Annual report pursuant to Section 13 and 15(d)

Quarterly Financial Data (Unaudited and Restated)

v3.23.3
Quarterly Financial Data (Unaudited and Restated)
 12 Months Ended
Dec. 31, 2022
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Financial Data (Unaudited and Restated) Quarterly Financial Data (Unaudited and Restated)
The Company is providing restated quarterly and year-to-date unaudited consolidated financial information for interim periods occurring within the years ended December 31, 2022 and December 31, 2021. See Note 2, Restatement of Previously Issued Consolidated Financial Statements for further background concerning the events preceding the restatement of financial information in this Comprehensive Form 10-K/A.

The Company assessed the impact of these errors on its previously issued interim financial statements and determined them to be quantitatively and qualitatively material to interim periods for 2022 and 2021 based on its analysis of Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”. The impact of these errors is summarized in the tables that follow.
The following table summarizes the effect of the errors on the Company’s consolidated balance sheets as of March 31, 2022, June 30, 2022, and September 30, 2022:
As Previously Reported Adjustments
As Restated
March 31, 2022 June 30, 2022 September 30, 2022 March 31, 2022 June 30, 2022 September 30, 2022 March 31, 2022 June 30, 2022 September 30, 2022
Intangible assets, net $ 4,829,941  $ 9,114,701  $ 10,162,506  $ (552,911) $ (2,356,584) $ (2,124,740) $ 4,277,030  $ 6,758,117  $ 8,037,766 
Deferred tax assets
 9,205,410  9,116,248  9,115,231  2,493,018  3,202,634  3,333,327  11,698,428  12,318,882  12,448,558 
Total assets 85,062,449  86,235,794  88,291,398  1,940,107  846,050  1,208,587  87,002,556  87,081,844  89,499,985 
Current liabilities:
Deferred franchise and regional development fee revenue, current portion 3,130,856  2,981,534  2,974,993  (3,130,856) (2,981,534) (2,974,993) —  —  — 
Deferred franchise fee revenue, current portion
 —  —  —  2,408,266  2,393,993  2,410,951  2,408,266  2,393,993  2,410,951 
Upfront regional developer fees, current portion —  —  —  722,590  587,541  564,042  722,590  587,541  564,042 
Other current liabilities 541,250  558,250  522,500  24,511  49,022  73,533  565,761  607,272  596,033 
Total current liabilities 20,624,047  20,238,810  21,637,706  24,511  49,022  73,533  20,648,558  20,287,832  21,711,239 
Deferred franchise and regional development fee revenue, net of current portion 15,410,136  15,447,554  15,604,180  (15,410,136) (15,447,554) (15,604,180) —  —  — 
Deferred franchise fee revenue, net of current portion
 —  —  —  13,154,047  13,584,091  13,870,401  13,154,047  13,584,091  13,870,401 
Upfront regional developer fees, net of current portion —  —  —  2,256,089  1,863,463  1,733,779  2,256,089  1,863,463  1,733,779 
Other liabilities 27,230  27,230  27,230  966,523  1,064,565  1,162,607  993,753  1,091,795  1,189,837 
Total liabilities 55,328,037  55,752,399  56,765,925  991,034  1,113,587  1,236,140  56,319,071  56,865,986  58,002,065 
Accumulated deficit (13,724,938) (13,380,196) (12,889,083) 949,073  (267,537) (27,553) (12,775,865) (13,647,733) (12,916,636)
Total The Joint Corp. stockholders' equity 29,709,412  30,458,395  31,500,473  949,073  (267,537) (27,553) 30,658,485  30,190,858  31,472,920 
Total equity 29,734,412  30,483,395  31,525,473  949,073  (267,537) (27,553) 30,683,485  30,215,858  31,497,920 
Total liabilities and stockholders' equity 85,062,449  86,235,794  88,291,398  1,940,107  846,050  1,208,587  87,002,556  87,081,844  89,499,985 
The following table summarizes the effect of the errors on the Company’s consolidated income statements for the three-month periods ended March 31, 2022 (Q1), June 30, 2022 (Q2), and September 30, 2022 (Q3):
As Previously Reported
Adjustments
As Restated
Q1'22
Q2'22
Q3'22
