Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 01, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-36724 | |
Entity Registrant Name | Joint Corp | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 90-0544160 | |
Entity Address, Address Line One | 16767 N. Perimeter Drive | |
Entity Address, Address Line Two | Suite 110 | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85260 | |
City Area Code | 480 | |
Local Phone Number | 245-5960 | |
Title of 12(b) Security | Common Stock, $0.001 Par Value Per Share | |
Trading Symbol | JYNT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,529,679 | |
Entity Central Index Key | 0001612630 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 10,272,112 | $ 19,526,119 |
Restricted cash | 696,030 | 386,219 |
Accounts receivable, net | 3,945,046 | 3,700,810 |
Deferred franchise and regional development costs, current portion | 1,032,930 | 994,587 |
Prepaid expenses and other current assets | 2,732,467 | 2,281,765 |
Assets held for sale | 243,387 | 0 |
Total current assets | 18,921,972 | 26,889,500 |
Property and equipment, net | 16,210,051 | 14,388,946 |
Operating lease right-of-use asset | 19,046,081 | 18,425,914 |
Deferred franchise and regional development costs, net of current portion | 5,621,297 | 5,505,420 |
Intangible assets, net | 10,162,506 | 5,403,390 |
Goodwill | 8,493,407 | 5,085,203 |
Deferred tax assets | 9,115,231 | 9,188,634 |
Deposits and other assets | 720,853 | 567,202 |
Total assets | 88,291,398 | 85,454,209 |
Current liabilities: | ||
Accounts payable | 1,982,237 | 1,705,568 |
Accrued expenses | 1,555,992 | 1,809,460 |
Co-op funds liability | 696,030 | 386,219 |
Payroll liabilities | 2,788,058 | 3,906,317 |
Operating lease liability, current portion | 4,969,470 | 4,613,843 |
Finance lease liability, current portion | 24,175 | 49,855 |
Deferred franchise and regional developer fee revenue, current portion | 2,974,993 | 3,191,892 |
Deferred revenue from company clinics ($3.7 million and $3.5 million attributable to VIE) | 5,900,964 | 5,235,745 |
Other current liabilities | 522,500 | 539,500 |
Liabilities to be disposed of | 223,287 | 0 |
Total current liabilities | 21,637,706 | 21,438,399 |
Operating lease liability, net of current portion | 17,427,096 | 16,872,093 |
Finance lease liability, net of current portion | 69,713 | 87,939 |
Debt under the Credit Agreement | 2,000,000 | 2,000,000 |
Deferred franchise and regional developer fee revenue, net of current portion | 15,604,180 | 15,458,921 |
Other liabilities | 27,230 | 27,230 |
Total liabilities | 56,765,925 | 55,884,582 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity: | ||
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of September 30, 2022 and December 31, 2021 | 0 | 0 |
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,561,545 shares issued and 14,529,679 shares outstanding as of September 30, 2022 and 14,451,355 shares issued and 14,419,712 outstanding as of December 31, 2021 | 14,561 | 14,450 |
Additional paid-in capital | 45,231,637 | 43,900,157 |
Treasury stock 31,866 shares as of September 30, 2022 and 31,643 shares as of December 31, 2021, at cost | (856,642) | (850,838) |
Accumulated deficit | (12,889,083) | (13,519,142) |
Total The Joint Corp. stockholders' equity | 31,500,473 | 29,544,627 |
Non-controlling Interest | 25,000 | 25,000 |
Total equity | 31,525,473 | 29,569,627 |
Total liabilities and stockholders' equity | $ 88,291,398 | $ 85,454,209 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) (unaudited) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Payroll liabilities | $ 2,788,058 | $ 3,906,317 |
Deferred revenue from company clinics attributable to VIE | $ 2,974,993 | $ 3,191,892 |
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) | 14,561,545 | 14,451,355 |
Common stock, shares outstanding (in shares) | 14,529,679 | 14,419,712 |
Treasury stock, shares (in shares) | 31,866 | 31,643 |
Variable Interest Entity, Primary Beneficiary | ||
Payroll liabilities | $ 800,000 | $ 400,000 |
Deferred revenue from company clinics attributable to VIE | $ 3,700,000 | $ 3,500,000 |
Condensed Consolidated Income S
Condensed Consolidated Income Statements (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenues: | ||||
Total revenues | $ 26,603,000 | $ 20,991,621 | $ 74,098,856 | $ 58,758,383 |
Cost of revenues: | ||||
Total cost of revenues | 2,490,276 | 2,300,122 | 7,230,092 | 6,103,976 |
Selling and marketing expenses | 3,539,287 | 2,881,575 | 10,666,500 | 8,503,617 |
Depreciation and amortization | 2,011,768 | 1,662,255 | 5,341,420 | 4,275,140 |
General and administrative expenses | 17,796,806 | 12,812,331 | 49,703,451 | 34,513,378 |
Total selling, general and administrative expenses | 23,347,861 | 17,356,161 | 65,711,371 | 47,292,135 |
Net loss (gain) on disposition or impairment | 264,391 | (3,540) | 360,140 | 16,967 |
Income from operations | 500,472 | 1,338,878 | 797,253 | 5,345,305 |
Other expense, net | (25,235) | (16,139) | (60,668) | (54,050) |
Income before income tax (benefit) expense | 475,237 | 1,322,739 | 736,585 | 5,291,255 |
Income tax (benefit) expense | (15,876) | (614,356) | 106,527 | (1,644,496) |
Net income | $ 491,113 | $ 1,937,095 | $ 630,058 | $ 6,935,751 |
Earnings per share: | ||||
Basic earnings per share (in dollars per share) | $ 0.03 | $ 0.13 | $ 0.04 | $ 0.49 |
Diluted earnings per share (in dollars per share) | $ 0.03 | $ 0.13 | $ 0.04 | $ 0.46 |
Basic weighted average shares (in shares) | 14,512,856 | 14,388,905 | 14,474,323 | 14,286,818 |
Diluted weighted average shares (in shares) | 14,829,629 | 14,970,328 | 14,878,050 | 14,931,759 |
Revenues from company-owned or managed clinics | ||||
Revenues: | ||||
Total revenues | $ 15,836,327 | $ 11,634,009 | $ 42,936,298 | $ 32,537,942 |
Royalty fees | ||||
Revenues: | ||||
Total revenues | 6,604,653 | 5,714,637 | 19,024,799 | 15,816,500 |
Franchise fees/Franchise and regional development cost of revenues | ||||
Revenues: | ||||
Total revenues | 642,405 | 648,598 | 1,970,256 | 1,967,680 |
Cost of revenues: | ||||
Cost of revenues | 2,141,945 | 1,907,874 | 6,219,646 | 5,319,278 |
Advertising fund revenue | ||||
Revenues: | ||||
Total revenues | 1,881,367 | 1,627,693 | 5,417,840 | 4,521,342 |
Software fees/IT cost of revenues | ||||
Revenues: | ||||
Total revenues | 1,109,753 | 840,969 | 3,166,732 | 2,387,543 |
Cost of revenues: | ||||
Cost of revenues | 348,331 | 392,248 | 1,010,446 | 784,698 |
Regional developer fees | ||||
Revenues: | ||||
Total revenues | 153,181 | 209,651 | 524,923 | 642,041 |
Other revenues | ||||
Revenues: | ||||
Total revenues | $ 375,314 | $ 316,064 | $ 1,058,008 | $ 885,335 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) - USD ($) | Total | Common Stock | Additional Paid In Capital | Treasury Stock | Accumulated Deficit | Total The Joint Corp. stockholders' equity | Non-controlling interest |
Balance, beginning common stock (in shares) at Dec. 31, 2020 | 14,174,237 | ||||||
Balance, beginning at Dec. 31, 2020 | $ 21,126,252 | $ 14,174 | $ 41,350,001 | $ (143,111) | $ (20,094,912) | $ 21,126,152 | $ 100 |
Balance, beginning treasury stock (in shares) at Dec. 31, 2020 | 17,167 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 246,494 | 246,494 | 246,494 | ||||
Issuance of restricted stock (in shares) | 7,879 | ||||||
Issuance of restricted stock | 0 | $ 8 | (8) | ||||
Exercise of stock options (in shares) | 105,995 | ||||||
Exercise of stock options | 620,776 | $ 106 | 620,670 | 620,776 | |||
Purchases of treasury stock under employee stock plans (in shares) | 13,619 | ||||||
Purchases of treasury stock under employee stock plans | (618,154) | $ (618,154) | (618,154) | ||||
Net (loss) income | 2,314,287 | 2,314,287 | 2,314,287 | ||||
Balance, ending common stock (in shares) at Mar. 31, 2021 | 14,288,111 | ||||||
Balance, ending at Mar. 31, 2021 | 23,689,655 | $ 14,288 | 42,217,157 | $ (761,265) | (17,780,625) | 23,689,555 | 100 |
Balance, ending treasury stock (in shares) at Mar. 31, 2021 | 30,786 | ||||||
Balance, beginning common stock (in shares) at Dec. 31, 2020 | 14,174,237 | ||||||
Balance, beginning at Dec. 31, 2020 | 21,126,252 | $ 14,174 | 41,350,001 | $ (143,111) | (20,094,912) | 21,126,152 | 100 |
Balance, beginning treasury stock (in shares) at Dec. 31, 2020 | 17,167 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | 6,935,751 | ||||||
Balance, ending common stock (in shares) at Sep. 30, 2021 | 14,444,982 | ||||||
Balance, ending at Sep. 30, 2021 | 29,661,410 | $ 14,444 | 43,632,373 | $ (850,839) | (13,159,568) | 29,636,410 | 25,000 |
Balance, ending treasury stock (in shares) at Sep. 30, 2021 | 31,643 | ||||||
Balance, beginning common stock (in shares) at Mar. 31, 2021 | 14,288,111 | ||||||
Balance, beginning at Mar. 31, 2021 | 23,689,655 | $ 14,288 | 42,217,157 | $ (761,265) | (17,780,625) | 23,689,555 | 100 |
Balance, beginning treasury stock (in shares) at Mar. 31, 2021 | 30,786 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 283,564 | 283,564 | 283,564 | ||||
Issuance of restricted stock (in shares) | 4,218 | ||||||
Issuance of restricted stock | 0 | $ 4 | (4) | ||||
Exercise of stock options (in shares) | 113,819 | ||||||
Exercise of stock options | 641,787 | $ 113 | 641,674 | 641,787 | |||
Net (loss) income | 2,683,962 | 2,683,962 | 2,683,962 | ||||
Balance, ending common stock (in shares) at Jun. 30, 2021 | 14,406,148 | ||||||
Balance, ending at Jun. 30, 2021 | 27,298,968 | $ 14,405 | 43,142,391 | $ (761,265) | (15,096,663) | 27,298,868 | 100 |
Balance, ending treasury stock (in shares) at Jun. 30, 2021 | 30,786 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 296,850 | 296,850 | 296,850 | ||||
Issuance of restricted stock (in shares) | 4,280 | ||||||
Issuance of restricted stock | 0 | $ 4 | (4) | ||||
Exercise of stock options (in shares) | 34,554 | ||||||
Exercise of stock options | 218,071 | $ 35 | 218,036 | 218,071 | |||
Purchases of treasury stock under employee stock plans (in shares) | 857 | ||||||
Purchases of treasury stock under employee stock plans | (89,574) | $ (89,574) | (89,574) | ||||
Change in redemption value of non-controlling interest | 0 | (24,900) | (24,900) | 24,900 | |||
Net (loss) income | 1,937,095 | 1,937,095 | 1,937,095 | ||||
Balance, ending common stock (in shares) at Sep. 30, 2021 | 14,444,982 | ||||||
Balance, ending at Sep. 30, 2021 | $ 29,661,410 | $ 14,444 | 43,632,373 | $ (850,839) | (13,159,568) | 29,636,410 | 25,000 |
Balance, ending treasury stock (in shares) at Sep. 30, 2021 | 31,643 | ||||||
Balance, beginning common stock (in shares) at Dec. 31, 2021 | 14,419,712 | 14,451,355 | |||||
Balance, beginning at Dec. 31, 2021 | $ 29,569,627 | $ 14,450 | 43,900,157 | $ (850,838) | (13,519,141) | 29,544,628 | 25,000 |
Balance, beginning treasury stock (in shares) at Dec. 31, 2021 | 31,643 | 31,643 | |||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | $ 323,556 | 323,556 | 323,556 | ||||
Issuance of restricted stock (in shares) | 36,722 | ||||||
Issuance of restricted stock | 0 | $ 37 | (37) | ||||
Exercise of stock options (in shares) | 4,972 | ||||||
Exercise of stock options | 49,623 | $ 5 | 49,618 | 49,623 | |||
Purchases of treasury stock under employee stock plans (in shares) | 74 | ||||||
Purchases of treasury stock under employee stock plans | (2,598) | $ (2,598) | (2,598) | ||||
Net (loss) income | (205,797) | (205,797) | (205,797) | ||||
Balance, ending common stock (in shares) at Mar. 31, 2022 | 14,493,049 | ||||||
Balance, ending at Mar. 31, 2022 | $ 29,734,412 | $ 14,492 | 44,273,294 | $ (853,436) | (13,724,938) | 29,709,412 | 25,000 |
Balance, ending treasury stock (in shares) at Mar. 31, 2022 | 31,717 | ||||||
Balance, beginning common stock (in shares) at Dec. 31, 2021 | 14,419,712 | 14,451,355 | |||||
Balance, beginning at Dec. 31, 2021 | $ 29,569,627 | $ 14,450 | 43,900,157 | $ (850,838) | (13,519,141) | 29,544,628 | 25,000 |
Balance, beginning treasury stock (in shares) at Dec. 31, 2021 | 31,643 | 31,643 | |||||
Stockholders' Equity [Roll Forward] | |||||||
Net (loss) income | $ 630,058 | ||||||
Balance, ending common stock (in shares) at Sep. 30, 2022 | 14,529,679 | 14,561,545 | |||||
Balance, ending at Sep. 30, 2022 | $ 31,525,473 | $ 14,561 | 45,231,637 | $ (856,642) | (12,889,083) | 31,500,473 | 25,000 |
Balance, ending treasury stock (in shares) at Sep. 30, 2022 | 31,866 | 31,866 | |||||
Balance, beginning common stock (in shares) at Mar. 31, 2022 | 14,493,049 | ||||||
Balance, beginning at Mar. 31, 2022 | $ 29,734,412 | $ 14,492 | 44,273,294 | $ (853,436) | (13,724,938) | 29,709,412 | 25,000 |
Balance, beginning treasury stock (in shares) at Mar. 31, 2022 | 31,717 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 340,191 | 340,191 | 340,191 | ||||
Issuance of restricted stock (in shares) | 28,758 | ||||||
Issuance of restricted stock | 0 | $ 29 | (29) | ||||
Exercise of stock options (in shares) | 4,610 | ||||||
Exercise of stock options | 64,050 | $ 5 | 64,045 | 64,050 | |||
Net (loss) income | 344,742 | 344,742 | 344,742 | ||||
Balance, ending common stock (in shares) at Jun. 30, 2022 | 14,526,417 | ||||||
Balance, ending at Jun. 30, 2022 | 30,483,395 | $ 14,526 | 44,677,501 | $ (853,436) | (13,380,196) | 30,458,395 | 25,000 |
Balance, ending treasury stock (in shares) at Jun. 30, 2022 | 31,717 | ||||||
Stockholders' Equity [Roll Forward] | |||||||
Stock-based compensation expense | 305,815 | 305,815 | 305,815 | ||||
Issuance of restricted stock (in shares) | 2,845 | ||||||
Issuance of restricted stock | 0 | $ 3 | (3) | ||||
Exercise of stock options (in shares) | 32,283 | ||||||
Exercise of stock options | 248,356 | $ 32 | 248,324 | 248,356 | |||
Purchases of treasury stock under employee stock plans (in shares) | 149 | ||||||
Purchases of treasury stock under employee stock plans | (3,206) | $ (3,206) | (3,206) | ||||
Net (loss) income | $ 491,113 | 491,113 | 491,113 | ||||
Balance, ending common stock (in shares) at Sep. 30, 2022 | 14,529,679 | 14,561,545 | |||||
Balance, ending at Sep. 30, 2022 | $ 31,525,473 | $ 14,561 | $ 45,231,637 | $ (856,642) | $ (12,889,083) | $ 31,500,473 | $ 25,000 |
Balance, ending treasury stock (in shares) at Sep. 30, 2022 | 31,866 | 31,866 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income | $ 630,058 | $ 6,935,751 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,341,420 | 4,275,140 |
Net loss on disposition or impairment | 360,140 | 109,871 |
Net franchise fees recognized upon termination of franchise agreements | (15,218) | (98,196) |
Deferred income taxes | 73,403 | (1,909,241) |
Stock based compensation expense | 969,562 | 826,908 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (244,236) | (1,069,864) |
Prepaid expenses and other current assets | (450,702) | 13,079 |
Deferred franchise costs | (186,618) | (1,245,049) |
Deposits and other assets | (153,651) | (95,176) |
Accounts payable | 50,702 | (49,415) |
Accrued expenses | (571,447) | 164,866 |
Payroll liabilities | (1,118,259) | 1,329,785 |
Deferred revenue | 636,470 | 2,410,202 |
Other liabilities | 360,791 | 852,926 |
Net cash provided by operating activities | 5,682,415 | 12,451,587 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (4,322,673) | (5,382,857) |
Reacquisition and termination of regional developer rights | (2,650,000) | (1,388,700) |
Net cash used in investing activities | (14,938,929) | (11,264,585) |
Cash flows from financing activities: | ||
Payments of finance lease obligation | (43,907) | (59,285) |
Purchases of treasury stock under employee stock plans | (5,804) | (707,728) |
Proceeds from exercise of stock options | 362,029 | 1,480,634 |
Repayment of debt under the Paycheck Protection Program | 0 | (2,727,970) |
Net cash provided by (used in) financing activities | 312,318 | (2,014,349) |
Decrease in cash, cash equivalents and restricted cash | (8,944,196) | (827,347) |
Cash, cash equivalents and restricted cash, beginning of period | 19,912,338 | 20,819,629 |
Cash, cash equivalents and restricted cash, end of period | 10,968,142 | 19,992,282 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | 10,272,112 | 19,542,685 |
Restricted cash | 696,030 | 449,597 |
Cash and cash equivalents and restricted cash | 10,968,142 | 19,992,282 |
AZ Clinics | ||
Cash flows from investing activities: | ||
Acquisition of clinics | (6,861,256) | (1,925,000) |
NC Clinics | ||
Cash flows from investing activities: | ||
Acquisition of clinics | $ (1,105,000) | $ (2,568,028) |
Supplemental Disclosure of Non-
Supplemental Disclosure of Non-cash Activity | 9 Months Ended |
Sep. 30, 2022 | |
Supplemental Cash Flow Information [Abstract] | |
Supplemental Disclosure of Non-cash Activity | During the nine months ended September 30, 2022 and 2021, cash paid for income taxes was $69,274 and $592,695, respectively. During the nine months ended September 30, 2022 and 2021, cash paid for interest was $43,938 and $58,533, respectively. Supplemental disclosure of non-cash activity: As of September 30, 2022, accounts payable included property and equipment purchases of $225,967. As of December 31, 2021, accounts payable and accrued expenses included property and equipment purchases of $158,293, and $152,501, respectively. In connection with the acquisition of franchised clinics during the nine months ended September 30, 2022, the Company acquired $383,906 of property and equipment and intangible assets of $4,988,707 in exchange for $8,284,235 (of which $317,979 is included in accounts payable as of September 30, 2022) to the sellers. Additionally, at the time of this transaction, the Company carried net deferred revenue of $115,372, representing net franchise fees collected upon the execution of the franchise agreements. The Company netted this amount against the purchase price of the acquisitions. In connection with the acquisition of franchised clinics during the nine months ended September 30, 2021, the Company acquired $528,974 of property and equipment and intangible assets of $3,766,972 in exchange for $4,493,028 in cash to the sellers. Additionally, at the time of these transactions, the Company carried net deferred revenue of $87,858, representing net franchise fees collected upon the execution of the franchise agreements. The Company netted this amount against the purchase price of the acquisitions. In connection with the Company’s reacquisition and termination of regional developer rights during the nine months ended September 30, 2022, the Company had deferred revenue of $452,918, representing fees collected upon the execution of the regional developer agreement. The Company netted this amount against the aggregate purchase price. In connection with the Company’s reacquisition and termination of regional developer rights during the nine months ended September 30, 2021, the Company had deferred revenue of $35,679, representing fees collected upon the execution of the regional developer agreement. The Company netted this amount against the aggregate purchase price. |
Nature of Operations and Summar
