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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024 
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission file number: 001-36724
The Joint Corp.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or
organization)
90-0544160
(IRS Employer Identification No.)
16767 N. Perimeter Drive, Suite 110, Scottsdale
Arizona
(Address of principal executive offices)
85260
(Zip Code)
(480) 245-5960
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 Par Value Per Share
JYNT
The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
Non- accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No ☑




As of August 1, 2024, the registrant had 14,996,775 shares of Common Stock ($0.001 par value) outstanding.


Table of Contents
THE JOINT CORP.
FORM 10-Q
TABLE OF CONTENTS
PAGE
NO.



Table of Contents
Forward-Looking Statements

This Quarterly Report on Form 10-Q, especially in the Management’s Discussion and Analysis or MD&A, contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. All statements, other than statements of historical facts, included or incorporated in this Quarterly Report on Form 10-Q could be deemed forward-looking statements, particularly statements about our plans, strategies and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “intend,” “seek,” “strive,” or the negative of these terms, “mission,” “goal,” “objective,” or “strategy,” or other comparable terminology. All forward-looking statements in this Quarterly Report on Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations as described from time to time in our SEC reports, including those risks outlined under “Risk Factors” which are contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and in Part II, Item 1A of this or any subsequent quarterly reports on Form 10-Q. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Quarterly Report on Form 10-Q. You should carefully consider the trends, risks and uncertainties described below and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. We undertake no obligation to update or revise publicly any forward-looking statements, other than in accordance with legal and regulatory obligations. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

The specific forward-looking statements in this Quarterly Report on Form 10-Q include the following:

that we seek to be the leading provider of chiropractic care in the markets we serve and to become the most recognized brand in our industry through the rapid and focused expansion of chiropractic clinics in key markets throughout North America and potentially abroad;

our belief that our monthly performance reports from our system and our clinics include key performance indicators per clinic, including gross sales, comparable same-store sales growth, or “Comp Sales,” number of new patients, conversion percentage and membership attrition;

our plan to re-franchise or sell the majority of our company-owned or managed clinics, which refined strategy will leverage our greatest strength - our capacity to build a franchise - to drive long-term growth for both our franchisees and The Joint as a public company;

our belief that the strong results with respect to our franchise licenses sold and our regional developers reflects the power of the regional developer program to accelerate the number of clinics sold, and eventually opened across the country;

our belief that we continue to have a sound business concept and will benefit from the fundamental changes taking place in the manner in which Americans access chiropractic care and their growing interest in seeking effective, affordable natural solutions for general wellness;

our belief that these trends join with the preference we have seen among chiropractic doctors to reject the insurance-based model to produce a combination that benefits the consumer and the service provider alike, and our belief that these forces create an important opportunity to accelerate the growth of our network;

our belief that recent events that may impact our business include unfavorable global economic or political conditions, such as the Ukraine War, the Israel-Gaza conflict, labor shortages, and inflation and other cost increases;

our anticipation that 2024 will continue to be a volatile macroeconomic environment;

our belief that we have created a robust framework for the re-franchising effort, organizing clinics into clusters, and generating comprehensive disclosure packets for marketing efficiency, and that we have received significant interest to date from our existing franchisees;



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our goal to generate significant processes that will provide us with value creating capital allocation opportunities, which opportunities could include, but are not limited to, reinvestment in the brand and related marketing, continued investment in our IT platforms, the repurchase of RD territories, and/or a stock repurchase program;

our belief that our operating results may fluctuate significantly as a result of a variety of factors, including the timing of new clinic sales, openings, closures, markets in which they are contained and related expenses, general economic conditions, cost inflation, labor shortages, consumer confidence in the economy, consumer preferences, competitive factors, and disease epidemics and other health-related concerns, such as the COVID-19 pandemic;

our belief that our existing cash and cash equivalents, our anticipated cash flows from operations and amounts available under our line of credit will be sufficient to fund our anticipated operating and investment needs for at least the next 12 months;

our belief that we have adequate capital resources and sufficient access to external financing sources to satisfy our current and reasonably anticipated requirements for funds to conduct our operations and meet other needs in the ordinary course of our business; and

our expectation that for the remainder of 2024, we expect to use or redeploy our cash resources to support our business within the context of prevailing market conditions, which, given the ongoing uncertainties described above, could rapidly and materially deteriorate or otherwise change.

Some of the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following:
the nationwide labor shortage has negatively impacted our ability to recruit chiropractors and other qualified personnel, which may limit our growth strategy, and the measures we have taken in response to the labor shortage have reduced our net revenues;

inflation has led to increased labor costs and interest rates and may lead to reduced discretionary spending, all of which may negatively impact our business;
we may not be able to successfully implement our growth strategy if our franchisees are unable to locate and secure appropriate sites for clinic locations, obtain favorable lease terms, and attract patients to our clinics;
we have limited experience operating company-owned or managed clinics in those geographic areas where we currently have few or no clinics, and we may not be able to duplicate the success of some of our franchisees;
short-selling strategies and negative opinions posted on the internet may drive down the market price of our common stock and could result in class action lawsuits;
we have previously identified material weaknesses in our internal controls over financial reporting and we may fail to remediate future material weaknesses in our internal controls over financial reporting or may otherwise be unable to maintain an effective system of internal control over financial reporting, which might negatively impact our ability to accurately report our financial results, prevent fraud, or maintain investor confidence;
we may fail to successfully design and maintain our proprietary and third-party management information systems or implement new systems;
we have restated our prior consolidated financial statements, which may lead to additional risks and uncertainties, including loss of investor confidence and negative impacts on our stock price;
we may fail to properly maintain the integrity of our data or to strategically implement, upgrade or consolidate existing information systems;
we may not be able to continue to sell franchises to qualified franchisees, and our franchisees may not succeed in developing profitable territories and clinics;


