The Joint (JYNT) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Presents the unaudited condensed consolidated financial statements and detailed notes for the reporting periods Item 1. Financial Statements Presents unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, as of specific dates | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :----------------------------------- | :------------------------ | :------------------ | | ASSETS | | | | Cash and cash equivalents | $29,811,667 | $25,051,355 | | Total current assets | $63,752,556 | $74,577,448 | | Total assets | $73,183,401 | $83,154,408 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $35,510,684 | $49,042,087 | | Total liabilities | $49,921,658 | $62,476,289 | | Total equity | $23,261,743 | $20,678,119 | Condensed Consolidated Income Statements Details the company's revenues, costs, and net income or loss for the specified reporting periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $13,270,270 | $12,610,036 | $26,347,860 | $24,794,752 | | Total cost of revenues | $2,772,607 | $2,812,389 | $5,744,733 | $5,516,901 | | Loss from operations | $(1,138,167) | $(1,779,325) | $(1,816,701) | $(2,205,921) | | Net loss from continuing operations | $(989,635) | $(1,710,023) | $(1,495,656) | $(2,108,942) | | Net income (loss) from discontinued operations | $1,082,998 | $(1,886,375) | $2,556,815 | $(540,477) | | Net income (loss) | $93,363 | $(3,596,398) | $1,061,159 | $(2,649,419) | | Basic EPS (Net income (loss)) | $0.01 | $(0.24) | $0.07 | $(0.18) | | Diluted EPS (Net income (loss)) | $0.01 | $(0.24) | $0.07 | $(0.18) | Condensed Consolidated Statements of Changes in Stockholders' Equity Outlines changes in equity over the period, driven by net income and stock-based activities - Total The Joint Corp. stockholders' equity increased from $20,653,119 at December 31, 2024, to $23,236,743 at June 30, 2025. This increase was primarily driven by net income of $967,796 for the period ending March 31, 2025, and $93,363 for the period ending June 30, 2025, along with stock-based compensation expense and proceeds from stock option exercises[18] Condensed Consolidated Statements of Cash Flows Summarizes cash flows from operating, investing, and financing activities for the reporting periods | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) provided by operating activities | $(2,832,005) | $1,836,874 | | Net cash provided by (used in) investing activities | $6,941,742 | $(433,350) | | Net cash provided by (used in) financing activities | $893,182 | $(1,970,095) | | Increase (decrease) in cash, cash equivalents and restricted cash | $5,002,919 | $(566,571) | | Cash, cash equivalents and restricted cash, end of period | $30,999,355 | $18,647,721 | - Net cash used in operating activities decreased by $4.7 million to $2.8 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $1.8 million for the prior year period. This was mainly due to changes in accrued expenses, accounts receivable, prepaid expenses, and payroll liabilities[164] - Net cash provided by investing activities significantly increased to $6.9 million for the six months ended June 30, 2025, primarily driven by $7.8 million in proceeds from clinic sales, partially offset by $0.8 million in property and equipment purchases[165] Notes to Unaudited Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1: Nature of Operations and Summary of Significant Accounting Policies Describes the company's business, operational structure, and key accounting principles - The Company's unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules, with certain disclosures condensed or omitted. The results of operations for the periods ended June 30, 2025 and 2024, are not necessarily indicative of expected operating results for the full year[23] - The corporate clinic segment's results are reported as discontinued operations, and related assets and liabilities are classified as such in the balance sheets. Cash flows related to discontinued operations are included in the consolidated statement of cash flows[25] | Clinic Type | June 30, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Franchised clinics in operation | 885 | 829 | | Company-owned or managed clinics in operation | 82 | 131 | | Total clinics in operation | 967 | 960 | | Clinic licenses sold but not yet developed | 92 | 113 | | Future clinic licenses subject to executed letters of intent | 60 | 45 | - The Company consolidates Variable Interest Entities (VIEs), primarily professional corporations (PCs) in states prohibiting corporate practice of chiropractic, where it acts as the primary beneficiary by directing activities and absorbing significant losses or benefits[30] - Restricted cash includes funds contributed by franchisees to the National Marketing Fund and regional Co-Op