Q1'22
Q2'22
Q3'22
Q1'22
Q2'22
Q3'22
Revenues:
Regional developer fees $ 201,787  $ 169,953  $ 153,181  $ (201,787) $ (169,953) $ (153,181) $ —  $ —  $ — 
Total revenues 22,438,538  25,057,318  26,603,000  (201,787) (169,953) (153,181) 22,236,751  24,887,365  26,449,819 
Cost of revenues:
Franchise and regional developer cost of revenues 2,002,813  2,074,889  2,141,945  (201,787) (169,953) (153,181) 1,801,026  1,904,936  1,988,764 
Total cost of revenues 2,312,771  2,427,045  2,490,276  (201,787) (169,953) (153,181) 2,110,984  2,257,092  2,337,095 
Depreciation and amortization 1,629,176  1,700,476  2,011,768  (292,520) (238,606) (231,844) 1,336,656  1,461,870  1,779,924 
General and administrative expenses 15,378,623  16,528,022  17,796,806  154,803  2,042,279  —  15,533,426  18,570,301  17,796,806 
Total selling, general and administrative expenses 20,295,287  22,068,222  23,347,861  (137,717) 1,803,673  (231,844) 20,157,570  23,871,895  23,116,017 
Income from operations (176,426) 473,207  500,472  137,717  (1,803,673) 231,844  (38,709) (1,330,466) 732,316 
Income before income tax expense (benefit) (192,573) 453,921  475,237  137,717  (1,803,673) 231,844  (54,856) (1,349,752) 707,081 
Income tax expense (benefit) 13,224  109,179  (15,876) (72,300) (587,064) (8,139) (59,076) (477,885) (24,015)
Net income (loss)
 (205,797) 344,742  491,113  210,017  (1,216,609) 239,983  4,220  (871,867) 731,096 
Earnings per share:
Basic earnings (loss) per share
 $ (0.01) $ 0.02  $ 0.03  $ 0.01  $ (0.08) $ 0.02  $ —  $ (0.06) $ 0.05 
Diluted earnings (loss) per share
 $ (0.01) $ 0.02  $ 0.03  $ 0.01  $ (0.08) $ 0.02  $ —  $ (0.06) $ 0.05 
The following table summarizes the effect of the errors on the Company’s consolidated income statements for the six-month period ended June 30, 2022 and the nine-month period ended September 30, 2022:
As Previously Reported
Adjustments
As Restated
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022
Revenues:
Regional developer fees $ 371,740  $ 524,923  $ (371,740) $ (524,923) $ —  $ — 
Total revenues 47,495,856  74,098,856  (371,740) (524,923) 47,124,116  73,573,933 
Cost of revenues:
Franchise and regional developer cost of revenues 4,077,701  6,219,646  (371,740) (524,923) 3,705,961  5,694,723 
Total cost of revenues 4,739,816  7,230,092  (371,740) (524,923) 4,368,076  6,705,169 
Depreciation and amortization 3,329,653  5,341,420  (531,126) (762,970) 2,798,527  4,578,450 
General and administrative expenses 31,906,644  49,703,451  2,197,082  2,197,082  34,103,726  51,900,533 
Total selling, general and administrative expenses 42,363,509  65,711,371  1,665,956  1,434,112  44,029,465  67,145,483 
Income from operations 296,782  797,253  (1,665,956) (1,434,112) (1,369,174) (636,859)
Income before income tax expense (benefit) 261,348  736,585  (1,665,956) (1,434,112) (1,404,608) (697,527)
Income tax expense (benefit) 122,403  106,527  (659,363) (667,503) (536,960) (560,976)
Net income (loss) 138,945  630,058  (1,006,593) (766,609) (867,648) (136,551)
Earnings per share:
Basic earnings (loss) per share $ 0.01  $ 0.04  $ (0.07) $ (0.05) $ (0.06) $ (0.01)
Diluted earnings (loss) per share $ 0.01  $ 0.04  $ (0.07) $ (0.05) $ (0.06) $ (0.01)

The following table summarizes the effect of the errors on the Company’s consolidated statements of stockholders' equity for the first through third fiscal quarters of 2022:
Accumulated
Deficit		 Total The Joint Corp. stockholder's equity
Total Equity
Balances, December 31, 2021 (as previously reported)
 $ (13,519,142) $ 29,544,627  $ 29,569,627 
Adjustment due to cumulative error correction
 739,057  739,057  739,057 
12/31/2021 (as restated)
 $ (12,780,085) $ 30,283,684  $ 30,308,684 
Balances, March 31, 2022 (as previously reported)
 $ (13,724,938) $ 29,709,412  $ 29,734,412 
Adjustment due to cumulative error correction
 949,073  949,073  949,073 
Balances, March 31, 2022 (as restated)