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new clinics may not reach the point of profitability, and we may not be able to maintain or improve revenues and franchise fees from existing franchised clinics;
the chiropractic industry is highly competitive, with many well-established independent competitors, which could prevent us from increasing our market share or result in reduction in our market share;
state administrative actions and rulings regarding the corporate practice of chiropractic and prepayment of chiropractic services may jeopardize our business model;
expected new federal regulations and state laws and regulations regarding joint employer responsibility could negatively impact the franchise business model, increasing our potential liability for employment law violations by our franchisees and the likelihood that we may be required to participate in collective bargaining with our franchisees’ employees;
an increased regulatory focus on the establishment of fair franchise practices could increase our risk of liability in disputes with franchisees and the risk of enforcement actions and penalties;
adverse developments affecting institutions, including bank failures, could adversely affect our liquidity and financial performance;
negative publicity or damage to our reputation, which could arise from concerns expressed by opponents of chiropractic and by chiropractors operating under traditional service models, could adversely impact our operations and financial position;
our IT security systems and those of our third-party service providers (as recently experienced by one of our marketing vendors) may be breached, and we may face civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract and retain patients;
new SEC regulations governing disclosure about risk management, strategy and governance regarding cybersecurity risks and new requirements for reporting of cybersecurity incidents may increase our compliance costs;
legislation, regulations, as well as new medical procedures and techniques, could reduce or eliminate our competitive advantages; and
the delayed filing of one of our quarterly reports has made us currently ineligible to use a registration statement on Form S-3 to register the offer and sale of securities, which could adversely affect our ability to raise future capital or complete acquisitions.
Additionally, there may be other risks that are otherwise described from time to time in the reports that we file with the SEC. Any forward-looking statements in this Quarterly Report on Form 10-Q should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others.


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PART I: FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
2024
December 31,
2023
ASSETS(unaudited)
Current assets:
Cash and cash equivalents$17,457,625 $18,153,609 
Restricted cash1,190,096 1,060,683 
Accounts receivable, net3,575,784 3,718,924 
Deferred franchise and regional development costs, current portion1,041,492 1,047,430 
Prepaid expenses and other current assets3,436,072 2,439,837 
Assets held for sale16,686,248 17,915,055 
Total current assets43,387,317 44,335,538 
Property and equipment, net8,928,658 11,044,317 
Operating lease right-of-use asset11,859,692 12,413,221 
Deferred franchise and regional development costs, net of current portion4,798,535 5,203,936 
Intangible assets, net4,145,162 5,020,926 
Goodwill7,677,695 7,352,879 
Deferred tax assets ($1.1 million and $1.1 million attributable to VIEs as of June 30, 2024 and December 31, 2023)
907,019 1,031,648 
Deposits and other assets736,498 748,394 
Total assets$82,440,576 $87,150,859 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$1,639,841 $1,625,088 
Accrued expenses3,161,257 1,963,009 
Co-op funds liability1,190,096 1,060,683 
Payroll liabilities ($0.7 million and $0.7 million attributable to VIEs as of June 30, 2024 and December 31, 2023)
4,272,155 3,485,744 
Operating lease liability, current portion3,811,835 3,756,328 
Finance lease liability, current portion26,038 25,491 
Deferred franchise fee revenue, current portion2,521,156 2,516,554 
Deferred revenue from company clinics ($2.2 million and $1.6 million attributable to VIEs as of June 30, 2024 and December 31, 2023)
4,420,601 4,463,747 
Upfront regional developer Fees, current portion298,306 362,326 
Other current liabilities532,251 483,249 
Liabilities to be disposed of ($2.8 million and $3.6 million attributable to VIEs as of June 30, 2024 and December 31, 2023)
12,140,570 13,831,863 
Total current liabilities34,014,106 33,574,082 
Operating lease liability, net of current portion10,205,222 10,914,997 
Finance lease liability, net of current portion24,858 38,016 
Debt under the Credit Agreement 2,000,000 
Deferred franchise fee revenue, net of current portion12,935,888 13,597,325 
Upfront regional developer fees, net of current portion814,823 1,019,316 
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Other liabilities ($1.2 million and $1.2 million attributable to VIEs as of June 30, 2024 and December 31, 2023)
1,235,241 1,235,241 
Total liabilities59,230,138 62,378,977 
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 June 30, 2024 and December 31, 2023
  
