The Joint Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Commitments and Contingencies

Note 13 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

13:

Commitments and Contingencies

Leases

The table below summarizes the components of lease expense and income statement location for the

three

and

nine

months ended

September 30, 2019:

	Line Item in the Company’s Consolidated Statements of Operations	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019

Finance lease costs:
Amortization of assets	Depreciation and amortization	$	6,169	$	18,506
Interest on lease liabilities	Other expense, net		1,642		5,331
Total finance lease costs			7,811		23,837
Operating lease costs	General and administrative expenses	$	855,962	$	2,292,191
Total lease costs		$	863,773	$	2,316,028

Supplemental information and balance sheet location related to leases is as follows:

	September 30, 2019

Operating Leases:
Operating lease right-of -use asset	$	13,149,467

Operating lease liability - current portion	$	2,195,852
Operating lease liability - net of current portion		11,798,120
Total operating lease liability	$	13,993,972

Finance Leases:
Property and equipment, at cost	$	80,604
Less accumulated amortization		(18,506	)
Property and equipment, net	$	62,098


Finance lease liability - current portion	$	23,656
Finance lease liability - net of current portion		40,689
Total finance lease liabilities	$	64,345

Weighted average remaining lease term (in years):
Operating leases		5.5
Finance lease		2.5

Weighted average discount rate:
Operating leases		8.8	%
Finance leases		10.0	%

Supplemental cash flow information related to leases is as follows:

	Nine Months Ended September 30, 2019

Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,233,149
Operating cash flows from finance leases		5,331
Financing cash flows from finance leases		16,259

Non-cash transactions: ROU assets obtained in exchange for lease liabilities
Operating lease	$	4,501,092
Finance lease		80,604

Maturities of lease liabilities as of

September 30, 2019

are as follows:

	Operating Leases			Finance Lease
2019 (remainder)	$	781,278		$	7,197
2020		3,353,552			28,786
2021		3,427,714			28,786
2022		3,310,735			7,676
2023		2,595,136			-
Thereafter		4,215,956			-
Total lease payments	$	17,684,371		$	72,445
Less: Imputed interest		(3,690,399	)		(8,100	)
Total lease obligations		13,993,972			64,345
Less: Current obligations		(2,195,852	)		(23,656	)
Long-term lease obligation	$	11,798,120		$	40,689

The future minimum obligations under operating leases in effect as of

December 31, 2018

having a noncancelable term in excess of

one

year as determined prior to the adoption of ASC

842

are as follows:

	Operating Leases
2019	$	2,630,443
2020	$	2,406,645
2021		2,299,887
2022		2,195,077
2023		1,474,396
Thereafter		2,772,575
Total lease payments	$	13,779,023

Litigation

In the normal course of business, the Company is party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will

not

have a material adverse effect on the Company.