Quarterly report pursuant to Section 13 or 15(d)

Nature of Operations and Summary of Significant Accounting Policies (Tables)

v3.23.3
Nature of Operations and Summary of Significant Accounting Policies (Tables)
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Schedule of Correction of Immaterial Error
The following table summarizes the effect of the errors on the Company’s condensed balance sheet as of September 30, 2022:

September 30,
2022		 September 30,
2022
As Previously Reported
Adjustments
As Restated
Intangible assets, net $ 10,162,506  $ (2,124,740) $ 8,037,766 
Deferred tax assets 9,115,231  3,333,327  12,448,558 
Total assets 88,291,398  1,208,587  89,499,985 
Current liabilities:
Deferred franchise and regional development fee revenue, current portion 2,974,993  (2,974,993) — 
Deferred franchise fee revenue, current portion —  2,410,951  2,410,951 
Upfront regional developer fees, current portion —  564,042  564,042 
Other current liabilities 522,500  73,533  596,033 
Total current liabilities 21,637,706  73,533  21,711,239 
Deferred franchise and regional development fee revenue, net of current portion 15,604,180  (15,604,180) — 
Deferred franchise fee revenue, net of current portion —  13,870,401  13,870,401 
Upfront regional developer fees, net of current portion —  1,733,779  1,733,779 
Other liabilities 27,230  1,162,607  1,189,837 
Total liabilities 56,765,925  1,236,140  58,002,065 
Accumulated deficit (12,889,083) (27,553) (12,916,636)
Total The Joint Corp. stockholders' equity 31,500,473  (27,553) 31,472,920 
Total equity 31,525,473  (27,553) 31,497,920 
Total liabilities and stockholders' equity 88,291,398  1,208,587  89,499,985 