Marketing Funds, which are classified as restricted cash despite not being legally segregated[34] - The Company adopted ASU 2023-07 (Segment Reporting) on January 1, 2024, with no material effect. It plans to adopt ASU 2023-09 (Income Taxes) for the year ending December 31, 2025, and is evaluating the impact of ASU 2024-03 (Expense Disaggregation Disclosures) for the annual period ending December 31, 2027[65][66][67] Note 2: Revenue Disclosures Details the company's revenue sources, recognition policies, and contract liabilities - The Company's primary revenue sources are royalties, franchise fees, advertising fund contributions, and software fees from its 885 franchised clinics. Initial franchise fees are recognized ratably over the 10-year franchise agreement term, while royalties and advertising fees are recognized as franchisee sales occur[69][75] | Revenue Recognition Timing | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue recognized at a point in time | $11,020,509 | $10,475,897 | $21,807,613 | $20,617,963 | | Revenue recognized over time | $2,249,761 | $2,134,139 | $4,540,247 | $4,176,789 | | Total revenue | $13,270,270 | $12,610,036 | $26,347,860 | $24,794,752 | | Contract Liabilities (Deferred Franchise Fees) | Amount | | :--------------------------------------------- | :------------- | | Balance at December 31, 2024 | $14,997,105 | | Revenue recognized from beginning of year liability | $(1,662,396) | | Net increase during six months ended June 30, 2025 | $1,181,468 | | Balance at June 30, 2025 | $14,516,177 | Note 3: Divestitures Explains the refranchising strategy for corporate clinics and the financial impact of these divestitures - The Company initiated a plan in 2023 to refranchise its corporate-owned or managed clinics, expanding in Q3 2024 to include the full portfolio. This refranchising plan is considered a strategic shift, leading to the corporate clinic segment being reported as discontinued operations[80][81] | Metric (Discontinued Operations) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues from company-owned or managed clinics | $16,642,013 | $17,650,525 | $33,548,363 | $35,187,976 | | Net income (loss) from discontinued operations | $1,082,998 | $(1,886,375) | $2,556,815 | $(540,477) | | Net loss on disposition or impairment | $1,752,494 | $1,434,658 | $2,885,852 | $1,796,486 | - As of June 30, 2025, the estimated fair value of the corporate clinic portfolio expected to be sold within one year was $6.4 million. The Company recorded an estimated loss on disposal of $1.4 million for the six months ended June 30, 2025, and maintains a valuation allowance of $5.7 million[83][84] - During the six months ended June 30, 2025, the Company sold $16.1 million in assets held for sale (net of a $1.0 million valuation allowance) and $7.2 million in liabilities to be disposed of, generating $7.8 million in sales proceeds. This resulted in a $0.6 million loss on sale[86] Note 4: Property and Equipment Provides a breakdown of property and equipment, along with related depreciation and amortization | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Office and computer equipment | $976,441 | $937,551 | | Leasehold improvements | $1,588,391 | $1,585,609 | | Software developed | $6,702,368 | $5,914,254 | | Accumulated depreciation and amortization | $(6,660,324) | $(5,982,533) | | Construction in progress | $568,554 | $751,873 | | Property and equipment, net | $3,175,430 | $3,206,754 | - Depreciation expense increased to $0.8 million for the six months ended June 30, 2025, from $0.7 million in the prior year, primarily due to internal use software enhancements and developments, including a new mobile app[88][147] Note 5: Fair Value Measurements Discusses fair value hierarchy and measurement of financial and non-financial assets and liabilities - The Company's financial instruments, excluding debt under the Credit Agreement, approximate fair value due to short maturities. Debt under the Credit Agreement approximates fair value and is considered a Level 2 fair value measurement[90] - Non-financial assets, including goodwill, intangible assets, property, plant and equipment, and operating lease ROU assets, are assessed for impairment periodically. Impairment charges are recorded to write down assets to fair value, which is considered Level 3 within the fair value hierarchy[92] - Assets held for sale are reported at the lower of carrying value or fair value less estimated cost to sell. As of June 30, 2025, the fair value measurement of assets held for sale was $0.1 million based on Level 2 inputs and $6.3 million based on Level 3 inputs, with a $5.7 million valuation allowance[93][94] Note 6: Debt Outlines the company's credit facility, borrowing terms, and compliance with covenants - The Company's 2022 Credit Facility