 $ (12,775,865) $ 30,658,485  $ 30,683,485 
Balances, June 30, 2022 (as previously reported)
 $ (13,380,196) $ 30,458,395  $ 30,483,395 
Adjustment due to cumulative error correction
 (267,537) (267,537) (267,537)
Balances, June 30, 2022 (as restated)
 $ (13,647,733) $ 30,190,858  $ 30,215,858 
Balances, September 30, 2022 (as previously reported)
 $ (12,889,083) $ 31,500,473  $ 31,525,473 
Adjustment due to cumulative error correction
 (27,553) (27,553) (27,553)
Balances, September 30, 2022 (as restated)
 $ (12,916,636) $ 31,472,920  $ 31,497,920 
The following table summarizes the effect of the errors on the Company’s consolidated statements of cash flows for the three-month period ended March 31, 2022, the six-month period ended June 30, 2022, and the nine-month period ended September 30, 2022:
As Previously Reported Adjustments As Restated
Three Months Ended March, 31, 2022
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022
Three Months Ended March, 31, 2022
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022
Three Months Ended March, 31, 2022
Six Months Ended June 30, 2022
Nine Months Ended September 30, 2022
Cash flows from operating activities:
Net income (loss)
 $ (205,797) $ 138,945  $ 630,058  210,017  (1,006,593) (766,609) $ 4,220  $ (867,648) $ (136,551)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 1,629,176  3,329,653  5,341,420  (292,520) (531,126) (762,970) 1,336,656  2,798,527  4,578,450 
Deferred income taxes (16,776) 72,386  73,403  (194,853) (904,469) (1,035,162) (211,629) (832,083) (961,759)
Changes in operating assets and liabilities:
Upfront regional developer fees
 —  —  —  (296,983) (824,658) (977,841) (296,983) (824,658) (977,841)
Deferred revenue 296,487  492,473  636,470  201,786  371,740  524,923  498,273  864,213  1,161,393 
Other liabilities
 280,162  404,329  360,790  122,553  245,106  367,659  402,715  649,435  728,449 
Net cash provided by (used in) operating activities
 447,878  1,465,160  5,682,415  (250,000) (2,650,000) (2,650,000) 197,878  (1,184,840) 3,032,415 
Cash flows from investing activities:
Reacquisition and termination of regional developer rights (250,000) (2,650,000) (2,650,000) 250,000  2,650,000  2,650,000  —  —  — 
Net cash used in investing activities (1,539,943) (11,414,961) (14,938,929) 250,000  2,650,000  2,650,000  (1,289,943) (8,764,961) (12,288,929)
Decrease in cash
 (1,066,427) (9,876,748) (8,944,196) —  —  —  (1,066,427) (9,876,748) (8,944,196)

The following table summarizes the effect of the errors on the Company’s consolidated balance sheets as of March 31, 2021, June 30, 2021, and September 30, 2021:
As Previously Reported Adjustments
As Restated
March 31, 2021 June 30, 2021 September 30, 2021 March 31, 2021 June 30, 2021 September 30, 2021 March 31, 2021 June 30, 2021 September 30, 2021
Intangible assets, net $ 3,444,538  $ 6,176,429  $ 5,280,024  $ (2,315,922) $ (1,774,158) $ (1,232,393) $ 1,128,616  $ 4,402,271  $ 4,047,631 
Deferred tax assets
 8,360,245  9,322,066  9,850,676  2,092,559  2,040,446  1,894,666  10,452,804  11,362,512  11,745,342 
Total assets 67,054,083  78,211,226  81,044,983  (223,364) 266,288  662,273  66,830,719  78,477,514  81,707,256 
Current liabilities:
Deferred franchise and regional development fee revenue, current portion 3,045,868  3,162,710  3,198,750  (3,045,868) (3,162,710) (3,198,750) —  —  — 
Deferred franchise fee revenue, current portion
 —  —  —  2,229,101  2,347,990  2,405,300  2,229,101  2,347,990  2,405,300 
Upfront regional developer fees, current portion —  —  —  816,767  814,720  793,450  816,767  814,720  793,450 
Other current liabilities 707,763  551,035  404,901  —  —  —  707,763  551,035  404,901 
Total current liabilities 17,414,714  21,778,714  20,934,744  —  —  —  17,414,714  21,778,714  20,934,744 
Deferred franchise and regional development fee revenue, net of current portion 13,560,449  14,708,216  15,349,878  (13,560,449) (14,708,216) (15,349,878) —  —  — 
