Annual report pursuant to Section 13 and 15(d)

Note 2 - Acquisitions

Note 2 - Acquisitions
12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
Business Combination Disclosure [Text Block]
Franchises acquired during
During the year ended
December 31, 2016,
the Company continued to execute its growth strategy and entered into a series of unrelated transactions with existing franchisees to re-acquire an aggregate of
developed franchises and
undeveloped franchise throughout California and New Mexico for an aggregate purchase price of
subject to certain adjustments, consisting of cash of
and notes payable of
The Company is operating the
developed 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
representing franchise fees collected upon the execution of the franchise agreements, and deferred franchise costs of
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
was accounted for as consideration paid for the acquired franchises.
The Company incurred approximately
of transaction costs related to these acquisitions for the year ended
December 31, 2016,
which are included in general and administrative expenses in the accompanying consolidated statements of operations.
Purchase Price Allocation
The following summarizes the aggregate estimated fair values of the assets acquired and liabilities assumed during
as of the acquisition date:
Property and equipment   $
Intangible assets    
Favorable leases    
Total assets acquired    
Deferred membership revenue    
Net purchase price   $
Intangible assets in the table above consist of reacquired franchise rights of
and customer relationships of
and will be amortized over their estimated useful lives ranging from
years and
years, respectively.
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 year ended
December 31, 2017
as if the acquisitions in
had been completed on
January 1, 2016.
    Pro Forma for the Year Ended
    December 31, 2017   December 31, 2016
Revenues, net   $
Net loss   $
This selected unaudited pro forma consolidated financial data is included only for the purpose of illustration and does
necessarily indicate what the operating results would have been if the acquisitions had been completed on that date. Moreover, this information is
indicative of what the Company’s future operating results will be. The information for
prior to the acquisitions is 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
this information includes actual data recorded in the Company’s consolidated financial statements for the period subsequent to the date of the acquisitions. The Company’s consolidated statements of operations for the year ended
December 31, 2016
includes net revenue and net income of approximately
million and
million, 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, 2015,
together with the consequential tax impacts.