What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-27 compared with 2023-03-10 · 91 added, 83 removed, 512 unchanged (25% of the section changed)

4 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Other Comprehensive Income/(Loss)

Consolidated Statements of Other Compre h ensiv e ( Loss)/Income

Consolidated Statements of Changes in Member’s/Stockholders’ Equity

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We have audited the accompanying consolidated balance sheets of AirSculpt Technologies, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, 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, 2022, and the related notes (collectively referred to as the “financial statements”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, other comprehensive (loss)/income, changes in member’s / stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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Miami, Florida

March 10, 2023

February 27, 2024

AirSculpt Technologies, Inc.

2 unchanged sentences

December 31, 2023 and 2022

($000s) December 31,

($000s, except for shares) December 31,

2023 December 31,

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For the years ended December 31, 2023, 2022 and 2021

Twelve Months Ended

(in $000s, except for shares and per share figures) 2023 2022 2021

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Depreciation and amortization 10,253 8,061 6,597

Loss on disposal of long-lived assets 147 — —

(Gain)/loss on disposal of long-lived assets ( 212 ) 147 —

Total operating expenses 186,434 173,339 117,547

(Loss)/income from operations ( 4,545 ) 15,768 10,033

Income/(loss) from operations 9,483 ( 4,545 ) 15,768

Interest expense, net 6,485 6,751 4,888

3 unchanged sentences

Loss per share of common stock

Basic $ ( 0.26 ) $ ( 0.01 ) N/A

Diluted $ ( 0.26 ) $ ( 0.01 ) N/A

Basic $ ( 0.08 ) $ ( 0.26 ) $ ( 0.01 )

Diluted $ ( 0.08 ) $ ( 0.26 ) $ ( 0.01 )

Weighted average shares outstanding

Basic 55,684,701 55,640,154 N/A

Diluted 55,684,701 55,640,154 N/A

Basic 56,778,793 55,684,701 55,640,154

Diluted 56,778,793 55,684,701 55,640,154

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

(1) In 2021, basic and diluted weighted average shares outstanding and loss per share represent only the period from October 28, 2021 to December 31, 2021 (see Note 7).

AirSculpt Technologies, Inc.

and Subsidiaries

Consolidated Statements of Other Comprehensive Income/(Loss)

Consolidated Statements of Other Comprehensive (Loss)/Income

For the years ended December 31, 2023, 2022 and 2021

Twelve Months Ended

($000s) 2023 2022 2021

Net (loss)/income $ ( 4,479 ) $ ( 14,679 ) $ 10,551

Other comprehensive loss:

Other comprehensive (loss)/income:

Change in foreign currency translation adjustment ( 336 ) ( 76 ) —

Total other comprehensive loss ( 76 ) — —

Total other comprehensive (loss)/income ( 336 ) ( 76 ) —

Comprehensive loss/(income) $ ( 4,815 ) $ ( 14,755 ) $ 10,551

6 unchanged sentences

Paid-in Capital Accumulated Other Comprehensive Loss

($000s) Member’s Equity Shares Amount Accumulated Deficit Total

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

($000s, except for share data) Member’s Equity Shares Amount Accumulated Deficit Total

Balance at December 31, 2020 $ 123,676 — $ — $ — $ — $ — $ 123,676

12 unchanged sentences

Balance at December 31, 2021 — 55,640,154 56 83,865 — ( 393 ) 83,528

— 55,640,154 56 83,865 — ( 393 ) 83,528

Issuance of common stock through unit vesting — 541,535 — — — — —

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Balance at December 31, 2022 — 56,181,689 56 85,858 ( 76 ) ( 15,072 ) 70,766

$ — 56,181,689 $ 56 $ 85,858 $ ( 76 ) $ ( 15,072 ) $ 70,766

Issuance of common stock through unit vesting — 1,173,987 1 — — — 1

Distributions — — — ( 79 ) — — ( 79 )

Dividends — — — 129 — — 129

Equity-based compensation — — — 18,224 — — 18,224

Payment of taxes withheld through vested equity-based compensation — — — ( 234 ) — — ( 234 )