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,996,787 shares issued and 14,963,772 shares outstanding as of June 30, 2024 and 14,783,757 shares issued and 14,751,633 outstanding as of December 31, 2023
14,996 14,783 
Additional paid-in capital48,595,496 47,498,151 
Treasury stock 33,015 shares as of June 30, 2024 and 32,124 shares as of December 31, 2023, at cost
(870,058)(860,475)
Accumulated deficit(24,554,996)(21,905,577)
Total The Joint Corp. stockholders' equity23,185,438 24,746,882 
Non-controlling Interest25,000 25,000 
Total equity23,210,438 24,771,882 
Total liabilities and stockholders' equity$82,440,576 $87,150,859 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED INCOME STATEMENTS
(unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
2024202320242023
Revenues:
Revenues from company-owned or managed clinics
$17,648,736 $17,802,838 $35,186,240 $34,930,795 
Royalty fees7,846,328 7,172,159 15,433,874 14,038,182 
Franchise fees719,103 671,368 1,374,977 1,425,794 
Advertising fund revenue2,240,838 2,041,050 4,407,311 3,993,455 
Software fees1,415,036 1,234,812 2,801,812 2,444,817 
Other revenues390,520 384,957 778,513 774,962 
Total revenues30,260,561 29,307,184 59,982,727 57,608,005 
Cost of revenues:
Franchise and regional development cost of revenues2,458,186 2,236,442 4,799,951 4,377,277 
IT cost of revenues368,486 359,070 742,797 692,920 
Total cost of revenues2,826,672 2,595,512 5,542,748 5,070,197 
Selling and marketing expenses5,401,834 4,707,818 9,287,948 8,868,062 
Depreciation and amortization1,523,813 2,329,267 2,927,718 4,544,322 
General and administrative expenses22,570,908 19,904,796 42,834,600 39,943,272 
Total selling, general and administrative expenses
29,496,555 26,941,881 55,050,266 53,355,656 
Net loss on disposition or impairment1,435,320 144,345 1,797,423 209,815 
Loss from operations(3,497,986)(374,554)(2,407,710)(1,027,663)
Other income (expense), net79,910 (106,520)115,540 3,714,642 
Income (loss) before income tax expense(3,418,076)(481,074)(2,292,170)2,686,979 
Income tax (benefit) expense178,322 (160,585)357,249 681,304 
Net (loss) income $(3,596,398)$(320,489)$(2,649,419)$2,005,675 
Earnings (loss) per share:
Basic (loss) earnings per share$(0.24)$(0.02)$(0.18)$0.14 
Diluted (loss) earnings per share$(0.24)$(0.02)$(0.18)$0.13 
Basic weighted average shares14,950,082 14,684,035 14,875,718 14,625,435 
Diluted weighted average shares15,206,238 14,952,363 15,110,736 14,907,593 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Common StockAdditional
Paid In
Capital
Treasury StockAccumulated
Deficit
Total The Joint Corp.
stockholders'
equity
Non-controlling
interest
Total
SharesAmountSharesAmount
Balances, December 31, 202314,783,757 $14,783 $47,498,151 32,124 $(860,475)$(21,905,577)$24,746,882 $25,000 $24,771,882 
Stock-based compensation expense— — 493,395 — — — 493,395 — 493,395 
Issuance of restricted stock184,790 184 (184)— — —  —  
Exercise of stock options— — — — — — — — — 
Purchases of treasury stock under employee stock plans— — — 707 (6,562)— (6,562)— (6,562)
Net income— — — — — 946,979 946,979 — 946,979 
Balances, March 31, 2024 (unaudited)14,968,547 $14,967 $47,991,362 32,831 $(867,037)$(20,958,598)$26,180,694 $25,000 $26,205,694 
Stock-based compensation expense— — 552,065 — — — 552,065 — 552,065 
Issuance of restricted stock21,905 23 (23)— — —  —  
Exercise of stock options6,335 6 52,092 — — — 52,098 — 52,098 
Purchases of treasury stock under employee stock plans— — — 184 (3,021)— (3,021)— (3,021)
Net loss— — — — — (3,596,398)(3,596,398)— (3,596,398)
Balances, June 30, 2024 (unaudited)14,996,787 $14,996 $48,595,496 33,015 $(870,058)$(24,554,996)$23,185,438 $25,000 $23,210,438 

