Quarterly report pursuant to Section 13 or 15(d)

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

v3.23.3
Nature of Operations and Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Schedule of Correction of Immaterial Error
The following table summarizes the effect of the errors on the Company’s consolidated balance sheet as of June 30, 2022:
June 30,
2022		 June 30,
2022
As Previously Reported
Adjustments
As Restated
Intangible assets, net $ 9,114,701  $ (2,356,584) $ 6,758,117 
Deferred tax assets 9,116,248  3,202,634  12,318,882 
Total assets 86,235,794  846,050  87,081,844 
Current liabilities:
Deferred franchise and regional development fee revenue, current portion 2,981,534  (2,981,534) — 
Deferred franchise fee revenue, current portion —  2,393,993  2,393,993 
Upfront regional developer fees, current portion —  587,541  587,541 
Other current liabilities 558,250  49,022  607,272 
Total current liabilities 20,238,810  49,022  20,287,832 
Deferred franchise and regional development fee revenue, net of current portion 15,447,554  (15,447,554) — 
Deferred franchise fee revenue, net of current portion —  13,584,091  13,584,091 
Upfront regional developer fees, net of current portion —  1,863,463  1,863,463 
Other liabilities 27,230  1,064,565  1,091,795 
Total liabilities 55,752,399  1,113,587  56,865,986 
Accumulated deficit (13,380,196) (267,537) (13,647,733)
Total The Joint Corp. stockholders' equity 30,458,395  (267,537) 30,190,858 
Total equity 30,483,395  (267,537) 30,215,858 
Total liabilities and stockholders' equity 86,235,794  846,050  87,081,844 
The following table summarizes the effect of the errors on the Company’s consolidated income statement for the three and six months ended June 30, 2022:
As Previously Reported Adjustments As Restated
Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Three Months Ended June 30, 2022 Six Months Ended June 30, 2022
Revenues:
Regional developer fees $ 169,953  $ 371,740  $ (169,953) $ (371,740) $ —  $ — 
Total revenues 25,057,318  47,495,856  (169,953) (371,740) 24,887,365  47,124,116 
Cost of revenues:
Franchise and regional developer cost of revenues 2,074,889  4,077,701  (169,953) (371,740) 1,904,936  3,705,961 
Total cost of revenues 2,427,045  4,739,816  (169,953) (371,740) 2,257,092  4,368,076 
Depreciation and amortization 1,700,476  3,329,653  (238,606) (531,126) 1,461,870  2,798,527 
General and administrative expenses 16,528,022  31,906,644  2,042,279  2,197,082  18,570,301  34,103,726 
Total selling, general and administrative expenses 22,068,222  42,363,509  1,803,673  1,665,956  23,871,895  44,029,465 
Income from operations 473,207  296,782  (1,803,673) (1,665,956) (1,330,466) (1,369,174)
Income before income tax expense (benefit) 453,921  261,348  (1,803,673) (1,665,956) (1,349,752) (1,404,608)
Income tax expense (benefit) 109,179  122,403  (587,063) (659,363) (477,884) (536,960)
Net income (loss) 344,742  138,945  (1,216,610) (1,006,593) (871,868) (867,648)
Earnings per share:
Basic earnings (loss) per share $ 0.02  $ 0.01  $ (0.08) $ (0.07) $ (0.06) $ (0.06)
Diluted earnings (loss) per share $ 0.02  $ 0.01  $ (0.08) $ (0.07) $ (0.06) $ (0.06)
The following table summarizes the effect of the errors on the Company’s consolidated statements of stockholders' equity as of June 30, 2022, March 31, 2022 and December 31, 2021:
Accumulated
Deficit		 Total The Joint Corp. stockholder's equity
