000018709402021FYFalseP2Mhttp://fasb.org/us-gaap/2021-01-31#AccountingStandardsUpdate201602MemberP5YP1Y0.500.33330.33330.333300018709402021-01-012021-12-3100018709402022-03-01xbrli:shares00018709402021-06-30iso4217:USD00018709402021-12-3100018709402020-12-31iso4217:USDxbrli:shares00018709402020-01-012020-12-3100018709402019-01-012019-12-310001870940us-gaap:MemberUnitsMember2018-12-3100018709402018-12-310001870940us-gaap:MemberUnitsMember2019-01-012019-12-310001870940us-gaap:MemberUnitsMember2019-12-3100018709402019-12-310001870940us-gaap:MemberUnitsMember2020-01-012020-12-310001870940us-gaap:MemberUnitsMember2020-12-310001870940us-gaap:MemberUnitsMember2021-01-012021-12-310001870940us-gaap:MemberUnitsMember2021-01-012021-10-2700018709402021-01-012021-10-270001870940us-gaap:CommonStockMember2021-01-012021-12-310001870940us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310001870940us-gaap:RetainedEarningsMember2021-10-282021-12-3100018709402021-10-282021-12-310001870940us-gaap:CommonStockMember2021-12-310001870940us-gaap:AdditionalPaidInCapitalMember2021-12-310001870940us-gaap:RetainedEarningsMember2021-12-310001870940us-gaap:IPOMember2021-10-282021-10-280001870940us-gaap:IPOMember2021-10-280001870940airs:InitialPublicOfferingSharesFromEntityMember2021-10-282021-10-280001870940airs:InitialPublicOfferingSharesFromExistingShareholdersMember2021-10-282021-10-280001870940us-gaap:OverAllotmentOptionMember2021-10-282021-10-2800018709402021-10-28airs:medical_practice0001870940airs:COVID19Membersrt:MinimumMember2020-01-012020-12-310001870940airs:COVID19Membersrt:MaximumMember2020-01-012020-12-310001870940airs:RestrictedStockUnitsRSUsAndPerformanceSharesMemberairs:ExecutiveOfficersAndDirectorsMember2021-11-042021-11-040001870940airs:RestrictedStockUnitsRSUsAndPerformanceSharesMemberus-gaap:ShareBasedPaymentArrangementEmployeeMember2021-11-102021-11-1000018709402018-01-012018-12-310001870940srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310001870940airs:EBSEnterprisesLLCMemberairs:EBSIntermediateParentLLCMember2018-10-022018-10-020001870940airs:EBSEnterprisesLLCMemberairs:EBSIntermediateParentLLCMember2018-10-020001870940airs:EBSEnterprisesLLCMemberairs:EBSIntermediateParentLLCMemberus-gaap:TrademarksAndTradeNamesMember2018-10-020001870940airs:EBSEnterprisesLLCMemberus-gaap:TechnologyBasedIntangibleAssetsMemberairs:EBSIntermediateParentLLCMember2018-10-020001870940us-gaap:TechnologyBasedIntangibleAssetsMember2021-12-310001870940us-gaap:TechnologyBasedIntangibleAssetsMember2020-12-310001870940us-gaap:TechnologyBasedIntangibleAssetsMember2021-01-012021-12-310001870940us-gaap:TrademarksAndTradeNamesMember2021-12-310001870940us-gaap:TrademarksAndTradeNamesMember2020-12-310001870940us-gaap:TrademarksAndTradeNamesMember2021-01-012021-12-310001870940us-gaap:EquipmentMember2021-12-310001870940us-gaap:EquipmentMember2020-12-310001870940us-gaap:OtherMachineryAndEquipmentMember2021-12-310001870940us-gaap:OtherMachineryAndEquipmentMember2020-12-310001870940us-gaap:FurnitureAndFixturesMember2021-12-310001870940us-gaap:FurnitureAndFixturesMember2020-12-310001870940us-gaap:LeaseholdImprovementsMember2021-12-310001870940us-gaap:LeaseholdImprovementsMember2020-12-310001870940us-gaap:ConstructionInProgressMember2021-12-310001870940us-gaap:ConstructionInProgressMember2020-12-310001870940us-gaap:SecuredDebtMemberairs:CreditAgreementMember2018-10-310001870940us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberairs:CreditAgreementMember2018-10-310001870940us-gaap:SecuredDebtMemberairs:CreditAgreementMember2021-05-3100018709402021-05-012021-05-310001870940airs:CreditAgreementMember2018-10-012018-10-310001870940airs:CreditAgreementMember2021-06-302021-06-300001870940airs:CreditAgreementMember2021-01-012021-12-310001870940airs:DebtInstrumentTriggeringEventOneMemberus-gaap:BaseRateMemberairs:CreditAgreementMember2021-01-012021-12-31xbrli:pure0001870940airs:DebtInstrumentTriggeringEventOneMemberus-gaap:LondonInterbankOfferedRateLIBORMemberairs:CreditAgreementMember2021-01-012021-12-310001870940airs:CreditAgreementMember2021-12-310001870940us-gaap:BaseRateMemberairs:CreditAgreementMemberairs:DebtInstrumentTriggeringEventTwoMember2021-01-012021-12-310001870940us-gaap:LondonInterbankOfferedRateLIBORMemberairs:CreditAgreementMemberairs:DebtInstrumentTriggeringEventTwoMember2021-01-012021-12-310001870940us-gaap:BaseRateMemberairs:DebtInstrumentTriggeringEventThreeMemberairs:CreditAgreementMember2021-01-012021-12-310001870940us-gaap:LondonInterbankOfferedRateLIBORMemberairs:DebtInstrumentTriggeringEventThreeMemberairs:CreditAgreementMember2021-01-012021-12-310001870940us-gaap:BaseRateMemberairs:CreditAgreementMember2021-12-312021-12-310001870940us-gaap:LondonInterbankOfferedRateLIBORMemberairs:CreditAgreementMember2021-12-312021-12-310001870940us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberairs:CreditAgreementMember2021-01-012021-12-310001870940us-gaap:SecuredDebtMember2021-12-310001870940us-gaap:SecuredDebtMember2020-12-310001870940us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberairs:CreditAgreementMember2021-12-310001870940srt:OfficeBuildingMember2021-01-012021-12-310001870940srt:OfficeBuildingMember2020-01-012020-12-310001870940srt:OfficeBuildingMember2019-01-012019-12-310001870940us-gaap:BuildingMember2021-01-012021-12-310001870940us-gaap:BuildingMember2020-01-012020-12-310001870940us-gaap:BuildingMember2019-01-012019-12-310001870940srt:MinimumMember2021-12-310001870940srt:MaximumMember2021-12-31airs:renewal_option0001870940airs:ProfitInterestAwardsMember2018-12-310001870940airs:ProfitInterestAwardsMember2021-10-270001870940airs:ProfitInterestAwardsMember2018-01-012018-12-310001870940airs:ProfitInterestAwardsMember2019-12-310001870940airs:ProfitInterestAwardsMember2020-01-012020-12-310001870940airs:ProfitInterestAwardsMember2020-12-310001870940airs:ProfitInterestAwardsMember2021-01-012021-12-310001870940airs:ProfitInterestAwardsMember2021-12-310001870940airs:RestrictedStockAwardsMember2021-01-012021-12-310001870940airs:RestrictedStockAwardsMembersrt:MinimumMember2021-01-012021-12-310001870940srt:MaximumMemberairs:RestrictedStockAwardsMember2021-01-012021-12-310001870940airs:EquityIncentivePlan2021Member2021-10-290001870940airs:EquityIncentivePlan2021Member2021-10-292021-10-290001870940us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310001870940us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMember2021-01-012021-12-310001870940us-gaap:RestrictedStockUnitsRSUMembersrt:MaximumMember2021-01-012021-12-310001870940us-gaap:PerformanceSharesMember2021-01-012021-12-310001870940airs:MarketBasedPerformanceSharesMember2021-01-012021-12-31airs:day0001870940airs:MarketBasedPerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-12-310001870940us-gaap:ShareBasedCompensationAwardTrancheTwoMemberairs:MarketBasedPerformanceSharesMember2021-01-012021-12-310001870940us-gaap:ShareBasedCompensationAwardTrancheThreeMemberairs:MarketBasedPerformanceSharesMember2021-01-012021-12-310001870940airs:RestrictedStockUnitsRSUsAndPerformanceSharesMember2020-12-310001870940airs:RestrictedStockUnitsRSUsAndPerformanceSharesMember2021-01-012021-12-310001870940airs:RestrictedStockUnitsRSUsAndPerformanceSharesMember2021-12-310001870940airs:TimeBasedVestingAwardsMember2021-12-310001870940us-gaap:PerformanceSharesMember2021-12-310001870940us-gaap:PerformanceSharesMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-12-310001870940us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:PerformanceSharesMember2021-01-012021-12-310001870940us-gaap:ShareBasedCompensationAwardTrancheThreeMemberus-gaap:PerformanceSharesMember2021-01-012021-12-3100018709402021-10-2700018709402021-10-290001870940us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310001870940us-gaap:PerformanceSharesMember2021-01-012021-12-310001870940us-gaap:DomesticCountryMember2021-12-310001870940us-gaap:ForeignCountryMember2021-12-310001870940airs:AnnualFeeMembersrt:AffiliatedEntityMemberairs:EBSIntermediateParentLLCMember2018-10-022018-10-020001870940airs:ManagementFeeMembersrt:AffiliatedEntityMember2021-01-012021-12-310001870940airs:ManagementFeeMembersrt:AffiliatedEntityMember2020-01-012020-12-310001870940airs:ManagementFeeMembersrt:AffiliatedEntityMember2019-01-012019-12-310001870940airs:ManagementFeePaidMembersrt:AffiliatedEntityMember2021-01-012021-12-31airs:reportable_segment

