,016 | $ 660,596 |
2,017 | 470,096 |
2,018 | 351,006 |
2,019 | 351,006 |
2,020 | 351,006 |
Thereafter | 358,559 |
Total | $ 2,542,269 |
Note 7 - Notes Payable (Details
Note 7 - Notes Payable (Details Textual) | 11 Months Ended | 12 Months Ended | |
Dec. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Notes Payable Delivered as a Portion of the Consideration Paid in Connection With Acquisitions [Member] | Minimum [Member] | |||
Debt Instrument, Interest Rate, Stated Percentage | 1.50% | 1.50% | |
Notes Payable Delivered as a Portion of the Consideration Paid in Connection With Acquisitions [Member] | Maximum [Member] | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | 5.25% | |
Notes Payable Delivered as a Portion of the Consideration Paid in Connection With Acquisitions [Member] | |||
Debt Instrument, Face Amount | $ 800,350 | $ 800,350 | |
Repayments of Notes Payable | 218,500 | ||
Number of Notes Payable Delivered as a Portion of the Consideration Paid in Connection With Acquisitions | 12 | ||
Repayments of Notes Payable | $ 218,500 |
Note 7 - Maturities of Notes Pa
Note 7 - Maturities of Notes Payable (Details) | Dec. 31, 2015USD ($) |
2,016 | $ 451,850 |
2,017 | 130,000 |
Total | $ 581,850 |
Note 8 - Equity (Details Textua
Note 8 - Equity (Details Textual) | Dec. 30, 2015USD ($)$ / sharesshares | Nov. 25, 2015$ / sharesshares | Dec. 16, 2014USD ($)$ / sharesshares | Nov. 14, 2014USD ($)$ / sharesshares | Sep. 16, 2014shares | Jan. 02, 2014USD ($)$ / sharesshares | Nov. 26, 2012shares | Dec. 30, 2015$ / sharesshares | Nov. 30, 2012 | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Sep. 17, 2014shares | May. 15, 2014shares | Dec. 24, 2013shares | Jan. 09, 2013shares |
IPO [Member] | |||||||||||||||
Stock Issued During Period, Shares, New Issues | 3,000,000 | ||||||||||||||
Share Price | $ / shares | $ 6.50 | ||||||||||||||
Proceeds from Issuance Initial Public Offering | $ | $ 17,065,000 | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 450,000 | ||||||||||||||
Proceeds from Stock Options Exercised | $ | $ 2,710,000 | ||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 90,000 | ||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 8.125 | ||||||||||||||
Secondary Offering [Member] | |||||||||||||||
Stock Issued During Period, Shares, New Issues | 2,272,727 | ||||||||||||||
Share Price | $ / shares | $ 5.50 | ||||||||||||||
Over-Allotment Option [Member] | |||||||||||||||
Share Price | $ / shares | $ 5.50 | $ 5.50 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 340,909 | ||||||||||||||
The 2012 Plan [Member] | |||||||||||||||
Share-based Compensation Arrangement, Award Plan Term | 10 years | ||||||||||||||
The 2014 Plan [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,513,000 | ||||||||||||||
Minimum [Member] | |||||||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Exercise Price | $ / shares | $ 5.99 | $ 1.20 | |||||||||||||
Maximum [Member] | |||||||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Exercise Price | $ / shares | $ 9.62 | $ 6.50 | |||||||||||||
Employee Stock Option [Member] | |||||||||||||||
Allocated Share-based Compensation Expense | $ | $ 328,772 | $ 32,105 | |||||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 175 days | ||||||||||||||
Restricted Stock [Member] | Tranche 1 [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | ||||||||||||||
Restricted Stock [Member] | Tranche 2 [Member] | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||||||||||||
Restricted Stock [Member] | |||||||||||||||
Share Price | $ / shares | $ 6.20 | $ 1.20 | $ 9.62 | ||||||||||||
Allocated Share-based Compensation Expense | $ | $ 496,373 | $ 69,725 | |||||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 186 days | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 95,000 | 567,375 | 8,000 | 662,375 | |||||||||||
Number of Tranches of Restricted Stock | 2 | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years | 4 years | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | $ | $ 589,000 | $ 679,000 | $ 76,960 | ||||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ | $ 790,706 | ||||||||||||||
Prior to Increase [Member] | |||||||||||||||
Common Stock, Shares Authorized | 150,000 | ||||||||||||||
Posterior to Increase [Member] | |||||||||||||||
Common Stock, Shares Authorized | 4,000,000 | ||||||||||||||
Stock Issued During Period, Shares, New Issues | 2,613,636 | ||||||||||||||
Proceeds from Issuance Initial Public Offering | $ | $ 22,425,000 | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 445 | ||||||||||||||
Proceeds from Stock Options Exercised | $ | $ 534 | ||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 8.125 | ||||||||||||||