Deferred franchise fee revenue, net of current portion
 —  —  —  10,672,244  11,887,275  12,671,068  10,672,244  11,887,275  12,671,068 
Upfront regional developer fees, net of current portion —  —  —  2,888,205  2,820,941  2,678,810  2,888,205  2,820,941  2,678,810 
Other liabilities 27,230  27,230  27,231  601,690  690,621  779,551  628,920  717,851  806,782 
Total liabilities 43,364,021  50,911,850  51,383,166  601,690  690,621  779,551  43,965,711  51,602,471  52,162,717 
Accumulated deficit (17,780,218) (15,096,255) (13,184,061) (825,054) (424,333) (117,278) (18,605,272) (15,520,588) (13,301,339)
Total The Joint Corp. stockholders' equity 23,689,962  27,299,276  29,636,817  (825,054) (424,333) (117,278) 22,864,908  26,874,943  29,519,539 
Total equity 23,690,062  27,299,376  29,661,817  (825,054) (424,333) (117,278) 22,865,008  26,875,043  29,544,539 
Total liabilities and stockholders' equity 67,054,083  78,211,226  81,044,983  (223,364) 266,288  662,273  66,830,719  78,477,514  81,707,256 
The following table summarizes the effect of the errors on the Company’s consolidated income statements for the three-month periods ended March 31, 2021, June 30, 2021, and September 30, 2021:
As Previously Reported
Adjustments
As Restated
Q1'21
Q2'21
Q3'21
Q1'21
Q2'21
Q3'21
Q1'21
Q2'21
Q3'21
Revenues:
Regional developer fees $ 217,956  $ 214,434  $ 209,651  $ (217,956) $ (214,434) $ (209,651) $ —  $ —  $ — 
Total revenues 17,547,965  20,218,798  20,991,621  (217,956) (214,434) (209,651) 17,330,009  20,004,364  20,781,970 
Cost of revenues:
Franchise and regional developer cost of revenues 1,624,572  1,786,833  1,907,874  (217,956) (214,434) (209,651) 1,406,616  1,572,399  1,698,223 
Total cost of revenues 1,765,317  2,038,538  2,300,122  (217,956) (214,434) (209,651) 1,547,361  1,824,104  2,090,471 
Depreciation and amortization 1,169,866  1,443,018  1,662,255  (541,765) (541,765) (541,764) 628,101  901,253  1,120,491 
General and administrative expenses 10,087,060  11,614,444  12,812,331  1,363,144  10,123  10,123  11,450,204  11,624,567  12,822,454 
Total selling, general and administrative expenses 13,746,205  16,190,177  17,356,161  821,379  (531,642) (531,641) 14,567,584  15,658,535  16,824,520 
Income from operations 1,971,676  2,034,343  1,338,878  (821,379) 531,642  531,641  1,150,297  2,565,985  1,870,519 
Income before income tax expense (benefit) 1,950,139  2,017,970  1,322,739  (821,379) 531,642  531,641  1,128,760  2,549,612  1,854,380 
Income tax expense (benefit) (364,148) (665,992) (614,356) (246,546) 130,920  224,587  (610,694) (535,072) (389,769)
Net income 2,314,287  2,683,962  1,937,095  (574,833) 400,722  307,054  1,739,454  3,084,684  2,244,149 
Earnings per share:
Basic earnings per share $ 0.16  $ 0.19  $ 0.13  $ (0.04) $ 0.03  $ 0.03  $ 0.12  $ 0.22  $ 0.16 
Diluted earnings per share $ 0.16  $ 0.18  $ 0.13  $ (0.04) $ 0.03  $ 0.02  $ 0.12  $ 0.21  $ 0.15 
The following table summarizes the effect of the errors on the Company’s consolidated income statements for the six-month period ended June 30, 2021 and the nine-month period ended September 30, 2021:
As Previously Reported
Adjustments
As Restated
Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021
Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021
Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021
Revenues:
Regional developer fees $ 432,390  $ 642,041  $ (432,390) $ (642,041) $ —  $ — 
Total revenues 37,766,762  58,758,383  (432,390) (642,041) 37,334,372  58,116,342 
Cost of revenues:
Franchise and regional developer cost of revenues 3,411,404  5,319,278  (432,390) (642,041) 2,979,014  4,677,237 
Total cost of revenues 3,803,854  6,103,976  (432,390) (642,041) 3,371,464  5,461,935 
Depreciation and amortization 2,612,884  4,275,140  (1,083,530) (1,625,295) 1,529,354  2,649,845 