Nature of Operations and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Nature of Operations and Summary of Significant Accounting Policies | Nature of Operations and Summary of Significant Accounting Policies Basis of Presentation These unaudited financial statements represent the condensed consolidated financial statements of The Joint Corp. (“The Joint”), its variable interest entities (“VIEs”), and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”). The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with U.S. generally accepted accounting principles (" GAAP"). Such unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with The Joint Corp. and Subsidiary and Affiliates consolidated financial statements and the notes thereto as set forth in The Joint’s Form 10-K for the year ended December 31, 2021, which included all disclosures required by U.S. GAAP. The results of operations for the periods ended September 30, 2022 and 2021 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the periods ended September 30, 2022 and 2021 is unaudited. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other (expenses) income that are reported in the condensed consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates. For a discussion of significant estimates and judgments made in recognizing revenue, accounting for leases, and accounting for income taxes, see Note 1, "Nature of Operations and Summary of Significant Accounting Policies." Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of The Joint and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC, which was dormant for all periods presented. The Company consolidates VIEs in which the Company is the primary beneficiary in accordance with Accounting Standards Codification 810, Consolidations (“ASC 810”). Non-controlling interests represent third-party equity ownership interests in VIEs. All significant inter-affiliate accounts and transactions between The Joint and its VIEs have been eliminated in consolidation. Comprehensive Income Net income and comprehensive income were the same for the three and nine months ended September 30, 2022 and 2021. Correction of Immaterial Error During the third and the fourth quarter of 2021, the Company identified immaterial errors in the following: (i) the calculation of deferred revenue related to wellness packages, (ii) the calculation of software fee revenue, and (iii) the calculation of breakage revenue related to wellness packages. Management assessed the materiality of the errors and determined the impact on the Company’s 2020 consolidated financial statements was not material. The December 31, 2020 balance sheet was revised to correct the errors. The table below sets forth the impact of the revision on the previously issued consolidated balance sheet: December 31, 2020 As Previously (i) (ii) (iii) Reported Adjustments Adjustments Adjustments As Adjusted ASSETS Accounts receivable, net 1,850,499 — 212,722 — 2,063,221 Total current assets 25,133,704 — 212,722 — 25,346,426 Deferred tax assets 8,007,633 22,154 (44,672) (43,679) 7,941,436 Total assets $ 65,732,843 $ 22,154 $ 168,050 $ (43,679) $ 65,879,368 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenue from company clinics 3,905,200 296,348 (524,993) 3,676,555 Total current liabilities 18,685,644 296,348 — (524,993) 18,456,999 Total liabilities 44,981,760 296,348 — (524,993) 44,753,115 Stockholders' equity: Accumulated deficit (20,470,081) (274,194) 168,050 481,314 (20,094,912) Total The Joint Corp. stockholders' equity 20,750,983 (274,194) 168,050 481,314 21,126,152 Total equity 20,751,083 (274,194) 168,050 481,314 21,126,252 Total liabilities and stockholders' equity $ 65,732,843 $ 22,154 $ 168,050 $ (43,679) $ 65,879,368 Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010 for the principal purpose of franchising and developing chiropractic clinics, selling regional developer rights, supporting the operations of franchised chiropractic clinics, and operating and managing corporate 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 and as company-owned or managed clinics for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended Franchised clinics: 2022 2021 2022 2021 Clinics open at beginning of period 662 555 610 515 Opened during the period 33 28 91 76 Acquired during the period 1 — 1 — Sold during the period (4) — (8) (8) Closed during the period (2) — (4) — Clinics in operation at the end of the period 690 583 690 583 Three Months Ended Nine Months Ended Company-owned or managed clinics: 2022 2021 2022 2021 Clinics open at beginning of period 107 78 96 64 Opened during the period 5 5 12 11 Acquired during the period 4 — 8 8 Sold during the period (1) — (1) — Closed during the period — — — — Clinics in operation at the end of the period 115 83 115 83 Total clinics in operation at the end of the period 805 666 805 666 Clinic licenses sold but not yet developed 212 252 212 252 Licenses for future clinics subject to executed letters of intent 40 43 40 43 Variable Interest Entities Certain states prohibit the “corporate practice of chiropractic,” which restricts business corporations from practicing chiropractic care by exercising control over clinical decisions by chiropractic doctors. In states which prohibit the corporate practice of chiropractic, the Company typically enters into long-term management agreements with professional corporations (“PCs”) that are owned by licensed chiropractic doctors, which, in turn, employ or contract with doctors who provide professional chiropractic care in its clinics. Under these management agreements with PCs, the Company provides, on an exclusive basis, all non-clinical services of the chiropractic practice. The Company has entered into such management agreements with three PCs, including one in Kansas, in connection with the opening of company-managed clinics in August 2022. An entity deemed to be the primary beneficiary of a 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. In accordance with relevant accounting guidance, these PCs were determined to be VIEs. Such PCs are VIEs, as fees paid by the PCs to the Company as its management service provider are considered variable interests because the fees do not meet all the following criteria: 1) The fees are compensation for services provided and are commensurate with the level of effort required to provide those services; 2) The decision maker or service provider does not hold other interests in the VIE that individually, or in the aggregate, would absorb more than an insignificant amount of the VIE’s expected losses or receive more than an insignificant amount of the VIE’s expected residual returns; 3) The service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length. Additionally, the Company has determined that it has the ability to direct the activities that most significantly impact the performance of these PCs and have an obligation to absorb losses or receive benefits which could potentially be significant to the PCs. Accordingly, the PCs are variable interest entities for which the Company is the primary beneficiary and are consolidated by the Company. The carrying amount of the VIEs’ assets and liabilities was immaterial as of September 30, 2022 and December 31, 2021, except for their payroll liability balances and amounts collected in advance for membership and wellness packages, which are recorded as deferred revenue. The VIEs’ payroll liability balances as of September 30, 2022 and December 31, 2021 were $0.8 million and $0.4 million, respectively. The VIE's deferred revenue liability balances as of September 30, 2022 and December 31, 2021 were $3.7 million and $3.5 million, respectively. 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 its cash in short-term bank deposits. The Company had no cash equivalents as of September 30, 2022 and December 31, 2021. Restricted Cash Restricted cash relates to cash that franchisees and company-owned or managed clinics contribute to the Company’s National Marketing Fund and cash that 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 Company’s Franchise Disclosure Document with a focus on regional and national marketing and advertising. While such cash balance is not legally segregated and restricted as to withdrawal or usage, the Company's accounting policy is to classify these funds as restricted cash. Accounts Receivable Accounts receivable primarily represent amounts due from franchisees for royalty fees. The Company records an allowance for credit losses as a reduction to its accounts receivables for amounts that the Company does not expect to recover. An allowance for credit losses is determined through assessments of collectability based on historical trends, the financial condition of the Company’s franchisees, including any known or anticipated bankruptcies, and an evaluation of current economic conditions, as well as the Company’s expectations of conditions in the future. Actual losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. As of September 30, 2022 and December 31, 2021, the Company had credit losses of $0. Deferred Franchise Costs and Regional Development Costs Deferred franchise and regional development costs represent commissions that are direct and incremental to the Company and are paid in conjunction with the sale of a franchise license or regional development rights. These costs are recognized as an expense, in franchise and regional development cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise or regional development agreement. Property and Equipment Property and equipment are stated at cost or for property acquired as part of franchise acquisitions at fair value at the date of closing. Depreciation is computed using the straight-line method over estimated useful lives, which is generally three Capitalized Software The Company capitalizes certain software development costs, including costs to implement cloud computing arrangements that is a service contract. These capitalized costs are primarily related to 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, which is generally three Leases The Company leases property and equipment under operating and finance leases. The Company leases its corporate office space and the space for each of the company-owned or managed clinics in the portfolio. The Company recognizes a right-of-use ("ROU") asset and lease liability for all leases. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and, as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the right-of-use asset and lease liability. When available, the Company uses the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of its leases. In such cases, the Company estimates its incremental borrowing rate as the interest rate it would pay to borrow an amount equal to the lease payments over a similar term, with similar collateral as in the lease, and in a similar economic environment. The Company estimates these rates using available evidence such as rates imposed by third-party lenders to the Company in recent financings or observable risk-free interest rate and credit spreads for commercial debt of a similar duration, with credit spreads correlating to the Company’s estimated creditworthiness. For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. Pre-opening costs are recorded as incurred in general and administrative expenses. Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred and are also included in general and administrative expenses on the consolidated income statements. Intangible Assets Intangible assets consist primarily of re-acquired franchise and regional developer 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 generally range from one one two Goodwill Goodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions of franchises. Goodwill and identifiable 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. Assets Held for Sale The Company classifies assets and related liabilities as held for sale when the following criteria are met: when management has committed to a plan to sell the asset, the asset is available for immediate sale, there is an active program to locate a buyer and the sale and transfer of the asset is probable within one year. Assets and liabilities are presented separately on the condensed consolidated balance sheet with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. Depreciation and amortization for property, plant and equipment, finite-lived intangible assets, and ROU assets are not recorded while these assets are classified as held for sale. Assets held for sale are tested for recoverability each period that they are classified as held for sale. 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 are recoverable. The Company records an impairment loss when the carrying amount of the asset is not recoverable and exceeds its fair value. During the three and nine months ended September 30, 2022, an operating lease ROU asset related to a closed clinic with a total carrying amount of approximately $250,000 was written down to zero. As a result, the Company recorded a noncash impairment loss of approximately $250,000 during the three and nine months ended September 30, 2022. During the nine months ended September 30, 2021, certain operating lease ROU assets related to closed clinics with a total carrying amount of $0.5 million were written down to their fair value of $0.4 million. As a result, the Company recorded a noncash impairment loss of approximately $0.1 million during the nine months ended September 30, 2021. In connection with the sale of two company managed clinics to franchisees the Company reclassified $288,192 of property and equipment and $359,807 of ROU assets to Assets held for sale and reclassified $428,593 of ROU liability and $54,351 of deferred revenue from company clinics to Liabilities to be disposed of, in the consolidated balance sheet as of June 30, 2022. Long-lived assets that meet the held for sale criteria are reported at the lower of their carrying value or fair value, less estimated costs to sell. As a result, the Company recorded a valuation allowance of $60,580 to adjust the carrying value of the disposal group to fair value less cost to sell during the nine months ended September 30, 2022. One of the two clinics was sold during August 2022, and the second clinic was sold in October 2022. Advertising Fund The Company has established an advertising fund for national or regional marketing and advertising of services offered by its clinics. The monthly marketing fee is 2% of clinic sales. 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 a related expense. Such costs are included in selling and marketing expenses on the consolidated income statements. 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 Co-Op Marketing Funds collected are segregated and used for the purposes specified by the Co-Ops’ officers. The Co-Op Marketing Funds are included in restricted cash on the Company’s consolidated balance sheets. Revenue Recognition The Company generates revenue primarily through its company-owned and managed clinics and through royalties, franchise fees, advertising fund contributions, IT related income and computer software fees from its franchisees. Revenues from Company-Owned or Managed Clinics. The Company earns revenues from clinics that it owns and operates or manages throughout the United States. Revenues are recognized when services are performed. The Company offers a variety of membership and wellness packages which feature discounted pricing as compared with its single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed. Any unused visits associated with monthly memberships are recognized on a month-to-month basis. The Company recognizes a contract liability (or a deferred revenue liability) related to the prepaid treatment plans for which the Company has an ongoing performance obligation. The Company derecognizes this contract liability, and recognizes revenue, as the patient consumes his or her visits related to the package and the Company transfers its services. If the Company determines that it is not subject to unclaimed property laws for the portion of wellness package that it does not expect to be redeemed (referred to as “breakage”) then it recognizes breakage revenue in proportion to the pattern of exercised rights by the patient. Royalties and Advertising Fund Revenue. The Company collects royalties from its franchisees, as stipulated in the franchise agreement, equal to 7% of gross sales and a marketing and advertising fee currently equal to 2% of gross sales. Royalties, including franchisee contributions to advertising funds, are calculated as a percentage of clinic sales over the term of the franchise agreement. The revenue accounting standard provides an exception for the recognition of sales-based royalties promised in exchange for a license (which generally requires the reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). As the franchise agreement royalties, inclusive of advertising fund contributions, represent sales-based royalties that are related entirely to the Company’s performance obligation under the franchise agreement, such royalties are recognized as franchisee clinic level sales occur. Royalties are collected semi-monthly, two working days after each sales period has ended. Franchise Fees. The Company requires the entire non-refundable initial franchise fee to be paid upon execution of a franchise agreement, which typically has an initial term of ten years. Initial franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. The Company’s services under the franchise agreement include training of franchisees and staff, site selection, construction/vendor management and ongoing operations support. The Company provides no financing to franchisees and offers no guarantees on their behalf. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. Renewal franchise fees, as well as transfer fees, are also recognized as revenue on a straight-line basis over the term of the respective franchise agreement. Software Fees. The Company collects a monthly fee from its franchisees for use of its proprietary chiropractic software, computer support, and internet services support. These fees are recognized ratably on a straight-line basis over the term of the respective franchise agreement. Regional Developer Fees. The Company has a regional developer program where regional developers are granted an exclusive geographical territory and commit to a minimum development obligation within that defined territory. Regional developer fees paid to the Company are non-refundable and are recognized as revenue ratably on a straight-line basis over the term of the regional developer agreement, which is considered to begin upon the execution of the agreement. The Company’s services under regional developer agreements include site selection, grand opening support for the clinics, sales support for identification of qualified franchisees, general operational support and marketing support to advertise for ownership opportunities. The services provided by the Company are highly interrelated with the development of the territory and the resulting franchise licenses sold by the regional developer and as such are considered to represent a single performance obligation. In addition, regional developers receive fees which are funded by the initial franchise fees collected from franchisees upon the sale of franchises within their exclusive geographical territory and a royalty of 3% of sales generated by franchised clinics in their exclusive geographical territory. Initial fees related to the sale of franchises within their exclusive geographical territory are initially deferred as deferred franchise costs and are recognized as an expense in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. Royalties of 3% of sales generated by franchised clinics in their regions are also recognized as franchise cost of revenues as franchisee clinic level sales occur. This 3% fee is funded by the 7% royalties collected from the franchisees in their regions. Certain regional developer agreements result in the regional developer acquiring the rights to existing royalty streams from clinics already open in the respective territory. In those instances, the revenue associated from the sale of the royalty stream is recognized over the remaining life of the respective franchise agreements. The Company did not enter into any new regional developer agreements during the nine months ended September 30, 2022 and 2021. Capitalized Sales Commissions. Sales commissions earned by the regional developers and the Company’s sales force are considered incremental and recoverable costs of obtaining a franchise agreement with a franchisee. These costs are deferred and then amortized as the respective franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. Advertising Costs Advertising costs are advertising and marketing expenses incurred by the Company, primarily through advertising funds. The Company expenses production costs of commercial advertising upon first airing and expenses the costs of communicating the advertising in the period in which the advertising occurs. Advertising expenses were $1,444,783 and $3,763,351 for the three and nine months ended September 30, 2022, respectively. Advertising expenses were $1,170,668 and $3,147,885 for the three and nine months ended September 30, 2021, respectively. Income Taxes Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date pre-tax income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected pre-tax income for the year and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. Earnings per Common Share Basic earnings per common share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options. Three Months Ended Nine Months Ended 2022 2021 2022 2021 Net income $ 491,113 $ 1,937,095 $ 630,058 $ 6,935,751 Weighted average common shares outstanding - basic 14,512,856 14,388,905 14,474,323 14,286,818 Effect of dilutive securities: Unvested restricted stock and stock options 316,773 581,423 403,727 644,941 Weighted average common shares outstanding - diluted 14,829,629 14,970,328 14,878,050 14,931,759 Basic earnings per share $ 0.03 $ 0.13 $ 0.04 $ 0.49 Diluted earnings per share $ 0.03 $ 0.13 $ 0.04 $ 0.46 The following common stock equivalents were excluded from the computation of diluted earnings per share for the periods presented because including them would have been antidilutive: Three Months Ended Nine Months Ended Weighted average dilutive securities: 2022 2021 2022 2021 Restricted stocks — — — — Stock options 77,485 601 41,293 35,293 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 the closing price on the date of the grant and the grant-date fair value of stock options using the Black-Scholes-Merton model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected option life. 