Quarterly report pursuant to Section 13 or 15(d)

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

v3.24.3
Nature of Operations and Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
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, 2024 and 2023:
Three Months Ended
September 30,
Nine Months Ended
September 30,
Franchised clinics: 2024 2023 2024 2023
Clinics open at beginning of period 829  756  800  712 
Opened during the period 14  24  46  76 
Acquired during the period —  — 
Sold during the period —  —  —  (3)
Closed during the period (6) (2) (11) (7)
Clinics in operation at the end of the period 838  778  838  778 
Three Months Ended
September 30,
Nine Months Ended
September 30,
Company-owned or managed clinics: 2024 2023 2024 2023
Clinics open at beginning of period 131  134  135  126 
Opened during the period —  — 
Acquired during the period —  —  — 
Sold during the period (1) —  (3) — 
Closed during the period (5) —  (7) (2)
Clinics in operation at the end of the period 125  136  125  136 
Total clinics in operation at the end of the period 963  914  963  914 
Clinic licenses sold but not yet developed 102  155  102  155 
Future clinic licenses subject to executed letters of intent 46  42  46  42 
Schedule of Variable Interest Entities
VIE total revenue, general and administrative expenses and income tax expense for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024 2023 2024 2023
Revenues $ 10,242,319  $ 10,688,500  $ 30,739,977  $ 30,997,617 
General and administrative expenses 4,527,176  4,525,305  13,749,229  13,614,211 
Income tax expense 109,693  129,849  322,562  217,655 
The carrying amount of the VIEs’ assets and liabilities was immaterial as of September 30, 2024 and December 31, 2023, except for the balances as follows:
September 30,
2024
December 31,
2023
Deferred tax assets 1,088,802  1,088,802 
Payroll liabilities 710,914  728,130 
Deferred revenue from company managed clinics 3,183,397  1,558,178 
Liabilities to be disposed of 1,378,295  3,622,481 
Other liabilities 1,235,241  1,235,241 
Schedule of Loss on Long-Lived Assets Held and Used
During the three months ended September 30, 2024, property and equipment, net, and ROU assets related to asset groups determined to not be recoverable were written down from their carrying values to their respective fair values resulting in the following non-cash impairment losses:
Three Months Ended September 30, 2024
Carrying Value Fair Value Net loss on disposition or impairment
Property and equipment, net $ 600,223  $ 476,270  $ 123,953 
Operating lease right-of-use asset 1,663,127  1,301,787  361,340 
Total Net loss on disposition or impairment $ 485,293 
During the nine months ended September 30, 2024, property and equipment, net, ROU assets and franchise rights related to asset groups determined to not be recoverable were written down from their carrying values to their respective fair values resulting in the following non-cash impairment losses:
Nine Months Ended September 30, 2024
Carrying Value Fair Value Net loss on disposition or impairment
Property and equipment, net $ 2,500,915  $ 1,865,255  $ 635,660 
Operating lease right-of-use asset 2,100,591  1,731,402  369,189 
Intangible assets, net $ 298,510  $ 252,746  45,764 
Total Net loss on disposition or impairment $ 1,050,613 
The following table shows a reconciliation of the Company’s impairment losses and disposal gains and losses recorded in net loss on disposition or impairment for the three and nine months ended September 30, 2024 and 2023t:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024 2023 2024 2023
Impairment on long-lived assets held for use
Property and equipment, net $ 123,953  $ —  $ 635,660  $ — 
Operating lease right-of-use asset 361,340  80,495  369,189  80,499 
Intangible assets, net —  —  45,764  — 
Impairment on assets held for sale
Assets held for sale 1,865,124  756,228  2,570,461  816,429 
Impairment on long-lived assets previously held for sale reclassified as held for use
Property and equipment, net 528,849  —  528,849  — 
Operating lease right-of-use asset 876,224  —  876,224  — 
Loss on disposal of assets
Property and equipment, net 3,549  68,200  196,457  217,810 
Operating lease right-of-use asset 32,775  —  406,039  — 
Loss (gain) on sale of assets 13,404  (26,002)
Total Net loss on disposition or impairment $ 3,805,218  $ 904,923  $ 5,602,641  $ 1,114,738 
Schedule of Loss Assets and Liabilities Held-for-Sale 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 net loss on disposal in loss on disposition or impairment in its condensed consolidated income statement as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024 2023 2024 2023
Net loss on disposition or impairment $ 1,865,124  $ 756,228  $ 2,570,461  $ 816,429 
The following table shows a reconciliation of the Company’s impairment losses and disposal gains and losses recorded in net loss on disposition or impairment for the three and nine months ended September 30, 2024 and 2023t:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024 2023 2024 2023
Impairment on long-lived assets held for use
Property and equipment, net $ 123,953  $ —  $ 635,660  $ — 
Operating lease right-of-use asset 361,340  80,495  369,189  80,499 
Intangible assets, net —  —  45,764  — 
Impairment on assets held for sale
Assets held for sale 1,865,124  756,228  2,570,461  816,429 
Impairment on long-lived assets previously held for sale reclassified as held for use
Property and equipment, net 528,849  —  528,849  — 
Operating lease right-of-use asset 876,224  —  876,224  — 
Loss on disposal of assets
Property and equipment, net 3,549  68,200  196,457  217,810 
Operating lease right-of-use asset 32,775  —  406,039  — 
Loss (gain) on sale of assets 13,404  (26,002)
Total Net loss on disposition or impairment $ 3,805,218  $ 904,923  $ 5,602,641  $ 1,114,738 
Schedule of Earnings (loss) per Common Share
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024 2023 2024 2023
Net (loss) income $ (3,165,139) $ (716,273) $ (5,814,558) $ 1,289,402 
Weighted average common shares outstanding - basic 14,959,132  14,790,663  14,903,726  14,666,222 
Effect of dilutive securities:
Unvested restricted stock and stock options 233,247  225,290  234,422  265,252 
Weighted average common shares outstanding - diluted 15,192,379  15,015,953  15,138,148  14,931,474 
Basic (loss) earnings per share $ (0.21) $ (0.05) $ (0.39) $ 0.09 
Diluted (loss) earnings per share $ (0.21) $ (0.05) $ (0.39) $ 0.09 
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
September 30,
Nine Months Ended
September 30,
Weighted average dilutive securities: 2024 2023 2024 2023
Restricted stocks —  —  —  — 
Stock options 78,764  121,699  81,363  89,883