Stock Issued During Period, Value, Stock Options Exercised | $ | $ 13,000,000 | $ 534 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 240,160 | 321,895 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ | $ 1,171,360 | ||||||||||||||
Allocated Share-based Compensation Expense | $ | $ 113,929 | ||||||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ | $ 854,051 | ||||||||||||||
Class of Warrant Or Right, Issued During Period | 90,000 | ||||||||||||||
Class of Warrants or Rights, Outstanding, Remaining Contractual Life | 2 years 328 days | ||||||||||||||
Preferred Stock, Shares Authorized | 50,000 | 50,000 | |||||||||||||
Convertible Preferred Stock, Shares Issued upon Conversion | 53.4 | ||||||||||||||
Convertible Preferred Stock Converted to Other Securities | $ | $ 25,000 | ||||||||||||||
Conversion of Stock, Shares Issued | 1,335,000 | ||||||||||||||
Common Stock Dividends, Shares | 0.78 | 29 | |||||||||||||
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 | 20,000,000 | 4,250,000 |
Note 8 - Fair Value Assumptions
Note 8 - Fair Value Assumptions of Options Granted (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Minimum [Member] | ||
Expected volatility | 44.00% | 43.00% |
Expected term (years) | 5 years 182 days | 5 years 182 days |
Risk-free rate | 1.54% | 0.07% |
Maximum [Member] | ||
Expected volatility | 50.00% | 46.00% |
Expected term (years) | 7 years | 7 years 182 days |
Risk-free rate | 2.01% | 2.05% |
Forfeiture rate | 20.00% |
Note 8 - Stock Options Activity
Note 8 - Stock Options Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Outstanding, Number of Shares (in shares) | 314,775 | |
Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 2.23 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 240,160 | 321,895 |
Granted at Market Price, Weighted Average Exercise Price (in dollars per share) | $ 8.16 | $ 2.04 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 445 | |
Exercised, Weighted Average Exercise Price (in dollars per share) | $ 1.20 | |
Cancelled, Number of Shares (in shares) | (77,031) | (7,120) |
Cancelled, Weighted Average Exercise Price (in dollars per share) | $ 7.88 | $ 1.20 |
Outstanding, Number of Shares (in shares) | 477,459 | 314,775 |
Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 4.30 | $ 2.23 |
Outstanding, Weighted Average Fair Value (in dollars per share) | $ 2.01 | $ 0.92 |
Exercised, Number of Shares (in shares) | (445) | |
Outstanding, Weighted Average Remaining Contractual Life | 8 years 255 days | |
Exercisable, Number of Shares (in shares) | 178,856 | |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 3.08 | |
Exercisable, Weighted Average Fair Value (in dollars per share) | $ 1.36 | |
Exercisable, Weighted Average Remaining Contractual Life | 8 years 73 days |
Note 8 - Restricted Stock Activ
Note 8 - Restricted Stock Activity (Details) - Restricted Stock [Member] - shares | Jan. 02, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
Outstanding at December 31, 2013 (in shares) | 662,375 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 567,375 | 8,000 | 662,375 |
Awards forfeited or exercised (in shares) | |||
Outstanding at December 31, 2014 (in shares) | 670,375 | 662,375 |
Note 8 - Fair Value of Warrants
Note 8 - Fair Value of Warrants Granted (Details) - Warrant [Member] | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Volatility | 33.00% | |
Risk-free interest rate | 0.78% | |
Contractual term (years) | 4 years |
Note 8 - Warrants (Details)
Note 8 - Warrants (Details) - Goods and Services Exchanged for Equity Instrument [Member] - Warrant [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Outstanding, Number of Units (in shares) | 90,000 | |
Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 8.13 | |
Outstanding, Weighted Average Remaining Contractual Term | 2 years 328 days | 3 years 328 days |
Granted, Number of Units (in shares) | ||
Granted, Weighted Average Exercise Price (in dollars per share) | ||
Outstanding, Number of Units (in shares) | 90,000 | 90,000 |
Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 8.13 | $ 8.13 |
Exercisable, Number of Units (in shares) | 90,000 | |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 8.13 | |
Exercisable, Weighted Average Remaining Contractual Term | 2.9 |
Note 9 - Income Taxes (Details
Note 9 - Income Taxes (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earliest Tax Year [Member] | Domestic Tax Authority [Member] | ||
Open Tax Year | 2,011 | |
Earliest Tax Year [Member] | State and Local Jurisdiction [Member] | ||
Open Tax Year | 2,011 | |
Latest Tax Year [Member] | Domestic Tax Authority [Member] | ||