Common StockAdditional
Paid In
Capital
Treasury StockAccumulated
Deficit
Total The Joint Corp.
stockholders'
equity
Non-controlling
interest
SharesAmountSharesAmountTotal
Balances, December 31, 202214,560,353 $14,560 $45,558,305 31,866 $(856,642)$(12,153,380)$32,562,843 $25,000 $32,587,843 
Stock-based compensation expense— — 266,210 — — — 266,210 — 266,210 
Issuance of restricted stock95,386 95 (95)— — —  —  
Exercise of stock options15,621 16 138,441 — — — 138,457 — 138,457 
Purchases of treasury stock under employee stock plans— — — 169 (2,637)— (2,637)— (2,637)
Net income— — — — — 2,326,164 2,326,164 — 2,326,164 
Balances, March 31, 2023, (unaudited)14,671,360 $14,671 $45,962,861 32,035 $(859,279)$(9,827,216)$35,291,037 $25,000 $35,316,037 
Stock-based compensation expense— — 417,017 — — — 417,017 — 417,017 
Issuance of restricted stock91,158 91 (91)— — —  —  
Exercise of stock options10,002 10 63,919 — — — 63,929 — 63,929 
Net loss— — — — — (320,489)(320,489)— (320,489)
Balances, June 30, 2023 (unaudited)14,772,520 $14,772 $46,443,706 32,035 $(859,279)$(10,147,705)$35,451,494 $25,000 $35,476,494 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
20242023
Cash flows from operating activities:
Net income (loss)$(2,649,419)$2,005,675 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization2,927,718 4,544,322 
Net loss on disposition or impairment (non-cash portion)1,797,422 209,815 
Net franchise fees recognized upon termination of franchise agreements(73,526)(20,050)
Deferred income taxes124,629 477,154 
Stock based compensation expense1,045,460 683,227 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable85,861 376,444 
Prepaid expenses and other current assets(997,307)(1,208,605)
Deferred franchise costs385,256 51,268 
Deposits and other assets5,196 (12,557)
Assets and liabilities held for sale, net(1,674,226) 
Accounts payable14,284 (1,440,375)
Accrued expenses1,198,248 1,104,369 
Payroll liabilities786,411 815,290 
Deferred revenue(631,272)245,363 
Upfront regional developer fees(268,513)(397,457)
Other liabilities(239,348)59,259 
Net cash provided by operating activities1,836,874 7,493,142 
Cash flows from investing activities:
Proceeds from sale of clinics224,100  
Acquisition of CA clinics (1,050,000)
Purchase of property and equipment(657,450)(2,729,875)
Net cash used in investing activities(433,350)(3,779,875)
Cash flows from financing activities:
Payments of finance lease obligation(12,610)(12,087)
Purchases of treasury stock under employee stock plans(9,583)(2,637)
Proceeds from exercise of stock options52,098 202,386 
Repayment of debt under the Credit Agreement(2,000,000) 
Net cash provided by (used in) financing activities(1,970,095)187,662 
Increase (decrease) in cash, cash equivalents and restricted cash(566,571)3,900,929 
Cash, cash equivalents and restricted cash, beginning of period19,214,292 10,550,417 
Cash, cash equivalents and restricted cash, end of period$18,647,721 $14,451,346 
Reconciliation of cash, cash equivalents and restricted cash:June 30,
2024
June 30,
2023
Cash and cash equivalents$17,457,625 $13,602,515 
Restricted cash1,190,096 848,831 
Cash, cash equivalents and restricted cash, end of period$18,647,721 $14,451,346 
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Supplemental cash flow disclosures:
The following table represents supplemental cash flow disclosures and non-cash investing and financing activities:
Six Months Ended
June 30,
20242023
Net cash paid for:
Interest$31,390 $127,481 
Income taxes$410,550 $59,989 
Non-cash investing and financing activity:
Unpaid purchases of property and equipment$469 $79,871 
Non-cash investment in acquisition of franchised clinics$ $28,997 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: 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”), which includes 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 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 condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commissions (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with 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 Annual Report on Form 10-K as of and for the year ended December 31, 2023, filed with the SEC on March 8, 2024, which included all disclosures required by GAAP. The results of operations for the periods ended June 30, 2024 and 2023 are not necessarily indicative of expected operating results for the full year. The information presented throughout the document as of and for the three and six-month periods ended June 30, 2024 and 2023 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, long-lived asset impairments 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 (loss) was the same as comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023, respectively.
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. The franchising of chiropractic clinics is regulated by the Federal Trade Commission and various state authorities.
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The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed clinics for the three and six months ended June 30, 2024 and 2023:
Three Months Ended
June 30,
Six Months Ended
June 30,
Franchised clinics:2024202320242023
Clinics open at beginning of period819 740 800 712 
Opened during the period9 23 32 52 
Acquired during the period2  2  
Sold during the period (3) (3)
Closed during the period(1)(4)(5)(5)
Clinics in operation at the end of the period829 756 829 756 
Three Months Ended
June 30,
Six Months Ended
June 30,
Company-owned or managed clinics:2024202320242023
Clinics open at beginning of period135 130 135 126 
Opened during the period 3  7 
Acquired during the period 3  3 
Sold during the period(2) (2) 
Closed during the period(2)(2)(2)(2)
Clinics in operation at the end of the period131 134 131 134 
Total clinics in operation at the end of the period960 890 960 890 
Clinic licenses sold but not yet developed113 171 113 171 
Future clinic licenses subject to executed letters of intent45 43 45 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 that 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 four PCs. If an entity is deemed to be the primary beneficiary of a VIE, the entity 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, 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; and (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 has an obligation to absorb losses or receive benefits which could potentially be significant to the PCs. Accordingly, the PCs are VIEs for which the Company is the primary beneficiary and are consolidated by the Company.
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VIE total revenue and general and administrative expenses for the three and six months ended June 30, 2024 and 2023 were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2024202320242023
Revenues$10,286,078 $10,426,826 $20,497,658 $20,309,117 
General and administrative expenses4,649,404 4,491,638 9,222,053 9,088,906 
The carrying amount of the VIEs’ assets and liabilities was immaterial as of June 30, 2024 and December 31, 2023, except for the balances as follows:
June 30,
2024
December 31,
2023
Deferred tax assets$1,088,802 $1,088,802 
Payroll liabilities746,266 728,130 
Deferred revenue from company managed clinics2,249,927 1,558,178 
Liabilities to be disposed of2,819,436 3,622,481 
Other liabilities1,235,241 1,235,241 
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less at the date of purchase to be cash equivalents. The Company continually monitors its positions with, and credit quality of, the financial institutions with which it invests. As of the balance sheet date and periodically throughout the period, the Company has maintained balances in various operating accounts in excess of federally insured limits. The Company has invested substantially all of its cash in short-term bank deposits. The Company had no cash equivalents as of June 30, 2024 and December 31, 2023.
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 represents 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 June 30, 2024 and December 31, 2023, the Company had an allowance for expected credit losses of $0.
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 to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. Major renewals and improvements are capitalized. When items of property or equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income. The losses on disposed of or retired property or equipment were recorded in net loss on disposition or impairment of $0.1 million and $0.2 million for the three and six months ended June 30, 2024,
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respectively. The losses on disposed of or retired property or equipment were recorded in net loss on disposition or impairment of $0.1 million and $0.1 million for the three and six months ended June 30, 2023, respectively.
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 accompanying condensed consolidated income statements.