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

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

Delaware						87-1471855
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
400 Alton Road, Unit TH-103M Miami Beach, FL						33139
(Address of Principal Executive Offices)						(Zip Code)

Registrant's telephone number, including area code: (786) 709-9690

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value $0.001 per share			AIRS			The Nasdaq Global Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 ☒ No ☐

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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

DOCUMENTS INCORPORATED BY REFERENCE

			Page
Part I
Item 1. Business			1
Item 1A. Risk Factors			13
Item 1B. Unresolved Staff Comments			46
Item 2. Properties			46
Item 3. Legal Proceedings			47
Item 4. Mine Safety Disclosures			47
Part II			48
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			48
Item 6. Reserved			48
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			49
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			61
Item 8. Financial Statements and Supplementary Data			62
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			84
Item 9A. Controls and Procedures			84
Item 9B. Other Information			84
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections			84
Part III			85
Item 10. Directors, Executive Officers and Corporate Governance			85
Item 11. Executive Compensation			85
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			85
Item 13. Certain Relationships and Related Transactions, and Director Independence			85
Item 14. Principal Accountant Fees and Services			85
Part IV			86
Item 15. Exhibits and Financial Statement Schedules			86
Item 16. Form 10-K Summary			87
Signatures			88

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Item 1. Business

Our treatment results—highlighted by a vast gallery of “before and after” photos across gender, body shape and treatment areas—are a powerful tool to build our brand through digital marketing on our website and social media accounts. We also leverage AirSculpt® TV, which takes viewers into procedure rooms to watch our surgeons use AirSculpt® body contouring procedure to achieve dramatic results and hear patient testimonials. We utilize celebrity and influencer endorsements, as well as word-of-mouth referrals, to drive new patient acquisition.

•Self-Image Awareness: increased consumer awareness and focus on beauty consciousness driven by social media and prioritization of healthy lifestyles;

•Social Acceptance: consumers have embraced cosmetic treatment and reduced the social stigma, especially through the proliferation of shared patient photos on social media;

•Improved Safety and Recovery Profile: advances in technology have led to reduced recovery times and introduction of more minimally-invasive procedures;

•Rise in Disposable Income: the global rise in disposable income provides individuals with greater discretionary funds for personal appearance enhancements including cosmetic surgery; and

•Increased Weight Gain in the Overall Population: worldwide prevalence of overweight and obesity in individuals continues to rise.

Fat reduction and body contouring procedures have become increasingly popular, but many offerings have significant limitations. Existing procedures for fat reduction or body contouring, other than AirSculpt®, currently include surgical procedures such as liposuction and abdominoplasty (tummy tuck) and non-surgical procedures that use cooling, injected medication or heat to reduce fat cells. We believe these procedures often have limited, inconsistent and less predictable results than AirSculpt®. Many procedures can also involve significant pain and may require excess recovery time post-surgery.

The AirSculpt® Difference

AirSculpt® is a minimally invasive procedure delivered in one session while the patient is awake. Each procedure is done by a trained surgeon for customized and precise results. As for discomfort, patients typically report limited soreness the next day following the procedure. We believe our procedures offer dramatic results to our patients.

The AirSculpt® method was created to offer patients a gentler alternative to traditional fat removal procedures with transformative results delivered in a luxurious, spa-like environment. We specialize in body contouring through the minimally invasive removal of unwanted fat. The proprietary AirSculpt® method empowers our surgeons to use their high level of skill and artistry to deliver dramatic results personalized to our patients.

Beneficial Treatment Results and Premium Patient Experience, Underpinned by Proprietary AirSculpt® Technology

We believe that our AirSculpt® procedures offer beneficial results and a premium patient experience. Our AirSculpt® procedures are differentiated by our patented technology, broad and innovative procedures, elite patient experience, and highly skilled surgeons.

•AirSculpt® Technology: Our patented and precision-engineered method, AirSculpt®, permanently removes fat and tightens skin while sculpting targeted areas of the body through minimally invasive body contouring procedures. Unlike traditional liposuction which uses cannulae in a scraping motion, AirSculpt® drives a cannula 1,000 times per minute in a corkscrew motion to remove fat cells while tightening skin simultaneously. It requires no needle, no scalpel, no stitches and no general anesthesia to create dramatically natural, smooth results. AirSculpt® is minimally invasive, providing transformative results, all delivered in one session while the patient is awake.

As of December 31, 2021, our patent portfolio is comprised of two issued U.S. utility patents and three pending U.S. utility patent applications, each of which we own directly. The tools we use to perform our fat removal and fat transfer procedures are purchased from third parties, and we do not own the proprietary rights to such tools. Instead of protecting specific, individual liposuction components (such as a particular handpiece design), our issued patents and one of our pending applications relate to certain proprietary implementations of the process described in the section “Our Technique, Training and Equipment,” and the combination of multiple components to form proprietary systems that are specially configured for carrying out those proprietary processes. We believe the systems and methodologies claimed in our issued patents provide impressive results with less patient trauma relative to other systems and methods, such as liposuction and abdominoplasty (tummy tuck), that require more invasive surgical procedures.

•Broad Offering of Innovative, Body Sculpting Procedures: We offer our patients a comprehensive suite of customized body contouring procedures, including fat removal and fat transfer, to meet their wants and needs.

Our fat removal procedures remove a patient’s stubborn fat from a variety of treatment areas, such as the stomach, back and buttocks. We created our popular 48-Hour Six Pack™ procedure to enhance and reveal abdominal muscles in just one session by removing the stubborn pockets of fat hiding one’s six-pack.

We also offer fat transfer procedures, during which our surgeons transfer a patient’s collected fat cells to enhance the buttocks, breast, hips or aging hands to naturally enhance or sharpen a patient’s contours. Some of our most popular fat transfer procedures are:

•Power BBL™ (“Brazilian Butt Lift”), which removes a patient’s unwanted fat from areas such as tummy or thighs and transfers it to the buttocks, giving a flatter stomach and slimmer waist, while shaping the buttocks and tightening the skin;

•Up a Cup™ Breast Augmentation, which removes a patient’s natural fat, typically from the tummy or thighs, and transfers it to the breasts to increase size by about one cup. AirSculpt® enhanced breasts are all natural. No silicone or other foreign material is implanted; and

•Hip Flip™, which removes unwanted fat from one area of the body and transfers it to the hips to fill in the “hip dip” to create the coveted hourglass figure. It is often performed in combination with the Power BBL™.

We are continuously innovating to better serve our patients. In 2020, we started performing and trademarked the Hip Flip™ procedure. Since then, we have continued to innovate and in 2020 we introduced CankCure™, a procedure that removes fat and contours the calf and ankle area. We are only in the beginning stages of innovation and have much more to introduce to the body contouring field.