provides a $20 million Revolver for working capital, general corporate purposes, acquisitions, development, and capital improvements. Borrowings bear interest at adjusted SOFR plus 0.10% plus 1.75%, or ABR plus 1.00%[98] - The 2022 Credit Facility terminates on February 28, 2027. As of June 30, 2025, the Company was in compliance with all covenants, and there was no outstanding balance on the debt, following a $2 million paydown on January 17, 2024[98][99] Note 7: Stock-Based Compensation Details stock-based award plans, activity, and related compensation expense - The Company grants stock-based awards under its 2024 Incentive Stock Plan, including non-qualified stock options, incentive stock options, and restricted stock. Compensation expense is recognized ratably over the service period[100] | Stock Option Activity | Number of Shares | Weighted Average Exercise Price | | :-------------------------- | :--------------- | :------------------------------ | | Outstanding at Dec 31, 2024 | 281,977 | $11.80 | | Exercised | (3,000) | $3.07 | | Forfeited | (432) | $45.39 | | Expired | (71,023) | $17.78 | | Outstanding at June 30, 2025 | 207,522 | $9.80 | | Exercisable at June 30, 2025 | 169,293 | $9.57 | | Restricted Stock Awards | Shares | Weighted Average Grant-Date Fair Value per Award | | :-------------------------- | :----- | :----------------------------------------------- | | Non-vested at Dec 31, 2024 | 305,982 | $11.97 | | Granted | 263,798 | $10.80 | | Vested | (91,347) | $12.90 | | Forfeited | (95,169) | $11.55 | | Non-vested at June 30, 2025 | 383,264 | $11.04 | - Stock-based compensation expense for restricted stock awards decreased to $586,248 for the six months ended June 30, 2025, from $943,685 in the prior year period[106] Note 8: Income Taxes Presents income tax expense and factors influencing the effective tax rate | Income Tax Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | From continuing operations | $11,390 | $11,169 | $24,794 | $19,751 | | From discontinued operations | $100,201 | $167,153 | $203,613 | $337,498 | - The Company's effective tax rate differs from the federal statutory rate primarily due to changes in valuation allowance and state taxes. Income tax expense increased for both three and six months ended June 30, 2025, mainly due to higher estimated state income taxes[107][152] Note 9: Commitments and Contingencies Discloses operating lease commitments, guarantees, and legal claims | Operating Lease Costs | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative expenses | $91,577 | $64,289 | $172,758 | $128,577 | - The Company has guaranteed 29 future operating lease commitments assumed by buyers in connection with clinic sales, totaling $4.3 million in undiscounted maximum remaining lease payments as of June 30, 2025. No liability has been recorded as payment under these guarantees is not probable[110] - During Q1 2025, the Company settled a medical injury claim for $3.4 million, accrued in discontinued operations current liabilities. This was offset by a $1.9 million receivable from the Company's insurance[113] Note 10: Segment Reporting Describes operating segments and financial performance, focusing on Franchise Operations - Historically, the Company had two operating segments: Corporate Clinics and Franchise Operations. Following the refranchising strategy, the Corporate Clinic segment is now reported as discontinued operations, leaving Franchise Operations as the sole reportable segment since December 31, 2024[115] - The Franchise Operations segment, comprising 885 clinics as of June 30, 2025, derives revenue from franchise licenses, royalties, and software fees. The CEO uses Net Income, Gross Profit, Operating Income, and Adjusted EBITDA to assess performance and allocate resources[116] | Segment Financials | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $13,270,270 | $12,610,036 | $26,347,860 | $24,794,752 | | Franchise and regional developer cost of revenues | $2,350,613 | $2,458,186 | $4,901,848 | $4,799,951 | | Selling and marketing expenses | $3,483,844 | $3,440,391 | $6,988,994 | $5,677,974 | | Segment loss | $(989,635) | $(1,710,023) | $(1,495,656) | $(2,108,942) | Note 11: Related Party Transactions Identifies transactions with related parties, including a board director's family member - Jefferson Gramm, a beneficial holder of over 5% of common stock and a Board Director, has a family member (Marshall Gramm) who owns four franchise licenses. These transactions were on terms no less favorable than those with unaffiliated parties[119][120][121] Note 12: Subsequent Events Reports significant events occurring after the reporting period, such as new legislation - On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, allowing more favorable deductibility of certain business expenses (e.g., R&D, bonus depreciation) starting in 2025. The Company is evaluating the financial impact, which was not reflected in the Q2 2025 income tax provision[123] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operations, key performance indicators, and liquidity Overview Introduces The Joint Corp.'s business model and key performance indicators - The Joint Corp. is a rapidly growing franchisor using a private pay, non-insurance, cash-based model, aiming to be the leading provider of chiropractic care in North America and potentially abroad[125] - Key performance indicators include gross sales, comparable same-store sales growth (Comp Sales), new patients, conversion percentage, membership attrition, system-wide sales, clinic openings, clinic license sales, and Adjusted EBITDA[126] Key Clinic Development Trends Details clinic growth strategy, refranchising efforts, and franchise sales - As of June 30, 2025, the Company and its franchisees operated 967 clinics (885 franchised, 82 company-owned/managed). Seven franchised clinics opened in Q2 2025, down from nine in Q2 2024[127] - The Company's strategy is to grow through franchise sales and development, including refranchising its entire portfolio of company-owned/managed clinics. In Q2 2025, 37 clinics were refranchised, with significant interest from multi-unit operators and private equity firms[128] - On June 30, 2025, 31 corporate clinics in Arizona and New Mexico were sold to an existing franchisee for $8.3 million cash, including regional developer territory rights. Another five clinics in Kansas City were sold on June 23, 2025[129] - The Company sold 13 franchise licenses in Q2 2025, compared to 7 in Q2 2024, and plans to continue leveraging its regional developer program to accelerate clinic sales and openings[131] Recent Events Discusses the impact of global economic conditions, inflation, and labor costs - Unfavorable global economic or political conditions, labor shortages, inflation, and other cost increases are expected to impact the business, with 2025 anticipated to be a volatile macroeconomic environment[133] - Labor costs are the primary inflationary factor, leading to increased general and administrative expenses in 2024 due to shortages and wage increases. Increased interest rates may also reduce patient discretionary spending[134][135] Other Significant Events and/or Recent Developments Highlights recent operational performance metrics, including comparable same-store and system-wide sales - For the three months ended June 30, 2025, comparable same-store sales (clinics open 13+ months) increased by 1.4%, while comp sales for mature clinics (48+ months) decreased by 2.0%. System-wide sales grew 2.6% to $129.6 million[139] Results of Operations Analyzes changes in revenues and expenses for current and prior reporting periods Total Revenues - Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024 Compares total revenues and their components for the three months ended June 30, 2025 and 2024 | Revenue Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change | Percent Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :----- | :------------- | | Royalty fees | $8,133,122 | $7,846,328 | $286,794 | 3.7% | | Franchise fees | $768,100 | $719,103 | $48,997 | 6.8% | | Advertising fund revenue | $2,332,695 | $2,240,839 | $91,856 | 4.1% | | IT-related income and software fees | $1,481,661 | $1,415,036 | $66,625 | 4.7% | | Other revenues | $554,692 | $388,730 | $165,962 | 42.7% | | Total revenues | $13,270,270 | $12,610,036 | $660,234 | 5.2% | - Total revenues increased by $0.7 million (5.2%) for the three months ended June 30, 2025, primarily due to the expansion and revenue growth of the franchise base, including increased royalty fees, advertising fund revenue, and software fees from a larger franchised clinic base (885 clinics in 2025 vs. 829 in 2024). Other revenues saw a significant 42.7% increase mainly from $150,000 in sponsorship payments for the annual conference[140][142] Total Revenues - Six Months Ended June 30, 2025 Compared with Six Months Ended June 30, 2024 Compares total revenues and their components for the six months ended June 30, 2025 and 2024 | Revenue Type | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | Percent Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :----- | :------------- | | Royalty fees | $16,204,107 | $15,433,874 | $770,233 | 5.0% | | Franchise fees | $1,596,619 | $1,374,977 | $221,642 | 16.1% | | Advertising fund revenue | $4,640,197 | $4,407,311 | $232,886 | 5.3% | | IT-related income and software fees | $2,943,628 | $2,801,812 | $141,816 | 5.1% | | Other revenues | $963,309 | $776,778 | $186,531 | 24.0% | | Total revenues | $26,347,860 | $24,794,752 | $1,553,108 | 6.3% | - Total revenues increased by $1.6 million (6.3%) for the