Open Tax Year | 2,012 | |
Latest Tax Year [Member] | State and Local Jurisdiction [Member] | ||
Open Tax Year | 2,012 | |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards | $ 4,533,000 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards | 6,016,000 | |
Other Liabilities [Member] | ||
Liability for Uncertain Tax Positions, Noncurrent | 65,600 | $ 121,700 |
General and Administrative Expense [Member] | ||
Income Tax Examination, Penalties and Interest Expense | $ 33,000 | $ 30,000 |
Effective Income Tax Rate Reconciliation, Percent | 2.60% | 79.30% |
Note 9 - Income Tax Provision (
Note 9 - Income Tax Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Federal | $ (208,900) | $ (388,900) |
State, net of state tax credits | (67,800) | (28,800) |
Total current benefit | (276,700) | (417,700) |
Federal | $ 40,800 | 1,403,100 |
State | 355,000 | |
Deferred income taxes | $ 40,800 | 1,758,100 |
Total income tax (benefit) provision | $ (235,855) | $ 1,340,436 |
Note 9 - Net Deferred Taxes (De
Note 9 - Net Deferred Taxes (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred revenue | $ 1,988,200 | $ 2,999,300 |
Deferred franchise costs | (664,000) | (932,900) |
Allowance for doubtful accounts | 1,781,000 | 30,800 |
Accrued expenses | 74,900 | $ 197,300 |
Goodwill | 87,000 | |
Restricted stock compensation | (44,100) | $ (231,300) |
Nonqualified stock options | 109,600 | |
Deferred rent | 209,700 | $ 207,000 |
Net operating loss carryforwards | 1,849,100 | $ 38,200 |
Tax Credits | 14,200 | |
Charitable contribution carryover | 1,300 | $ 400 |
Asset basis difference related to property and equipment | 167,500 | (45,400) |
Gross non-current deferred tax asset | 5,574,400 | 2,263,400 |
Less valuation allowance | $ (5,574,400) | (2,054,600) |
Net non-current deferred tax asset | $ 208,800 |
Note 9 - Reconciliation of the
Note 9 - Reconciliation of the Statutory Federal Income Tax Rate (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Expected federal tax benefit | $ (3,071,300) | $ (574,900) |
Expected federal tax benefit | 34.00% | 34.00% |
State tax provision, net of federal benefit | $ (387,500) | $ (72,500) |
State tax provision, net of federal benefit | 4.29% | 4.29% |
Effect of increase in valuation allowance | $ 3,519,800 | $ 2,054,600 |
Effect of increase in valuation allowance | 38.97% | 121.52% |
Permanent differences | $ (58,800) | $ 23,900 |
Permanent differences | 0.65% | 1.41% |
Non-deductible expenses | $ (46,500) | $ (20,900) |
Non-deductible expenses | 0.51% | 1.24% |
Effect of reduced state rates for deferred | $ (80,100) | $ 33,000 |
Effect of reduced state rates for deferred | 0.89% | 1.95% |
Other, net | $ (111,500) | $ (102,800) |
Other, net | 1.23% | 6.08% |
Total income tax (benefit) provision | $ (235,855) | $ 1,340,436 |
Total income tax (benefit) provision | 2.61% | 79.28% |
Note 9 - Uncertain Tax Benefits
Note 9 - Uncertain Tax Benefits (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Unrecognized tax benefit - January 1 | $ 91,700 |
Unrecognized tax benefit - January 1 | $ 114,500 |
Gross increases - tax positions in prior period | |
Gross decreases - tax positions in prior period | $ (59,100) |
Uncertain tax benefit | 32,600 |
Uncertain tax benefit | $ 91,700 |
Note 10 - Related Party Trans59
Note 10 - Related Party Transactions (Details Textual) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Shareholder [Member] | ||
Related Party Transaction, Amounts of Transaction | $ 643,000 | $ 923,000 |
Note 11 - Commitments and Con60
Note 11 - Commitments and Contingencies (Details Textual) | Feb. 03, 2014USD ($) | Feb. 02, 2014USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Minimum [Member] | ||||
Operating Lease, Monthly Rent Expense | $ 1,432 | |||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 1 year 180 days | |||
Maximum [Member] | ||||
Operating Lease, Monthly Rent Expense | $ 13,213 | |||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 10 years 120 days | |||
Number of Monthly Payments | 66 | |||
Operating Lease, Monthly Rent Expense | $ 22,000 | $ 10,500 | ||
Additional Leases Assumed | 47 | |||
Operating Leases, Rent Expense | $ 1,574,803 | $ 134,801 |
Note 11 - Summary of Future Min
Note 11 - Summary of Future Minimum Rental Payments for Operating Leases (Details) | Dec. 31, 2015USD ($) |
2,016 | $ 2,731,356 |
2,017 | 2,807,921 |
2,018 | 2,290,057 |
2,019 | 1,998,139 |
2,020 | 1,763,150 |
Thereafter | 8,373,011 |
Total | $ 19,963,634 |
Note 12 - Subsequent Event (Det
Note 12 - Subsequent Event (Details Textual) | Jan. 01, 2016USD ($) |
Repurchase Right to Develop Franchises, Consideration | $ 275,000 |