•Premium Patient Experience: We offer our patients a premium consumer experience. From the initial consultation to the day of procedure, our patients are guided by knowledgeable patient care consultants. Our centers are located near high end retail environments, such as Rodeo Drive in Beverly Hills and Fifth Avenue in New York. The centers are designed and furnished with furniture from a high-end retailer with the patient experience in mind, offering a comfortable and calming environment ahead of and after the procedure. In 2020, we began to offer our patients the choice of virtual consults prior to their procedures.

•Elite Surgeons: Our surgeons are chosen not only for their medical skills, generally as plastic or cosmetic surgeons, but also for their artistic vision. They are selected to join our nationwide practice because they are at the top of their profession, specialize in body sculpting, and have artistic skill. Before working on Elite Body Sculpture patients, each surgeon completes extensive AirSculpt® training to ensure the best results for every patient and treatment.

We offer our surgeons a compelling economic opportunity, with annual compensation for part-time work at Elite Body Sculpture often higher than the average full-time salary in a private practice. By joining Elite Body Sculpture, surgeons are also able to grow their private practices by attracting Elite patients to their private practice for non-body contouring procedures, such as face lifts and injectables. Our surgeons are also featured on our social media platforms.

AirSculpt® allows the surgeon to provide high quality outcomes to patients while being less physically demanding on the surgeon than traditional liposuction. As AirSculpt® is only available for use at Elite Body Sculpture centers, we protect our brand and are able to retain high quality surgeons.

National Footprint Fueled by Attractive Unit Economics

We have a growing national footprint consisting of 19 centers across 15 states as of March 10, 2022. Our centers are located primarily in metropolitan cities near retail shops that our patients frequent and popular areas. On average, our centers contain two procedure rooms with the capacity to perform up to 36 surgeries a week, in addition to additional consultation offices for prospective patients. Our accreditation as an office-based practice under the Joint Commission demonstrates our commitment to safety and quality. In 2021, we generated revenue per case of $12,065 on average. We require 100% private pay upfront and face no reimbursement risk.

Our centers generate highly attractive unit-level economics and require only a modest investment to open. Given the consistently high level of demand for our services and the average price of our procedures, our centers typically achieve profitability within approximately three months, providing Elite Body Sculpture with a highly attractive and near-immediate return on invested capital.

Scaled Platform and Consistent Demand Drives Attractive Growth and Free Cash Flow

Our operating model is highly scalable and enables capital efficient growth. We have generated double digit growth in each of the years since 2015. For the year ended December 31, 2021, we generated approximately $133 million of revenue compared to approximately $63 million for the year ended December 31, 2020, which represents approximately 112% growth. We have a capital efficient business that requires minimal maintenance capital expenditures and working capital to support our operations, enabling us to generate strong cash flows to fund future growth. We have achieved consistent, self-funded growth since our founding in 2012 and have accelerated our performance in recent years.

Experienced Founder-Led Management Team to Support Growth

•Continue to Grow Our Brand Awareness and Attract New Patients: We believe that consumer trends towards greater acceptance of body contouring and cosmetic treatments will continue to expand the market for our services. We believe we are a leading provider of body contouring procedures and that there is a significant opportunity to drive awareness and adoption of our AirSculpt® method and procedure offerings.

•Continue to Drive Sales Growth of Our Centers: We employ the following strategies to increase our procedures performed and drive higher revenue per procedure with the aim of continuing to accelerate our growth in existing centers:

◦Continue to add new procedure rooms: Our centers typically have one to two procedure rooms. We have the opportunity to continue to both add procedure rooms and adapt our schedule from primarily open six days to seven days a week in order to meet the strong demand from our patients for our services. Through referral and outreach, we plan to continue recruiting surgeons to operate on our growing number of patients and staff to conduct consultations and organize appointments.

◦Increase speed and efficiency of patient onboarding to increase utilization and reduce patient waiting times: We have and will continue to execute initiatives that increase the speed through which patients convert from initial consultation to procedure. These initiatives include hiring additional sales support staff to respond to patient inquiries and utilizing virtual consultations that enable our patients to speak with surgeons and qualified patient care representatives in the convenience of their own home or office, making it easier and quicker to schedule a procedure and reduce overall waiting time.

◦Continue to introduce new, innovative procedures: Since our founding in 2012, we have demonstrated our ability to innovate with the novel introduction of the AirSculpt® method to the cosmetic surgery field. Over the past decade, we have generated more revenue per patient, which we believe is a direct result of our successful introduction of new procedures to meet our patients’ needs. Fat transfer has been a highly successful innovation and is now a critical component of our offering, enabling the artistry of many of our most popular and highest revenue procedures. We also continue to develop new procedures, such as the Hip Flip™ and CankCure™, to meet our patients’ demand and drive traffic to our centers.

◦Increase prices on procedures: We have an ability to increase prices on our procedures driven by the strong value proposition that our services offer to our patients.

•Developing digital content, including a “before and after” photo gallery and AirSculpt® TV: We have collected a catalog of over 200,000 “before and after” photos, showcasing our treatment outcomes. Our AirSculpt® TV program, featured on our Elite Body Sculpture Instagram page and website, provides a never-before seen transparency in our space, encouraging further growth. We will continue to develop high quality digital content that highlights the transformative power of our minimally invasive procedures.

•Social, digital and traditional marketing: Our in-house marketing team generates continuous media coverage of our offering across social, digital, and traditional media channels, such as magazines and TV. By using web-based lead generation, we generate over 250,000 monthly website visits, primarily through optimized spend on Google’s marketing engine.

•Celebrity endorsements: We collaborate with celebrity influencers and TV personalities to drive continuous media coverage that raises brand awareness and social acceptance of our procedures.

•Patient testimonials: Our patients are some of the best advocates for our brand, with many recommending our procedures to family and friends. We encourage our patients to share their “before and after” photos on social media.

We employ the following strategies to expand our footprint:

•Expand Footprint by Opening New Centers in the United States: We believe our track record of successfully opening new Elite Body Sculpture centers consistently generating strong unit-level economics validates our strategy across the United States and to domestically expand our footprint. In order to ensure our new centers are profitable, we follow the same business plan for each new center. A new center is generally profitable within the first few months of opening, supported by our 100% upfront private pay policy. We have strong conviction in our ability to continuously improve our unit economics as we open additional centers in the United States. With our patient care consultants and surgeons performing virtual consultations ahead of store openings, we are able to pre-book procedures and can begin performing surgeries on a center’s opening day, accelerating the ramp up of those centers.

•Disciplined Approach to Choosing Potential Markets: Management uses a disciplined approach to choose potential markets, opening centers at minimal cost located near premium retail shops that our patients frequent. We believe

there is a significant domestic growth opportunity and will continue to opportunistically evaluate new center openings and target opening three to four centers each year.

•Expand Internationally: We believe our brand has global appeal. We draw clients from international markets that travel to our existing centers for body contouring procedures. We believe there is significant opportunity to open new centers in densely populated, affluent international metropolitan regions.

Our Technique, Training and Equipment

AirSculpt® is a proprietary, patented method of tumescent liposuction that removes unwanted fat from several targeted areas of the body in a minimally invasive procedure, producing dramatic results. By contrast to traditional liposuction, AirSculpt® requires no needle, no scalpel, no stitches and no general anesthesia, with patients remaining awake during the procedure. We train our surgeons in the AirSculpt® procedure, for which we possess a patent covering the process. Our surgeons are contractually prohibited from performing Elite Body Sculpture’s proprietary procedures, including the AirSculpt® procedure, if they leave Elite Body Sculpture.

1. Pain Management						Prior to the procedure, patient is given a sedative cocktail and local anesthesia via air pressure from a needleless jet injector. *Patient remains fully awake during the procedure
2. Access Point Creation						One to three entryways are created by the jet injector, which are widened to 2mm (freckle-sized) by means of a biopsy punch.
3. Local Numbing						A thin cannula is inserted in each entryway, at which point a local numbing solution is dispersed subdermally to the target areas.
4. Laser Ablation						Laser ablation, which is the use of the heat from laser light to destroy unwanted cells, is then applied to soften the fat cells for extraction. As a byproduct of the laser’s heat, the skin in the treated area is tightened for post-surgery effects.
5. Fat Removal Process						Proprietary fat removal process uses industry accepted, FDA approved tools to grab, separate, and remove fat cells. An FDA-approved handpiece drives cannula 1,000 times per minute in a corkscrew motion to remove fat cells, without harming surrounding tissue and structures. The amount of fat removed via the AirSculpt® method depends on patient body size, desired outcomes and state regulations. After the procedure is complete, a piece of dry gauze is used to cover the entryway to protect against infection.