The following table summarizes the effect of the errors on the Company’s condensed income statement for the three and nine months ended September 30, 2022:
As Previously Reported Adjustments As Restated
Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022 Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
Revenues:
Regional developer fees $ 153,181  $ 524,923  $ (153,181) $ (524,923) $ —  $ — 
Total revenues 26,603,000  74,098,856  (153,181) (524,923) 26,449,819  73,573,933 
Cost of revenues:
Franchise and regional developer cost of revenues 2,141,945  6,219,646  (153,181) (524,923) 1,988,764  5,694,723 
Total cost of revenues 2,490,276  7,230,092  (153,181) (524,923) 2,337,095  6,705,169 
Depreciation and amortization 2,011,768  5,341,420  (231,844) (762,970) 1,779,924  4,578,450 
General and administrative expenses 17,796,806  49,703,451  —  2,197,082  17,796,806  51,900,533 
Total selling, general and administrative expenses 23,347,861  65,711,371  (231,844) 1,434,112  23,116,017  67,145,483 
Income (loss) from operations 500,472  797,253  231,844  (1,434,112) 732,316  (636,859)
Income before income tax expense (benefit) 475,237  736,585  231,844  (1,434,112) 707,081  (697,527)
Income tax expense (benefit) (15,876) 106,527  (8,139) (667,503) (24,015) (560,976)
Net income (loss) $ 491,113  $ 630,058  $ 239,983  $ (766,609) $ 731,096  $ (136,551)
Earnings per share:
Basic earnings (loss) per share $ 0.03  $ 0.04  $ 0.02  $ (0.05) $ 0.05  $ (0.01)
Diluted earnings (loss) per share $ 0.03  $ 0.04  $ 0.02  $ (0.05) $ 0.05  $ (0.01)
The following table summarizes the effect of the errors on the Company’s condensed statements of stockholders' equity as of September 30, 2022, June 30, 2022, March 31, 2022 and December 31, 2021:
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 
Balances, December 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 condensed statement of cash flows for the nine-month period ended September 30, 2022:
Nine Months Ended September 30,
2022		 Nine Months Ended September 30,
2022
As Previously Reported Adjustments As Restated
Cash flows from operating activities:
Net income (loss) $ 630,058  (766,609) $ (136,551)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 5,341,420  (762,970) 4,578,450 
Deferred income taxes 73,403  (1,035,162) (961,759)
Changes in operating assets and liabilities:
Upfront regional developer fees —  (977,841) (977,841)
Deferred revenue 636,470  524,923  1,161,393 
Other liabilities 360,790  367,659  728,449 
Net cash provided by (used in) operating activities 5,682,415  (2,650,000) 3,032,415 
Cash flows from investing activities:
Reacquisition and termination of regional developer rights (2,650,000) 2,650,000  — 
Net cash used in investing activities (14,938,929) 2,650,000  (12,288,929)
Decrease in cash (8,944,196) —  (8,944,196)
Schedule of Franchisor Disclosure
The following table summarizes the number of clinics in operation under franchise agreements and as company-owned or managed clinics for the three and nine months ended September 30, 2023 and 2022:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Franchised clinics: 2023 2022 2023 2022
Clinics open at beginning of period 756  662  712  610 
Opened during the period 24  33  76  91 
Acquired during the period —  1  —  1 
Sold during the period —  (4) (3) (8)
Closed during the period (2) (2) (7) (4)
Clinics in operation at the end of the period 778  690  778  690 
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Company-owned or managed clinics: 2023 2022 2023 2022
Clinics open at beginning of period 134  107  126  96 
Opened during the period 2  5  9  12 
Acquired during the period —  4  3  8 
Sold during the period —  (1) —  (1)
Closed during the period —  —  (2) — 
Clinics in operation at the end of the period 136  115  136  115 
Total clinics in operation at the end of the period 914  805  914  805 
Clinic licenses sold but not yet developed 155  212  155  212 
Licenses for future clinics subject to executed letters of intent 42  40  42  40 
Schedule of Revenue VIE total revenue and general administrative expenses for the three and nine-months ended September 30, 2023 and 2022 were as follows:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
(as restated) (as restated)
Revenues $ 10,688,500  $ 9,150,103  $ 30,997,617  $ 25,433,407 
General and administrative expenses 4,525,305  4,079,552  13,614,211  11,212,760 
The following table shows the Company's revenues disaggregated according to the timing of transfer of services:
Three Months Ended
September 30, 2023		 Nine Months Ended
September 30, 2023
2023 2022 2023 2022
(as restated) (as restated)
Revenue recognized at a point in time $ 27,418,343  $ 24,697,661  $ 81,155,737  $ 68,436,945 
Revenue recognized over time 2,055,606  1,752,158  5,926,216  5,136,988 
Total Revenues $ 29,473,949  $ 26,449,819  $ 87,081,953  $ 73,573,933 
Schedule of VIEs' Payroll Liability
The carrying amount of the VIEs’ assets and liabilities was immaterial as of September 30, 2023 and December 31, 2022, except for their payroll liability balances and amounts collected in advance for membership and wellness packages, which are recorded as deferred revenue. The VIEs’ payroll liability and deferred revenue from company managed clinics balances as of September 30, 2023 and December 31, 2022 were as follows:
September 30,
2023		 December 31,
2022
Payroll liabilities $ 952,854  $ 586,960 
Deferred revenue from company managed clinics 4,553,228  4,702,044 
Schedule of Earnings (Loss) per Common Share
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2023 2022 2023 2022
Net (loss) income $ (716,273) $ 731,096  $ 1,289,402  $ (136,551)
Weighted average common shares outstanding - basic 14,790,663  14,512,856  14,666,222  14,474,323 
Effect of dilutive securities:
Unvested restricted stock and stock options 225,290  316,773  265,252  644,941 
Weighted average common shares outstanding - diluted 15,015,953  14,829,629  14,931,474  15,119,264 
Basic earnings (loss) per share $ (0.05) $ 0.05  $ 0.09  $ (0.01)
Diluted earnings (loss) per share $ (0.05) $ 0.05  $ 0.09  $ (0.01)
The following common stock equivalents were excluded from the computation of diluted earnings per share for the periods presented because including them would have been antidilutive:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
Weighted average dilutive securities: 2023 2022 2023 2022
Restricted stocks —  —  —  — 
Stock options 121,699  77,485  89,883  41,293