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. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%. Retirement Benefit Plan Employees of the Company are eligible to participate in a defined contribution retirement plan, the Joint Corp. 401(k) Retirement Plan (“401(k) Plan”), under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees may contribute their eligible compensation, not to exceed the annual limits set by the IRS. The 401(k) Plan allows the Company to match participants’ contributions in an amount determined at the sole discretion of the Company. Loss Contingencies ASC Topic 450 governs the disclosure of loss contingencies and accrual of loss contingencies in respect of litigation and other claims. The Company records an accrual for a potential loss when it is probable that a loss will occur and the amount of the loss can be reasonably estimated. When the reasonable estimate of the potential loss is within a range of amounts, the minimum of the range of potential loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Moreover, even if an accrual is not required, the Company provides additional disclosure related to litigation and other claims when it is reasonably possible (i.e., more than remote) that the outcomes of such litigation and other claims include potential material adverse impacts on the Company. Legal costs to be incurred in connection with a loss contingency are expensed as such costs are incurred. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP 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 credit losses, loss contingencies, share-based compensations, useful lives and realizability of long-lived assets, deferred revenue and revenue recognition related to breakage, deferred franchise costs, calculation of ROU assets and liabilities related to leases, realizability of deferred tax assets, impairment of goodwill, intangible assets, other long-lived assets, and purchase price allocations and related valuations. Recent Accounting Pronouncements Adopted and Not Yet Adopted In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments " and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requi |
Revenue Disclosures
Revenue Disclosures | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Disclosures | Revenue Disclosures Company-owned or Managed Clinics The Company earns revenues from clinics that it owns and operates or manages throughout the United States. Revenues are recognized when services are performed. The Company offers a variety of membership and wellness packages which feature discounted pricing as compared with its single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed or in accordance with the Company’s breakage policy as discussed in Note 1, Revenue Recognition . Franchising Fees, Royalty Fees, Advertising Fund Revenue, and Software Fees The Company currently franchises its concept across 38 states and the District of Columbia. The franchise arrangement is documented in the form of a franchise agreement. The franchise arrangement requires the Company to perform various activities to support the brand that do not directly transfer goods and services to the franchisee, but instead represent a single performance obligation, which is the transfer of the franchise license. The intellectual property subject to the franchise license is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the franchise license is to provide the franchisee with access to the brand’s symbolic intellectual property over the term of the license. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. The transaction price in a standard franchise arrangement primarily consists of (a) initial franchise fees; (b) continuing franchise fees (royalties); (c) advertising fees; and (d) software fees. The revenue accounting standard provides an exception for the recognition of sales-based royalties promised in exchange for a license (which otherwise requires reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). The Company recognizes the primary components of the transaction price as follows: • Initial and renewal franchise fees, as well as transfer fees, are recognized as revenue ratably on a straight-line basis over the term of the respective franchise agreement commencing with the execution of the franchise, renewal, or transfer agreement. As these fees are typically received in cash at or near the beginning of the contract term, the cash received is initially recorded as a contract liability until recognized as revenue over time. • The Company is entitled to royalties and advertising fees based on a percentage of the franchisee's gross sales as defined in the franchise agreement. Royalty and advertising revenue are recognized when the franchisee's sales occur. Depending on timing within a fiscal period, the recognition of revenue results in either what is considered a contract asset (unbilled receivable) or, once billed, accounts receivable, on the balance sheet. • The Company is entitled to a software fee, which is charged monthly. The Company recognizes revenue related to software fees ratably on a straight-line basis over the term of the franchise agreement. In determining the amount and timing of revenue from contracts with customers, the Company exercises significant judgment with respect to collectability of the amount; however, the timing of recognition does not require significant judgment as it is based on either the franchise term or the reported sales of the franchisee, none of which require estimation. The Company believes its franchising arrangements do not contain a significant financing component. The Company recognizes advertising fees received under franchise agreements as advertising fund revenue. Regional Developer Fees The Company currently utilizes regional developers to assist in the development of the brand across certain geographic territories. The arrangement is documented in the form of a regional developer agreement. The arrangement between the Company and the regional developer requires the Company to perform various activities to support the brand that do not directly transfer goods and services to the regional developer, but instead represent a single performance obligation, which is the transfer of the development rights to the defined geographic region. The intellectual property subject to the development rights is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The nature of the Company’s promise in granting the development rights is to provide the regional developer with access to the brand’s symbolic intellectual property over the term of the agreement. The services provided by the Company are highly interrelated with the development of the territory and the resulting franchise licenses sold by the regional developer and as such are considered to represent a single performance obligation. The transaction price in a standard regional developer arrangement primarily consists of the initial territory fees. The Company recognizes the regional developer fee as revenue ratably on a straight-line basis over the term of the regional developer agreement commencing with the execution of the regional developer agreement. As these fees are typically received in cash at or near the beginning of the term of the regional developer agreement, the cash received is initially recorded as a contract liability until recognized as revenue over time. Capitalized Sales Commissions Sales commissions earned by the regional developers and the Company’s sales force are considered incremental and recoverable costs of obtaining a franchise agreement with a franchisee. These costs are deferred and then amortized as the respective franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. Disaggregation of Revenue The Company believes that the captions contained on the condensed consolidated income statements appropriately reflect the disaggregation of its revenue by major type for the three and nine months ended September 30, 2022 and 2021. Other revenues primarily consist of preferred vendor royalties associated with franchisees' credit card transactions. Rollforward of Contract Liabilities and Contract Assets Changes in the Company's contract liability for deferred franchise and regional development fees during the nine months ended September 30, 2022 were as follows: Deferred Revenue Balance at December 31, 2021 $ 18,650,813 Revenue recognized that was included in the contract liability at the beginning of the year (2,397,451) Net increase during the nine months ended September 30, 2022 2,325,811 Balance at September 30, 2022 $ 18,579,173 The Company's deferred franchise and development costs represent capitalized sales commissions. Changes during the nine months ended September 30, 2022 were as follows: Deferred Franchise and Development Costs Balance at December 31, 2021 $ 6,500,007 Cost of revenue recognized that was included in the contract asset at the beginning of the year (777,114) Net increase during the nine months ended September 30, 2022 931,334 Balance at September 30, 2022 $ 6,654,227 The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, 2022: Contract liabilities expected to be recognized in Amount 2022 (remainder) $ 779,185 2023 2,904,946 2024 2,657,763 2025 2,460,418 2026 2,359,896 Thereafter 7,416,965 Total $ 18,579,173 |
Acquisition and Assets Held for
Acquisition and Assets Held for Sale | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition and Assets Held for Sale | Acquisition and Assets Held for Sale Acquisition On May 19, 2022, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller four operating franchises in Arizona. The Company operates the franchises as company-owned clinics. The total purchase price for the transaction was $5,761,256, less $70,484 of net deferred revenue, resulting in total purchase consideration of $5,690,772. On July 5, 2022, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller one operating franchise in Arizona (collectively, including the May 19th purchase, the “AZ Clinics Purchase”). The Company operates the franchise as a company-owned clinic. The total purchase price for the transaction was $1,205,667 less $13,241 of net deferred revenue, resulting in total purchase consideration of $1,192,426. Based on the terms of the purchase agreements, the AZ Clinics Purchase has been treated as a business combination under U.S. GAAP using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. The allocation of the total purchase price of AZ Clinics Purchase was as follows: Property and equipment $ 241,511 Operating lease right-of-use asset 912,937 Intangible assets 3,689,100 Total identifiable assets acquired 4,843,548 Goodwill 3,408,205 Deferred revenue (455,317) Operating lease liability - current portion (128,516) Operating lease liability - net of current portion (784,722) Net purchase consideration $ 6,883,198 Intangible assets in the table above consist of re-acquired franchise rights of $2,892,100 amortized over estimated useful lives of approximately four two Goodwill represents the excess of the purchase consideration over the fair value of the underlying acquired net tangible and intangible assets. The factors that contributed to the recognition of goodwill included synergies and benefits expected to be gained from leveraging the Company’s existing operations and infrastructures, as well as the expected associated revenue and cash flow projections. Goodwill has been allocated to the Company’s Corporate Clinics segment based on such expected benefits. Goodwill related to the acquisition is expected to be deductible for income tax purposes over 15 years. The Company expects to finalize the purchase price allocation during the fourth quarter of 2022. On July 29, 2022, the Company entered into Asset and Franchise Purchase Agreements under which the Company repurchased from the sellers three operating franchises in North Carolina (the “NC Clinics Purchase”). The Company operates the franchises as company-managed clinics. The total purchase price for the transactions was $1,317,312, less $31,647 of net deferred revenue, resulting in total purchase consideration of $1,285,665. Based on the terms of the purchase agreement, the NC Clinics Purchase has been treated as asset purchases under U.S. GAAP as there were no outputs or processes to generate outputs acquired as part of this transaction. Under an asset purchase, assets are recognized based on their cost to the acquiring entity. Cost is allocated to the individual assets acquired or liabilities assumed based on their relative fair values and does not give rise to goodwill. The allocation of the purchase price for the NC Clinics Purchase was as follows: Property and equipment $ 142,395 Operating lease right-of-use asset 122,641 Intangible assets 1,299,607 Total identifiable assets acquired 1,564,643 Deferred revenue (153,176) Operating lease liability - current portion (85,414) Operating lease liability - net of current portion (40,388) Net purchase consideration $ 1,285,665 Intangible assets in the table above consist of re-acquired franchise rights of $546,033 amortized over estimated useful lives of approximately two three Pro Forma Results of Operations (Unaudited) The following table summarizes selected unaudited pro forma consolidated income statements for the three and nine months ended September 30, 2022 and 2021 as if both the AZ Clinics Purchase (which has been accounted for as a business combination) and the NC Clinics Purchase (which has been accounted for as an asset purchase) had been completed on January 1, 2021. Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues, net $ 26,706,585 $ 22,154,271 $ 76,417,098 $ 62,093,498 Net income 498,670 1,772,429 400,324 6,561,995 The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the purchases had taken place on January 1, 2021 or of results that may occur in the future. For 2022, this information includes actual data recorded in the Company’s consolidated financial statements for the period subsequent to the date of the acquisition. The Company’s condensed consolidated income statements for the three and nine months ended September 30, 2022 include net revenue and net income of acquired clinics in Arizona and North Carolina as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 Revenues, net $ 1,093,373 $ 1,615,858 Net income 228,625 509,000 Assets Held for Sale In May 2022, the Company entered into two separate letters of intent to sell two of its company-managed clinics in California to two existing franchisees for a combined total of $105,200. One of the two clinics was sold during August 2022, and the second clinic was sold in October 2022. These transactions do not represent a strategic shift for the Company, and, therefore, it does not meet the criteria to be classified as a discontinued operation. As a result, the results of these two clinics were reported in the Company’s operating results and in its Corporate Clinics segment until the sales were finalized. Effective with the designation as held for sale in June 2022, the Company discontinued recording depreciation on Property and equipment, net and amortization of ROU assets for these two clinics as required by U.S. GAAP. The Company also separately classified the related assets and liabilities of the clinics as held for sale in its June 30, 2022 condensed consolidated balance sheet. Assets and liabilities held for sale as of September 30, 2022 represent the assets and liabilities of the second clinic sold in October 2022. Long-lived assets that meet the criteria for the held for sale designation are reported at the lower of their carrying value or fair value less estimated cost to sell. As a result of its evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the agreed upon sales price, the Company recorded an estimated loss on disposal of $60,580 during the nine months ended September 30, 2022 as Net loss on disposition or impairment in its condensed consolidated income statement and a valuation allowance included in assets held for sale on its condensed consolidated balance sheet. The principal components of the held for sale assets and liabilities as of September 30, 2022 were as follows: September 30, 2022 Assets Property and equipment, net $ 137,971 Operating lease right-of-use asset 165,996 Valuation allowance (60,580) Total assets held for sale $ 243,387 Liabilities Operating lease liability, current and non-current $ (187,808) Deferred revenue from company clinics (35,479) Total liabilities to be disposed of $ (223,287) |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consist of the following, excluding amounts related to properties classified as held for sale: September 30, December 31, Office and computer equipment $ 4,693,398 $ 3,704,425 Leasehold improvements 16,064,014 13,457,765 Software developed 5,649,332 5,044,339 Finance lease assets 151,396 267,252 26,558,140 22,473,780 Accumulated depreciation and amortization (11,872,077) (9,184,932) 14,686,063 13,288,847 Construction in progress 1,523,988 1,100,099 Property and equipment, net $ 16,210,051 $ 14,388,946 Depreciation expense was $1,046,495 and $700,953 for the three months ended September 30, 2022 and 2021, respectively. Depreciation expense was $2,866,745 and $1,506,660 for the nine months ended September 30, 2022 and 2021, respectively. Amortization expense related to finance lease assets was $7,570 and $21,797 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense related to finance lease assets was $48,001 and $63,506 for the nine months ended September 30, 2022 and 2021, respectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company’s financial instruments include cash, restricted cash, accounts receivable, accounts payable, accrued expenses and notes payable. The carrying amounts of its financial instruments approximate their fair value due to their short maturities. 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 September 30, 2022, and December 31, 2021, the Company did not have any financial instruments that were measured on a recurring basis as Level 1, 2 or 3. The Company’s non-financial assets, which primarily consist of goodwill, intangible assets, property, plant and equipment, and operating lease right-of-use assets, are not required to be measured at fair value on a recurring basis, and instead are reported at their carrying amount. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying amount may not be fully recoverable (and at least annually for goodwill), non-financial assets are assessed for impairment. If the fair value is determined to be lower than the carrying amount, an impairment charge is recorded to write down the asset to its fair value, which is considered Level 3 within the fair value hierarchy. The assets and liabilities resulting from the Acquisition (reference Note 3) were recorded at fair values on a nonrecurring basis and are considered Level 3 within the fair value hierarchy. During the three and nine months ended September 30, 2022, an operating lease ROU asset related to a closed clinic with a total carrying amount of approximately $250,000 was written down to zero. The associated operating lease liability had a life of 39 months as of September 30, 2022. However, the ROU asset was fully impaired due to the abandonment of the lease as of September 30, 2022. The Company considers the ROU asset as abandoned as it lacks the ability to sublease the underlying asset and obtain economic benefits. As a result, the Company recorded a noncash impairment loss of approximately $250,000 during the three and nine months ended September 30, 2022. During the nine months ended September 30, 2021, certain operating lease ROU assets related to closed clinics with a total carrying amount of $0.5 million were written down to their fair value of $0.4 million. Fair value of the Company's operating lease right-of-use assets was determined based on the discounted cash flows of the estimated market rents. As a result, the Company recorded a noncash impairment loss of approximately $0.1 million during the nine months ended September 30, 2021. In connection with the sale of two company managed clinics to franchisees the Company reclassified $288,192 of property and equipment and $359,807 of ROU assets to Assets held for sale and reclassified $428,593 of ROU liability and $54,351 of deferred revenue from company clinics to Liabilities to be disposed of, in the consolidated balance sheet as of June 30, 2022. Long-lived assets that meet the held for sale criteria are reported at the lower of their carrying value or fair value, less estimated costs to sell. As a result, the Company recorded a valuation allowance of $60,580 to adjust the carrying value of the disposal group to fair value less cost to sell during the nine months ended September 30, 2022. The estimated fair value of assets held for sale was based upon Level 2 inputs, which include negotiated letters of intent and the final sale price. One of the two clinics was sold during August 2022, and the second clinic was sold in October 2022. All of the aforementioned impairment charges are recorded in the Corporate Clinics segment in Net loss (gain) on disposition or impairment in the condensed consolidated income statement. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets On March 18, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in New Jersey. The total consideration for the transaction was $250,000. The Company carried a deferred revenue balance associated with this transaction of $95,197, representing the unrecognized fee collected upon the execution of the regional developer agreement. The Company accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred revenue was netted against the aggregate purchase price. The Company recognized the net amount of $154,803 as reacquired development rights on March 18, 2022, which is amortized over the remaining original contract period of approximately 5.5 years. On April 1, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in California. The total consideration for the transaction was $2,400,000. The Company carried a deferred revenue balance associated with this transaction of $357,721, representing the unrecognized fee collected upon the execution of the regional developer agreement. The Company accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred revenue was netted against the aggregate purchase price. The Company recognized the net amount of $2,042,279 as reacquired development rights on April 1, 2022, which is amortized over the remaining original contract period of approximately 5.3 years. During 2022, the Company recognized $3,438,133, $1,223,489, and $327,085 of reacquired franchise rights, customer relationships, and assembled workforce, respectively, from the acquisitions (reference Note 3). Intangible assets consisted of the following: As of September 30, 2022 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 10,233,998 $ (4,277,349) $ 5,956,649 Customer relationships 3,826,495 (2,076,027) 1,750,468 Reacquired development rights 6,603,303 (4,478,565) 2,124,738 Assembled workforce 386,397 (55,746) 330,651 $ 21,050,193 $ (10,887,687) $ 10,162,506 As of December 31, 2021 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 6,795,865 $ (3,153,037) $ 3,642,828 Customer relationships 2,603,006 (1,587,443) 1,015,563 Reacquired development rights 4,406,221 (3,715,594) 690,627 Assembled workforce 59,311 (4,939) 54,372 $ 13,864,403 $ (8,461,013) $ 5,403,390 Amortization expense related to the Company’s intangible assets was $957,703 and $939,505 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense was $2,426,674 and $2,704,974 for the nine months ended September 30, 2022 and 2021, respectively. Estimated amortization expense for 2022 and subsequent years is as follows: Amount 2022 (remainder) $ 914,765 2023 3,021,310 2024 2,159,463 2025 1,596,470 2026 1,333,885 Thereafter $ 1,136,613 Total $ 10,162,506 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | DebtCredit Agreement On February 28, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”), with JPMorgan Chase Bank, N.A., individually, and as Administrative Agent and Issuing Bank (“JPMorgan Chase” or the “Lender”). The Credit Agreement provided for senior secured credit facilities (the "Credit Facilities") in the amount of $7,500,000, including a $2,000,000 revolver (the "Revolver") and $5,500,000 development line of credit (the "Line of Credit"). The Revolver included amounts available for letters of credit of up to $1,000,000 and an uncommitted additional amount of $2,500,000. All outstanding principal and interest on the Revolver were due on February 28, 2022. On February 28, 2022, the Company entered into an amendment to its Credit Facilities (as amended, the “2022 Credit Facility”) with the Lender. Under the 2022 Credit Facility, the Revolver increased to $20,000,000 (from $2,000,000), the portion of the Revolver available for letters of credit increased to $5,000,000 (from $1,000,000), the uncommitted additional amount increased to $30,000,000 (from $2,500,000) and the developmental line of credit of $5,500,000 was terminated. The Revolver will be used for working capital needs, general corporate purposes and for acquisitions, development and capital improvement uses. At the option of the Company, borrowings under the 2022 Credit Facility bear interest at: (i) the adjusted Secured Overnight Financing Rate ("SOFR"), which is the daily simple SOFR plus 0.10%, plus 1.75%, payable on the last day of the selected interest period of one, three or six months, and on the three-month anniversary of the beginning of any six month interest period, if applicable; or (ii) an Alternative Base Rate (ABR), plus 1.00%, payable monthly. The ABR is the greatest of: (A) the prime rate (as published by the Wall Street Journal), (B) the Federal Reserve Bank of New York rate, plus 0.5%, and (C) the adjusted one-month term SOFR rate. Amounts outstanding under the Revolver on February 28, 2022 continued to bear interest at the rate selected under the Credit Facilities prior to the amendment until the last day of the interest period in effect, at which time, if not repaid, the amounts outstanding under the Revolver will bear interest at the 2022 Credit Facility rate. As a result of this refinance, $2,000,000 of current maturity of long-term debt has been reclassified to long-term as of December 31, 2021. The 2022 Credit Facility will terminate and all principal and interest will become due and payable on the fifth anniversary of the amendment (February 28, 2027). The Credit Facilities contain customary events of default, including but not limited to nonpayment; material inaccuracy of representations and warranties; violations of covenants; certain bankruptcies and liquidations; cross-default to material indebtedness; certain material judgments; and certain fundamental changes such as a merger or sale of substantially all assets (as further defined in the Credit Facilities). The Credit Facilities require the Company to comply with customary affirmative, negative and financial covenants, including minimum interest coverage and maximum net leverage. A breach of any of these operating or financial covenants would result in a default under the Credit Facilities. If an event of default occurs and is continuing, the lenders could elect to declare all amounts then outstanding, together with accrued interest, to be immediately due and payable. The Credit Facilities are collateralized by substantially all of the Company’s assets, including the assets in the Company’s company-owned or managed clinics. The interest rate on funds borrowed under the Revolver as of September 30, 2022 was 3.90%. As of September 30, 2022, the Company was in compliance with all applicable financial and non-financial covenants under the Credit Agreement, and $2,000,000 remains outstanding as of September 30, 2022. Paycheck Protection Program Loan On April 10, 2020, the Company received a loan in the amount of approximately $2.7 million from JPMorgan Chase Bank, N.A. (the “Loan”), pursuant to the Paycheck Protection Program (the “PPP”) administered by the United States Small Business Administration. The PPP is part of the Coronavirus Aid, Relief, and Economic Security Act, which provides for forgiveness of up to the full principal amount and accrued interest of qualifying loans guaranteed under the PPP. The Loan was granted pursuant to a Note dated April 9, 2020 issued by the Company. The Note had a maturity date of April 11, 2022 and bore interest at a rate of 0.98% per annum. On March 4, 2021, the Company elected to repay the full principal and accrued interest on the PPP loan of approximately $2.7 million from JPMorgan Chase Bank, N.A. without prepayment penalty, in accordance with the terms of the PPP loan. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company grants stock-based awards under its 2014 Incentive Stock Plan (the “2014 Plan”). The shares issued as a result of stock-based compensation transactions generally have been funded with the issuance of new shares of the Company’s common stock. The Company may grant the following types of incentive awards under the 2014 Plan: (i) non-qualified stock options; (ii) incentive stock options; (iii) stock appreciation rights; (iv) restricted stock; and (v) restricted stock units. Each award granted under the 2014 Plan is subject to an award agreement that incorporates, as applicable, the exercise price, the term of the award, the periods of restriction, the number of shares to which the award pertains, and such other terms and conditions as the plan committee determines. Awards granted under the 2014 Plan are classified as equity awards, which are recorded in stockholders’ equity in the Company’s consolidated balance sheets. Through December 31, 2021, the Company has granted under the 2014 Plan (i) non-qualified stock options; (ii) incentive stock options; and (iii) restricted stocks. There were no stock appreciation rights and restricted stock units granted under the 2014 Plan as of September 30, 2022. Stock Options The Company’s closing price on the date of grant is 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, the Company uses available historical volatility of the Company’s common stock over a period of time corresponding to the expected stock option term. The Company uses the simplified method to calculate the expected term of stock option grants to employees as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. Accordingly, the expected life of the options granted is based on the average of the vesting term, which is generally four years and the contractual term, which is generally ten years. The Company will continue to evaluate the appropriateness of utilizing such method. The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected stock option term. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%. The Company did not grant options during the three and nine months ended September 30, 2022. The Company has computed the fair value of all options granted using the Black-Scholes-Merton model during the nine months ended September 30, 2021 using the following assumptions: Nine Months Ended 2021 Expected volatility 56.6% to 56.9% Expected dividends None Expected term (years) 7 Risk-free rate 0.97% to 1.15% Forfeiture rate 5% The information below summarizes the stock options activity for the nine months ended September 30, 2022: Number of Weighted Weighted Outstanding at December 31, 2021 595,089 $ 9.72 5.9 Granted — — Exercised (41,865) 8.65 Forfeited (11,538) 24.40 Expired (2,148) 23.34 Outstanding at September 30, 2022 539,538 $ 9.43 5.0 Exercisable at September 30, 2022 447,457 $ 6.45 4.5 For the three months ended September 30, 2022 and 2021, stock-based compensation expense for stock options was $113,324 and $179,111, respectively. For the nine months ended September 30, 2022 and 2021, stock-based compensation expense for stock options was $420,680 and $506,159, respectively. Restricted Stock Restricted stocks granted to employees generally vest in four equal annual installments. Restricted stocks granted to non-employee directors typically vest in full one year after the date of grant. The information below summarizes the restricted stock activity for the nine months ended September 30, 2022: Restricted Stock Awards Shares Weighted Average Non-vested at December 31, 2021 27,720 $ 28.51 Granted 68,125 29.47 Vested (15,055) 30.64 Forfeited (5,586) 28.92 Non-vested at September 30, 2022 75,204 $ 28.92 For the three months ended September 30, 2022 and 2021, stock-based compensation expense for restricted stock was $192,491 and $117,739, respectively. For the nine months ended September 30, 2022 and 2021, stock-based compensation expense for restricted stock was $548,882 and $320,749, respectively. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesDuring the three months ended September 30, 2022 and 2021, the Company recorded income tax benefit of $15,876 and $614,356, respectively. During the nine months ended September 30, 2022 and 2021, the Company recorded income tax expense (benefit) of $106,527 and $(1,644,496), respectively. The Company’s effective tax rates differ from the federal statutory tax rate due to permanent differences and state taxes. The negative effective tax rate for the three months ended September 30, 2022 was mostly driven by excess tax benefits from exercise of stock options and discrete items for the quarter. The negative effective tax rates for the three and nine months ended September 30, 2021 were primarily driven by excess tax benefits from exercise of stock options. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Leases The table below summarizes the components of lease expense and income statement location for the three and nine months ended September 30, 2022 and 2021: Line Item in the Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended Finance lease costs: Amortization of assets Depreciation and amortization $ 7,570 $ 21,797 $ 48,001 $ 63,506 Interest on lease liabilities Other expense, net 1,015 2,132 3,564 7,225 Total finance lease costs 8,585 23,929 51,565 70,731 Operating lease costs General and administrative expenses 1,426,010 $ 1,201,547 4,138,801 $ 3,221,145 Total lease costs $ 1,434,595 $ 1,225,476 $ 4,190,366 $ 3,291,876 Supplemental information and balance sheet location related to leases (excluding amounts related to leases classified as held for sale) is as follows: September 30, 2022 December 31, 2021 Operating Leases: Operating lease right-of -use asset $19,046,081 $18,425,914 Operating lease liability - current portion $4,969,470 $4,613,843 Operating lease liability - net of current portion 17,427,096 16,872,093 Total operating lease liability $22,396,566 $21,485,936 Finance Leases: Property and equipment, at cost $151,396 $267,252 Less accumulated amortization (80,083) (147,937) Property and equipment, net $71,313 $119,315 Finance lease liability - current portion 24,175 49,855 Finance lease liability - net of current portion 69,713 87,939 Total finance lease liabilities $93,888 $137,794 Weighted average remaining lease term (in years): Operating leases 5.4 5.4 Finance lease 3.6 3.6 Weighted average discount rate: Operating leases 4.5 % 4.6 % Finance leases 4.3 % 4.8 % Supplemental cash flow information related to leases is as follows: Nine Months Ended Nine Months Ended Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 4,309,229 $ 3,069,797 Operating cash flows from finance leases 3,564 7,225 Financing cash flows from finance leases 43,907 59,285 Non-cash transactions: ROU assets obtained in exchange for lease liabilities Operating lease $ 4,402,229 $ 6,232,875 Finance lease — 15,140 ` Maturities of lease liabilities as of September 30, 2022 were as follows: Operating Leases Finance Lease 2022 (remainder) $ 1,520,692 $ 6,900 2023 5,661,042 27,600 2024 5,051,926 27,600 2025 4,589,077 27,600 2026 2,768,973 11,500 Thereafter 5,537,408 — Total lease payments $ 25,129,118 $ 101,200 Less: Imputed interest (2,732,552) (7,312) Total lease obligations 22,396,566 93,888 Less: Current obligations (4,969,470) (24,175) Long-term lease obligation $ 17,427,096 $ 69,713 During the second quarter of 2022, the Company entered into various operating leases that have not yet commenced for spaces to be used by the Company’s new corporate clinics. These leases are expected to result in additional ROU assets and liabilities of approximately $1.5 million. These leases are expected to commence during the last quarter of 2022 and the first quarter of 2023, with lease terms of five Guarantees in Connection with the Sale of the Divested Business In connection with the sale of a corporate managed clinic, the Company guaranteed a future operating lease commitment assumed by the buyer. The Company is obligated to perform under the guarantee if the buyer fails to perform under the lease agreement at any time during the remainder of the lease agreement, which expires on May 31, 2027. As of September 30, 2022, the undiscounted maximum potential future payments under the lease guarantee were $247,296. During the nine months ended September 30, 2022, the buyer had performed under the lease agreement. The Company has not recorded a liability with respect to the guarantee obligation as of September 30, 2022, as the Company concluded that payment under the lease guarantee was not probable. Litigation |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”) to evaluate performance and make operating decisions. The Company has identified its CODM as the Chief Executive Officer. The Company has two operating business segments and one non-operating business segment. The Corporate Clinics segment is composed of the operating activities of the company-owned or managed clinics. As of September 30, 2022, the Company operated or managed 115 clinics under this segment. The Franchise Operations segment is composed of the operating activities of the franchise business unit. As of September 30, 2022, the franchise system consisted of 690 clinics in operation. Corporate is a non-operating segment that develops and implements strategic initiatives and supports the Company’s two operating business segments by centralizing key administrative functions such as finance and treasury, information technology, insurance and risk management, legal and human resources. Corporate also provides the necessary administrative functions to support the Company as a publicly-traded company. A portion of the expenses incurred by Corporate are allocated to the operating segments. The tables below present financial information for the Company’s two operating business segments. Three Months Ended Nine Months Ended September 30, September 30, Revenues: 2022 2021 2022 2021 Corporate clinics $ 15,836,327 $ 11,634,009 $ 42,936,298 $ 32,537,942 Franchise operations 10,766,673 9,357,612 31,162,558 26,220,441 Total revenues $ 26,603,000 $ 20,991,621 $ 74,098,856 $ 58,758,383 Depreciation and amortization: Corporate clinics 1,736,757 1,538,251 4,543,253 3,879,786 Franchise operations 189,426 165,475 549,161 166,159 Corporate administration 85,585 (41,471) 249,006 229,195 Total depreciation and amortization $ 2,011,768 $ 1,662,255 $ 5,341,420 $ 4,275,140 Segment operating income (loss): Corporate clinics $ (291,866) $ 1,241,081 $ (417,313) $ 4,415,793 Franchise operations 5,195,558 4,156,829 13,803,845 11,887,071 Total segment operating income $ 4,903,692 $ 5,397,910 $ 13,386,532 $ 16,302,864 Reconciliation of total segment operating income to consolidated earnings before income taxes: Total segment operating income $ 4,903,692 $ 5,397,910 $ 13,386,532 $ 16,302,864 Unallocated corporate (4,403,220) (4,059,032) (12,589,279) (10,957,559) Consolidated income from operations 500,472 1,338,878 797,253 5,345,305 Other expense, net (25,235) (16,139) (60,668) (54,050) Income before income tax benefit $ 475,237 $ 1,322,739 $ 736,585 $ 5,291,255 Segment assets: September 30, December 31, Corporate clinics $ 52,689,649 $ 40,722,898 Franchise operations 13,057,205 12,593,912 Total segment assets 65,746,854 53,316,810 Unallocated cash and cash equivalents 10,272,112 19,912,338 Unallocated property and equipment 900,494 857,176 Other unallocated assets 11,371,938 11,367,885 Total assets $ 88,291,398 $ 85,454,209 |