Across our centers, we use a network of independent surgeons to perform the AirSculpt® procedure. We believe that the desire to be an Elite Body Sculpture surgeon has provided us with ready access to talented providers, making recruitment a selective process. Additionally, through referral and outreach, we plan to continue recruiting surgeons to perform procedures on our growing number of patients. We conduct background checks on prospective surgeons, confirming licensure and checking surgeon records contained in the National Practitioner Data Bank. Furthermore, we consider the body of work of prospective surgeons, including before and after photos and areas of specialization. Following this initial selection process, our prospective surgeons undergo in-house training through the Elite Fellowship Program where they receive proprietary information regarding the AirSculpt® method and approved body markings, observe videos of experienced AirSculpt® surgeons, observe those surgeons complete eight to ten procedures in-person, and later complete three procedures under the in -person supervision of those surgeons. If a prospective surgeon successfully completes the Elite Fellowship Program, they are permitted to conduct the AirSculpt® method without restrictions. Otherwise, they are observed in additional training procedures or are not chosen to join the Elite Body Sculpture team. Additionally, there is a comprehensive ongoing review process of all surgeons conducted by our experienced AirSculpt® surgeons, which includes on-site visits at centers to help maintain quality standards, and feedback from other staff members, including members of our nursing team.

In connection with the AirSculpt® method, we currently use an FDA-approved handpiece manufactured by Euromi S.A., a Belgian company that specializes in the manufacturing and distribution of medical, dermatological and plastic surgery products, and other FDA- approved parts, such as the cannula and vacuum pump, from other manufacturers. The handpiece we use costs significantly more than other handpiece models, and we believe it is more powerful while being gentler for the patient, helping to produce better results. Some of the other parts used are customized for us by our suppliers for our procedure. Although using FDA-approved equipment in medical procedures is the practice of medicine and does not itself require further FDA review or approval, FDA regulations require that we report certain information about adverse medical events if our AirSculpt® procedures have caused or contributed to those adverse events.

While we recruit our surgeons with a focus on excellence and skill, the handpiece we use in connection with the AirSculpt® method is designed to automatically shut off if any issues are detected in the process (e.g., excessive heat levels). As of the date of this Annual Report on Form 10-K, we are not aware of any adverse events in connection with the AirSculpt® procedure that would require reporting under any regulations.

We are continuously working to innovate to make the AirSculpt® procedure easier to perform, deliver enhanced results, and be more pleasant for our patients, all with a goal of providing the best body contouring results possible. Moreover, we continue to develop AirSculpt® for new procedures and also seek to incorporate new technologies into our current procedures.

As of December 31, 2021, our patent portfolio is comprised of two issued U.S. utility patents and three pending U.S. utility patent applications, each of which we own directly. The tools we use to perform our fat removal and fat transfer procedures are purchased from third parties and we do not own the proprietary rights to such tools. Instead of protecting specific, individual liposuction components (such as a particular handpiece design), our issued patents and one of our pending applications relate to certain proprietary implementations of the process described in the section “Our Technique, Training and Equipment,” and the combination of multiple components to form proprietary systems that are specially configured for carrying out those proprietary processes. We believe the systems and methodologies claimed in our issued patents provide impressive results with less patient trauma relative to other systems and methods, such as liposuction and abdominoplasty (tummy tuck), that require more invasive surgical procedures. In general, patents have a term of 20 years from the application filing date or earliest claimed non-provisional priority date. We expect our issued patents to expire in 2033 or later.

•Patients: We compete for patients to utilize our procedures through our marketing efforts and exceptional brand reputation.

•Procedure Offering: We compete with providers of liposuction, abdominoplasty (tummy tuck) and gastric bypass surgery, and non-surgical procedures that use cooling, injected medication or heat to reduce fat cells. Many procedures can also involve significant pain and may require excess post-surgical recovery time.

•Surgeons and other professionals: We compete for high quality surgeons and other professionals across the body contouring and cosmetic surgery industry to ensure we are able to continue to provide our patients with a smooth process, premium service, and high quality results.

•We have a limited operating history and our past results may not be indicative of our future performance.

•Our success depends on our ability to maintain the value and reputation of the AirSculpt® brand.

•We have grown rapidly recently and have limited operating experience at our current scale of operations.

•Our financial results will be harmed if there is not sufficient patient demand for AirSculpt® procedures.

•Our success depends largely upon patient satisfaction with the effectiveness of the AirSculpt® procedure.

•We may fail to open and operate new centers in a timely and cost-effective manner.

•We may not be able to successfully expand in markets outside of North America.

•We may not be able to compete or achieve significant market penetration.

•Changes in laws and regulations related to the internet, perceptions toward the use of social media and changes in internet infrastructure itself may diminish our ability to drive new customer acquisition.

•Regulations related to healthcare may hamper our availability to provide virtual consultations.

•We face competition for surgeons and other workers that provide our medspa and cosmetic services.

•We outsource the manufacturing of key elements of the tools we use for AirSculpt® procedures to a single third-party manufacturer, Euromi, who is dependent upon third-party suppliers.

•In some jurisdictions, we are precluded or limited in our ability to enter into non-compete agreements with our surgeons.

•Our centers and our affiliated Professional Associations may become subject to medical liability claims.

•Our revenue could decline due to changes in credit markets and decisions made by credit providers.

•We may be adversely affected if we lose any member of our senior management.

•The interests of our Sponsor may conflict with the interests of the Company and its other stockholders.

•Our leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and expose us to interest rate risk.

•Restrictive covenants in our debt instruments may adversely affect us.

•Any failure to meet our debt service obligations could have a material adverse effect on our business, prospects, results of operations and financial condition.

•We are a holding company with no operations of our own.

•Our management team has limited experience managing a public company.

•The COVID-19 global pandemic could negatively affect our operations, business and financial condition, and liquidity.

•Use and storage of paper medical records increases risk of loss, destruction and could increase human error with respect to documentation and patient care.

•Our internal computer systems, or those of any of our manufacturers, other contractors, consultants, or collaborators, may fail or suffer security or data privacy breaches or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data, employee data, or personal data.

•Our competitors could develop and commercialize procedures and products similar or identical to ours.

•We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to market and perform our services.

•If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed.

•We may not be able to protect our intellectual property rights throughout the world to the same extent as in the United States.

Risks Related to Government Regulations

•If we fail to comply with numerous laws and regulations relating to the operation of our centers, we could incur significant penalties or other costs or be required to make significant changes to our operations.

•AirSculpt® procedures may cause or contribute to adverse medical events that we are required to report to the FDA and if we fail to do so, we could be subject to sanctions that would materially harm our business.

•If laws governing the corporate practice of medicine or fee-splitting change, we may be required to restructure some of our relationships.

•We may be subject to various federal and state laws pertaining to healthcare fraud and abuse, including anti-kickback, self-referral, false claims and fraud laws, and any violations by us of such laws could result in fines or other penalties.

•Certain risks are inherent in providing prescription and over the counter (“OTC”) treatments, and our insurance may not be adequate to cover any claims against us.

Risks Related to Ownership of Our Common Stock

•We are an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

•Our stock price could be extremely volatile, and, as a result, you may not be able to resell your shares at or above the price you paid for them.

•There may be sales of a substantial amount of our common stock by our current stockholders, and these sales could cause the price of our common stock to fall.

•Provisions in our charter documents and Delaware law may deter takeover efforts that could be beneficial to stockholder value.

•We have no plans to pay cash dividends on our common stock for the foreseeable future.

•Our internal controls may not be effective.

•The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business.

•Our stock price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business.

•Operating metrics may fluctuate from quarter to quarter, which makes these metrics difficult to predict.

Item 1A. Risk Factors

Our success depends on our ability to maintain the value and reputation of the AirSculpt® brand.

We believe that our brand is important to attracting patients and high-quality surgeons. Maintaining, protecting, and enhancing our brand depends largely on our ability to deliver results for our patients and the success of our marketing efforts. We believe that the importance of our brand will increase as competition further intensifies. Our brand could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity. Unfavorable publicity about us, including our procedures and technology, could diminish confidence in the AirSculpt® brand. Such negative publicity also could have an adverse effect on our business, financial condition, and operating results.