Net loss — — — — — ( 4,479 ) ( 4,479 )

Other comprehensive loss — — — — ( 336 ) — ( 336 )

Balance at December 31, 2023 $ — 57,355,676 $ 57 $ 103,898 $ ( 412 ) $ ( 19,551 ) $ 83,992

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

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For the years ended December 31, 2023, 2022 and 2021

Twelve Months Ended

($000s) 2023 2022 2021

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Deferred income taxes 1,342 1,134 208

Loss on disposal of long-lived assets 147 — —

(Gain)/loss on disposal of long-lived assets ( 212 ) 147 —

Changes in assets and liabilities

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Net cash used in financing activities ( 13,391 ) ( 27,257 ) ( 4,549 )

Net (decrease)/increase in cash and cash equivalents ( 15,731 ) 14,968 5,251

Net decrease in cash and cash equivalents 646 ( 15,731 ) 14,968

Cash and cash equivalents

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The Company and its consolidated subsidiaries are referred to collectively in these consolidated financial statements as “we,” “our,” and “us.” Solely for convenience, some of the copyrights, trade names and trademarks referred to in these consolidated financial statements are listed without their © , ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks.

The Company, through its wholly-owned subsidiaries, is a provider of practice management services to professional associations (“PAs”) located throughout the United States and Canada.

The Company, through its wholly-owned subsidiaries, is a provider of practice management services to professional associations (“PAs”) located throughout the United States, Canada, and the United Kingdom.

The Company owns and operates non-clinical assets and provides its management services to the PAs through management services agreements (“MSAs”).

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Principles of Consolidation

These consolidated financial statements present the financial position and results of operations of the Company, its wholly-owned subsidiaries, and the PAs, which are under the control of the Company and are considered variable interest entities in which the Company is the primary beneficiary.

These consolidated financial statements present the financial position and results of operations of the Company, its wholly-owned domestic and international subsidiaries, and its variable interest in the managed PAs in the United States ("Domestic PAs"), which are under the control of the Company and are considered variable interest entities in which the Company is the primary beneficiary.

All intercompany accounts and transactions have been eliminated in consolidation.

Variable Interest Entities

The Company has a variable interest in the managed PAs where it has a long-term and unilateral controlling financial interest over such PAs’ assets and operations.

The Company has the ability to direct the activities that most significantly affect the PAs’ economic performance via the MSAs and related agreements.

The Company has a variable interest in the Domestic PAs where it has a long-term and unilateral controlling financial interest over their assets and operations.

The Company has the ability to direct the activities that most significantly affect the Domestic PAs’ economic performance via the MSAs and related agreements.

The Company is a practice management service organization and does not engage in the practice of medicine.

These services are provided by licensed professionals at each of the PAs.

Certain key features of the MSAs and related agreements enable the Company to assign the member interests of certain of the PAs to another member designated by the Company (i.e., “nominee shareholder”) for a nominal value in certain circumstances at the Company’s sole discretion.

The MSA does not allow the Company to be involved in, or provide guidance on, the clinical operations of the PAs.

The Company consolidates the PAs into the financial statements.

All of the Company’s revenue is earned from services provided by the PAs.

The only assets and liabilities held by the PAs included in the accompanying consolidated balance sheets are clinical related.

These services are provided by licensed professionals at each of the Domestic PAs.

Certain key features of the MSAs and related agreements enable the Company to assign the member interests of certain of the Domestic PAs to another member designated by the Company (i.e., “nominee shareholder”) for a nominal value in certain circumstances at the Company’s sole discretion.

The MSA does not allow the Company to be involved in, or provide guidance on, the clinical operations of the Domestic PAs.

The Company consolidates the Domestic PAs into the financial statements.

All of the Company’s revenue is earned from services provided by the Domestic PAs and its wholly-owned foreign subsidiaries in the United Kingdom and Canada.

The only assets and liabilities held by the Domestic PAs included in the accompanying consolidated balance sheets are clinical related.

The clinical assets and liabilities are not material to the Company as a whole.

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Payments received for services that have yet to be performed as of December 31, 2023 and December 31, 2022 are included in deferred revenue and patient deposits.

