jynt-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to _________________

Commission file number: 001-36724

The Joint Corp.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)			90-0544160 (IRS Employer Identification No.)


16767 N. Perimeter Drive, Suite 240, Scottsdale Arizona (Address of principal executive offices)			85260 (Zip Code)

(480) 245-5960

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value Per Share	JYNT	The NASDAQ Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of May 3, 2021, the registrant had 14,226,700 shares of Common Stock ($0.001 par value) outstanding.

Table of Contents

THE JOINT CORP.

FORM 10-Q

TABLE OF CONTENTS


		PAGE NO.
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	1
	Condensed Consolidated Income Statements for the Three Months Ended March 31, 2021 and 2020 (unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Three M onths Ended March 31, 2021 and 2020 (unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 4.	Controls and Procedures	32

Part I, Item 3 – Not applicable

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 6.	Exhibits	36

EXHIBIT INDEX		37

SIGNATURES		38

Part II, Items 3, 4, and 5 - Not applicable

Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	March 31, 2021		December 31, 2020
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	17,834,526	$	20,554,258
Restricted cash	172,624		265,371
Accounts receivable, net	2,292,507		1,850,499
Deferred franchise and regional development costs, current portion	910,008		897,551
Prepaid expenses and other current assets	1,950,402		1,566,025
Total current assets	23,160,067		25,133,704
Property and equipment, net	9,338,838		8,747,369
Operating lease right-of-use asset	13,010,941		11,581,435
Deferred franchise and regional development costs, net of current portion	4,467,579		4,340,756
Intangible assets, net	3,444,538		2,865,006
Goodwill	4,625,604		4,625,604
Deferred tax assets	8,426,443		8,007,633
Deposits and other assets	433,549		431,336
Total assets	$	66,907,559	$	65,732,843

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,154,803	$	1,561,648
Accrued expenses	830,714		770,221
Co-op funds liability	172,623		248,468
Payroll liabilities	2,559,016		2,776,036
Debt under the Credit Agreement	2,000,000		—
Operating lease liability, current portion	3,125,921		2,918,140
Finance lease liability, current portion	75,992		70,507
Deferred franchise and regional developer fee revenue, current portion	3,045,868		3,000,369
Deferred revenue from company clinics ($2.7 million and $2.6 million attributable to VIE)	3,971,067		3,905,200
Debt under the Paycheck Protection Program	—		2,727,970
Other current liabilities	707,763		707,085
Total current liabilities	17,643,767		18,685,644
Operating lease liability, net of current portion	12,246,741		10,632,672
Finance lease liability, net of current portion	114,887		132,469
Debt under the Credit Agreement	—		2,000,000
Deferred franchise and regional developer fee revenue, net of current portion	13,560,449		13,503,745
Other liabilities	27,230		27,230
Total liabilities	43,593,074		44,981,760
Commitments and contingencies
Stockholders' equity:
Series A preferred stock, $0.001 par value; 50,000 shares authorized, 0 issued and outstanding, as of March 31, 2021 and December 31, 2020	—		—
Common stock, $0.001 par value; 20,000,000 shares authorized, 14,288,111 shares issued and 14,257,325 shares outstanding as of March 31, 2021 and 14,174,237 shares issued and 14,157,070 outstanding as of December 31, 2020	14,288		14,174
Additional paid-in capital	42,217,157		41,350,001
Treasury stock 30,786 shares as of March 31, 2021 and 17,167 shares as of December 31, 2020, at cost	(761,265)		(143,111)
Accumulated deficit	(18,155,795)		(20,470,081)
Total The Joint Corp. stockholders' equity	23,314,385		20,750,983
Non-controlling Interest	100		100
Total equity	23,314,485		20,751,083
Total liabilities and stockholders' equity	$	66,907,559	$	65,732,843

Table of Contents

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(unaudited)


	Three Months Ended March 31,
	2021		2020
Revenues:
Revenues from company-owned or managed clinics	$	9,470,860	$	7,294,295
Royalty fees	4,769,246		3,718,230
Franchise fees	695,427		512,751
Advertising fund revenue	1,374,741		1,057,618
Software fees	760,537		645,725
Regional developer fees	217,956		207,642
Other revenues	259,198		208,225
Total revenues	17,547,965		13,644,486
Cost of revenues:
Franchise and regional development cost of revenues	1,624,572		1,417,491
IT cost of revenues	140,745		68,664
Total cost of revenues	1,765,317		1,486,155
Selling and marketing expenses	2,489,279		2,055,289
Depreciation and amortization	1,169,866		654,249
General and administrative expenses	10,087,060		8,694,250
Total selling, general and administrative expenses	13,746,205		11,403,788
Net loss on disposition or impairment	64,767		1,193
Income from operations	1,971,676		753,350
Other expense, net	(21,537)		(4,337)
Income before income tax benefit	1,950,139		749,013
Income tax benefit	(364,148)		(65,934)
Net income and comprehensive income	$	2,314,287	$	814,947
Less: income attributable to the non-controlling interest	—		—
Net income attributable to The Joint Corp. stockholders	$	2,314,287	$	814,947
Earnings per share:
Basic earnings per share	$	0.16	$	0.06
Diluted earnings per share	$	0.16	$	0.06
Basic weighted average shares	14,178,542		13,890,673
Diluted weighted average shares	14,854,809		14,483,584

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

THE JOINT CORP. AND SUBSIDIARY AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(unaudited)


	Common Stock			Additional Paid In Capital		Treasury Stock			Accumulated Deficit		Total The Joint Corp. stockholders' equity		Non-controlling interest		Total
	Shares	Amount				Shares	Amount
Balances, December 31, 2020	14,174,237	$	14,174	$	41,350,001	17,167	$	(143,111)	$	(20,470,081)	$	20,750,983	$	100	$	20,751,083
Stock-based compensation expense	—	—		246,494		—	—		—		246,494		—		246,494
Issuance of restricted stock	7,879	8		(8)		—	—		—		—		—		—
Exercise of stock options	105,995	106		620,670		—	—		—		620,776		—		620,776
Purchases of treasury stock under employee stock plans	—	—		—		13,619	(618,154)		—		(618,154)		—		(618,154)
Net income	—	—		—		—	—		2,314,287		2,314,287		—		2,314,287
Balances, March 31, 2021 (unaudited)	14,288,111	$	14,288	$	42,217,157	30,786	$	(761,265)	$	(18,155,795)	$	23,314,385	$	100	$	23,314,485


	Common Stock			Additional Paid In Capital		Treasury Stock			Accumulated Deficit		Total The Joint Corp. stockholders' equity		Non-controlling interest
	Shares	Amount				Shares	Amount								Total
Balances, December 31, 2019	13,898,694	$	13,899	$	39,454,937	15,762	$	(111,041)	$	(33,637,395)	$	5,720,400	$	100	$

SEC Form 10-Q filed by The Joint Corp.