Total Equity
Balances, December 31, 2021 (as previously reported)
 $ (13,519,142) $ 29,544,627  $ 29,569,627 
Adjustment due to cumulative error correction
 739,057  739,057  739,057 
Balances, December 31, 2021 (as restated) $ (12,780,085) $ 30,283,684  $ 30,308,684 
Balances, March 31, 2022 (as previously reported)
 $ (13,724,938) $ 29,709,412  $ 29,734,412 
Adjustment due to cumulative error correction
 949,073  949,073  949,073 
Balances, March 31, 2022 $ (12,775,865) $ 30,658,485  $ 30,683,485 
Balances, June 30, 2022 (as previously reported)
 $ (13,380,196) $ 30,458,395  $ 30,483,395 
Adjustment due to cumulative error correction
 (267,537) (267,537) (267,537)
Balances, June 30, 2022 (as restated)
 $ (13,647,733) $ 30,190,858  $ 30,215,858 

The following table summarizes the effect of the errors on the Company’s consolidated statement of cash flows for the six-month period ended June 30, 2022:
Six Months Ended June 30,
2022		 Six Months Ended June 30,
2022
As Previously Reported Adjustments As Restated
Cash flows from operating activities:
Net income (loss) $ 138,945  (1,006,593) $ (867,648)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 3,329,653  (531,126) 2,798,527 
Deferred income taxes 72,386  (904,469) (832,083)
Changes in operating assets and liabilities:
Upfront regional developer fees —  (824,658) (824,658)
Deferred revenue 492,473  371,740  864,213 
Other liabilities 404,329  245,106  649,435 
Net cash provided by (used in) operating activities 1,465,160  (2,650,000) (1,184,840)
Cash flows from investing activities:
Reacquisition and termination of regional developer rights (2,650,000) 2,650,000  — 
Net cash used in investing activities (11,414,961) 2,650,000  (8,764,961)
Decrease in cash (9,876,748) —  (9,876,748)
The table below sets forth the impact of the revision on the previously issued consolidated balance sheet for the interim period ended March 31, 2023.
March 31, 2023
As Previously (i)
Reported Adjustments As Adjusted
ASSETS
Intangible assets, net 11,905,176  (1,914,106) 9,991,070 
Deferred tax assets 7,708,323  3,486,439  11,194,762 
Total assets $ 98,050,712  $ 1,572,333  $ 99,623,045 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Deferred franchise and regional development fee revenue, current portion 2,978,937  (2,978,937) — 
Deferred franchise fee revenue, current portion
 —  2,487,795  2,487,795 
Upfront regional developer fees, current portion —  491,142  491,142 
Other current liabilities 494,250  98,043  592,293 
Total current liabilities 24,969,858  98,043  25,067,901 
Deferred franchise and regional development fee revenue, net of current portion 15,682,833  (15,682,833) — 
Deferred franchise fee revenue, net of current portion —  14,233,564  14,233,564 
Upfront regional developer fees, net of current portion
 —  1,449,270  1,449,270 
Other liabilities 27,230  1,260,649  1,287,879 
Total liabilities 62,948,315  1,358,693  64,307,008 
Stockholders' equity:
Accumulated deficit (10,040,856) 213,640  (9,827,216)
Total The Joint Corp. stockholders' equity 35,077,397  213,640  35,291,037 
Total equity 35,102,397  213,640  35,316,037 
Total liabilities and stockholders' equity $ 98,050,712  $ 1,572,333  $ 99,623,045 


The table below sets forth the impact of the revision on the previously issued consolidated income statement for the interim period ended March 31, 2023.