All of the deferred revenue and patient deposits as of December 31, 2022 were recognized in revenue during the twelve months ended December 31, 2023.

For the years ended December 31, 2023, 2022 and 2021, revenue from international locations was $ 5.2 million, $ 0.3 million and $ — million , respectively.

Cost of Service

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Depreciation of leasehold improvements is based on the shorter of the estimated useful life of the improvement or the remaining lease term.

As of December 31, 2023, the Company has $ 1.7 m recorded in other long-term assets related to a software as a service hosting arrangement that has not yet been implemented.

The Company determines if an arrangement is a lease at inception.

Right-of-use assets represent the right to use the underlying assets for the lease term and the lease liabilities represent the obligation to make lease payments arising from the leases.

Right-of-use assets and liabilities are recognized at commencement date based on the present value of future lease payments over the lease term, which includes only payments that are fixed and determinable at the time of commencement.

When readily determinable, the Company uses the interest rate implicit in a lease to determine the present value of future lease payments.

2 unchanged sentences

The Company applies its incremental borrowing rate using a portfolio approach.

The right-of-use assets also include any lease payments made prior to commencement and is recorded net of any lease incentives received.

The right-of-use assets also include any lease payments made prior to commencement and

is recorded net of any lease incentives received.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

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Long-Lived Assets

The Company accounts for impairment of long-lived assets in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360, Impairment or Disposal of Long-Lived Assets .

This standard requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

These standards require that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to future estimated cash flows expected to arise as a direct result of the use and eventual disposition of the asset.

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Prior to the IPO, the EBS Intermediate Parent, LLC structure included only LLC common units.

As a result, the Company does not believe earnings per share to be a meaningful presentation in the accompanying consolidated financial statements for the periods of 2021 prior to the IPO and for the twelve months ended December 31, 2020.

As a result, the Company does not believe earnings per share to be a meaningful presentation in the accompanying consolidated financial statements for the periods of 2021 prior to the IPO.

Therefore, earnings per share information has not been presented for periods prior to the IPO on October 28, 2021.

Thus, the basic and diluted earnings (loss) per share represent only the period from October 28, 2021 to December 31, 2021.

Advertising Costs

10 unchanged sentences

ASC 740-10 also modifies disclosure requirements related to uncertain tax positions for nonpublic entities and provides that all entities are subject to ASC 740-10 even if the only tax position in question is the entity’s status as a pass-through.

As required by the uncertain tax position guidance, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

For tax positions meeting the more-likely-than-not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

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NOTE 4 – DEBT

In October 2018, the Company entered into a credit agreement (the “Credit Agreement”) with a lender.

Under the terms of the Credit Agreement, we obtained a $ 34.0 million term loan.

In May 2021, the Company amended the Credit Agreement by adding an incremental $ 52.0 million senior secured term loan, resulting in an $ 85.0 million term loan in aggregate.

The proceeds from this loan plus excess cash on the balance sheet were used to pay a distribution to EBS Parent, LLC (the "Parent") of approximately $ 59.7 million and the related fees for this transaction.

Beginning on June 30, 2021, the quarterly principal payments increased from $ 100,000 to $ 212,500 .

On August 11, 2022 the Company amended the Credit Agreement to provide for (i) the payment of cash dividends in an amount not to exceed $ 23.0 million on or prior to September 30, 2022 and (ii) the payment of cash dividends in an amount not to exceed $ 2.0 million with respect to securities that are not vested at the time such cash dividend is paid.

In doing so, the Company incurred an amendment fee of $ 0.2 million.

On November 7, 2022, the Company entered into a new credit agreement with a syndicate of lenders (the "new Credit Agreement") maturing November 7, 2027.

Pursuant to the new Credit Agreement, there is (i) an $ 85.0 million aggregate principal amount of term loans and (ii) a revolving loan facility in an aggregate principal amount of up to $ 5.0 million.

The proceeds were used, in part, to pay off the Company’s $ 83.6 million outstanding principal balance under its existing credit facility.

In doing so, the Company recognized a loss on debt extinguishment of $ 0.9 million.