We are dependent upon the success of the AirSculpt® body sculpting procedure. If market acceptance for the AirSculpt® procedure fails to grow significantly, our business and future prospects could be harmed.

We commenced performing AirSculpt® procedures in 2012, and we expect that the revenue we generate from performing AirSculpt® procedures will account for substantially all of our revenue for the next several years. Accordingly, our success depends on the acceptance among patients of the AirSculpt® procedure as a preferred aesthetic treatment for the selective reduction of fat. The degree of market acceptance of the AirSculpt® procedure by patients is unproven. We believe that market acceptance of the AirSculpt® procedure will depend on many factors, including:

•the perceived advantages or disadvantages of AirSculpt® procedures compared to other aesthetic products and treatments;

•the safety and efficacy of AirSculpt® procedures relative to other aesthetic products and alternative treatments;

•the price of AirSculpt® procedures relative to other aesthetic products and alternative treatments;

•our success in expanding our sales and marketing organization;

•the effectiveness of our marketing initiatives;

•our success in maintaining the premium pricing for the AirSculpt® procedure; and

•our success in recruiting and training surgeons in the proper use of the AirSculpt® procedure and selection of appropriate patients as candidates for AirSculpt® procedures.

Further, market acceptance and success of the AirSculpt® procedure can be affected by adverse publicity or negative public perception about us, our competitors, our patients, our services, or our industry generally. Adverse publicity may include publicity about the cosmetic treatment industry generally, the efficacy, safety and quality of body fat reduction procedures in general, and liability claims or other litigation, regardless of whether such litigation involves us or the business practices or services of our competitors. Our business, financial condition and results of operations could be adversely affected if the AirSculpt® procedure or any body fat reduction services provided by our competitors are alleged to be or are proved to be harmful to patients or to have unanticipated and unwanted health consequences.

We cannot assure you that the AirSculpt® procedure will achieve broad market acceptance among patients. Because we expect to derive substantially all of our revenue for the foreseeable future from AirSculpt® procedures, any failure of this product to satisfy patient demand or to achieve meaningful market acceptance will harm our business and future prospects.

If there is not sufficient patient demand for AirSculpt® procedures, our financial results and future prospects will be harmed.

The AirSculpt® procedure is an elective procedure, the cost of which must be borne by the patient, and is not reimbursable through government or private health insurance. The decision to undergo an AirSculpt® procedure is thus driven by patient demand, which may be influenced by a number of factors, such as:

•the success of our sales and marketing programs;

•our success in attracting consumers who have not previously undergone an aesthetic procedure;

•the extent to which the AirSculpt® procedure satisfies patient expectations;

•our ability to properly train our surgeons in performing AirSculpt® procedures such that our patients do not experience excessive discomfort during treatment or adverse side effects;

•the cost, safety, and effectiveness of AirSculpt® procedures versus other aesthetic treatments;

•consumer sentiment about the benefits and risks of aesthetic procedures generally and the AirSculpt® procedure in particular;

•general consumer confidence, which may be impacted by economic and political conditions;

•our use of social media to drive new customer acquisition; and

•our ability to offer virtual consultations to our patients.

Our financial performance will be materially harmed in the event we cannot generate significant patient demand for the AirSculpt® procedure.

Our success depends largely upon patient satisfaction with the effectiveness of the AirSculpt® procedure.

In order to generate repeat and referral business, patients must be satisfied with the effectiveness of the AirSculpt® procedure. Patient perception of their results may vary. If patients are not satisfied with the aesthetic benefits of the AirSculpt® procedure, or feel that it is too expensive for the results obtained, our reputation and future sales will suffer.

•recruit qualified surgeons through our affiliated Professional Associations for our new centers;

•address regulatory, competitive, and marketing, and other challenges encountered in connection with expansion into new markets;

•hire, train and retain surgeons and other personnel through our affiliated Professional Associations;

•maintain adequate information system and other operational system capabilities;

•successfully integrate new centers into our existing management structure with affiliated Professional Associations and operations, including information system integration;

•negotiate acceptable lease terms at suitable locations;

•source sufficient levels of medical supplies at acceptable costs;

•obtain and maintain necessary permits and licenses through our affiliated Professional Associations;

•construct and open our centers on a timely basis;

•generate sufficient levels of cash or obtain financing on acceptable terms to support our expansion;

•achieve and maintain brand awareness in new and existing markets; and

•identify and satisfy the needs and preferences of our patients.

•difficulties in staffing and managing our international operations;

•increased competition as a result of more procedures receiving regulatory approval or otherwise freedom to market in international markets;

•reduced or varied protection for intellectual property rights in some countries;

•foreign tax laws;

•fluctuations in currency exchange rates;

•foreign certification and regulatory clearance or approval requirements;

•difficulties in developing effective marketing campaigns in unfamiliar foreign countries;

•geopolitical events (such as Russian invasion of Ukraine), social and economic instability abroad, terrorist attacks, and security concerns in general;

•potentially adverse tax consequences, including the complexities of foreign value-added tax systems, tax inefficiencies related to our corporate structure, and restrictions on the repatriation of earnings;

•the burdens of complying with a wide variety of foreign laws and different legal standards; and

•increased financial accounting and reporting burdens and complexities.

The body contouring market is highly competitive and dynamic and is characterized by rapid and substantial technological development and product innovations. Demand for the AirSculpt® procedure could be limited by the products and technologies offered by our competitors. In the United States, we compete against companies that have developed non-invasive and other minimally-invasive procedures for body contouring and companies that have developed invasive surgical procedures for fat reduction. Due to less stringent regulatory requirements, there are many more aesthetic products and procedures available for use in international markets than are approved for use in the United States. There are also fewer limitations on the claims our competitors in international markets can make about the effectiveness of their products and the manner in which they can market them. As a result, we face even greater competition in these markets than in the United States. Further, our patent protection is limited to the United States, and therefore we may face increased competition from competitors using procedures similar to the AirSculpt® procedure in other countries.

Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.

Our business depends on email and other messaging services for promoting our brand and services. If we are unable to successfully deliver emails or other messages to potential customers, or if potential customers decline to open or read our messages, our business, financial condition and results of operations may be materially adversely affected. Changes in how web and mail services block, organize and prioritize email may reduce the number of subscribers who receive or open our emails. For example, Google’s Gmail service has a feature that organizes incoming emails into categories (for example, primary, social and promotions). Such categorization or similar inbox organizational features may result in our emails being delivered in a less prominent location in a subscriber’s inbox or viewed as “spam” by our subscribers and may reduce the likelihood of that subscriber reading our emails. Actions by third parties to block, impose restrictions on or charge for the delivery of emails or other messages could also adversely impact our business. From time to time, Internet service providers or other third parties may block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other messages to consumers.

In addition, the use of the internet as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease-of-use, accessibility and quality of service. The performance of the internet and its acceptance as a business tool have been adversely affected by “viruses,” “worms” and similar malicious programs, as well as the risks associated with other types of security breaches. If the use of the internet is reduced as a result of these or other issues, then the reduction in marketing and networking with respect to our services and patients could result in a decline in demand for the AirSculpt® procedure, which could adversely affect our revenue, business, results of operations and financial condition.

We outsource the manufacturing of key elements of the tools we use for AirSculpt® procedures to a single third-party manufacturer.

Euromi manufactures the handpiece our surgeons use for AirSculpt® procedures. If the operations of Euromi are interrupted or if they are unable to meet our delivery requirements due to capacity limitations or other constraints, we may be limited in our ability to perform procedures for customers which could harm our reputation and results of operations.

The handpieces that our surgeons use for AirSculpt® procedures are currently manufactured by Euromi. We have not qualified alternate suppliers and rely upon purchase orders, rather than long-term supply agreements. A supply interruption or an increase in demand beyond Euromi’s capabilities could harm our ability to perform AirSculpt® procedures until new sources of supply are identified and qualified. Our reliance on a single supplier of handpieces subjects us to a number of risks that could harm our business, including:

•interruption of supply resulting from modifications to or discontinuation of Euromi’s operations;

•delays in product shipments resulting from uncorrected defects, reliability issues, or Euromi’s variation in a component;

•a lack of long-term supply agreements;

•inability to obtain adequate supply in a timely manner or to obtain adequate supply on commercially reasonable terms;

•difficulty and cost associated with locating and qualifying alternative suppliers for our handpieces in a timely manner;

•production delays related to the evaluation and testing of handpieces from alternative suppliers and corresponding regulatory qualifications; and

•damage to our brand reputation caused by defective handpieces.