six months ended June 30, 2025, driven by continued expansion and sales growth in the franchise base. Royalty fees, advertising fund revenue, and software fees all increased due to a larger franchised clinic base. Other revenues increased by $150,000 from annual conference sponsorship payments[141][143][144] Cost of Revenues Analyzes changes in the cost of revenues for the three and six months ended June 30, 2025 and 2024 | Cost of Revenues | 2025 | 2024 | Change | Percent Change | | :----------------------- | :----------- | :----------- | :----- | :------------- | | Three Months Ended June 30, | $2,772,607 | $2,812,389 | $(39,782) | (1.4)% | | Six Months Ended June 30, | $5,744,733 | $5,516,901 | $227,832 | 4.1% | - Cost of revenues decreased by 1.4% for the three months ended June 30, 2025, primarily due to a reduction in regional developer sales commissions. For the six months, it increased by 4.1% due to more franchised clinics and sales growth in regional developer regions, partially offset by the commission reduction[145] Selling and Marketing Expenses Examines the trends and drivers behind selling and marketing expenses for the specified periods | Selling and Marketing Expenses | 2025 | 2024 | Change | Percent Change | | :------------------------------- | :----------- | :----------- | :----- | :------------- | | Three Months Ended June 30, | $3,483,844 | $3,440,391 | $43,453 | 1.3% | | Six Months Ended June 30, | $6,988,994 | $5,677,974 | $1,311,020 | 23.1% | - Selling and marketing expenses increased by 1.3% for the three months and 23.1% for the six months ended June 30, 2025, primarily due to increased expenses associated with digital marketing transformation efforts incurred in Q1 2025[146] Depreciation and Amortization Expenses Reviews changes in depreciation and amortization expenses, primarily due to software development | Depreciation and Amortization Expenses | 2025 | 2024 | Change | Percent Change | | :--------------------------------------- | :----------- | :----------- | :----- | :------------- | | Three Months Ended June 30, | $402,295 | $342,454 | $59,841 | 17.5% | | Six Months Ended June 30, | $764,225 | $672,088 | $92,137 | 13.7% | - Depreciation and amortization expenses increased by 17.5% for the three months and 13.7% for the six months ended June 30, 2025, mainly due to depreciation related to internal use software enhancements and the launch of a new mobile app[147] General and Administrative Expenses Discusses fluctuations in general and administrative expenses, including payroll and employee compensation | General and Administrative Expenses | 2025 | 2024 | Change | Percent Change | | :------------------------------------ | :----------- | :----------- | :----- | :------------- | | Three Months Ended June 30, | $7,745,251 | $7,793,465 | $(48,214) | (0.6)% | | Six Months Ended June 30, | $14,660,196 | $15,132,773 | $(472,577) | (3.1)% | - General and administrative expenses decreased by 0.6% for the three months and 3.1% for the six months ended June 30, 2025, primarily due to a decrease in payroll and other employee compensation expenses, reflecting fewer employees and the departure of long-tenure employees with stock-based compensation[148] - As a percentage of revenue, general and administrative expenses decreased from 62% to 58% for the three months, and from 61% to 56% for the six months ended June 30, 2025[149] Loss from Operations Analyzes the company's operating loss and factors contributing to its change over the periods | Loss from Operations | 2025 | 2024 | Change | Percent Change | | :----------------------- | :------------- | :------------- | :------- | :------------- | | Three Months Ended June 30, | $(1,138,167) | $(1,779,325) | $641,158 | 36.0% | | Six Months Ended June 30, | $(1,816,701) | $(2,205,921) | $389,220 | 17.6% | - Loss from operations decreased by $0.6 million (36.0%) for the three months and $0.4 million (17.6%) for the six months ended June 30, 2025, driven by increased total revenues, a slight decrease in total cost of revenues, and reduced general and administrative expenses, partially offset by higher selling and marketing expenses[150][154] Other Income (Expense), Net Details components of other income and expense, primarily interest income | Other Income (Expense), Net | 2025 | 2024 | Change | Percent Change | | :---------------------------- | :----------- | :----------- | :----- | :------------- | | Three Months Ended June 30, | $159,922 | $80,471 | $79,451 | (98.7)% | | Six Months Ended June 30, | $345,839 | $116,730 | $229,109 | (196.3)% | - Other income (expense), net increased significantly for both three and six months ended June 30, 2025, primarily due to higher interest income from deploying additional cash and cash equivalents into higher interest rate savings