The Joint Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Commitments and Contingencies

Note 13 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

13:

Commitments and Contingencies

Leases

The table below summarizes the components of lease expense and income statement location for the

three

and

six

months ended

June 30, 2019:

	Line Item in the Company’s Consolidated Statements of Operations	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019

Finance lease costs:
Amortization of assets	Depreciation and amortization	$	6,169	$	12,337
Interest on lease liabilities	Other income (expense), net		1,778		3,689
Total finance lease costs			7,947		16,026
Operating lease costs	General and administrative expenses	$	706,368	$	1,394,100
Total lease costs		$	714,315	$	1,410,126

Supplemental information and balance sheet location related to leases is as follows:

	June 30, 2019

Operating Leases:
Operating lease right-of -use asset	$	10,030,737

Operating lease liability - current portion	$	1,827,233
Operating lease liability - net of current portion		9,049,948
Total operating lease liability	$	10,877,181

Finance Leases:
Property and equipment, at cost	$	80,604
Less accumulated amortization		(12,337	)
Property and equipment, net	$	68,267


Finance lease liability - current portion	$	23,075
Finance lease liability - net of current portion		46,826
Total finance lease liabilities	$	69,901

Weighted average remaining lease term (in years):
Operating leases		5.71
Finance lease		2.77

Weighted average discount rate:
Operating leases		9.20	%
Finance leases		10.00	%

Supplemental cash flow information related to leases is as follows:

	Six Months Ended June 30, 2019

Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	1,469,684
Operating cash flows from finance leases		3,689
Financing cash flows from finance leases		10,704

Non-cash transactions: ROU assets obtained in exchange for lease liabilities
Operating lease	$	400,980
Finance lease		80,604

Maturities of lease liabilities as of

June 30, 2019

are as follows:

	Operating Leases			Finance Lease
2019 (remainder)	$	1,372,050		$	14,393
2020		2,642,993			28,786
2021		2,545,456			28,786
2022		2,454,666			7,676
2023		1,776,161			–
Thereafter		3,180,176			–
Total lease payments	$	13,971,502		$	79,641
Less: Imputed interest		(3,094,321	)		(9,740	)
Total lease obligations		10,877,181			69,901
Less: Current obligations		(1,827,233	)		(23,075	)
Long-term lease obligation	$	9,049,948		$	46,826

The future minimum obligations under operating leases in effect as of

December 31, 2018

having a noncancelable term in excess of

one

year as determined prior to the adoption of ASC

842

are as follows:

	Operating Leases
2019	$	2,630,443
2020		2,406,645
2021		2,299,887
2022		2,195,077
2023		1,474,396
Thereafter		2,772,575
Total lease payments	$	13,779,023

May 2019,

the Company entered into an operating lease for its new corporate office space that has

not

yet commenced. The new lease is expected to result in additional ROU asset and liability of approximately

$2.1

million. The lease is expected to commence during the

fourth

quarter of

2019,

with a lease term of

six

years.

Litigation

In the normal course of business, the Company is party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will

not

have a material adverse effect on the Company.