Other Comments
Other Comments | 9 Months Ended |
Sep. 30, 2022 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Other Comments | Other Comments COVID-19 Update As a provider of an essential healthcare service, the Company has substantially maintained its operations, without significant disruption to serve its patients and franchisees, demonstrating top-line growth while managing through the effect of the COVID-19 pandemic to-date. Throughout the pandemic, the Company has generally maintained its workforce and operational |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 12, 2022, the Company entered into an agreement under which the Company repurchased the right to develop franchises in various counties in the Philadelphia area. The total consideration for the transaction was $225,000. The Company carried a deferred revenue balance associated with this transaction of $73,757, representing the unrecognized fee collected upon the execution of the regional developer agreement. The Company accounted for the termination of development rights associated with unsold or undeveloped franchises as a cancellation, and the associated deferred revenue was netted against the aggregate purchase price. The Company recognized the net amount of $151,243 as reacquired development rights on October 12, 2022, which is amortized over the remaining original contract period of approximately 4.2 years. On October 13, 2022, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller an operating franchise in North Carolina. The Company operates the franchise as a company-managed clinic. The total purchase price for the transaction was $772,000, less $5,108 of net deferred revenue, resulting in total purchase consideration of $766,892. On October 24, 2022, the Company entered into an Asset and Franchise Purchase Agreement under which the Company repurchased from the seller an operating franchise in North Carolina. The Company operates the franchise as a company-managed clinic. The total purchase price for the transaction was $1,400,000, less $9,262 of net deferred revenue, resulting in total purchase consideration of $1,390,738. Employee Retention Credit In October 2022, the Company filed an application with the Internal Revenue Service for an Employee Retention Credit in an amount of approximately $4.7 million. The Employee Retention Credit, originally included in the CARES Act in 2020 and subsequently modified by Congress, is a refundable tax credit against certain employment taxes equal to 50-70% of the qualified wages an eligible employer pays to its employees. The Company’s application was filed with respect to the modification of operations and partial suspension of business operations due to a governmental order and the related wages paid between the period of January 1, 2021 and June 30, 2021. There is no assurance that the Company will qualify for this credit or when, or in what amount, the application will be approved. |
Nature of Operations and Summ_2
Nature of Operations and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited financial statements represent the condensed consolidated financial statements of The Joint Corp. (“The Joint”), its variable interest entities (“VIEs”), and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC (collectively, the “Company”). The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented in accordance with U.S. generally accepted accounting principles (" GAAP"). Such unaudited interim condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with The Joint Corp. and Subsidiary and Affiliates consolidated financial statements and the notes thereto as set forth in The Joint’s Form 10-K for the year ended December 31, 2021, which included all disclosures required by U.S. GAAP. The results of operations for the periods ended September 30, 2022 and 2021 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the periods ended September 30, 2022 and 2021 is unaudited. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of The Joint and its wholly owned subsidiary, The Joint Corporate Unit No. 1, LLC, which was dormant for all periods presented. The Company consolidates VIEs in which the Company is the primary beneficiary in accordance with Accounting Standards Codification 810, Consolidations |
Comprehensive Income | Comprehensive Income Net income and comprehensive income were the same for the three and nine months ended September 30, 2022 and 2021. |
Correction of Immaterial Error | Correction of Immaterial Error During the third and the fourth quarter of 2021, the Company identified immaterial errors in the following: (i) the calculation of deferred revenue related to wellness packages, (ii) the calculation of software fee revenue, and (iii) the calculation of breakage revenue related to wellness packages. Management assessed the materiality of the errors and determined the impact on the Company’s 2020 consolidated financial statements was not material. The December 31, 2020 balance sheet was revised to correct the errors. |
Nature of Operations | Nature of Operations The Joint Corp., a Delaware corporation, was formed on March 10, 2010 for the principal purpose of franchising and developing chiropractic clinics, selling regional developer rights, supporting the operations of franchised chiropractic clinics, and operating |
Variable Interest Entities | Variable Interest Entities Certain states prohibit the “corporate practice of chiropractic,” which restricts business corporations from practicing chiropractic care by exercising control over clinical decisions by chiropractic doctors. In states which prohibit the corporate practice of chiropractic, the Company typically enters into long-term management agreements with professional corporations (“PCs”) that are owned by licensed chiropractic doctors, which, in turn, employ or contract with doctors who provide professional chiropractic care in its clinics. Under these management agreements with PCs, the Company provides, on an exclusive basis, all non-clinical services of the chiropractic practice. The Company has entered into such management agreements with three PCs, including one in Kansas, in connection with the opening of company-managed clinics in August 2022. An entity deemed to be the primary beneficiary of a 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. In accordance with relevant accounting guidance, these PCs were determined to be VIEs. Such PCs are VIEs, as fees paid by the PCs to the Company as its management service provider are considered variable interests because the fees do not meet all the following criteria: 1) The fees are compensation for services provided and are commensurate with the level of effort required to provide those services; 2) The decision maker or service provider does not hold other interests in the VIE that individually, or in the aggregate, would absorb more than an insignificant amount of the VIE’s expected losses or receive more than an insignificant amount of the VIE’s expected residual returns; 3) The service arrangement includes only terms, conditions, or amounts that are customarily present in arrangements for similar services negotiated at arm’s length. Additionally, the Company has determined that it has the ability to direct the activities that most significantly impact the performance of these PCs and have an obligation to absorb losses or receive benefits which could potentially be significant to the PCs. Accordingly, the PCs are variable interest entities for which the Company is the primary beneficiary and are consolidated by the Company. The carrying amount of the VIEs’ assets and liabilities was immaterial as of September 30, 2022 and December 31, |
Cash and Cash Equivalents | Cash and Cash EquivalentsThe 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 its cash in short-term bank deposits. |
Restricted Cash | Restricted CashRestricted cash relates to cash that franchisees and company-owned or managed clinics contribute to the Company’s National Marketing Fund and cash that 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 Company’s Franchise Disclosure Document with a focus on regional and national marketing and advertising. While such cash balance is not legally segregated and restricted as to withdrawal or usage, the Company's accounting policy is to classify these funds as restricted cash. |
Accounts Receivable | Accounts ReceivableAccounts receivable primarily represent amounts due from franchisees for royalty fees. The Company records an allowance for credit losses as a reduction to its accounts receivables for amounts that the Company does not expect to recover. An allowance for credit losses is determined through assessments of collectability based on historical trends, the financial condition of the Company’s franchisees, including any known or anticipated bankruptcies, and an evaluation of current economic conditions, as well as the Company’s expectations of conditions in the future. Actual losses ultimately could differ materially in the near term from the amounts estimated in determining the allowance. |
Deferred Franchise Costs and Regional Development Costs | Deferred Franchise Costs and Regional Development Costs Deferred franchise and regional development costs represent commissions that are direct and incremental to the Company and are paid in conjunction with the sale of a franchise license or regional development rights. These costs are recognized as an expense, in franchise and regional development cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise or regional development agreement. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost or for property acquired as part of franchise acquisitions at fair value at the date of closing. Depreciation is computed using the straight-line method over estimated useful lives, which is generally three |
Capitalized Software | Capitalized Software The Company capitalizes certain software development costs, including costs to implement cloud computing arrangements that is a service contract. These capitalized costs are primarily related to 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, which is generally three |
Leases | Leases The Company leases property and equipment under operating and finance leases. The Company leases its corporate office space and the space for each of the company-owned or managed clinics in the portfolio. The Company recognizes a right-of-use ("ROU") asset and lease liability for all leases. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and, as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the right-of-use asset and lease liability. When available, the Company uses the rate implicit in the lease to discount lease payments; however, the rate implicit in the lease is not readily determinable for substantially all of its leases. In such cases, the Company estimates its incremental borrowing rate as the interest rate it would pay to borrow an amount equal to the lease payments over a similar term, with similar collateral as in the lease, and in a similar economic environment. The Company estimates these rates using available evidence such as rates imposed by third-party lenders to the Company in recent financings or observable risk-free interest rate and credit spreads for commercial debt of a similar duration, with credit spreads correlating to the Company’s estimated creditworthiness. For operating leases that include rent holidays and rent escalation clauses, the Company recognizes lease expense on a straight-line basis over the lease term from the date it takes possession of the leased property. Pre-opening costs are recorded as incurred in general and administrative expenses. Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred and are also included in general and administrative expenses on the consolidated income statements. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of re-acquired franchise and regional developer 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 generally range from one one two |
Goodwill | GoodwillGoodwill consists of the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired in the acquisitions of franchises. Goodwill and identifiable 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. |
Assets Held for Sale/Long-Lived Assets | Assets Held for Sale The Company classifies assets and related liabilities as held for sale when the following criteria are met: when management has committed to a plan to sell the asset, the asset is available for immediate sale, there is an active program to locate a buyer and the sale and transfer of the asset is probable within one year. Assets and liabilities are presented separately on the condensed consolidated balance sheet with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. Depreciation and amortization for property, plant and equipment, finite-lived intangible assets, and ROU assets are not recorded while these assets are classified as held for sale. Assets held for sale are tested for recoverability each period that they are classified as held for sale. Long-Lived Assets |
Advertising Fund | Advertising Fund The Company has established an advertising fund for national or regional marketing and advertising of services offered by its clinics. The monthly marketing fee is 2% of clinic sales. 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 a related expense. Such costs are included in selling and marketing expenses on the consolidated income statements. |
Co-Op Marketing Funds | 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 Co-Op Marketing Funds collected are segregated and used for the purposes specified by the Co-Ops’ officers. The Co-Op Marketing Funds are included in restricted cash on the Company’s consolidated balance sheets. |
Revenue Recognition | Revenue Recognition The Company generates revenue primarily through its company-owned and managed clinics and through royalties, franchise fees, advertising fund contributions, IT related income and computer software fees from its franchisees. Revenues from Company-Owned or Managed Clinics. The Company earns revenues from clinics that it owns and operates or manages throughout the United States. Revenues are recognized when services are performed. The Company offers a variety of membership and wellness packages which feature discounted pricing as compared with its single-visit pricing. Amounts collected in advance for membership and wellness packages are recorded as deferred revenue and recognized when the service is performed. Any unused visits associated with monthly memberships are recognized on a month-to-month basis. The Company recognizes a contract liability (or a deferred revenue liability) related to the prepaid treatment plans for which the Company has an ongoing performance obligation. The Company derecognizes this contract liability, and recognizes revenue, as the patient consumes his or her visits related to the package and the Company transfers its services. If the Company determines that it is not subject to unclaimed property laws for the portion of wellness package that it does not expect to be redeemed (referred to as “breakage”) then it recognizes breakage revenue in proportion to the pattern of exercised rights by the patient. Royalties and Advertising Fund Revenue. The Company collects royalties from its franchisees, as stipulated in the franchise agreement, equal to 7% of gross sales and a marketing and advertising fee currently equal to 2% of gross sales. Royalties, including franchisee contributions to advertising funds, are calculated as a percentage of clinic sales over the term of the franchise agreement. The revenue accounting standard provides an exception for the recognition of sales-based royalties promised in exchange for a license (which generally requires the reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). As the franchise agreement royalties, inclusive of advertising fund contributions, represent sales-based royalties that are related entirely to the Company’s performance obligation under the franchise agreement, such royalties are recognized as franchisee clinic level sales occur. Royalties are collected semi-monthly, two working days after each sales period has ended. Franchise Fees. The Company requires the entire non-refundable initial franchise fee to be paid upon execution of a franchise agreement, which typically has an initial term of ten years. Initial franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. The Company’s services under the franchise agreement include training of franchisees and staff, site selection, construction/vendor management and ongoing operations support. The Company provides no financing to franchisees and offers no guarantees on their behalf. The services provided by the Company are highly interrelated with the franchise license and as such are considered to represent a single performance obligation. Renewal franchise fees, as well as transfer fees, are also recognized as revenue on a straight-line basis over the term of the respective franchise agreement. Software Fees. The Company collects a monthly fee from its franchisees for use of its proprietary chiropractic software, computer support, and internet services support. These fees are recognized ratably on a straight-line basis over the term of the respective franchise agreement. Regional Developer Fees. The Company has a regional developer program where regional developers are granted an exclusive geographical territory and commit to a minimum development obligation within that defined territory. Regional developer fees paid to the Company are non-refundable and are recognized as revenue ratably on a straight-line basis over the term of the regional developer agreement, which is considered to begin upon the execution of the agreement. The Company’s services under regional developer agreements include site selection, grand opening support for the clinics, sales support for identification of qualified franchisees, general operational support and marketing support to advertise for ownership opportunities. The services provided by the Company are highly interrelated with the development of the territory and the resulting franchise licenses sold by the regional developer and as such are considered to represent a single performance obligation. In addition, regional developers receive fees which are funded by the initial franchise fees collected from franchisees upon the sale of franchises within their exclusive geographical territory and a royalty of 3% of sales generated by franchised clinics in their exclusive geographical territory. Initial fees related to the sale of franchises within their exclusive geographical territory are initially deferred as deferred franchise costs and are recognized as an expense in franchise cost of revenues when the respective revenue is recognized, which is generally over the term of the related franchise agreement. Royalties of 3% of sales generated by franchised clinics in their regions are also recognized as franchise cost of revenues as franchisee clinic level sales occur. This 3% fee is funded by the 7% royalties collected from the franchisees in their regions. Certain regional developer agreements result in the regional developer acquiring the rights to existing royalty streams from clinics already open in the respective territory. In those instances, the revenue associated from the sale of the royalty stream is recognized over the remaining life of the respective franchise agreements. The Company did not enter into any new regional developer agreements during the nine months ended September 30, 2022 and 2021. Capitalized Sales Commissions. Sales commissions earned by the regional developers and the Company’s sales force are considered incremental and recoverable costs of obtaining a franchise agreement with a franchisee. These costs are deferred and then amortized as the respective franchise fees are recognized ratably on a straight-line basis over the term of the franchise agreement. |