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 months ended June 30, 2024, property and equipment, net, and ROU assets related to asset groups determined to not be recoverable with a total carrying amount of approximately $1.0 million and $0.5 million, respectively, was written down to $0.6 million and $0.1 million, respectively. During the six months ended June 30, 2024, a total carrying amount of approximately $2.4 million was written down to $1.4 million. As a result, the Company recorded a non-cash impairment loss of $0.8 million and $0.9 million during the three and six months ended June 30, 2024, respectively.
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 prices or the clinics estimated fair values, the Company recorded an estimated loss on disposal of $0.5 million and $0.7 million for the three and six months ended June 30, 2024, respectively in net loss on disposition or impairment in its condensed consolidated income statement. A valuation allowance of $1.3 million and $0.7 million as of June 30, 2024 and December 31, 2023, respectively, are included in assets held for sale on its condensed consolidated balance sheet.
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
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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 a reporting entity to estimate the amount of variable consideration to which it will be entitled in the transaction price). 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 and therefore, 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 10 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.
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.
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 amortized on a straight-line basis over the term of the regional developer agreement and recognized as a decrease to franchise cost of revenues.
In addition, regional developers receive fees that 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 within 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 six months ended June 30, 2024 and 2023.
Regional Developer Rights Contract Termination Costs
From time to time, subject to the Company’s strategy, regional developer rights are reacquired by the Company, resulting in a termination of the contract. The termination costs to reacquire the regional developer rights are recognized at fair value, less any unrecognized upfront regional developer fee liability balance, as a general and administrative expense in the period in which the contract is terminated in accordance with the contract terms. Termination costs to reacquire the regional developer rights were $0.5 million for the three and six months ended June 30, 2024.
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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 $2.2 million and $4.0 million for the three and six months ended June 30, 2024, respectively. Advertising expenses were $2.0 million and $3.6 million for the three and six months ended June 30, 2023, respectively.
Income Taxes
Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date pre-tax income, plus any significant unusual or infrequently occurring items that are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected pre-tax income for the year and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.
Earnings (loss) per Common Share
Basic earnings (loss) per common share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed by giving effect to all potentially dilutive common shares including restricted stock and stock options.
Three Months Ended
June 30,
Six Months Ended
June 30,
2024202320242023
Net (loss) income$(3,596,398)$(320,489)$(2,649,419)$2,005,675 
Weighted average common shares outstanding - basic14,950,082 14,684,035 14,875,718 14,625,435 
Effect of dilutive securities:
Unvested restricted stock and stock options256,156 268,328 235,018 282,158 
Weighted average common shares outstanding - diluted15,206,238 14,952,363 15,110,736 14,907,593 
Basic (loss) earnings per share$(0.24)$(0.02)$(0.18)$0.14 
Diluted (loss) earnings per share$(0.24)$(0.02)$(0.18)$0.13 
The following common stock equivalents were excluded from the computation of diluted earnings (loss) per share for the periods presented because including them would have been antidilutive:
Three Months Ended
June 30,
Six Months Ended
June 30,
Weighted average dilutive securities:2024202320242023
Restricted stocks    
Stock options80,132 87,983 82,722 90,953 
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. 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%.
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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, impairment of intangible assets, impairment of other long-lived assets, and purchase price allocations and related valuations.
Recent Accounting Pronouncements Adopted and Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to provide greater disaggregation within their annual rate reconciliation, including new requirements to present reconciling items on a gross basis in specified categories, disclose both percentages and dollar amounts and disaggregate individual reconciling items by jurisdiction and nature when the effect of the items meet a quantitative threshold. The guidance also requires disaggregating the annual disclosure of income taxes paid, net of refunds received, by federal (national), state and foreign taxes, with separate presentation of individual jurisdictions that meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024 on a prospective basis, with a retrospective option, and early adoption is permitted. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM and how the CODM uses the reported measure(s) of a segment’s profit or loss to assess performance and decide how to allocate resources. The guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, applied retrospectively with early adoption permitted. The Company is currently evaluating the impact of adoption of this standard on its consolidated financial statements and disclosures.
Note 2: 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 that 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, Nature of Operations and Summary of Significant Accounting Policies—Revenue Recognition.
Franchising Fees, Royalty Fees, Advertising Fund Revenue, and Software Fees
The Company currently franchises its concept across 41 states, the District of Columbia and Puerto Rico. 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
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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 a 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.
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 six months ended June 30, 2024 and 2023. Other revenues primarily consist of preferred vendor royalties associated with franchisees’ credit card transactions.
The following table shows the Company’s revenues disaggregated according to the timing of transfer of services:
Three Months Ended
June 30,
Six Months Ended
June 30,
2024202320242023
Revenue recognized at a point in time$28,126,422 $27,401,004 $55,805,938 $53,737,394 
Revenue recognized over time2,134,139 1,906,180 4,176,789 3,870,611 
Total Revenue$30,260,561 $29,307,184 $59,982,727 $57,608,005 
Rollforward of Accounts Receivable
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Changes in the Company’s accounts receivable, net during the six months ended June 30, 2024 were as follows:
Accounts Receivable, Net
Balance at December 31, 2022$3,911,272 
Balance at December 31, 2023$3,718,924 
Cash received against accounts receivable included at the beginning of the year(3,161,586)
Net increase during the six months ended June 30, 20243,018,446 
Balance at June 30, 2024$3,575,784 
Rollforward of Contract Liabilities and Contract Assets
Changes in the Company’s contract liability for deferred revenue from Company clinics during the six months ended June 30, 2024 were as follows:
Deferred Revenue from company clinics
Balance at December 31, 2022$7,471,549 
Balance at December 31, 2023$4,463,747 
Revenue recognized that was included in the contract liability at the beginning of the year(3,626,245)
Net increase during the six months ended June 30, 20243,583,099 
Balance at June 30, 2024$4,420,601 
Changes in the Company’s contract liability for deferred franchise fees during the six months ended June 30, 2024 were as follows:
Deferred Revenue
short and long-term
Balance at December 31, 2022$16,629,735 
Balance at December 31, 2023$16,113,879 
Revenue recognized that was included in the contract liability at the beginning of the year(1,333,503)
Net increase during the six months ended June 30, 2024676,668 
Balance at June 30, 2024$15,457,044 
The Company’s deferred franchise and development costs represent capitalized sales commissions. Changes during the six months ended June 30, 2024 were as follows:
Deferred Franchise and Development Costs
short and long-term
Balance at December 31, 2022$6,761,738 
Balance at December 31, 2023$6,251,366 
Recognized as cost of revenue during the six months ended June 30, 2024(560,968)
Net increase during the six months ended June 30, 2024149,629 
Balance at June 30, 2024$5,840,027 
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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 June 30, 2024:
Contract liabilities expected to be recognized inAmount
2024 (remainder)$1,288,312 
20252,442,897 
20262,347,229 
20272,271,789 
20282,139,524 
Thereafter4,967,293 
Total$15,457,044 

