Quarterly report [Sections 13 or 15(d)]

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

v3.25.2
Nature of Operations and Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2025
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 six months ended June 30, 2025 and 2024:
Three Months Ended
June 30,		 Six Months Ended
June 30,
Franchised clinics: 2025 2024 2025 2024
Clinics open at beginning of period 847  819  842  800 
Opened during the period 7  9  12  32 
Acquired during the period 37  2  39  2 
Sold during the period —  —  —  — 
Closed during the period (6) (1) (8) (5)
Clinics in operation at the end of the period 885  829  885  829 
Three Months Ended
June 30,		 Six Months Ended
June 30,
Company-owned or managed clinics: 2025 2024 2025 2024
Clinics open at beginning of period 122  135  125  135 
Opened during the period —  —  —  — 
Acquired during the period —  —  —  — 
Sold during the period (37) (2) (39) (2)
Closed during the period (3) (2) (4) (2)
Clinics in operation at the end of the period 82  131  82  131 
Total clinics in operation at the end of the period 967  960  967  960 
Clinic licenses sold but not yet developed 92  113  92  113 
Future clinic licenses subject to executed letters of intent 60  45  60  45 
Schedule of Variable Interest Entities
VIE net income (including the management fee) for the three and six months ended June 30, 2025 and 2024, respectively, is included in Income from discontinued operations before income tax expense and Income tax expense from discontinued operations in the condensed consolidated income statements as follows:
Three Months Ended
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Income from discontinued operations before income tax $ 427,212  $ 407,519  $ 814,499  $ 814,889 
Income tax expense from discontinued operations 100,201  213,171  203,613  321,071 
Net income $ 327,011  $ 194,348  $ 610,886  $ 493,818 
The carrying amount of the VIEs’ assets and liabilities is included in discontinued operations as of June 30, 2025 and December 31, 2024, in the condensed consolidated balance sheets as follows:
June 30,
2025		 December 31,
2024
Discontinued operations current assets $ 1,087,203  $ 1,087,203 
Discontinued operations current liabilities 6,553,808  7,125,071 
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, 2023 $ — 
Bad debt expense recognized during the year 220,893 
Write-off of uncollectible amounts — 
Balance at December 31, 2024 $ 220,893 
Bad debt expense recognized during the year — 
Write-off of uncollectible amounts — 
Balance at June 30, 2025 $ 220,893 
Schedule of Impairment Losses and Disposal Gains and Losses Recorded in Income from Discontinued Operations
During the three and six months ended June 30, 2024, property and equipment, net 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 June 30, 2024
Carrying Value Fair Value Net loss on disposition or impairment related to discontinued operations
Property and equipment, net $ 1,040,615  $ 660,946  $ 379,669 
Operating lease right-of-use asset 476,983  95,870  381,113 
Intangible assets, net 298,510  252,746  45,764 
Total net loss on disposition or impairment related to discontinued operations $ 806,546 
Six Months Ended June 30, 2024
Carrying Value Fair Value Net loss on disposition or impairment related to discontinued operations
Property and equipment, net $ 1,900,692  $ 1,388,984  $ 511,708 
Operating lease right-of-use asset 476,983  95,870  381,113 
Intangible assets, net 298,510  252,746  45,764 
Total net loss on disposition or impairment related to discontinued operations $ 938,585 
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, which is included in Income from discontinued operations before income tax expense in its condensed consolidated income statement as follows:
Three Months Ended
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Net loss on disposition or impairment related to discontinued operations $ 439,831  $ 527,081  $ 1,422,765  $ 705,337 
The following table shows a reconciliation of the Company’s impairment and disposal losses recorded in Income from discontinued operations before income tax expense for the three and six months ended June 30, 2025 and 2024:
Three Months Ended
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Impairment on long-lived assets held for use
Property and equipment, net $ —  $ 379,669  $ —  $ 511,708 
Operating lease right-of-use asset —  381,113  —  381,113 
Intangible assets, net —  45,764  —  45,764 
Impairment on assets held for sale
Assets held for sale 439,831  527,081  1,422,765  705,337 
Loss on disposal of assets other than by sale
Property and equipment, net 257,922  101,031  267,164  152,564 
Operating lease right-of-use asset 233,695  —  425,778  — 
Loss on sale of assets 821,046  —  770,145  — 
Total net loss on disposition or impairment related to discontinued operations $ 1,752,494  $ 1,434,658  $ 2,885,852  $ 1,796,486 