Advertising Costs | Advertising Costs Advertising costs are advertising and marketing expenses incurred by the Company, primarily through advertising funds. The Company expenses production costs of commercial advertising upon first airing and expenses the costs of communicating the advertising in the period in which the advertising occurs. Advertising expenses were $1,444,783 and $3,763,351 for the three and nine months ended September 30, 2022, respectively. Advertising expenses were $1,170,668 and $3,147,885 for the three and nine months ended September 30, 2021, respectively. |
Income Taxes | Income Taxes Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date pre-tax income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected pre-tax income for the year and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes. |
Earnings per Common Share | Earnings per Common Share Basic earnings per common share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options. |
Stock-Based Compensation | 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 the closing price on the date of the grant and the grant-date fair value of stock options using the Black-Scholes-Merton model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including risk-free interest rate, volatility, expected dividend yield and expected option life. 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. Forfeitures are estimated based on historical and forecasted turnover, which is approximately 5%. |
Retirement Benefit Plans | Retirement Benefit Plan Employees of the Company are eligible to participate in a defined contribution retirement plan, the Joint Corp. 401(k) Retirement Plan (“401(k) Plan”), under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees may contribute their eligible compensation, not to exceed the annual limits set by the IRS. The 401(k) Plan allows the Company to match participants’ contributions in an amount determined at the sole discretion of the Company. |
Loss Contingencies | Loss Contingencies ASC Topic 450 governs the disclosure of loss contingencies and accrual of loss contingencies in respect of litigation and other claims. The Company records an accrual for a potential loss when it is probable that a loss will occur and the amount of the loss can be reasonably estimated. When the reasonable estimate of the potential loss is within a range of amounts, the minimum of the range of potential loss is accrued, unless a higher amount within the range is a better estimate than any other amount within the range. Moreover, even if an accrual is not required, the Company provides additional disclosure related to litigation and other claims when it is reasonably possible (i.e., more than remote) that the outcomes of such litigation and other claims include potential material adverse impacts on the Company. Legal costs to be incurred in connection with a loss contingency are expensed as such costs are incurred. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results |
Recent Accounting Pronouncements Adopted and Not Yet Adopted | Recent Accounting Pronouncements Adopted and Not Yet Adopted In June 2016, the Financial Accounting Standards Board issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments " and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company adopted Topic 326 on December 31, 2021 and the adoption had no impact on the Company’s consolidated financial statements. The Company reviewed other newly issued accounting pronouncements and concluded that they either are not applicable to the Company's operations or that no material effect is expected on the Company's financial statements upon future adoption. |
Nature of Operations and Summ_3
Nature of Operations and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Correction of Immaterial Error | The table below sets forth the impact of the revision on the previously issued consolidated balance sheet: December 31, 2020 As Previously (i) (ii) (iii) Reported Adjustments Adjustments Adjustments As Adjusted ASSETS Accounts receivable, net 1,850,499 — 212,722 — 2,063,221 Total current assets 25,133,704 — 212,722 — 25,346,426 Deferred tax assets 8,007,633 22,154 (44,672) (43,679) 7,941,436 Total assets $ 65,732,843 $ 22,154 $ 168,050 $ (43,679) $ 65,879,368 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Deferred revenue from company clinics 3,905,200 296,348 (524,993) 3,676,555 Total current liabilities 18,685,644 296,348 — (524,993) 18,456,999 Total liabilities 44,981,760 296,348 — (524,993) 44,753,115 Stockholders' equity: Accumulated deficit (20,470,081) (274,194) 168,050 481,314 (20,094,912) Total The Joint Corp. stockholders' equity 20,750,983 (274,194) 168,050 481,314 21,126,152 Total equity 20,751,083 (274,194) 168,050 481,314 21,126,252 Total liabilities and stockholders' equity $ 65,732,843 $ 22,154 $ 168,050 $ (43,679) $ 65,879,368 |
Schedule of Franchisor Disclosure | The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed clinics for the three and nine months ended September 30, 2022 and 2021: Three Months Ended Nine Months Ended Franchised clinics: 2022 2021 2022 2021 Clinics open at beginning of period 662 555 610 515 Opened during the period 33 28 91 76 Acquired during the period 1 — 1 — Sold during the period (4) — (8) (8) Closed during the period (2) — (4) — Clinics in operation at the end of the period 690 583 690 583 Three Months Ended Nine Months Ended Company-owned or managed clinics: 2022 2021 2022 2021 Clinics open at beginning of period 107 78 96 64 Opened during the period 5 5 12 11 Acquired during the period 4 — 8 8 Sold during the period (1) — (1) — Closed during the period — — — — Clinics in operation at the end of the period 115 83 115 83 Total clinics in operation at the end of the period 805 666 805 666 Clinic licenses sold but not yet developed 212 252 212 252 Licenses for future clinics subject to executed letters of intent 40 43 40 43 |
Schedule of Earnings (Loss) per Common Share | Three Months Ended Nine Months Ended 2022 2021 2022 2021 Net income $ 491,113 $ 1,937,095 $ 630,058 $ 6,935,751 Weighted average common shares outstanding - basic 14,512,856 14,388,905 14,474,323 14,286,818 Effect of dilutive securities: Unvested restricted stock and stock options 316,773 581,423 403,727 644,941 Weighted average common shares outstanding - diluted 14,829,629 14,970,328 14,878,050 14,931,759 Basic earnings per share $ 0.03 $ 0.13 $ 0.04 $ 0.49 Diluted earnings per share $ 0.03 $ 0.13 $ 0.04 $ 0.46 The following common stock equivalents were excluded from the computation of diluted earnings per share for the periods presented because including them would have been antidilutive: Three Months Ended Nine Months Ended Weighted average dilutive securities: 2022 2021 2022 2021 Restricted stocks — — — — Stock options 77,485 601 41,293 35,293 |
Revenue Disclosures (Tables)
Revenue Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract with Customer, Asset and Liability | Changes in the Company's contract liability for deferred franchise and regional development fees during the nine months ended September 30, 2022 were as follows: Deferred Revenue Balance at December 31, 2021 $ 18,650,813 Revenue recognized that was included in the contract liability at the beginning of the year (2,397,451) Net increase during the nine months ended September 30, 2022 2,325,811 Balance at September 30, 2022 $ 18,579,173 The Company's deferred franchise and development costs represent capitalized sales commissions. Changes during the nine months ended September 30, 2022 were as follows: Deferred Franchise and Development Costs Balance at December 31, 2021 $ 6,500,007 Cost of revenue recognized that was included in the contract asset at the beginning of the year (777,114) Net increase during the nine months ended September 30, 2022 931,334 Balance at September 30, 2022 $ 6,654,227 |
Schedule of Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, 2022: Contract liabilities expected to be recognized in Amount 2022 (remainder) $ 779,185 2023 2,904,946 2024 2,657,763 2025 2,460,418 2026 2,359,896 Thereafter 7,416,965 Total $ 18,579,173 |
Acquisition and Assets Held f_2
Acquisition and Assets Held for Sale (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation of the total purchase price of AZ Clinics Purchase was as follows: Property and equipment $ 241,511 Operating lease right-of-use asset 912,937 Intangible assets 3,689,100 Total identifiable assets acquired 4,843,548 Goodwill 3,408,205 Deferred revenue (455,317) Operating lease liability - current portion (128,516) Operating lease liability - net of current portion (784,722) Net purchase consideration $ 6,883,198 The allocation of the purchase price for the NC Clinics Purchase was as follows: Property and equipment $ 142,395 Operating lease right-of-use asset 122,641 Intangible assets 1,299,607 Total identifiable assets acquired 1,564,643 Deferred revenue (153,176) Operating lease liability - current portion (85,414) Operating lease liability - net of current portion (40,388) Net purchase consideration $ 1,285,665 |
Schedule of Business Acquisition, Pro Forma Information | The following table summarizes selected unaudited pro forma consolidated income statements for the three and nine months ended September 30, 2022 and 2021 as if both the AZ Clinics Purchase (which has been accounted for as a business combination) and the NC Clinics Purchase (which has been accounted for as an asset purchase) had been completed on January 1, 2021. Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Revenues, net $ 26,706,585 $ 22,154,271 $ 76,417,098 $ 62,093,498 Net income 498,670 1,772,429 400,324 6,561,995 The Company’s condensed consolidated income statements for the three and nine months ended September 30, 2022 include net revenue and net income of acquired clinics in Arizona and North Carolina as follows: Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 Revenues, net $ 1,093,373 $ 1,615,858 Net income 228,625 509,000 |
Summary Of Assets And Liabilities Held For Sale | The principal components of the held for sale assets and liabilities as of September 30, 2022 were as follows: September 30, 2022 Assets Property and equipment, net $ 137,971 Operating lease right-of-use asset 165,996 Valuation allowance (60,580) Total assets held for sale $ 243,387 Liabilities Operating lease liability, current and non-current $ (187,808) Deferred revenue from company clinics (35,479) Total liabilities to be disposed of $ (223,287) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment consist of the following, excluding amounts related to properties classified as held for sale: September 30, December 31, Office and computer equipment $ 4,693,398 $ 3,704,425 Leasehold improvements 16,064,014 13,457,765 Software developed 5,649,332 5,044,339 Finance lease assets 151,396 267,252 26,558,140 22,473,780 Accumulated depreciation and amortization (11,872,077) (9,184,932) 14,686,063 13,288,847 Construction in progress 1,523,988 1,100,099 Property and equipment, net $ 16,210,051 $ 14,388,946 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consisted of the following: As of September 30, 2022 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 10,233,998 $ (4,277,349) $ 5,956,649 Customer relationships 3,826,495 (2,076,027) 1,750,468 Reacquired development rights 6,603,303 (4,478,565) 2,124,738 Assembled workforce 386,397 (55,746) 330,651 $ 21,050,193 $ (10,887,687) $ 10,162,506 As of December 31, 2021 Gross Carrying Accumulated Net Carrying Intangible assets subject to amortization: Reacquired franchise rights $ 6,795,865 $ (3,153,037) $ 3,642,828 Customer relationships 2,603,006 (1,587,443) 1,015,563 Reacquired development rights 4,406,221 (3,715,594) 690,627 Assembled workforce 59,311 (4,939) 54,372 $ 13,864,403 $ (8,461,013) $ 5,403,390 Amortization expense related to the Company’s intangible assets was $957,703 and $939,505 for the three months ended September 30, 2022 and 2021, respectively. Amortization expense was $2,426,674 and $2,704,974 for the nine months ended September 30, 2022 and 2021, respectively. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated amortization expense for 2022 and subsequent years is as follows: Amount 2022 (remainder) $ 914,765 2023 3,021,310 2024 2,159,463 2025 1,596,470 2026 1,333,885 Thereafter $ 1,136,613 Total $ 10,162,506 |
Stock-Based Compensation_ (Tabl
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The Company has computed the fair value of all options granted using the Black-Scholes-Merton model during the nine months ended September 30, 2021 using the following assumptions: Nine Months Ended 2021 Expected volatility 56.6% to 56.9% Expected dividends None Expected term (years) 7 Risk-free rate 0.97% to 1.15% Forfeiture rate 5% |
Share-based Payment Arrangement, Option, Activity | The information below summarizes the stock options activity for the nine months ended September 30, 2022: Number of Weighted Weighted Outstanding at December 31, 2021 595,089 $ 9.72 5.9 Granted — — Exercised (41,865) 8.65 Forfeited (11,538) 24.40 Expired (2,148) 23.34 Outstanding at September 30, 2022 539,538 $ 9.43 5.0 Exercisable at September 30, 2022 447,457 $ 6.45 4.5 |
Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | The information below summarizes the restricted stock activity for the nine months ended September 30, 2022: Restricted Stock Awards Shares Weighted Average Non-vested at December 31, 2021 27,720 $ 28.51 Granted 68,125 29.47 Vested (15,055) 30.64 Forfeited (5,586) 28.92 Non-vested at September 30, 2022 75,204 $ 28.92 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease, Cost | The table below summarizes the components of lease expense and income statement location for the three and nine months ended September 30, 2022 and 2021: Line Item in the Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended Finance lease costs: Amortization of assets Depreciation and amortization $ 7,570 $ 21,797 $ 48,001 $ 63,506 Interest on lease liabilities Other expense, net 1,015 2,132 3,564 7,225 Total finance lease costs 8,585 23,929 51,565 70,731 Operating lease costs General and administrative expenses 1,426,010 $ 1,201,547 4,138,801 $ 3,221,145 Total lease costs $ 1,434,595 $ 1,225,476 $ 4,190,366 $ 3,291,876 |
Schedule of Assets And Liabilities, Lessee | Supplemental information and balance sheet location related to leases (excluding amounts related to leases classified as held for sale) is as follows: September 30, 2022 December 31, 2021 Operating Leases: Operating lease right-of -use asset $19,046,081 $18,425,914 Operating lease liability - current portion $4,969,470 $4,613,843 Operating lease liability - net of current portion 17,427,096 16,872,093 Total operating lease liability $22,396,566 $21,485,936 Finance Leases: Property and equipment, at cost $151,396 $267,252 Less accumulated amortization (80,083) (147,937) Property and equipment, net $71,313 $119,315 Finance lease liability - current portion 24,175 49,855 Finance lease liability - net of current portion 69,713 87,939 Total finance lease liabilities $93,888 $137,794 Weighted average remaining lease term (in years): Operating leases 5.4 5.4 Finance lease 3.6 3.6 Weighted average discount rate: Operating leases 4.5 % 4.6 % Finance leases 4.3 % 4.8 % Supplemental cash flow information related to leases is as follows: Nine Months Ended Nine Months Ended Cash paid for amounts included in measurement of liabilities: Operating cash flows from operating leases $ 4,309,229 $ 3,069,797 Operating cash flows from finance leases 3,564 7,225 Financing cash flows from finance leases 43,907 59,285 Non-cash transactions: ROU assets obtained in exchange for lease liabilities Operating lease $ 4,402,229 $ 6,232,875 Finance lease — 15,140 ` |
Schedule of Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities as of September 30, 2022 were as follows: Operating Leases Finance Lease 2022 (remainder) $ 1,520,692 $ 6,900 2023 5,661,042 27,600 2024 5,051,926 27,600 2025 4,589,077 27,600 2026 2,768,973 11,500 Thereafter 5,537,408 — Total lease payments $ 25,129,118 $ 101,200 Less: Imputed interest (2,732,552) (7,312) Total lease obligations 22,396,566 93,888 Less: Current obligations (4,969,470) (24,175) Long-term lease obligation $ 17,427,096 $ 69,713 |
Schedule of Finance Lease, Liability, Maturity | Maturities of lease liabilities as of September 30, 2022 were as follows: Operating Leases Finance Lease 2022 (remainder) $ 1,520,692 $ 6,900 2023 5,661,042 27,600 2024 5,051,926 27,600 2025 4,589,077 27,600 2026 2,768,973 11,500 Thereafter 5,537,408 — Total lease payments $ 25,129,118 $ 101,200 Less: Imputed interest (2,732,552) (7,312) Total lease obligations 22,396,566 93,888 Less: Current obligations (4,969,470) (24,175) Long-term lease obligation $ 17,427,096 $ 69,713 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The tables below present financial information for the Company’s two operating business segments. Three Months Ended Nine Months Ended September 30, September 30, Revenues: 2022 2021 2022 2021 Corporate clinics $ 15,836,327 $ 11,634,009 $ 42,936,298 $ 32,537,942 Franchise operations 10,766,673 9,357,612 31,162,558 26,220,441 Total revenues $ 26,603,000 $ 20,991,621 $ 74,098,856 $ 58,758,383 Depreciation and amortization: Corporate clinics 1,736,757 1,538,251 4,543,253 3,879,786 Franchise operations 189,426 165,475 549,161 166,159 Corporate administration 85,585 (41,471) 249,006 229,195 Total depreciation and amortization $ 2,011,768 $ 1,662,255 $ 5,341,420 $ 4,275,140 Segment operating income (loss): Corporate clinics $ (291,866) $ 1,241,081 $ (417,313) $ 4,415,793 Franchise operations 5,195,558 4,156,829 13,803,845 11,887,071 Total segment operating income $ 4,903,692 $ 5,397,910 $ 13,386,532 $ 16,302,864 Reconciliation of total segment operating income to consolidated earnings before income taxes: Total segment operating income $ 4,903,692 $ 5,397,910 $ 13,386,532 $ 16,302,864 Unallocated corporate (4,403,220) (4,059,032) (12,589,279) (10,957,559) Consolidated income from operations 500,472 1,338,878 797,253 5,345,305 Other expense, net (25,235) (16,139) (60,668) (54,050) Income before income tax benefit $ 475,237 $ 1,322,739 $ 736,585 $ 5,291,255 |