Note 3: Acquisitions and Assets Held for Sale
2023 Acquisition
On May 22, 2023, the Company entered into an Asset and Franchise Purchase Agreement pursuant to which the Company repurchased from the sellers three operating franchised clinics in California (the “CA Clinics Purchase”). As of the acquisition date, the Company operated the franchises as company-managed clinics. The total purchase price for the transactions was $1,188,764 to the seller (of which $109,767 was paid in the third quarter of 2023)., less $28,997 of net deferred revenue, resulting in total purchase consideration of $1,159,767.

Based on the terms of the purchase agreement, the CA Clinics Purchase has been treated as an asset purchase under GAAP as there were no outputs or processes to generate outputs acquired as part of these transactions. 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 total purchase price of the CA Clinics Purchase was as follows:
Property and equipment$313,995 
Operating lease right-of-use asset317,662 
Intangible assets1,004,513 
Total assets acquired1,636,170 
Deferred revenue(158,365)
Operating lease liability - current portion(118,081)
Operating lease liability - net of current portion(199,957)
Net purchase consideration$1,159,767 
Intangible assets in the table above primarily consisted of reacquired franchise rights of $0.7 million amortized over their estimated useful lives of six to seven years, customer relationships of $0.1 million amortized over an estimated useful life of two years, and assembled workforce of $0.2 million amortized over an estimated useful life of two years.
Assets Held for Sale
In 2023, the Company initiated plans to re-franchise the majority of its corporate-owned or managed clinics with plans to retain a small portion of high-performing clinics. The clinics identified to re-franchise make up approximately 76% of the corporate-owned or managed clinic portfolio. The clinics are in varying stages of sales negotiations with approximately 52% of the remaining clinics to be sold expected to close within one year with an estimated fair value of $21.8 million at June 30, 2024. The clinics identified to commit to sell within one year did not represent a major strategic shift because the clinics identified to commit to sell within one year do not involve exiting a major line of business or exiting a major geographic area. As a result, the results of these clinics will continue to be reported in the Company’s operating results and in its Corporate Clinics segment until the sales are each finalized. Effective with the designation as held for sale, the Company discontinued recording depreciation on property
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and equipment, net, amortization of intangible assets, net and amortization of ROU assets for the clinics as required by GAAP. The Company also separately classified the related assets and liabilities of the clinics as held for sale in its June 30, 2024 and December 31, 2023 condensed consolidated balance sheets.
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 prices or the clinics estimated fair values, the Company recorded an estimated loss on disposal of $0.5 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and an estimated loss on disposal of $0.7 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively, in net loss on disposition or impairment in its condensed consolidated income statement.
During the six months ended June 30, 2024, in connection with the sale of company-owned and managed clinics classified as held for sale as of December 31, 2023 for a combined sales price of $0.2 million, the Company sold $0.5 million Assets held for sale, net of a $0.1 million valuation allowance and $0.4 million of Liabilities to be disposed of in the condensed consolidated balance sheet as of June 30, 2024.

The principal components of the held for sale assets and liabilities as of December 31, 2023 and June 30, 2024 were as follows:

June 30,
2024
December 31,
2023
Assets
Property and equipment, net
$4,680,677 $4,887,220 
Operating lease right-of-use asset9,231,454 9,193,496 
Intangible assets, net3,288,812 3,351,430 
Goodwill781,543 1,140,529 
Valuation allowance(1,296,238)(657,620)
Total assets held for sale$16,686,248 $17,915,055 
Liabilities
Operating lease liability, current and non-current$8,688,387 $10,209,382 
Deferred revenue from company clinics3,452,183 3,622,481 
Total liabilities to be disposed of$12,140,570 $13,831,863 