Three Months Ended March, 31 2023 Three Months Ended March, 31 2023
As Previously Reported
Adjustments
 As Adjusted
Revenues:
Regional developer fees $ 149,478  $ (149,478) $ — 
Total revenues 28,450,298  (149,478) 28,300,820 
Cost of revenues:
Franchise and regional developer cost of revenues 2,290,313  (149,478) 2,140,835 
Total cost of revenues 2,624,163  (149,478) 2,474,685 
Depreciation and amortization 2,342,544  (127,489) 2,215,055 
General and administrative expenses 19,936,115  102,361  20,038,476 
Total selling, general and administrative expenses 26,438,903  (25,128) 26,413,775 
Loss from operations (678,237) 25,128  (653,109)
Income before income tax expense (benefit) 3,142,925  25,128  3,168,053 
Income tax expense 841,889  —  841,889 
Net income $ 2,301,036  $ 25,128  $ 2,326,164 
Earnings per share:
Basic earnings per share $ 0.16  $ —  $ 0.16 
Diluted earnings per share $ 0.15  $ 0.01  $ 0.16 
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, 2023 and 2022:
Three Months Ended
June 30,		 Six Months Ended
June 30,
Franchised clinics: 2023 2022 2023 2022
Clinics open at beginning of period 740  636  712  610 
Opened during the period 23  31  52  58 
Sold during the period (3) (4) (3) (4)
Closed during the period (4) (1) (5) (2)
Clinics in operation at the end of the period 756  662  756  662 
Three Months Ended
June 30,		 Six Months Ended
June 30,
Company-owned or managed clinics: 2023 2022 2023 2022
Clinics open at beginning of period 130  100  126  96 
Opened during the period 3  3  7  7 
Acquired during the period 3  4  3  4 
Closed during the period (2) —  (2) — 
Clinics in operation at the end of the period 134  107  134  107 
Total clinics in operation at the end of the period 890  769  890  769 
Clinic licenses sold but not yet developed 171  229  171  229 
Licenses for future clinics subject to executed letters of intent 43  41  43  41 
Schedule of Earnings (Loss) per Common Share
Three Months Ended
June 30,		 Six Months Ended
June 30,
2023 2022 2023 2022
(as restated) (as restated)
Net (loss) income $ (320,489) $ (871,868) $ 2,005,675  $ (867,648)
Weighted average common shares outstanding - basic 14,684,035  14,475,825  14,625,435  14,454,738 
Effect of dilutive securities:
Unvested restricted stock and stock options 268,328  366,991  282,158  432,500 
Weighted average common shares outstanding - diluted 14,952,363  14,842,816  14,907,593  14,887,238 
Basic (loss) earnings per share $ (0.02) $ (0.06) $ 0.14  $ (0.06)
Diluted (loss) earnings per share $ (0.02) $ (0.06) $ 0.13  $ (0.06)
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,
Weighted average dilutive securities: 2023 2022 2023 2022
Restricted stocks —  —  —  — 
Stock options 87,983  43,120  90,953  42,064 
Schedule of Revenue
VIE total revenue and general and administrative expenses for the three and six months ended June 30, 2023 and 2022 were as follows:
Three Months Ended
June 30,		 Six Months Ended
June 30,
2023 2022 2023 2022
(as restated) (as restated)
Revenues $ 10,426,826  $ 8,480,265  $ 20,309,117  $ 16,283,304 
General and administrative expenses 4,491,638  3,720,307  9,088,906  7,133,208 
The following table shows the Company's revenues disaggregated according to the timing of transfer of services:
Three Months Ended
June 30,		 Six Months Ended
June 30,
2023 2022 2023 2022
(as restated) (as restated)
Revenue recognized at a point in time $ 27,401,004  $ 23,100,498  $ 53,737,394  $ 43,739,286 
Revenue recognized over time 1,906,180  1,786,867  3,870,611  3,384,830 
Total Revenues $ 29,307,184  $ 24,887,365  $ 57,608,005  $ 47,124,116 
Schedule of VIEs' payroll liability The VIEs’ payroll liability and deferred revenue from company managed clinics balances as of June 30, 2023 and December 31, 2022 were as follows:
June 30,
2023		 December 31,
2022
Payroll liabilities $ 621,735  $ 586,960 
Deferred revenue from company managed clinics $ 4,985,654  $ 4,702,044