Schedule of Reconciliation of Assets from Segment to Consolidated | Segment assets: September 30, December 31, Corporate clinics $ 52,689,649 $ 40,722,898 Franchise operations 13,057,205 12,593,912 Total segment assets 65,746,854 53,316,810 Unallocated cash and cash equivalents 10,272,112 19,912,338 Unallocated property and equipment 900,494 857,176 Other unallocated assets 11,371,938 11,367,885 Total assets $ 88,291,398 $ 85,454,209 |
Supplemental Disclosure of No_2
Supplemental Disclosure of Non-cash Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Mar. 18, 2022 | |
Cash paid for income taxes | $ 69,274 | $ 592,695 | |||
Cash paid for interest | 43,938 | 58,533 | |||
Net deferred revenue | 18,579,173 | $ 18,650,813 | |||
Franchise Fees Collected Upon Franchise Agreement | |||||
Property and equipment | 383,906 | 528,974 | |||
Intangible assets | 4,988,707 | 3,766,972 | |||
Purchase price | 8,284,235 | 4,493,028 | |||
Net deferred revenue | 115,372 | 87,858 | |||
Franchise Fees Collected Upon Franchise Agreement | Forecast | |||||
Purchase price | $ 317,979 | ||||
License Fee Collection Upon Regional Developer Agreement | |||||
Net deferred revenue | 452,918 | $ 35,679 | $ 95,197 | ||
Purchase of Property, Plant and Equipment Included in Accounts Payable | |||||
Capital expenditures incurred but not yet paid | $ 225,967 | 158,293 | |||
Purchase of Property, Plant and Equipment Included in Accrued Expenses | |||||
Capital expenditures incurred but not yet paid | $ 152,501 |
Nature of Operations and Summ_4
Nature of Operations and Summary of Significant Accounting Policies - Correction of Immaterial Error (Details) - USD ($) | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
ASSETS | ||||||||
Accounts receivable, net | $ 3,945,046 | $ 3,700,810 | $ 2,063,221 | |||||
Total current assets | 18,921,972 | 26,889,500 | 25,346,426 | |||||
Deferred tax assets | 9,115,231 | 9,188,634 | 7,941,436 | |||||
Total assets | 88,291,398 | 85,454,209 | 65,879,368 | |||||
Current liabilities: | ||||||||
Deferred revenue from company clinics | 3,676,555 | |||||||
Total current liabilities | 21,637,706 | 21,438,399 | 18,456,999 | |||||
Total liabilities | 56,765,925 | 55,884,582 | 44,753,115 | |||||
Stockholders' equity: | ||||||||
Accumulated deficit | (12,889,083) | (13,519,142) | (20,094,912) | |||||
Total The Joint Corp. stockholders' equity | 31,500,473 | 29,544,627 | 21,126,152 | |||||
Total equity | 31,525,473 | $ 30,483,395 | $ 29,734,412 | 29,569,627 | $ 29,661,410 | $ 27,298,968 | $ 23,689,655 | 21,126,252 |
Total liabilities and stockholders' equity | $ 88,291,398 | $ 85,454,209 | 65,879,368 | |||||
As Previously Reported | ||||||||
ASSETS | ||||||||
Accounts receivable, net | 1,850,499 | |||||||
Total current assets | 25,133,704 | |||||||
Deferred tax assets | 8,007,633 | |||||||
Total assets | 65,732,843 | |||||||
Current liabilities: | ||||||||
Deferred revenue from company clinics | 3,905,200 | |||||||
Total current liabilities | 18,685,644 | |||||||
Total liabilities | 44,981,760 | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | (20,470,081) | |||||||
Total The Joint Corp. stockholders' equity | 20,750,983 | |||||||
Total equity | 20,751,083 | |||||||
Total liabilities and stockholders' equity | 65,732,843 | |||||||
Correction of Immaterial Error Related to Deferred Revenue | ||||||||
ASSETS | ||||||||
Deferred tax assets | 22,154 | |||||||
Total assets | 22,154 | |||||||
Current liabilities: | ||||||||
Deferred revenue from company clinics | 296,348 | |||||||
Total current liabilities | 296,348 | |||||||
Total liabilities | 296,348 | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | (274,194) | |||||||
Total The Joint Corp. stockholders' equity | (274,194) | |||||||
Total equity | (274,194) | |||||||
Total liabilities and stockholders' equity | 22,154 | |||||||
Correction of Immaterial Error Related to Software Fee Revenue | ||||||||
ASSETS | ||||||||
Accounts receivable, net | 212,722 | |||||||
Total current assets | 212,722 | |||||||
Deferred tax assets | (44,672) | |||||||
Total assets | 168,050 | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | 168,050 | |||||||
Total The Joint Corp. stockholders' equity | 168,050 | |||||||
Total equity | 168,050 | |||||||
Total liabilities and stockholders' equity | 168,050 | |||||||
Correction of Immaterial Error Related to Breakage Revenue | ||||||||
ASSETS | ||||||||
Deferred tax assets | (43,679) | |||||||
Total assets | (43,679) | |||||||
Current liabilities: | ||||||||
Deferred revenue from company clinics | (524,993) | |||||||
Total current liabilities | (524,993) | |||||||
Total liabilities | (524,993) | |||||||
Stockholders' equity: | ||||||||
Accumulated deficit | 481,314 | |||||||
Total The Joint Corp. stockholders' equity | 481,314 | |||||||
Total equity | 481,314 | |||||||
Total liabilities and stockholders' equity | $ (43,679) |
Nature of Operations and Summ_5
Nature of Operations and Summary of Significant Accounting Policies - Clinics in Operation Under Franchise Agreements or Company-owned or Managed (Details) - clinic | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||||
Closed during the period | 0 | 0 | ||
Clinics in operation at the end of the period | 805 | 666 | 805 | 666 |
Clinic licenses sold but not yet developed | 212 | 252 | 212 | 252 |
Licenses for future clinics subject to executed letters of intent | 40 | 43 | 40 | 43 |
Franchised Clinics | ||||
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||||
Clinics open at beginning of period | 662 | 555 | 610 | 515 |
Opened during the period | 33 | 28 | 91 | 76 |
Acquired during the period | 1 | 0 | 1 | 0 |
Sold during the period | (4) | 0 | (8) | (8) |
Closed during the period | (2) | 0 | (4) | 0 |
Clinics in operation at the end of the period | 690 | 583 | 690 | 583 |
Company-Owned or Managed Clinics | ||||
Product Information, Franchised Clinics, Company-Owned Or Managed Clinics, Activity [Roll Forward] | ||||
Clinics open at beginning of period | 107 | 78 | 96 | 64 |
Opened during the period | 5 | 5 | 12 | 11 |
Acquired during the period | 4 | 0 | 8 | 8 |
Sold during the period | (1) | 0 | (1) | 0 |
Closed during the period | 0 | 0 | ||
Clinics in operation at the end of the period | 115 | 83 | 115 | 83 |
Nature of Operations and Summ_6
Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | |||||
Jul. 29, 2022 | Sep. 30, 2022 USD ($) clinic corporation option | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) clinic corporation option | Sep. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) clinic | Dec. 31, 2021 USD ($) | |
Product Information [Line Items] | |||||||
Number of professional corporations | corporation | 3 | 3 | |||||
Payroll liabilities | $ 2,788,058 | $ 2,788,058 | $ 3,906,317 | ||||
Deferred franchise and regional developer fee revenue, current portion | 2,974,993 | 2,974,993 | 3,191,892 | ||||
Cash equivalents | 0 | 0 | 0 | ||||
Allowance for credit losses | $ 0 | $ 0 | 0 | ||||
Number of lease renewal options | option | 1 | 1 | |||||
Operating lease right-of-use asset | $ 19,046,081 | $ 19,046,081 | 18,425,914 | ||||
Impairments of long-lived assets | 250,000 | $ 250,000 | $ 100,000 | ||||
Marketing fee percentage | 2% | ||||||
Percentage of franchise royalty sales | 7% | ||||||
Initial term of franchise agreement | 10 years | ||||||
Percentage royalty of sales generated by franchised clinics | 3% | ||||||
Advertising costs | $ 1,444,783 | $ 1,170,668 | $ 3,763,351 | 3,147,885 | |||
Forecasted turnover percentage | 5% | 5% | |||||
Disposal Group, Held-for-sale, Not Discontinued Operations | |||||||
Product Information [Line Items] | |||||||
Number of clinics sold | clinic | 2 | 2 | 2 | ||||
Property and equipment, net | $ 288,192 | ||||||
Operating lease right-of-use asset | 359,807 | ||||||
Operating lease liability, current and non-current | 428,593 | ||||||
Deferred revenue from company clinics | $ 54,351 | ||||||
Reported Value Measurement | |||||||
Product Information [Line Items] | |||||||
Operating lease right-of-use asset | 500,000 | 500,000 | |||||
Estimate of Fair Value Measurement | |||||||
Product Information [Line Items] | |||||||
Operating lease right-of-use asset | $ 0 | $ 400,000 | $ 0 | $ 400,000 | |||
Minimum | |||||||
Product Information [Line Items] | |||||||
Property and equipment, useful life | 3 years | ||||||
Minimum | Computer Software, Intangible Asset | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 3 years | ||||||
Minimum | Reacquired franchise rights | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 1 year | ||||||
Minimum | Reacquired development rights | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 1 year | ||||||
Minimum | Customer relationships | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 2 years | ||||||
Maximum | |||||||
Product Information [Line Items] | |||||||
Property and equipment, useful life | 10 years | ||||||
Maximum | Computer Software, Intangible Asset | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 5 years | ||||||
Maximum | Reacquired franchise rights | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 4 years | 9 years | |||||
Maximum | Reacquired development rights | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 7 years | ||||||
Maximum | Customer relationships | |||||||
Product Information [Line Items] | |||||||
Intangible assets, useful life | 4 years | 4 years | |||||
Variable Interest Entity, Primary Beneficiary | |||||||
Product Information [Line Items] | |||||||
Payroll liabilities | 800,000 | $ 800,000 | 400,000 | ||||
Deferred franchise and regional developer fee revenue, current portion | $ 3,700,000 | $ 3,700,000 | $ 3,500,000 | ||||
NORTH CAROLINA | |||||||
Product Information [Line Items] | |||||||
Number of professional corporations | corporation | 1 | 1 |
Nature of Operations and Summ_7
Nature of Operations and Summary of Significant Accounting Policies - Earnings per Common Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Product Information [Line Items] | ||||
Net income | $ 491,113 | $ 1,937,095 | $ 630,058 | $ 6,935,751 |
Weighted average common shares outstanding - basic (in shares) | 14,512,856 | 14,388,905 | 14,474,323 | 14,286,818 |
Effect of dilutive securities: | ||||
Unvested restricted stock and stock options (in shares) | 316,773 | 581,423 | 403,727 | 644,941 |
Weighted average common shares outstanding - diluted (in shares) | 14,829,629 | 14,970,328 | 14,878,050 | 14,931,759 |
Basic earnings per share (in dollars per share) | $ 0.03 | $ 0.13 | $ 0.04 | $ 0.49 |
Diluted earnings per share (in dollars per share) | $ 0.03 | $ 0.13 | $ 0.04 | $ 0.46 |
Restricted stocks | ||||
Effect of dilutive securities: | ||||
Weighted average dilutive securities (in shares) | 0 | 0 | 0 | 0 |
Stock options | ||||
Effect of dilutive securities: | ||||
Weighted average dilutive securities (in shares) | 77,485 | 601 | 41,293 | 35,293 |
Revenue Disclosures - Narrative
Revenue Disclosures - Narrative (Details) | Sep. 30, 2022 state |
Revenue from Contract with Customer [Abstract] | |
Franchises, number of states and district | 38 |
Revenue Disclosures - Changes i
Revenue Disclosures - Changes in Contract Assets and Contract Liabilities (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Deferred Revenue short and long-term | |
Balance, beginning | $ 18,650,813 |
Revenue recognized that was included in the contract liability at the beginning of the year | (2,397,451) |
Net increase during the period | 2,325,811 |
Balance, ending | 18,579,173 |
Deferred Franchise and Development Costs short and long-term | |
Balance, beginning | 6,500,007 |
Cost of revenue recognized that was included in the contract asset at the beginning of the year | (777,114) |
Net increase during the period | 931,334 |
Balance, ending | $ 6,654,227 |
Revenue Disclosures - Schedule
Revenue Disclosures - Schedule of Contract Liabilities Expected to be Recognized (Details) | Sep. 30, 2022 USD ($) |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 18,579,173 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 779,185 |
Revenue expected to be recognized, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,904,946 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,657,763 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,460,418 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 2,359,896 |
Revenue expected to be recognized, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01 | |
Disaggregation of Revenue [Line Items] | |
Revenue expected to be recognized, amount | $ 7,416,965 |
Revenue expected to be recognized, period |
Acquisition and Assets Held f_3
Acquisition and Assets Held for Sale - Narrative (Details) | 1 Months Ended | 9 Months Ended | ||||||||||
Oct. 24, 2022 USD ($) | Oct. 13, 2022 USD ($) | Jul. 29, 2022 USD ($) franchise | Jul. 05, 2022 USD ($) franchise | May 19, 2022 USD ($) franchise | May 31, 2022 USD ($) franchise letter clinic | Sep. 30, 2022 USD ($) clinic | Oct. 31, 2022 clinic | Aug. 31, 2022 clinic | Jun. 30, 2022 clinic | Apr. 01, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Business Acquisition [Line Items] | ||||||||||||
Net deferred revenue | $ 18,579,173 | $ 18,650,813 | ||||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of clinics sold | clinic | 2 | 2 | ||||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | Sale Of Company-Managed Clinics | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of letters of intent | letter | 2 | |||||||||||
Number of clinics sold | clinic | 2 | 1 | ||||||||||
Number of existing franchisees | franchise | 2 | |||||||||||
Total consideration | $ 105,200 | |||||||||||
Loss on disposal | $ 60,580 | |||||||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | Sale Of Company-Managed Clinics | Subsequent Event | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of clinics sold | clinic | 2 | |||||||||||
Reacquired franchise rights | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Net deferred revenue | $ 357,721 | |||||||||||
Reacquired franchise rights | Minimum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 1 year | |||||||||||
Reacquired franchise rights | Maximum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 4 years | 9 years | ||||||||||
Customer relationships | Minimum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 2 years | |||||||||||
Customer relationships | Maximum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 4 years | 4 years | ||||||||||
Asset and Franchise Purchase Agreement, Arizona | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of businesses acquired | franchise | 1 | 4 | ||||||||||
Purchase price | $ 1,205,667 | $ 5,761,256 | ||||||||||
Net deferred revenue | 13,241 | 70,484 | ||||||||||
Net purchase consideration | $ 1,192,426 | 5,690,772 | ||||||||||
Intangible assets | 3,689,100 | |||||||||||
Asset and Franchise Purchase Agreement, Arizona | Reacquired franchise rights | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets | $ 2,892,100 | $ 3,438,133 | ||||||||||
Asset and Franchise Purchase Agreement, Arizona | Reacquired franchise rights | Minimum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 4 years | |||||||||||
Asset and Franchise Purchase Agreement, Arizona | Reacquired franchise rights | Maximum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 8 years | |||||||||||
Asset and Franchise Purchase Agreement, Arizona | Customer relationships | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets | $ 797,000 | 1,223,489 | ||||||||||
Asset and Franchise Purchase Agreement, Arizona | Customer relationships | Minimum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 2 years | |||||||||||
Asset and Franchise Purchase Agreement, Arizona | Customer relationships | Maximum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 3 years | |||||||||||
Asset and Franchise Purchase Agreement, Arizona | Assembled workforce | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets | $ 327,085 | |||||||||||
Asset and Franchise Purchase Agreement, North Carolina | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Number of businesses acquired | franchise | 3 | |||||||||||
Purchase price | $ 1,317,312 | |||||||||||
Net deferred revenue | 31,647 | |||||||||||
Net purchase consideration | 1,285,665 | |||||||||||
Intangible assets | 1,299,607 | |||||||||||
Asset and Franchise Purchase Agreement, North Carolina | Subsequent Event | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Purchase price | $ 1,400,000 | $ 772,000 | ||||||||||
Net deferred revenue | 9,262 | 5,108 | ||||||||||
Net purchase consideration | $ 1,390,738 | $ 766,892 | ||||||||||
Asset and Franchise Purchase Agreement, North Carolina | Reacquired franchise rights | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets | $ 546,033 | |||||||||||
Asset and Franchise Purchase Agreement, North Carolina | Reacquired franchise rights | Minimum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 2 years | |||||||||||
Asset and Franchise Purchase Agreement, North Carolina | Customer relationships | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets | $ 426,489 | |||||||||||
Asset and Franchise Purchase Agreement, North Carolina | Customer relationships | Minimum | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets, useful life | 3 years | |||||||||||
Asset and Franchise Purchase Agreement, North Carolina | Assembled workforce | ||||||||||||
Business Acquisition [Line Items] | ||||||||||||
Intangible assets | $ 327,085 | |||||||||||
Intangible assets, useful life | 2 years |
Acquisition and Assets Held f_4
Acquisition and Assets Held for Sale - Assets Acquired and Liabilities Assumed (Details) - USD ($) | Sep. 30, 2022 | Jul. 29, 2022 | May 19, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 8,493,407 | $ 5,085,203 | ||
Asset and Franchise Purchase Agreement, Arizona | ||||
Business Acquisition [Line Items] | ||||
Property and equipment | $ 241,511 | |||
Operating lease right-of-use asset | 912,937 | |||
Intangible assets | 3,689,100 | |||
Total identifiable assets acquired | 4,843,548 | |||
Goodwill | 3,408,205 | |||
Deferred revenue | (455,317) | |||
Operating lease liability - current portion | (128,516) | |||
Operating lease liability - net of current portion | (784,722) | |||
Net purchase consideration | $ 6,883,198 | |||
Asset and Franchise Purchase Agreement, North Carolina | ||||
Business Acquisition [Line Items] | ||||
Property and equipment | $ 142,395 | |||
Operating lease right-of-use asset | 122,641 | |||
Intangible assets | 1,299,607 | |||
Total identifiable assets acquired | 1,564,643 | |||
Deferred revenue | (153,176) | |||
Operating lease liability - current portion | (85,414) | |||
Operating lease liability - net of current portion | $ (40,388) |
Acquisition and Assets Held f_5
Acquisition and Assets Held for Sale - Unaudited Pro Forma Information (Details) - Assets and Franchise Agreement - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Business Acquisition [Line Items] | ||||
Revenues, net | $ 26,706,585 | $ 22,154,271 | $ 76,417,098 | $ 62,093,498 |
Net income | 498,670 | $ 1,772,429 | 400,324 | $ 6,561,995 |
Revenues, net | 1,093,373 | 1,615,858 | ||
Net income | $ 228,625 | $ 509,000 |
Acquisition and Assets Held f_6
Acquisition and Assets Held for Sale - Assets and Liabilities Held For Sale (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations - USD ($) | Sep. 30, 2022 | Jun. 30, 2022 |
Assets | ||
Property and equipment, net | $ 288,192 | |
Operating lease right-of-use asset | 359,807 | |
Liabilities | ||
Operating lease liability, current and non-current | (428,593) | |
Deferred revenue from company clinics | $ (54,351) | |
Sale Of Company-Managed Clinics | ||
Assets | ||
Property and equipment, net | $ 137,971 | |
Operating lease right-of-use asset | 165,996 | |