General and administrative expenses 21,701,047  34,513,378  1,373,267  1,383,389  23,074,314  35,896,767 
Total selling, general and administrative expenses 29,935,974  47,292,135  289,737  (241,906) 30,225,711  47,050,229 
Income from operations 4,006,426  5,345,305  (289,737) 241,906  3,716,689  5,587,211 
Income before income tax expense (benefit) 3,968,517  5,291,255  (289,737) 241,906  3,678,780  5,533,161 
Income tax expense (benefit) (1,030,140) (1,644,496) (115,626) 108,961  (1,145,766) (1,535,535)
Net income 4,998,657  6,935,751  (174,111) 132,945  4,824,546  7,068,696 
Earnings per share:
Basic earnings per share $ 0.35  $ 0.49  $ (0.01) $ —  $ 0.34  $ 0.49 
Diluted earnings per share $ 0.34  $ 0.46  $ (0.02) $ 0.01  $ 0.32  $ 0.47 

The following table summarizes the effect of the errors on the Company’s consolidated statements of stockholders' equity for the first through third fiscal quarters of 2021:
Accumulated
Deficit		 Total The Joint Corp. stockholder's equity
Total Equity
Balances, December 31, 2020 (as previously reported)
 $ (20,094,912) $ 21,126,152  $ 21,126,252 
Adjustment due to cumulative error correction
 (250,220) (250,220) (250,220)
Balances, December 31, 2020 (as restated)
 $ (20,345,132) $ 20,875,932  $ 20,876,032 
Balances, March 31, 2021 (as previously reported)
 $ (17,780,218) $ 23,689,962  $ 23,690,062 
Adjustment due to cumulative error correction
 (825,054) (825,054) (825,054)
Balances, March 31, 2021 (as restated)
 $ (18,605,272) $ 22,864,908  $ 22,865,008 
Balances, June 30, 2021 (as previously reported)
 $ (15,096,255) $ 27,299,276  $ 27,299,376 
Adjustment due to cumulative error correction
 (424,333) (424,333) (424,333)
Balances, June 30, 2021 (as restated)
 $ (15,520,588) $ 26,874,943  $ 26,875,043 
Balances, September 30, 2021 (as previously reported)
 $ (13,184,061) $ 29,636,817  $ 29,661,817 
Adjustment due to cumulative error correction
 (117,278) (117,278) (117,278)
Balances, September 30, 2021 (as restated)
 $ (13,301,339) $ 29,519,539  $ 29,544,539 
The following table summarizes the effect of the errors on the Company’s consolidated statements of cash flows for the three-month period ended March 31, 2021, the six-month period ended June 30, 2021, and the nine-month period ended September 30, 2021:
As Previously Reported Adjustments
As Restated
Three Months Ended March, 31, 2021
Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021
Three Months Ended March, 31, 2021
Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021
Three Months Ended March, 31, 2021
Six Months Ended June 30, 2021
Nine Months Ended September 30, 2021
Cash flows from operating activities:
Net income $ 2,314,287  $ 4,998,657  $ 6,935,751  $ (574,833) $ (174,111) $ 132,945  $ 1,739,454  $ 4,824,546  $ 7,068,696 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,169,866  2,612,884  4,275,140  (541,765) (1,083,530) (1,625,295) 628,101  1,529,354  2,649,845 
Deferred income taxes (418,810) (1,380,631) (1,909,241) (325,352) (273,239) (127,459) (744,162) (1,653,870) (2,036,700)
Changes in operating assets and liabilities:
Upfront regional developer fees
 —  —  —  (143,634) (212,945) (376,346) (143,634) (212,945) (376,346)
Deferred revenue 329,383  1,757,294  2,410,202  107,955  177,266  340,666  437,338  1,934,560  2,750,868 
Other liabilities 235,116  565,779  852,924  88,929  177,859  266,789  324,045  743,638  1,119,713 
Net cash provided by operating activities 2,271,448  9,014,529  12,451,587  (1,388,700) (1,388,700) (1,388,700) 882,748  7,625,829  11,062,887 
Cash flows from investing activities:
Reacquisition and termination of regional developer rights (1,388,700) (1,388,700) (1,388,700) 1,388,700  1,388,700  1,388,700  —  —  — 
Net cash used in investing activities (2,340,341) (8,877,659) (11,264,585) 1,388,700  1,388,700  1,388,700  (951,641) (7,488,959) (9,875,885)
Decrease in cash
 (2,812,479) (1,985,284) (827,347) —  —  —  (2,812,479) (1,985,284) (827,347)