products[151] Income Tax Expense Explains income tax expense and reasons for its changes | Income Tax Expense | 2025 | 2024 | Change | Percent Change | | :------------------- | :----------- | :----------- | :----- | :------------- | | Three Months Ended June 30, | $11,390 | $11,169 | $221 | 2.0% | | Six Months Ended June 30, | $24,794 | $19,751 | $5,043 | 25.5% | - Income tax expense increased for both three and six months ended June 30, 2025, primarily due to an increase in estimated state income taxes[152] Non-GAAP Financial Measures Presents and reconciles non-GAAP financial measures like EBITDA and Adjusted EBITDA for performance evaluation | Non-GAAP Financial Data | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net (Loss) income | $93,363 | $(3,596,398) | $1,061,159 | $(2,649,419) | | EBITDA | $464,447 | $(1,974,173) | $1,751,695 | $520,008 | | Adjusted EBITDA | $3,239,193 | $2,126,162 | $6,094,181 | $5,632,876 | - Adjusted EBITDA from continuing operations increased to $88,049 for the three months and $134,443 for the six months ended June 30, 2025, compared to $(380,434) and $44,274 respectively in the prior year, used to evaluate ongoing operating results and trends, excluding items like interest, taxes, depreciation, amortization, and certain non-recurring expenses[156][157] Liquidity and Capital Resources Assesses cash position, cash flow activities, and ability to meet financial obligations - As of June 30, 2025, the Company had $29.8 million in unrestricted cash and short-term bank deposits, with management believing existing cash, anticipated cash flows from operations, and available credit will be sufficient for the next 12 months, despite potential liquidity risks from global economic conditions[160][161] - Net cash used in operating activities for both continuing and discontinued operations decreased by $4.7 million to $2.8 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $1.8 million for the prior year period[164] - Net cash provided by investing activities was $6.9 million for the six months ended June 30, 2025, primarily from $7.8 million in clinic sales proceeds. Net cash provided by financing activities was $0.9 million, mainly from stock option exercises[165][166] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk disclosures since the December 31, 2024 Annual Report on Form 10-K/A - No material changes to quantitative and qualitative disclosures about market risk as of June 30, 2025, compared to the December 31, 2024 Annual Report on Form 10-K/A[168] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to a material weakness in complex transaction accounting - The CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness[170] - The material weakness identified as of December 31, 2024, and continuing as of June 30, 2025, is the inadequate design, implementation, and maintenance of effective controls to analyze and account for non-routine, unusual, or complex transactions, particularly impairment of assets held for sale[171][172] - The remediation plan includes designing, implementing, and maintaining enhanced internal controls for timely analysis and accounting of complex transactions and reviewing valuation methodologies for impairment charges[173][179] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control during the quarter ended June 30, 2025, other than the ongoing material weakness[174] PART II OTHER INFORMATION Contains disclosures on legal proceedings, risk factors, equity sales, other information, and exhibits Item 1. Legal Proceedings Legal proceedings information is detailed in Note 9, Commitments and Contingencies - Legal proceedings information is detailed in Note 9, Commitments and Contingencies[175] Item 1A. Risk Factors No material changes to risk factors since the December 31, 2024 Annual Report on Form 10-K/A - No material changes to risk factors since the filing of the amended and restated Annual Report on Form 10-K/A for the year ended December 31, 2024[176] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported - No unregistered sales of equity securities or use of proceeds were reported[177] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[178] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Exhibits include Employment Agreement (10.1), Asset Purchase Agreement (10.2), Certifications of Principal Executive Officer (31.1) and Principal Financial Officer (31.2), Certifications pursuant to 18 U.S.C. Section 1350 (32), and XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[181] SIGNATURES Confirms the official signing of the Quarterly Report on Form 10-Q by the principal executive and financial officers - The Quarterly Report on Form 10-Q was signed on August 11, 2025, by Sanjiv Razdan, Chief Executive Officer and President, and Scott J. Bowman, Chief Financial Officer[185]