Annual report [Section 13 and 15(d), not S-K Item 405]

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

v3.25.0.1
Nature of Operations and Summary of Significant Accounting Policies (Tables)
 12 Months Ended
Dec. 31, 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 for the years ended December 31, 2024 and 2023. All company-owned or managed clinics operations are recorded as discontinued operations:
Year Ended December 31,
Franchised clinics: 2024 2023
Clinics open at beginning of year 800  712 
Opened during the year 57  104 
Acquired during the year 3  — 
Sold during the year —  (3)
Closed during the year (18) (13)
Clinics in operation at the end of the year 842  800 
Year Ended December 31,
Company-owned or managed clinics: 2024 2023
Clinics open at beginning of year 135  126 
Opened during the year —  10 
Acquired during the year —  3 
Sold during the year (3) — 
Closed during the year (7) (4)
Clinics in operation at the end of the year 125  135 
Total clinics in operation at the end of the year 967  935 
Clinic licenses sold but not yet developed 92  132 
Executed letters of intent for future clinic licenses 53  40 
Schedule of Variable Interest Entities
VIE net income (including the management fee) of $1.4 million and $1.2 million for the years ended December 31, 2024 and 2023, respectively, is included in (Loss) income from discontinued operations before income tax expense and income tax expense from discontinued operations in the consolidated income statements as follows:
Year Ended December 31,
2024 2023
Income from discontinued operations before income tax expense 1,641,325  1,505,635 
Income tax expense from discontinued operations 212,642  310,388 

The carrying amount of the VIEs’ assets and liabilities is included in discontinued operations as of December 31, 2024 and December 31, 2023, in the consolidated balance sheets as follows:

December 31,
2024		 December 31,
2023
Discontinued operations current assets 1,087,203  — 
Discontinued operations noncurrent assets —  1,088,801 
Discontinued operations current liabilities 7,125,071  5,908,789 
Discontinued operations liabilities, net of current portion —  1,235,241 
Reconciliation of Accounts Receivable Allowance for Credit Losses
The following table provides a reconciliation of the activity related to the Company’s accounts receivable allowance for credit losses:
Accounts receivable allowance for credit losses
Balance at December 31, 2022 $ — 
Bad debt expense recognized during the year — 
Write-off of uncollectible amounts — 
Balance at December 31, 2023 $ — 
Bad debt expense recognized during the year 220,893 
Write-off of uncollectible amounts — 
Balance at December 31, 2024 $ 220,893 
Schedule of Impairment Losses and Disposal Gains and Losses Recorded in (Loss) Income from Discontinued Operations
During the year ended December 31, 2024, certain long-lived assets groups classified as held and used were determined to not be recoverable and were written down from their carrying values to their respective fair values resulting in the following non-cash impairment losses which are included in (Loss) income from discontinued operations before income tax expense in the consolidated income statement.
Year Ended December 31, 2024
Carrying Value Fair Value Net loss on disposition or impairment related to discontinued operations
Property and equipment, net $ 3,971,353  $ 2,795,190  $ 1,176,163 
Operating lease right-of-use asset 6,483,393  5,014,771  1,468,622 
Intangible assets, net 311,074  252,746  58,328 
Total Net loss (income) on disposition or impairment related to discontinued operations $ 2,703,113 
During the year ended December 31, 2023, certain long-lived asset groups classified as held and used were 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 which are included in (Loss) income from discontinued operations before income tax expense in the consolidated income statement.
Year Ended December 31, 2023
Carrying Value Fair Value Net loss on disposition or impairment related to discontinued operations
Property and equipment, net $ 2,893,779  $ 1,233,438  $ 1,660,341 
Operating lease right-of-use asset $ 80,449  $ —  $ 80,449 
Total Net loss (income) on disposition or impairment related to discontinued operations $ 1,740,790 
As a result of its evaluation of the recoverability of the carrying value of the assets and liabilities held for sale relative to the clinics estimated fair values, the Company recorded an estimated net loss on disposal, which is included in (Loss) income from discontinued operations before income tax expense in the consolidated income statement:
Years Ended
2024 2023
Net loss (income) on disposition or impairment related to discontinued operations $ 7,214,565  $ 657,620 
The following table shows a reconciliation of the Company’s impairment losses and disposal gains and losses recorded in (Loss) income from discontinued operations before income tax expense for the years ended December 31, 2024 and 2023:
Years Ended
2024 2023
Impairment on long-lived assets held for use
Property and equipment, net $ 1,176,163  $ 1,660,341 
Operating lease right-of-use asset 1,468,622  80,449 
Intangible assets, net 58,328  — 
Impairment on assets held for sale
Assets held for sale 7,214,565  657,620 
Loss on disposal of assets other than by sale
Property and equipment, net 161,057  255,088 
Operating lease right-of-use asset 406,038  — 
Loss (gain) on sale of assets (44,807) — 
Total net loss on disposition or impairment related to discontinued operations $ 10,439,966  $ 2,653,498 
The key components of Net (loss) income from discontinued operations that were included in the Company’s consolidated income statements are as follows:
Year Ended December 31,
2024 2023
Revenues:
Revenues from company-owned or managed clinics $ 70,249,169  $ 70,718,879 
Total revenues 70,249,169  70,718,879 
Cost of revenues:
IT cost of revenues 48,010  65,912 
Total cost of revenues 48,010  65,912 
Selling and marketing expenses 7,900,884  7,852,327 
Depreciation and amortization 3,358,684  7,304,056 
General and administrative expenses 55,279,799  55,234,472 
Total selling, general and administrative expenses 66,539,367  70,390,855 
Net loss on disposition or impairment from discontinued operations 10,439,967  2,653,497 
Loss from discontinued operations (6,778,175) (2,391,385)
Other expense (income), net 2,114  (3,776,135)
(Loss) income before income tax expense (6,780,289) 1,384,750 
Income tax expense from discontinued operations 212,642  367,542 
Net (loss) income from discontinued operations $ (6,992,931) $ 1,017,208 
The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in the Company’s consolidated balance sheets:
December 31,
2024		 December 31,
2023
ASSETS
Accounts receivable $ 2,484,248  $ 1,138,335 
Prepaid expenses and other current assets 549,605  595,497 
Assets held for sale 36,071,975  17,915,055 
Property and equipment, net 208,074  — 
Deferred tax assets (attributable to VIEs) 1,087,204  — 
Deposits and other assets 425,938  — 
Total current assets, discontinued operations 40,827,044  19,648,887 
Property and equipment, net 7,238,430 
Operating lease right-of-use asset 11,946,953 
Intangible assets, net 5,020,926 
Goodwill 7,352,879 
Deferred tax assets (attributable to VIEs) 1,088,801 
Deposits and other assets 494,095 
Total noncurrent assets, discontinued operations
 33,142,084 
Total assets, discontinued operations $ 40,827,044  $ 52,790,971 
LIABILITIES
Accounts payable $ 67,107  $ 371,272 
Accrued expenses 5,066,941  805,187 
Payroll liabilities ($0.9 million and $0.7 million attributable to VIEs as of December 31, 2024 and 2023)
 2,333,335  2,626,882 
Operating lease liability, current portion 153,517  3,343,727 
Finance lease liability, current portion 38,015  25,491 
Deferred revenue from company clinics ($0.0 million and $1.6 million attributable to VIEs as of December 31, 2024 and 2023)
 —  4,463,747 
Other current liabilities (attributable to VIEs) 1,079,441  — 
Liabilities to be disposed of ($5.2 million and $3.6 million attributable to VIEs as of December 31, 2024 and 2023)
 28,975,844  13,831,863 
Total current liabilities, discontinued operations 37,714,200  25,468,169 
Operating lease liability, net of current portion 10,466,689 
Finance lease liability, net of current portion 38,016 
Other liabilities, noncurrent (attributable to VIEs) 1,235,241 
Total noncurrent liabilities, discontinued operations 11,739,946 
Total liabilities, discontinued operations $ 37,714,200  $ 37,208,115 
The key components of cash flows from discontinued operations are as follows:
Year Ended December 31,
2024 2023
Depreciation and amortization 3,358,684  7,304,056 
Capital expenditures
Acquisition of CA clinics —  1,188,765 
Purchase of property and equipment 664,423  3,857,005 
Significant operating and investing non-cash items
Net loss on disposition or impairment 10,439,967  2,653,497 
The principal components of the held for sale assets and liabilities to be disposed of as of December 31, 2024 and December 31, 2023 were as follows:

December 31, 2024 December 31, 2023
Assets
Property and equipment, net
$ 8,497,499  $ 4,887,220 
Operating lease right-of-use asset 19,954,069  9,193,496 
Intangible assets, net 6,906,807  3,351,430 
Goodwill 8,459,238  1,140,529 
Valuation allowance (7,745,638) (657,620)
Total assets held for sale $ 36,071,975  $ 17,915,055 
Liabilities
Operating lease liability, current and non-current $ 20,873,455  $ 10,209,382 
Deferred revenue from company clinics 8,102,389  3,622,481 
Total liabilities to be disposed of $ 28,975,844  $ 13,831,863 
Schedule of (Loss) Earnings per Common Share
Year Ended December 31,
2024 2023
Net loss from continuing operations $ (1,536,912) $ (10,769,405)
Net (loss) income from discontinued operations $ (6,992,931) $ 1,017,208 
Net loss $ (8,529,843) $ (9,752,197)
Weighted average common shares outstanding — basic 14,919,091  14,688,115 
Effect of dilutive securities:
Unvested restricted stock and stock options 228,156  247,102 
Weighted average common shares outstanding — diluted 15,147,247  14,935,217 
(Loss) earnings per share:
Basic (loss) earnings per share:
Continuing operations $ (0.10) $ (0.73)
Discontinued operations $ (0.47) $ 0.07 
Net loss per share $ (0.57) $ (0.66)
Diluted (loss) earnings per share
Continuing operations $ (0.10) $ (0.72)
Discontinued operations $ (0.46) $ 0.07 
Net loss per share $ (0.56) $ (0.65)
Potentially dilutive securities excluded from the calculation of diluted net (loss) income per common share as the effect would be anti-dilutive were as follows:
Year Ended December 31,
2024 2023
Stock options 87,651  89,152