Any interruption in the supply of handpieces, or our inability to obtain substitute handpieces from alternate sources at acceptable prices in a timely manner, could harm our ability to perform AirSculpt® procedures until new sources of supply are identified and qualified.

•the collapse or insolvency of our insurance carriers;

•further increases in premiums and deductibles;

•increases in the number of liability claims against us or the cost of settling or trying cases related to those claims; or

•an inability to obtain one or more types of insurance on acceptable terms, if at all.

•making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations under any of our debt instruments, including restrictive covenants, could result in an event of default under such instruments;

•making us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

•limiting cash flow available for general corporate purposes, including capital expenditures and opening new centers, because a substantial portion of our cash flow from operations must be dedicated to servicing our debt;

•limiting our ability to obtain additional debt financing in the future for working capital, capital expenditures or opening new centers;

•limiting our flexibility in reacting to competitive and other changes in our industry and economic conditions generally; and

•exposing us to risks inherent in interest rate fluctuations because some of our borrowings will be at variable rates of interest, which could result in higher interest expense in the event of increases in interest rates.

•incur additional indebtedness;

•make certain distributions, investments and other restricted payments;

•dispose of our assets;

•grant liens on our assets;

•engage in transactions with affiliates;

•make capital expenditures in excess of agreed upon amounts

•merge, consolidate or transfer substantially all of our assets; and

•make payments to us (in the case of our restricted subsidiaries).

Our variable rate debt exposes us to risks associated with rising interest rates, including as a result of the phase out of LIBOR, which could adversely affect our cash flows.

Proposals to change U.S. or foreign tax laws could have an adverse impact on our effective tax rate, income tax expense, and financial performance. For example, the U.S. Congress, the Organization for Economic Cooperation and Development (“OECD”), and other government agencies are considering various proposals that may affect the taxation of multinational corporations. Although we cannot predict whether or in what form these proposals may pass, changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, or other changes could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, or could increase our future tax expense.

If we are unable to obtain and maintain patent protection of sufficient scope or at all or freedom to operate for the AirSculpt® procedure or any technology we develop, our ability to successfully commercialize any procedures we may develop may be adversely affected.

Similarly, interference or derivation proceedings provoked by third parties or brought by the USPTO may be necessary to determine priority with respect to our patents, patent applications, trademarks or trademark applications. We may also become involved in other proceedings, such as reexamination, inter partes review, derivation, cancellation or opposition proceedings before the USPTO or other jurisdictional body relating to our intellectual property rights or the intellectual property rights of others. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from using or selling our procedures or technology or using proprietary names, which would have a significant adverse impact on our business, financial condition and results of operations.

Additionally, we may file lawsuits or initiate other proceedings to protect or enforce our patents, or other intellectual property rights and contractual restrictive covenants with our surgeons not to use the procedure outside of our centers, each of which could be expensive, time consuming and unsuccessful. Competitors may infringe our issued patents or other intellectual property, which we may not always be able to detect. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property or alleging that our intellectual property is invalid or unenforceable. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may raise challenges to the validity of certain of our existing and future patent claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). In any such lawsuit or other proceedings, a court or other administrative body may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

•ownership and control of our centers and our arrangements with our affiliated Professional Associations;

•operating policies and procedures;

•qualification, training and supervision of medical and support persons;

•the appropriateness and adequacy of medical care, equipment, personnel, operating policies and procedures; maintenance and preservation of medical records;

•the protection and privacy of patient and other sensitive information of privacy, including, but not limited to, patient health information and credit card information;

•screening, stabilization and transfer of individuals who have emergency medical conditions and provision of emergency services;

•antitrust;

•building codes;

•workplace health and safety;

•licensure, certification and accreditation;

•fee-splitting and the corporate practice of medicine;

•handling of medication;

•confidentiality, data breach, identity theft and maintenance and protection of health-related and other personal information and medical records;

•fat removal; and

•environmental protection, health and safety.

We believe that our brand is important to attracting patients and high-quality surgeons. As we continue our international expansion, we cannot be certain if and when regulatory agencies outside the United States will approve use of the AirSculpt® procedure in their respective jurisdictions. Accordingly, we may need to adapt the AirSculpt® procedure to local regulatory requirements, which could produce inferior results. Moreover, altering the AirSculpt® procedure could create confusion among consumers and dilute our brand identity. If inferior results are produced or our brand identity is diluted, we may not be able to compete effectively and our business, financial condition and results of operations may be adversely affected.

AirSculpt® procedures may cause or contribute to adverse medical events that we are required to report to the FDA and if we fail to do so, we could be subject to sanctions that would materially harm our business.

In connection with the AirSculpt® procedure, we currently use an FDA-approved handpiece manufactured by Euromi S.A., a Belgian company that specializes in the manufacturing and distribution of medical, dermatological and plastic surgery products, and other FDA-approved parts, such as the cannula and vacuum pump, from other manufacturers. Using FDA-approved equipment in medical procedures is the practice of medicine and does not itself require further FDA review or approval. However, FDA regulations require that we report certain information about adverse medical events if the AirSculpt® procedure has caused or contributed to those adverse events. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events we become aware of within the prescribed timeframe. We may also fail to appreciate that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use of our products. If we fail to comply with our reporting obligations, the FDA could take action including criminal prosecution, the imposition of civil monetary penalties, revocation of our device clearance or approval, seizure of our products, or delay in approval or clearance of future products.

•the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs. Remuneration has been broadly defined to include anything of value, including cash, improper discounts and free or reduced price items and services;

•the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government, and which may apply to entities that provide coding and billing advice to customers. The federal False Claims Act has been used to prosecute persons submitting claims for payment that are inaccurate or fraudulent, that are for services not provided as claimed or for services that are not medically necessary. The federal False Claims Act includes a whistleblower provision that allows individuals to bring actions on behalf of the federal government and share a portion of the recovery of successful claims;

•HIPAA, as amended, also created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

•similar state anti-kickback and false claims laws, some of which apply to items or services reimbursed by any third party payor, including commercial insurers or services paid out-of-pocket by consumers; and

•the Federal Trade Commission Act and federal and state consumer protection, advertisement and unfair competition laws, which broadly regulate marketplace activities and activities that could potentially harm consumers.

•the requirement that a majority of its board of directors consist of independent directors;

•the requirement that its nominating and corporate governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

•the requirement that its compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

•variations in our operating performance and the performance of our competitors;

•actual or anticipated fluctuations in our quarterly or annual operating results;

•publication of research reports by securities analysts about us or our competitors or our industry;

•announcements by us, our competitors or our vendors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments;

•our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;

•additions and departures of key personnel;

•strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

•the passage of legislation or other regulatory developments affecting us or our industry;

•speculation in the press or investment community;

•changes in accounting principles;

•geopolitical conditions such as acts of terrorism, military or armed conflicts, such as the Russian invasion of Ukraine, or global pandemics;

•natural disasters and other calamities; and

•changes in general market and economic conditions.

•a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;

•no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

•the exclusive right of our board of directors, unless the board of directors grants such right to the stockholders, to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

•the required approval of at least 662∕3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause;

•the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;

•the required approval of at least 662∕3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors;

•a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

•an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings;

•the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

•advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us; and

•certain restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock other than affiliates of our Sponsor.

•any derivative Proceeding brought on our behalf;

•any Proceeding asserting a claim of a breach of fiduciary duty owed by any of our current or former directors, officers, other employees or stockholders to us or our stockholders;

•any Proceeding arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (in each case, as may be amended from time to time) or as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware;

•any Proceeding seeking to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; and

•any Proceeding asserting a claim against us or any of our current or former directors, officers, other employees or stockholders governed by the internal-affairs doctrine.