Valuation allowance | (60,580) | |
Total assets held for sale | 243,387 | |
Liabilities | ||
Operating lease liability, current and non-current | (187,808) | |
Deferred revenue from company clinics | (35,479) | |
Total liabilities to be disposed of | $ (223,287) |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Finance lease assets | $ 151,396 | $ 267,252 |
Property and equipment, net | 16,210,051 | 14,388,946 |
Construction in progress | 1,523,988 | 1,100,099 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,693,398 | 3,704,425 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 16,064,014 | 13,457,765 |
Software developed | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,649,332 | 5,044,339 |
Finance lease assets | ||
Property, Plant and Equipment [Line Items] | ||
Finance lease assets | 151,396 | 267,252 |
Property Plant and Equipment, Excluding Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 26,558,140 | 22,473,780 |
Accumulated depreciation and amortization | (11,872,077) | (9,184,932) |
Property and equipment, net | $ 14,686,063 | $ 13,288,847 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 1,046,495 | $ 700,953 | $ 2,866,745 | $ 1,506,660 |
Amortization of assets | $ 7,570 | $ 21,797 | $ 48,001 | $ 63,506 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 USD ($) clinic | Sep. 30, 2022 USD ($) clinic | Sep. 30, 2021 USD ($) | Oct. 31, 2022 clinic | Aug. 31, 2022 clinic | Jun. 30, 2022 USD ($) clinic | May 31, 2022 clinic | Dec. 31, 2021 USD ($) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Impairments of long-lived assets | $ 250,000 | $ 250,000 | $ 100,000 | |||||
Operating lease right-of-use asset | $ 19,046,081 | $ 19,046,081 | $ 18,425,914 | |||||
Operating lease liability, life | 39 months | 39 months | ||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Number of clinics sold | clinic | 2 | 2 | 2 | |||||
Property and equipment, net | $ 288,192 | |||||||
Operating lease right-of-use asset | 359,807 | |||||||
Operating lease liability, current and non-current | 428,593 | |||||||
Deferred revenue from company clinics | $ 54,351 | |||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | Sale Of Company-Managed Clinics | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Number of clinics sold | clinic | 1 | 2 | ||||||
Property and equipment, net | $ 137,971 | $ 137,971 | ||||||
Operating lease right-of-use asset | 165,996 | 165,996 | ||||||
Operating lease liability, current and non-current | 187,808 | 187,808 | ||||||
Deferred revenue from company clinics | 35,479 | 35,479 | ||||||
Loss on disposal | 60,580 | |||||||
Disposal Group, Held-for-sale, Not Discontinued Operations | Sale Of Company-Managed Clinics | Subsequent Event | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Number of clinics sold | clinic | 2 | |||||||
Estimate of Fair Value Measurement | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Operating lease right-of-use asset | $ 0 | $ 0 | 400,000 | |||||
Reported Value Measurement | ||||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||
Operating lease right-of-use asset | $ 500,000 |
Intangible Assets - Narrative (
Intangible Assets - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Apr. 01, 2022 | Mar. 18, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jul. 05, 2022 | May 19, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||||||||
Net deferred revenue | $ 18,579,173 | $ 18,579,173 | $ 18,650,813 | ||||||
Amortization expense | 957,703 | $ 939,505 | 2,426,674 | $ 2,704,974 | |||||
License Fee Collection Upon Regional Developer Agreement | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Net deferred revenue | $ 95,197 | 452,918 | $ 35,679 | 452,918 | $ 35,679 | ||||
Asset and Franchise Purchase Agreement, Arizona | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Net deferred revenue | $ 13,241 | $ 70,484 | |||||||
Intangible assets | 3,689,100 | ||||||||
Reacquired franchise rights | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Total consideration for the transaction | $ 2,400,000 | 250,000 | |||||||
Net deferred revenue | 357,721 | ||||||||
Consideration for the transaction | $ 2,042,279 | $ 154,803 | |||||||
Remaining original contract period | 5 years 3 months 18 days | 5 years 6 months | |||||||
Reacquired franchise rights | Asset and Franchise Purchase Agreement, Arizona | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Intangible assets | 3,438,133 | 3,438,133 | 2,892,100 | ||||||
Customer relationships | Asset and Franchise Purchase Agreement, Arizona | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Intangible assets | 1,223,489 | 1,223,489 | $ 797,000 | ||||||
Assembled workforce | Asset and Franchise Purchase Agreement, Arizona | |||||||||
Finite-Lived Intangible Assets [Line Items] | |||||||||
Intangible assets | $ 327,085 | $ 327,085 |
Intangible Assets - Intangible
Intangible Assets - Intangible Assets Acquired (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 21,050,193 | $ 13,864,403 |
Accumulated Amortization | (10,887,687) | (8,461,013) |
Total | 10,162,506 | 5,403,390 |
Reacquired franchise rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,233,998 | 6,795,865 |
Accumulated Amortization | (4,277,349) | (3,153,037) |
Total | 5,956,649 | 3,642,828 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,826,495 | 2,603,006 |
Accumulated Amortization | (2,076,027) | (1,587,443) |
Total | 1,750,468 | 1,015,563 |
Reacquired development rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 6,603,303 | 4,406,221 |
Accumulated Amortization | (4,478,565) | (3,715,594) |
Total | 2,124,738 | 690,627 |
Assembled workforce | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 386,397 | 59,311 |
Accumulated Amortization | (55,746) | (4,939) |
Total | $ 330,651 | $ 54,372 |
Intangible Assets - Estimated A
Intangible Assets - Estimated Amortization Expense (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 (remainder) | $ 914,765 | |
2023 | 3,021,310 | |
2024 | 2,159,463 | |
2025 | 1,596,470 | |
2026 | 1,333,885 | |
Thereafter | 1,136,613 | |
Total | $ 10,162,506 | $ 5,403,390 |
Debt (Details)
Debt (Details) - USD ($) | 9 Months Ended | |||||
Feb. 28, 2022 | Sep. 30, 2022 | Mar. 04, 2021 | Apr. 10, 2020 | Apr. 09, 2020 | Feb. 28, 2020 | |
Reclassification, Other | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 2,000,000 | |||||
Paycheck Protection Program, CARES Act | JPMorgan Chase Bank | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 2,700,000 | $ 2,700,000 | ||||
State interest rate percentage | 0.98% | |||||
Line of Credit | Senior Secured Credit Facilities | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 7,500,000 | |||||
Maximum borrowing capacity, additional amount | 2,500,000 | 2,500,000 | ||||
Line of Credit | Senior Secured Credit Facilities | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 2,000,000 | |||||
Debt instrument, face amount | 2,000,000 | |||||
Interest rate on funds borrowed under the revolver | 390% | |||||
Proceeds from lines of credit | $ 2,000,000 | |||||
Line of Credit | Senior Secured Credit Facilities | Development Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | 5,500,000 | |||||
Termination of development line of credit | 5,500,000 | |||||
Line of Credit | Senior Secured Credit Facilities | Letter of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | 1,000,000 | $ 1,000,000 | ||||
Line of Credit | 2022 Credit Facility | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity, additional amount | 30,000,000 | |||||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 20,000,000 | |||||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.10% | |||||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1.75% | |||||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Base Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 1% | |||||
Line of Credit | 2022 Credit Facility | Revolving Credit Facility | Federal Reserve Bank Of New York Rate | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate | 0.50% | |||||
Line of Credit | 2022 Credit Facility | Letter of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 5,000,000 |
Stock-Based Compensation_ - Nar
Stock-Based Compensation - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) installment | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) installment | Sep. 30, 2021 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Forecasted turnover percentage | 5% | 5% | ||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting term | 4 years | |||
Contractual term | 10 years | |||
Forecasted turnover percentage | 5% | 5% | ||
Stock-based compensation expense | $ 113,324 | $ 179,111 | $ 420,680 | $ 506,159 |
Restricted stocks | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 192,491 | $ 117,739 | $ 548,882 | $ 320,749 |
Number of installments | installment | 4 | 4 |
Stock-Based Compensation_ - Fai
Stock-Based Compensation - Fair Value Assumptions of Options Granted (Details) - Stock options | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (years) | 7 years | |
Forfeiture rate | 5% | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 56.60% | |
Risk-free rate | 0.97% | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 56.90% | |
Risk-free rate | 1.15% |
Stock-Based Compensation_ - Sto
Stock-Based Compensation - Stock Options Activity (Details) - Stock options | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Number of Shares | ||
Outstanding, number of shares (in shares) | shares | 595,089 | |
Granted, number of shares (in shares) | shares | 0 | |
Exercised, number of shares (in shares) | shares | (41,865) | |
Forfeited, number of shares (in shares) | shares | (11,538) | |
Expired, number of shares (in shares) | shares | (2,148) | |
Outstanding, number of shares (in shares) | shares | 539,538 | 595,089 |
Exercisable, number of shares (in shares) | shares | 447,457 | |
Weighted Average Exercise Price | ||
Outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 9.72 | |
Granted, weighted average exercise price (in dollars per share) | $ / shares | 0 | |
Exercised, weighted average exercise price (in dollars per share) | $ / shares | 8.65 | |
Forfeited, weighted average exercise price (in dollars per share) | $ / shares | 24.40 | |
Expired, weighted average exercise price (in dollars per share) | $ / shares | 23.34 | |
Outstanding, weighted average exercise price (in dollars per share) | $ / shares | 9.43 | $ 9.72 |
Exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 6.45 | |
Outstanding, weighted average remaining contractual life (Year) | 5 years | 5 years 10 months 24 days |
Exercisable, weighted average remaining contractual life (Year) | 4 years 6 months |
Stock-Based Compensation_ - Res
Stock-Based Compensation - Restricted Stock Activity (Details) - Restricted stocks | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Shares | |
Unvested, beginning (in shares) | shares | 27,720 |
Granted (in shares) | shares | 68,125 |
Awards vested (in shares) | shares | (15,055) |
Forfeited (in shares) | shares | (5,586) |
Unvested, ending (in shares) | shares | 75,204 |
Weighted Average Grant-Date Fair Value per Award | |
Non-vested, beginning (in dollars per share) | $ / shares | $ 28.51 |
Granted (in dollar per share) | $ / shares | 29.47 |
Vested (in dollars per share) | $ / shares | 30.64 |
Forfeited (in dollars per share) | $ / shares | 28.92 |
Non-vested, ending (in dollars per share) | $ / shares | $ 28.92 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) expense | $ (15,876) | $ (614,356) | $ 106,527 | $ (1,644,496) |
Commitments and Contingencies -
Commitments and Contingencies - Lease Expense and Supplemental Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Finance lease costs: | |||||
Amortization of assets | $ 7,570 | $ 21,797 | $ 48,001 | $ 63,506 | |
Interest on lease liabilities | 1,015 | 2,132 | 3,564 | 7,225 | |
Total finance lease costs | 8,585 | 23,929 | 51,565 | 70,731 | |
Operating lease costs | 1,426,010 | 1,201,547 | 4,138,801 | 3,221,145 | |
Total lease costs | 1,434,595 | $ 1,225,476 | 4,190,366 | 3,291,876 | |
Operating Leases: | |||||
Operating lease right-of-use asset | 19,046,081 | 19,046,081 | $ 18,425,914 | ||
Operating lease liability, current portion | 4,969,470 | 4,969,470 | 4,613,843 | ||
Operating lease liability - net of current portion | 17,427,096 | 17,427,096 | 16,872,093 | ||
Total operating lease liability | 22,396,566 | 22,396,566 | 21,485,936 | ||
Finance Leases: | |||||
Property and equipment, at cost | 151,396 | 151,396 | 267,252 | ||
Less accumulated amortization | (80,083) | (80,083) | (147,937) | ||
Property and equipment, net | 71,313 | 71,313 | 119,315 | ||
Finance lease liability, current portion | 24,175 | 24,175 | 49,855 | ||
Finance lease liability, net of current portion | 69,713 | 69,713 | 87,939 | ||
Total finance lease liabilities | $ 93,888 | $ 93,888 | $ 137,794 | ||
Weighted average remaining lease term (in years): | |||||
Operating leases | 5 years 4 months 24 days | 5 years 4 months 24 days | 5 years 4 months 24 days | ||
Finance lease | 3 years 7 months 6 days | 3 years 7 months 6 days | 3 years 7 months 6 days | ||
Weighted average discount rate: | |||||
Operating leases | 4.50% | 4.50% | 4.60% | ||
Finance leases | 4.30% | 4.30% | 4.80% | ||
Cash paid for amounts included in measurement of liabilities: | |||||
Operating cash flows from operating leases | $ 4,309,229 | 3,069,797 | |||
Operating cash flows from finance leases | 3,564 | 7,225 | |||
Financing cash flows from finance leases | 43,907 | 59,285 | |||
Non-cash transactions: ROU assets obtained in exchange for lease liabilities | |||||
Operating lease | 4,402,229 | 6,232,875 | |||
Finance lease | $ 0 | $ 15,140 |
Commitments and Contingencies_2
Commitments and Contingencies - Maturities of Lease Liabilities (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Operating Leases | ||
2022 (remainder) | $ 1,520,692 | |
2023 | 5,661,042 | |
2024 | 5,051,926 | |
2025 | 4,589,077 | |
2026 | 2,768,973 | |
Thereafter | 5,537,408 | |
Total lease payments | 25,129,118 | |
Less: Imputed interest | (2,732,552) | |
Total lease obligations | 22,396,566 | $ 21,485,936 |
Less: Current obligations | (4,969,470) | (4,613,843) |
Long-term lease obligation | 17,427,096 | 16,872,093 |
Finance Lease | ||
2022 (remainder) | 6,900 | |
2023 | 27,600 | |
2024 | 27,600 | |
2025 | 27,600 | |
2026 | 11,500 | |
Thereafter | 0 | |
Total lease payments | 101,200 | |
Less: Imputed interest | (7,312) | |
Total lease obligations | 93,888 | 137,794 |
Less: Current obligations | (24,175) | (49,855) |
Long-term lease obligation | $ 69,713 | $ 87,939 |
Commitments and Contingencies_3
Commitments and Contingencies - Narrative (Details) | Sep. 30, 2022 USD ($) |
Lessee, Lease, Description [Line Items] | |
Lease not yet commenced liability | $ 1,500,000 |
Guarantees obligations, maximum exposure, undiscounted | $ 247,296 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of leases not yet commenced | 5 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of leases not yet commenced | 10 years |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 9 Months Ended | |||||
Sep. 30, 2022 clinic segment | Jun. 30, 2022 clinic | Dec. 31, 2021 clinic | Sep. 30, 2021 clinic | Jun. 30, 2021 clinic | Dec. 31, 2020 clinic | |
Segment Reporting Information [Line Items] | ||||||
Number of operating segments | segment | 2 | |||||
Number of non-operating segments | segment | 1 | |||||
Number of stores | 805 | 666 | ||||
Company-Owned or Managed Clinics | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 115 | 107 | 96 | 83 | 78 | 64 |
Franchised Clinics | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of stores | 690 | 662 | 610 | 583 | 555 | 515 |
Segment Reporting - Segment Rep
Segment Reporting - Segment Reporting Financial Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 26,603,000 | $ 20,991,621 | $ 74,098,856 | $ 58,758,383 |
Depreciation and amortization | 2,011,768 | 1,662,255 | 5,341,420 | 4,275,140 |
Segment operating income (loss) | 500,472 | 1,338,878 | 797,253 | 5,345,305 |
Other expense, net | (25,235) | (16,139) | (60,668) | (54,050) |
Income before income tax (benefit) expense | 475,237 | 1,322,739 | 736,585 | 5,291,255 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income (loss) | 4,903,692 | 5,397,910 | 13,386,532 | 16,302,864 |
Unallocated corporate | ||||
Segment Reporting Information [Line Items] | ||||
Segment operating income (loss) | (4,403,220) | (4,059,032) | (12,589,279) | (10,957,559) |
Corporate clinics | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 15,836,327 | 11,634,009 | 42,936,298 | 32,537,942 |
Corporate clinics | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 1,736,757 | 1,538,251 | 4,543,253 | 3,879,786 |
Segment operating income (loss) | (291,866) | 1,241,081 | (417,313) | 4,415,793 |
Franchise operations | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 10,766,673 | 9,357,612 | 31,162,558 | 26,220,441 |
Franchise operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | 189,426 | 165,475 | 549,161 | 166,159 |
Segment operating income (loss) | 5,195,558 | 4,156,829 | 13,803,845 | 11,887,071 |
Corporate administration | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation and amortization | $ 85,585 | $ (41,471) | $ 249,006 | $ 229,195 |
Segment Reporting - Segment R_2
Segment Reporting - Segment Reporting Information, Assets (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Segment Reporting Information [Line Items] | ||||
Total assets | $ 88,291,398 | $ 85,454,209 | $ 65,879,368 | |
Unallocated cash and cash equivalents | 10,272,112 | 19,526,119 | $ 19,542,685 | |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 65,746,854 | 53,316,810 | ||
Unallocated cash and cash equivalents | 10,272,112 | 19,912,338 | ||
Unallocated property and equipment | 900,494 | 857,176 | ||
Other unallocated assets | 11,371,938 | 11,367,885 | ||
Corporate clinics | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | 52,689,649 | 40,722,898 | ||
Franchise operations | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total assets | $ 13,057,205 | $ 12,593,912 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Oct. 24, 2022 | Oct. 13, 2022 | Oct. 12, 2022 | Jul. 29, 2022 | Apr. 01, 2022 | Mar. 18, 2022 | Oct. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Subsequent Event [Line Items] | ||||||||||
Net deferred revenue | $ 18,579,173 | $ 18,650,813 | ||||||||
Reacquired franchise rights | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Total consideration for the transaction | $ 2,400,000 | $ 250,000 | ||||||||
Net deferred revenue | $ 357,721 | |||||||||
Remaining original contract period | 5 years 3 months 18 days | 5 years 6 months | ||||||||
Consideration for the transaction | $ 2,042,279 | $ 154,803 | ||||||||
License Fee Collection Upon Regional Developer Agreement | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Net deferred revenue | $ 95,197 | $ 452,918 | $ 35,679 | |||||||
Asset and Franchise Purchase Agreement, North Carolina | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Net deferred revenue | $ 31,647 | |||||||||
Purchase price | 1,317,312 | |||||||||
Net purchase consideration | $ 1,285,665 | |||||||||
Subsequent Event | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Employee retention credit | $ 4,700,000 | |||||||||
Subsequent Event | License Fee Collection Upon Regional Developer Agreement | Reacquired franchise rights | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Total consideration for the transaction | $ 225,000 | |||||||||
Net deferred revenue | $ 73,757 | |||||||||
Remaining original contract period | 4 years 2 months 12 days | |||||||||
Consideration for the transaction | $ 151,243 | |||||||||
Subsequent Event | Asset and Franchise Purchase Agreement, North Carolina | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Net deferred revenue | $ 9,262 | $ 5,108 | ||||||||
Purchase price | 1,400,000 | 772,000 | ||||||||
Net purchase consideration | $ 1,390,738 | $ 766,892 |