The key components of Net income from discontinued operations that were included in the Company’s condensed consolidated income statements are as follows:
Three Months Ended June 30, Six Months Ended June 30,
2025 2024 2025 2024
Revenues:
Revenues from company-owned or managed clinics $ 16,642,013  $ 17,650,525  $ 33,548,363  $ 35,187,976 
Total revenues 16,642,013  17,650,525  33,548,363  35,187,976 
Cost of revenues:
IT cost of revenues 5,551  14,282  11,723  25,846 
Total cost of revenues 5,551  14,282  11,723  25,846 
Selling and marketing expenses 1,825,654  1,961,443  3,718,400  3,609,974 
Depreciation and amortization 17,120  1,181,359  43,505  2,255,631 
General and administrative expenses 11,857,995  14,777,444  24,128,217  27,701,829 
Total selling, general and administrative expenses 13,700,769  17,920,246  27,890,122  33,567,434 
Net loss on disposition or impairment from discontinued operations 1,752,494  1,434,658  2,885,852  1,796,486 
Income (loss) from discontinued operations 1,183,199  (1,718,661) 2,760,666  (201,790)
Other expense, net —  561  238  1,189 
Income (loss) before income tax expense 1,183,199  (1,719,222) 2,760,428  (202,979)
Income tax expense from discontinued operations 100,201  167,153  203,613  337,498 
Net income (loss) from discontinued operations $ 1,082,998  $ (1,886,375) $ 2,556,815  $ (540,477)
The following table summarizes the major classes of assets and liabilities of discontinued operations that were included in the Company’s condensed consolidated balance sheets:
June 30,
2025		 December 31,
2024
ASSETS
Accounts receivable $ 674,573  $ 2,484,248 
Prepaid expenses and other current assets 1,375,346  549,605 
Assets held for sale 22,692,768  38,395,986 
Property and equipment, net 156,288  208,074 
Deferred tax assets (attributable to VIEs) 1,087,204  1,087,204 
Deposits and other assets 303,506  425,938 
Total assets, discontinued operations $ 26,289,685  $ 43,151,055 
LIABILITIES
Accounts payable $ 144,560  $ 67,107 
Accrued expenses 2,329,986  5,066,941 
Payroll liabilities ($0.7 million and $0.9 million attributable to VIEs, respectively)
 2,045,251  2,333,335 
Operating lease liability, current portion 286,324  153,517 
Finance lease liability, current portion —  38,015 
Other current liabilities (attributable to VIEs) 1,079,442  1,079,441 
Liabilities to be disposed of ($4.8 million and $5.2 million attributable to VIEs, respectively)
 19,492,223  28,629,103 
Total liabilities, discontinued operations $ 25,377,786  $ 37,367,459 
The key components of cash flows from discontinued operations are as follows:
Six Months Ended June 30,
2025 2024
Depreciation and amortization $ 43,505  $ 2,255,631 
Capital expenditures
Purchase of property and equipment 73,535  245,486 
Significant operating and investing non-cash items
Net loss on disposition or impairment 2,885,852  1,796,486 
The principal components of the held for sale assets and liabilities to be disposed of as of June 30, 2025 and December 31, 2024 were as follows:
June 30, 2025 December 31, 2024
Assets
Contract assets $ 1,220,767  $ — 
Property and equipment, net
 4,938,413  8,457,627 
Operating lease right-of-use asset 14,184,353  19,643,917 
Intangible assets, net 4,518,833  6,906,807 
Goodwill 3,482,718  8,459,238 
Valuation allowance (5,652,316) (5,071,603)
Total assets held for sale $ 22,692,768  $ 38,395,986 
Liabilities
Operating lease liability, current and non-current $ 13,970,185  $ 20,526,714 
Deferred revenue from company-owned or managed clinics 5,522,038  8,102,389 
Total liabilities to be disposed of $ 19,492,223  $ 28,629,103 
Schedule of Earnings (loss) per Common Share
Three Months Ended
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Net (loss) from continuing operations $ (989,635) $ (1,710,023) $ (1,495,656) $ (2,108,942)
Net income (loss) from discontinued operations 1,082,998  (1,886,375) 2,556,815  (540,477)
Net income (loss) $ 93,363  $ (3,596,398) $ 1,061,159  $ (2,649,419)
Weighted average common shares outstanding - basic 15,326,317  14,950,082  15,256,755  14,875,718 
Effect of dilutive securities:
Unvested restricted stock and stock options 74,091  256,156  71,443  235,018 
Weighted average common shares outstanding - diluted 15,400,408  15,206,238  15,328,198  15,110,736 
Income (loss) earnings per share:
Basic income (loss) earnings per share:
Continuing operations $ (0.06) $ (0.11) $ (0.10) $ (0.14)
Discontinued operations 0.07  (0.13) 0.17  (0.04)
Net income (loss) per share $ 0.01  $ (0.24) $ 0.07  $ (0.18)
Diluted income (loss) earnings per share
Continuing operations $ (0.06) $ (0.11) $ (0.10) $ (0.14)
Discontinued operations 0.07  (0.12) 0.17  (0.04)
Net income (loss) per share $ 0.01  $ (0.24) $ 0.07  $ (0.18)
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
June 30,		 Six Months Ended
June 30,
2025 2024 2025 2024
Stock options 81,153  80,132  76,825  82,722