The pre-tax income of the clinics designated as held for sale was $0.6 million and pre-tax loss of $90,000 for the three months ended June 30, 2024 and 2023, respectively, the results of which exclude the allocation of overhead. The pre-tax income of the clinics designated as held for sale was $1.8 million and pre-tax loss of $40,000 for the six months ended June 30, 2024 and 2023, respectively, the results of which exclude the allocation of overhead.
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Note 4: Property and Equipment
Property and equipment consisted of the following:
June 30,
2024
December 31,
2023
Office and computer equipment$4,151,850 $4,169,576 
Leasehold improvements12,054,891 12,013,250 
Software developed5,897,211 5,399,698 
Finance lease assets151,396 151,396 
22,255,348 21,733,920 
Accumulated depreciation and amortization(13,863,768)(12,005,459)
8,391,580 9,728,461 
Construction in progress537,078 1,315,856 
Property and equipment, net$8,928,658 $11,044,317 
Depreciation expense was $1.1 million and $1.4 million for the three months ended June 30, 2024 and 2023, respectively. Depreciation expense was $2.1 million and $2.6 million for the six months ended June 30, 2024 and 2023, respectively.
Amortization expense related to finance lease assets was $7,570 and $7,570 for the three months ended June 30, 2024 and 2023, respectively. Amortization expense related to finance lease assets was $15,140 and $15,139 for the six months ended June 30, 2024 and 2023, respectively.
Construction in progress at June 30, 2024 and December 31, 2023 principally related to development and construction costs for company-owned or managed clinics and to the development of software.
Note 5: Fair Value Measurements
The Company’s financial instruments include cash, restricted cash, accounts receivable, accounts payable, accrued expenses and debt under the Credit Agreement (as defined in Note 7, Debt). The carrying amounts of its financial instruments, except for debt, approximate their fair value due to their short maturities, which is considered a Level 1 fair value measurement. The carrying value of the Company’s debt under the Credit Agreement approximates fair value due to its interest rate being calculated from observable quoted prices for similar instruments, which is considered a Level 2 fair value measurement.
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 June 30, 2024 and December 31, 2023, 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
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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 Acquisitions (see Note 3, Acquisitions and Assets Held for Sale) were recorded at fair values on a nonrecurring basis and are considered Level 3 within the fair value hierarchy.
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. The estimated fair values of the company-owned or managed clinics classified as Held for Sale (see Note 3, Acquisitions and Assets Held for Sale) were recorded at fair values on a nonrecurring basis and are based upon Level 2 inputs, which includes a potential buyer agreed upon selling price or Level 3 inputs, which include the multiple earnings approach using historical financial performance of the clinic and historical acquisition trends based on previous reacquired franchise clinic purchases. The fair value measurement of the assets held for sale was recorded as $0.8 million based upon Level 2 inputs and $21.0 million based upon Level 3 inputs. As a result, the Company maintains a valuation allowance of $1.3 million to adjust the carrying value of the disposal group to fair value less cost to sell as of June 30, 2024.
Long-lived assets classified as held and used where the asset group was not determined to be recoverable are tested for impairment. The asset group was determined to be the clinic level, as this is the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The long-lived assets fair values were determined by the following: Level 1 inputs, which included observable inputs from executed lease termination agreements; Level 2 inputs where available, which included using a valuation multiple (e.g, price per square foot) based on observable prices for comparable long-lived assets; and Level 3 inputs, which included the multiple earnings approach using the Company's historical earnings trend data, comparable historical asset sales by the Company and franchisees that were not exact matches, and (for calculating the fair value of intangible assets specifically) the Company’s historical experience, future projections and comparable market data include future cash flows, long-term growth rates, attrition rates and discount rates. The carrying values of these asset groups impaired to their fair value included ROU assets of $0.5 million that were written down to $0.1 million determined by Level 1 and Level 2 inputs. The carrying values of these asset groups impaired to their fair value also included property and equipment, net of $1.9 million that were written down to $1.3 million determined by the Level 3 inputs discussed above. For the three and six months ended June 30, 2024, the Company recorded an impairment loss of $0.8 million and $0.9 million, respectively, included in the net loss, disposition and impairment on the condensed consolidated income statement for impairment of long-lived assets classified as held and used where the asset group was not determined to be recoverable.
Note 6: Intangible Assets
In May 2023, the Company recognized $0.7 million, $0.1 million and $0.2 million of reacquired franchise rights, customer relationships and acquired workforce, respectively, from the CA Clinics Purchase (see Note 3, Acquisitions and Assets Held for Sale).
Intangible assets consisted of the following:
As of June 30, 2024
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Value
Intangible assets subject to amortization:
Reacquired franchise rights$7,340,066 $(3,436,502)$3,903,564 
Customer relationships1,682,807 (1,571,730)111,077 
Assembled workforce440,844 (310,323)130,521 
$9,463,717 $(5,318,555)$4,145,162 
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As of December 31, 2023
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Value
Intangible assets subject to amortization:
Reacquired franchise rights$7,385,830 $(2,926,595)$4,459,235 
Customer relationships1,682,807 (1,349,938)332,869 
Assembled workforce440,844 (212,022)228,822 
$9,509,481 $(4,488,555)$5,020,926 
Amortization expense related to the Company’s intangible assets was $0.4 million and $0.9 million for the three months ended June 30, 2024 and 2023, respectively. Amortization expense was $0.8 million and $1.9 million for the six months ended June 30, 2024 and 2023, respectively.
Estimated amortization expense for 2024 and subsequent years is as follows:
Amount
2024 (remainder)$666,043 
20251,091,548 
2026949,138 
2027556,369 
2028444,967 
Thereafter$437,097 
Total$4,145,162 

Note 7: Debt
Credit 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 (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 a $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 was 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 SOFR rate, 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 was 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, which will occur on February 28, 2027. On January 17, 2024, the Company paid down the outstanding balance on its Debt under the Credit Agreement of $2,000,000.

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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. As of June 30, 2024, the Company was in compliance with all applicable financial and non-financial covenants under the Credit Agreement, and there is no outstanding balance as of June 30, 2024.
Note 8: Stock-Based Compensation 
The Company grants stock-based awards under its Amended and Restated 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 June 30, 2024, the Company has granted under the 2014 Plan (i) non-qualified stock options; (ii) incentive stock options; and (iii) restricted stock. There were no stock appreciation rights and restricted stock units granted under the 2014 Plan as of June 30, 2024.
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 historically has used the simplified method to calculate the expected term of stock option grants to employees as the Company did 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 six months ended June 30, 2024 and 2023.
The information below summarizes the stock option activity for the six months ended June 30, 2024:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Life
(Years)
Outstanding at December 31, 2023486,334 $8.88 3.7
Granted  
Exercised(6,335)8.22 
Forfeited(2,054)34.60 
Expired(4,619)25.87 
Outstanding at June 30, 2024473,326 $8.61 3.2
Exercisable at June 30, 2024465,930 $7.99 3.1
For the three months ended June 30, 2024 and 2023, stock-based compensation expense for stock options was $47,037 and $85,724, respectively. For the six months ended June 30, 2024 and 2023, stock-based compensation expense for stock options was $101,775 and $150,606, respectively.
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Restricted Stock
Restricted stock granted to employees generally vests in four equal annual installments, although on March 5, 2024, the Company granted 29,454 shares of restricted stock as part of a special award to certain executive employees that vest in one installment on the first anniversary of the grant. Restricted stock granted to non-employee directors typically vests in full one year after the date of grant.
The information below summarizes the restricted stock activity for the six months ended June 30, 2024:
Restricted Stock AwardsSharesWeighted Average
Grant-Date Fair
Value per Award
Non-vested at December 31, 2023231,901 $17.32 
Granted234,672 9.78 
Vested(103,070)16.32 
Forfeited(27,977)15.83 
Non-vested at June 30, 2024335,526 $12.48 
For the three months ended June 30, 2024 and 2023, stock-based compensation expense for restricted stock was $505,028 and $331,293, respectively. For the six months ended June 30, 2024 and 2023, stock-based compensation expense for restricted stock was $943,685 and $532,621, respectively.
Note 9: Income Taxes
During the three months ended June 30, 2024 and 2023, the Company recorded income tax expense of $0.2 million and income tax benefit of $0.2 million, respectively. During the six months ended June 30, 2024 and 2023, the Company recorded income tax expense of $0.4 million and $0.7 million, respectively. The Company’s effective tax rates differ from the federal statutory tax rate for the three months ended June 30, 2024 due to change in valuation allowance. The Company’s effective tax rate differs from the statutory rate for the six months ended June 30, 2024 primarily due to nondeductible meals and entertainment, change in valuation allowance, and state taxes. The effective tax rate for the three and six months ended June 30, 2023 differs from the statutory rate primarily due to permanent differences, discrete items and state taxes.
Note 10: Commitments and Contingencies
Leases
The table below summarizes the components of lease expense and income statement location for the three and six months ended June 30, 2024 and 2023:

Line Item in the
Company’s Condensed Consolidated
Income Statements
Three Months Ended
June 30, 2024
Three Months Ended
June 30, 2023
Six Months Ended
June 30, 2024
Six Months Ended
June 30, 2023
Finance lease costs:
Amortization of assetsDepreciation and amortization$7,570 $7,570 $15,140 $15,139 
Interest on lease liabilitiesOther income (expense), net561 825 1,189 1,713 
Total finance lease costs8,131 8,395 16,329 16,852 
Operating lease costsGeneral and administrative expenses1,035,959 1,639,749 2,077,415 3,253,595 
Total lease costs$1,044,090 $1,648,144 $2,093,744 $3,270,447 
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Supplemental information and balance sheet location related to leases (excluding amounts related to leases classified as held for sale) was as follows:
June 30, 2024December 31, 2023
Operating Leases:
Operating lease right-of -use asset$11,859,692$12,413,221
Operating lease liability - current portion$3,811,835$3,756,328
Operating lease liability - net of current portion10,205,22210,914,997
Total operating lease liability$14,017,057$14,671,325
Finance Leases:
Property and equipment, at cost$151,396$151,396
Less accumulated amortization(133,071)(117,932)
Property and equipment, net$18,325$33,464
Finance lease liability - current portion26,03825,491
Finance lease liability - net of current portion24,85838,016
Total finance lease liabilities$50,896$63,507
Weighted average remaining lease term (in years):
Operating leases4.74.8
Finance lease1.92.4
Weighted average discount rate:
Operating leases5.5 %5.4 %
Finance leases4.3 %4.3 %
Supplemental cash flow information related to leases was as follows:
Six Months Ended
June 30, 2024
Six Months Ended
June 30, 2023
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases$2,380,024 $3,465,890 
Operating cash flows from finance leases1,189 1,713 
Financing cash flows from finance leases12,610 12,087 
Non-cash transactions: ROU assets obtained in exchange for lease liabilities
Operating lease$1,216,902 $3,859,696 
Finance lease  
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Maturities of lease liabilities as of June 30, 2024 are as follows:
Operating LeasesFinance Lease
2024 (remainder)$2,264,595 $13,800 
20254,304,571 27,600 
20262,962,306 11,500 
20272,277,031  
20281,507,778  
Thereafter2,654,183  
Total lease payments$15,970,464 $52,900 
Less: Imputed interest(1,953,407)(2,004)
Total lease obligations14,017,057 50,896 
Less: Current obligations(3,811,835)(26,038)
Long-term lease obligation$10,205,222 $24,858 
During the second quarter of 2024, the Company held an operating lease that has not yet commenced for space to be used by the Company’s new corporate clinic. The lease is expected to result in additional ROU assets and liabilities of approximately $0.6 million. This lease is expected to commence during the fourth quarter of 2024, with a lease term of ten years.
Guarantee in Connection with the Sale of the Divested Business
In connection with the sale of a company-managed clinic in 2022, the Company guaranteed one future operating lease commitment assumed by the buyers. The Company is obligated to perform under the guarantee if the buyers fail to perform under the lease agreement at any time during the remainder of the lease agreement, which expires on May 31, 2027. At the date of sale, the undiscounted maximum potential future payments totaled $0.2 million. As of June 30, 2024, the undiscounted remaining lease payments under the agreement totaled $0.2 million. The Company had not recorded a liability with respect to the guarantee obligation as of June 30, 2024, as the Company concluded that payment under the lease guarantee was not probable.
Litigation
In the normal course of business, the Company is party to litigation and claims from time to time. The Company maintains insurance to cover certain litigation and claims. During the three and six months ended June 30, 2024, the Company incurred litigation expenses, including settlement costs related to employment matters that were outside the normal course of business of $1.5 million included as general and administrative expenses on the condensed consolidated income statement.
Note 11: 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 June 30, 2024, the Company operated or managed 131 clinics under this segment. The Franchise Operations segment is composed of the operating activities of the franchise business unit. As of June 30, 2024, the franchise system consisted of 829 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 following tables present financial information for the Company’s two operating business segments.
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Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
Revenues:
Corporate clinics$17,648,736 $17,802,838 $35,186,240 $34,930,795 
Franchise operations12,611,825 11,504,346 24,796,487 22,677,210 
Total revenues$30,260,561 $29,307,184 $59,982,727 $57,608,005 
Depreciation and amortization:
Corporate clinics$1,211,613 $2,032,666 $2,315,845 $3,959,758 
Franchise operations234,064 207,717 453,314 406,690 
Corporate administration78,136 88,884 158,559 177,874 
Total depreciation and amortization$1,523,813 $2,329,267 $2,927,718 $4,544,322