•the continued market acceptance of, and the growth of the body contouring market;

•our ability to maintain and attract new customers;

•our development and improvement of the quality of the AirSculpt® experience, including, improving our proprietary AirSculpt® technology and innovating new procedures;

•any change in the competitive landscape of our market;

•pricing pressure as a result of competition or otherwise;

•delays or disruptions in our supply of handpieces;

•errors in our forecasting of the demand for our services, which could lead to lower revenue or increased costs, or both;

•increases in marketing, sales, and other operating expenses that we may incur to grow and expand our footprint and to remain competitive;

•the ability to maintain and open new centers;

•successful expansion into international markets;

•constraints on the availability of consumer financing or increased down payment requirements to finance our procedures;

•system failures or breaches of security or privacy;

•adverse litigation judgments, settlements, or other litigation-related costs;

•changes in the legislative or regulatory environment, including with respect to healthcare regulation, privacy, consumer product safety, and advertising, or enforcement by government regulators, including fines, orders, or consent decrees;

•fluctuations in currency exchange rates and changes in the proportion of our revenue and expenses denominated in foreign currencies;

•changes in our effective tax rate;

•changes in accounting standards, policies, guidance, interpretations, or principles; and

•changes in business or macroeconomic conditions, including lower consumer confidence, recessionary conditions, increased unemployment rates, or stagnant or declining wages.

Item 1B. Unresolved Staff Comments

State

City

Number of Procedure Rooms

Arizona

Scottsdale

1

California

Beverly Hills

2

California

Sacramento

2

California

San Diego

2

Colorado

Denver

2

Florida

Orlando

2

Florida

Miami

2

Georgia

Atlanta

2

Illinois

Chicago

1

Minnesota

Minneapolis

2

New York

New York

2

North Carolina

Charlotte

2

Tennessee

Nashville

2

Texas

Dallas

1

Texas

Houston

1

Nevada

Las Vegas

2

Utah

Salt Lake City

2

Washington

Seattle

2

Virginia

Vienna

2

*    Leases have been signed with facilities in Toronto, Boston, and Philadelphia, but it is not yet known when these facilities will open for business.

Item 4. Mine Safety Disclosures

Our Common Shares are traded on the Nasdaq Stock Market under the symbol “AIRS.”

•general consumer confidence, which may be impacted by economic and political conditions;

•individual levels of disposable income to pay for our procedures and the continued availability of financing for our patients;

•the cost, safety and efficacy of AirSculpt® relative to other aesthetic products and alternative treatments;

•the success of our sales and marketing programs;

•the perceived advantages or disadvantages of AirSculpt® compared to other aesthetic products and treatments;

•the extent to which our AirSculpt® procedure satisfies patient expectations;

•our ability to properly train our surgeons in performing AirSculpt® procedures such that our patients do not experience excessive discomfort during treatment or adverse side effects; and

•consumer sentiment about the benefits and risks of aesthetic procedures generally and AirSculpt® in particular.

•recruit qualified surgeons for our new centers;

•address regulatory, competitive, marketing, and other challenges encountered in connection with expansion into new markets;

•hire, train and retain surgeons and other personnel;

•maintain adequate information system and other operational system capabilities;

•successfully integrate new centers into our existing management structure and operations, including information system integration;

•negotiate acceptable lease terms at suitable locations;

•source sufficient levels of medical supplies at acceptable costs;

•obtain and maintain necessary permits and licenses;

•construct and open our centers on a timely basis;

•generate sufficient levels of cash or obtain financing on acceptable terms to support our expansion;

•achieve and maintain brand awareness in new and existing markets; and

•identify and satisfy the needs and preferences of our patients.

•Cases performed were 11,050, 5,885 and 3,865 in 2021, 2020 and 2019, respectively;

•Revenue per case was $12,065, $10,665 and $10,669 in 2021, 2020 and 2019, respectively;

•Same-center information;

◦Same-center revenue per case increased 12.1% and (0.6)% in 2021 and 2020, respectively;

◦Same-center volume increased 55.5% and 9.8% in 2021 and 2020, respectively;

•Net income (loss) was $10.6 million, $7.6 million and $(2.2) million in 2021, 2020 and 2019, respectively;

•Adjusted EBITDA was $46.1 million, $17.5 million and $7.3 million in 2021, 2020 and 2019, respectively; and

•Adjusted EBITDA Margin was 34.6%, 27.9% and 17.8% in 2021, 2020 and 2019, respectively.

			Fiscal Year Ended December 31,
			2021						2020						2019
Cases			11,050						5,885						3,865
Case growth			87.8		%				52.3		%				N/A
Revenue per case			$12,065						$10,665						$10,669
Revenue per case growth			13.1		%				0.0		%				N/A
Number of total facilities			18						14						10
Number of total procedure rooms			32						23						16

			Fiscal Year Ended December 31,
			2021						2020
Cases			8,851						5,692
Case growth			55.5		%				N/A
Revenue per case			$11,917						$10,630
Revenue per case growth			12.1		%				N/A
Number of total facilities			11						11
Number of total procedure rooms			19						19

			Fiscal Year Ended December 31,
			2020						2019
Cases			4,074						3,712
Case growth			9.8		%				N/A
Revenue per case			$10,603						$10,669
Revenue per case growth			(0.6)		%				N/A
Number of total facilities			7						7
Number of total procedure rooms			10						10

We define Adjusted EBITDA as net income (loss) excluding loss on debt modification, IPO related costs, sponsor management fee, pre-opening de novo and relocation costs, restructuring and related severance, equity-based compensation, depreciation and amortization, interest expense, net and income tax expense.

			Fiscal Year Ended December 31,
($ in thousands)			2021						2020						2019
Net income (loss)			$	10,551					$	7,577					$	(2,212)
Plus
Sponsor management fee1			1,636						500						500
Equity-based compensation			7,185						325						341
Loss on debt modification			682						—						—
IPO related costs			11,837						—						—
Pre-opening de novo and relocation costs			1,556						879						391
Restructuring and related severance costs			850						115						482
Depreciation and amortization			6,597						5,641						4,960
Interest expense, net			4,888						2,456						2,875
Income tax expense			329						—						—
Adjusted EBITDA			$	46,111					$	17,493					$	7,337
Adjusted EBITDA Margin			34.6		%				27.9		%				17.8		%

			Fiscal Year Ended December 31,
			2021												2020												2019
($ in thousands)			Amount						% of Revenues						Amount						% of Revenues						Amount						% of Revenues
Revenue			$	133,315					100.0		%				$	62,766					100.0		%				$	41,236					100.0		%
Operating expenses:
Cost of service (exclusive of depreciation and amortization shown below)			44,536						33.4		%				23,471						37.4		%				15,488						37.6		%
Selling, general and administrative			65,732						49.3		%				23,621						37.6		%				20,125						48.8		%
Loss on debt modification			682						0.5		%				—						—		%				—						0.0		%
Depreciation and amortization			6,597						4.9		%				5,641						9.0		%				4,960						12.0		%
Total operating expenses			117,547						88.2		%				52,733						84.0		%				40,573						98.4		%
Income from operations			15,768						11.8		%				10,033						16.0		%				663						1.6		%
Interest expense, net			4,888						3.7		%				2,456						3.9		%				2,875						7.0		%
Pre-tax net income (loss)			10,880						8.2		%				7,577						12.1		%				(2,212)						(5.4		%)
Income tax expense			329						0.2		%				—						—		%				—						0.0		%
Net income (loss)			$	10,551					7.9		%				$	7,577					12.1		%				$	(2,212)					(5.4		%)

Overview—Our financial results for the fiscal year ended December 31, 2020 compared to fiscal year ended December 31, 2019 reflect the addition of four centers which increased our procedure rooms by seven. Additionally, our 2020 results were negatively impacted by the COVID-19 pandemic. Beginning in March 2020, our revenue and operations were negatively affected. As a result of federal, state, and local guidelines, we cancelled or postponed most procedures scheduled at our facilities during the second half of March 2020 and much of the second quarter of 2020. As a result, case volumes and revenue and cost of services across most of our centers were significantly impacted in the second quarter of 2020.

			Fiscal Year Ended December 31,
($ in thousands)			2021						2020						2019
Cash Flows Provided By (Used For):
Operating activities			$	26,633					$	13,957					$	4,938
Investing activities			(7,116)						(3,689)						(4,439)
Financing activities			(4,549)						(5,017)						(783)
Net increase (decrease) in cash and cash equivalents			14,968						5,251						(284)

Net cash used in financing activities during the twelve months ended December 31, 2021 was $4.5 million. During the twelve months ended December 31, 2021, we received cash of $49.6 million, net of fees, from amending our existing credit agreement, adding an incremental $52.0 million in senior secured term loans. We used the proceeds from these borrowings plus approximately $10.0 million of cash from our balance sheet to pay $59.7 million of distributions to our member. We had further distributions to our member during the twelve months ended December 31, 2021 of $7.2 million and made scheduled principal payments on our debt of $0.8 million.

