Note 2 - Acquisitions
|9 Months Ended|
Sep. 30, 2017
|Notes to Financial Statements|
|Business Combination Disclosure [Text Block]||
September 30, 2016,the Company entered into a series of unrelated transactions with existing franchisees to re-acquire an aggregate of
sixdeveloped franchises and
oneundeveloped franchise throughout California and New Mexico for an aggregate purchase price of
$1,025,000,subject to certain adjustments, consisting of cash of
$839,000and notes payable of
$186,000.The Company is operating the
sixdeveloped franchises as company-owned or managed clinics and has terminated the undeveloped clinic license. At the time these transactions were consummated, the Company carried
a deferred revenue balance of
$29,000,representing franchise fees collected upon the execution of the franchise agreements, and deferred franchise costs of
$1,450,related to an undeveloped franchise. The Company accounted for the franchise rights associated with the undeveloped franchise as a cancellation, and the respective deferred revenue and deferred franchise costs were netted against the aggregate purchase price. The remaining
$997,450was accounted for as consideration paid for the acquired franchises.
The Company incurred approximately
$64,000of transaction costs related to these acquisitions for the
September 30, 2016,which are included in general and administrative expenses in the accompanying statements of operations.
Purchase Price Allocation
The following summarizes the aggregate estimated fair values of the assets acquired and liabilities assumed during
2016as of the acquisition date:
Intangible assets in the table above consist of reacquired franchise rights of
$181,000and customer relationships of
$158,000,and will be amortized over their estimated useful lives ranging from
Goodwill recorded in connection with these acquisitions was attributable to the workforce of the clinics and synergies expected to arise from cost savings opportunities. All of the recorded goodwill is tax-deductible.
Pro Forma Results of Operations (Unaudited)
The following table summarizes selected unaudited pro forma condensed consolidated statements of operations data for the
September 30, 2017and
2016as if the acquisitions in
2016had been completed on
January 1, 2016.
This selected unaudited pro forma condensed consolidated financial data is included only for the purpose of illustration and does
notnecessarily indicate what the operating results would have been if the acquisitions had been completed on that date. Moreover, this information is
notindicative of what the Company’s future operating results will be. The information for
2016is included based on prior accounting records maintained by the acquired companies. In some cases, accounting policies differed materially from accounting policies adopted by the Company following the acquisitions. For
2016,this information includes actual data recorded in the Company’s condensed consolidated financial statements for the period subsequent to the date of the acquisitions. The Company’s condensed consolidated statement of operations for the
2016includes net revenue and net income of approximately
$0.1million, respectively, attributable to the acquisitions. The Company’s condensed consolidated statement of operations for the
September 30, 2016includes net revenue and net income of approximately
$0.5million, respectively, attributable to the acquisitions.
The pro forma amounts included in the table above reflect the application of accounting policies and adjustment of the results of the clinics to reflect the additional depreciation and amortization that would have been charged assuming the fair value adjustments to property and equipment and intangible assets had been applied from
January 1, 2016,together with the consequential tax impacts.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://www.xbrl.org/2003/role/presentationRef