Quarterly report pursuant to Section 13 or 15(d)

Note 2 - Acquisition

v3.10.0.1
Note 2 - Acquisition
6 Months Ended
Jun. 30, 2018
Notes to Financial Statements  
Business Combination Disclosure [Text Block]
Note
2:
Acquisition
 
On
April 6, 2018,
the Company entered into an Asset and Franchise Purchase Agreement under which (i) the Company repurchased from the seller
one
operating franchise in San Diego, California and (ii) the parties agreed to mutually terminate a
second
franchise agreement for an operating franchise. The Company intends to operate the remaining franchise as a company-managed clinic. The total purchase price for the transaction was
$100,000,
less
$12,998
of deferred revenue resulting in total purchase consideration of
$87,002
related to the transaction.
 
The Company incurred approximately
$3,250
of transaction costs related to this acquisition, which is 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
2018
as of the acquisition date:
 
Property and equipment   $
17,964
 
Intangible assets    
129,000
 
Favorable leases    
15,302
 
Total assets acquired    
162,266
 
Bargain purchase gain    
(75,264
)
Net purchase price   $
87,002
 
 
Intangible assets in the table above consist of reacquired franchise rights of
$85,000
amortized over an estimated useful life of
four
years and customer relationships of
$44,000
amortized over an estimated useful life of
two
years.
 
Pro Forma Results of Operations (Unaudited)
 
The following table summarizes selected unaudited pro forma condensed consolidated statements of operations data for the
three
and
six
months ended
June 30, 2018
and
2017
as if the acquisitions in
2018
had been completed on
January 1, 2017.
 
    Pro Forma for the Three Months Ended   Pro Forma for the Six Months Ended
    June 30, 2018   June 30, 2017   June 30, 2018   June 30, 2017
Revenues, net   $
7,561,471
    $
6,082,097
    $
14,659,386
    $
11,663,316
 
Net income (loss)   $
139,769
    $
(1,022,668
)   $
(440,214
)   $
(2,357,491
)
 
This selected unaudited pro forma consolidated financial data is included only for the purpose of illustration and does
not
necessarily indicate what the operating results would have been if the acquisitions had been completed on that date. Moreover, this information is
not
indicative of what the Company’s future operating results will be. The information for
2017
and
2018
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
2018,
this information includes actual data recorded in the Company’s financial statements for the period subsequent to the date of the acquisitions. The Company’s consolidated statement of operations for the
three
and
six
months ended
June 
30,
2018
includes net revenue and net income of approximately
$62,000
and
$17,000,
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, 2017.