						Payments due by Period
($ in thousands)						Total						Less than 1 Year						1-3 Years						4-5 Years						More than 5 Years
Debt – principal						$	84,262					$	850					$	83,412					$	—					$	—
Interest expense(1)						8,784						5,030						3,754						—						—
Operating lease agreements						22,547						3,858						7,604						7,182						3,903
Total						$	22,640					$	3,864					$	7,691					$	7,182					$	3,903

(1)Amounts in the table reflect the contractually required interest payable pursuant to borrowings under our debt related to our Credit Agreement. Interest payments in the table above were calculated using an interest rate of 6.0% for the debt which was the average interest rate applicable to the borrowing as of December 31, 2021.

i.Identify the contract(s) with a customer;

ii.Identify the performance obligations in the contract;

iii.Determine the transaction price;

iv.Allocate the transaction price to the performance obligations in the contract; and

v.Recognize revenue as the entity satisfies a performance obligation.

•Expected volatility—Expected volatility is based on historical volatilities of a publicly traded peer group based on daily price observations over a period equivalent to the expected term of the market-based PSU awards.

•Expected term—The term is estimated in consideration of the time period expected to achieve the market condition.

•Risk-free interest rate—The risk-free interest rate is based on the U.S. Treasury yield of treasury bonds with a maturity that approximates the expected term of the market-based PSU awards.

•Expected dividend yield—The dividend yield is based on the current expectations of dividend payouts. The Company does not anticipate paying any cash dividends in the foreseeable future.

			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)			63
Consolidated Balance Sheets			64
Consolidated Statements of Operations			65
Consolidated Statement of Changes in Member’s/Stockholders’ Equity			66
Consolidated Statements of Cash Flows			67
Notes to Consolidated Financial Statements			67

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of AirSculpt Technologies, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in member’s / stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2018.

Miami, Florida

March 11, 2022

($000s)						2021						2020
Assets
Current assets
Cash and cash equivalents						$	25,347					$	10,379
Prepaid expenses and other current assets						4,093						1,184
Total current assets						29,440						11,563
Property and equipment, net						13,627						7,108
Other long-term assets						1,742						1,544
Right of use operating lease assets						18,159						17,053
Intangible assets, net						55,852						60,608
Goodwill						81,734						81,734
Total assets						$	200,554					$	179,610
Liabilities and Member’s/Stockholders’ Equity
Current liabilities
Accounts payable						$	2,670					$	1,095
Accrued payroll and benefits						2,509						1,258
Current portion of long-term debt						850						400
Deferred revenue and patient deposits						2,810						3,233
Accrued and other current liabilities						4,103						581
Current right of use operating lease liabilities						3,473						2,890
Total current liabilities						16,415						9,457
Long-term debt, net						81,755						32,119
Deferred tax liability						4,351						—
Long-term right of use operating lease liability						14,505						14,358
Total liabilities						117,026						55,934
Commitments and contingent liabilities (Note 11)
Member’s equity						—						123,676
Common stock, $0.001 par value; shares authorized - 450,000,000; shares issued and outstanding - 55,640,154 and zero, respectively						56						—
Additional paid-in capital						83,865						—
Accumulated deficit						(393)						—
Total member’s/stockholders’ equity						83,528						123,676
Total liabilities and member’s/stockholders’ equity						$	200,554					$	179,610

($000s)						2021						2020						2019
Revenue						$	133,315					$	62,766					$	41,236
Operating expenses:
Cost of service (exclusive of depreciation and amortization shown below)						44,536						23,471						15,488
Selling, general and administrative						65,732						23,621						20,125
Loss on debt modification						682						—						—
Depreciation and amortization						6,597						5,641						4,960
Total operating expenses						117,547						52,733						40,573
Income from operations						15,768						10,033						663
Interest expense, net						4,888						2,456						2,875
Pre-tax net income (loss)						10,880						7,577						(2,212)
Income tax expense						329						—						—
Net income (loss)						$	10,551					$	7,577					$	(2,212)
Earnings (loss) per share of common stock(1)
Basic						$	(0.01)					N/A						N/A
Diluted						$	(0.01)					N/A						N/A
Weighted average shares outstanding(1)
Basic						55,640,154						N/A						N/A
Diluted						55,640,154						N/A						N/A

												Common Stock
($000s)						Member’s Equity						Shares						Amount						Additional Paid-in Capital						Accumulated Deficit						Total
Balance at December 31, 2018						$	122,548					—						$	—					$	—					$	—					$	122,548
Distributions						(283)						—						—						—						—						(283)
Equity-based compensation						341						—						—						—						—						341
Net loss						(2,212)						—						—						—						—						(2,212)
Other						(3)						—						—						—						—						(3)
Balance at December 31, 2019						120,391						—						—						—						—						120,391
Distributions						(4,617)						—						—						—						—						(4,617)
Equity-based compensation						325						—						—						—						—						325
Net income						7,577						—						—						—						—						7,577
Balance at December 31, 2020						123,676						—						—						—						—						123,676
Activity prior to Reorganization and IPO
Distributions						(67,283)						—						—						—						—						(67,283)
Equity-based compensation						2,460						—						—						—						—						2,460
Net income						10,944						—						—						—						—						10,944
Effect of Reorganization and IPO
Reorganization transaction						(69,797)						53,466,241						54						69,743						—						—
Recognition of deferred tax liability in connection with Reorganization						—						—						—						(4,143)						—						(4,143)
Issuance of common stock in connection with the IPO, net of issuance costs of $10,372						—						2,173,913						2						13,540						—						13,542
Activity subsequent to IPO
Share-based compensation						—						—						—						4,725						—						4,725
Net loss						—						—						—						—						(393)						(393)
Balance at December 31, 2021						$	—					55,640,154						$	56					$	83,865					$	(393)					$	83,528

($000s)						2021						2020						2019
Cash flows from operating activities
Net income (loss)						$	10,551					$	7,577					$	(2,212)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization						6,597						5,641						4,960
Equity-based compensation						7,185						325						341
Loss on debt modification						682						—						—
Non-cash interest expense; amortization of debt costs						639						211						226
Deferred income taxes						208						—						—
Changes in assets and liabilities
Prepaid expense and other current assets						(3,845)						275						(1,841)
Other assets						(1,305)						(204)						(635)
Accounts payable						1,576						(1,019)						1,872
Deferred revenue and patient deposits						(423)						45						1,835
Accrued and other liabilities						4,768						1,106						392
Net cash provided by operating activities						26,633						13,957						4,938
Cash flows from investing activities
Purchases of property and equipment, net						(7,116)						(3,689)						(4,439)
Net cash used in investing activities						(7,116)						(3,689)						(4,439)
Cash flows from financing activities
Payment on term loan						(838)						(2,900)						(500)
Borrowings on term loan						49,603						2,500						—
Proceeds from IPO						13,542						—						—
Distributions to member						(66,856)						(4,617)						(283)
Net cash used in financing activities						(4,549)						(5,017)						(783)
Net increase (decrease) in cash and cash equivalents						14,968						5,251						(284)
Cash and cash equivalents
Beginning of period						10,379						5,128						5,412
End of period						$	25,347					$	10,379					$	5,128
Supplemental disclosure of cash flow information:
Cash paid for interest						$	4,255					$	2,293					$	2,683
Supplemental disclosure of non-cash investing and financing information:
Property and equipment included in accounts payable and accrued expenses						$	255					$	—					$	—
Distributions to member included in accrued expenses						427						—						—

Impact of COVID-19

Unit-based Compensation

Share-based Compensation

Prior to the Reorganization, EBS Intermediate was organized as a limited liability company and elected to be treated as a partnership for federal and state income tax purposes. Accordingly, the tax consequences of EBS Intermediate’s profits and losses were passed through to the members of EBS Intermediate and were reported in their respective income tax returns. Therefore, prior to the Reorganization no provision for income taxes was provided.

As of October 28, 2021 and pursuant the Reorganization, the Company became a Corporation and is now subject to being taxed as a C corporation.

Income taxes consist of U.S. federal, state and international taxes for jurisdictions in which we conduct business. Deferred income taxes arise from temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. If based upon all available positive and negative evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is established. The valuation allowance may be reversed in a subsequent reporting period if the Company determines that it is more likely than not that all or part of the deferred tax asset will become realizable.