Under the new Credit Agreement, all outstanding loans bear interest based on either a base rate or SOFR plus an applicable per annum margin.

On November 7, 2022, the Company entered into a credit agreement with a syndicate of lenders (the "Credit Agreement") maturing November 7, 2027.

Pursuant to the Credit Agreement, there is (i) an $ 85.0 million aggregate principal amount of term loans and (ii) a revolving loan facility in an aggregate principal amount of up to $ 5.0 million.

The proceeds were used, in part, to pay off the Company’s $ 83.6 million outstanding principal balance under its previous credit facility.

On September 29, 2023, the Company voluntarily pre-paid $ 10.0 million of the principal using cash on hand.

Under the Credit Agreement, all outstanding loans bear interest based on either a base rate or SOFR plus an applicable per annum margin.

The applicable per annum margin is 2.0 % or 3.0 % for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.0 x.

1 unchanged sentence

If the Company's total leverage ratio is below 1.0 x, the applicable per annum margin is 1.0 % or 2.0 % for base rate or SOFR, respectively.

As of December 31, 2023, the interest rate was 7.85 %.

Total borrowings as of December 31, 2023 and December 31, 2022 were as follows (in 000’s):

5 unchanged sentences

Long-term debt, net $ 69,503 $ 81,420

As of December 31, 2022 and 2021, the Company had $ 5.0 million available on the revolving credit facility.

As of December 31, 2023 and December 31, 2022, the Company had $ 5.0 million available on the revolving credit facility.

The scheduled future maturities of long-term debt as of December 31, 2023 is as follows (in 000’s):

Year ending December 31,

Total maturities $ 72,875

All borrowings under the new Credit Agreement are cross collateralized by substantially all assets of the Company and are subject to certain restrictive covenants including quarterly total leverage ratio and fixed charge ratio requirements.

The Company is in compliance with all covenants and has no letter of credit outstanding as of December 31, 2022 and 2021.

All borrowings under the Credit Agreement are cross collateralized by substantially all assets of the Company and are subject to certain restrictive covenants including quarterly total leverage ratio and fixed charge ratio requirements.

The Company is in compliance with all covenants and has no letter of credit outstanding as of December 31, 2023 and December 31, 2022.

NOTE 5 – LEASES

14 unchanged sentences

2023 December 31,

2021 December 31,

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

Future minimum rental payments under all non-cancellable operating lease agreements for the succeeding five years are as follows, excluding common area maintenance charges that may be required by the agreements (in 000’s):

Year ended December 31,

Year ending December 31,

Thereafter 8,901

6 unchanged sentences

This amount will automatically increase on January 1 of each year for a period of ten years starting on January 1, 2023, in an amount equal to the lesser of (i) four percent of the total Common Stock outstanding on December 31 of the preceding year and (ii) such smaller number of shares as determined by the Company’s Board.

Under the 2021 Equity Incentive Plan, 3,950,450 stock units were awarded to

AirSculpt’s executive officers and directors and 728,880 stock units were awarded to employees on November 4, 2021 and November 10, 2021, respectively.

Under the 2021 Equity Incentive Plan, 3,950,450 stock units were awarded to AirSculpt’s executive officers and directors and 728,880 stock units were awarded to employees on November 4, 2021 and November 10, 2021, respectively.

These stock units were granted in the form of RSUs and PSUs.

During the twelve months ended December 31, 2022, the Company granted 216,421 RSUs to certain officers, employees and non-employee directors in accordance with the 2021 Plan.

During the twelve months ended December 31, 2023 and 2022, the Company granted 767,261 and 216,421 RSUs, respectively, to certain officers, employees and non-employee directors in accordance with the 2021 Plan.

Vesting and payment of these RSUs are generally subject to continuing service of the employee or non-employee director over the ratable vesting periods beginning one year from the date of grant to one or three years after the date of grant.

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These RSUs are not considered outstanding until vested.

During the twelve months ended December 31, 2022, the Company granted 38,775 PSUs subject to the achievement of a combination of performance conditions.

During the twelve months ended December 31, 2023 and 2022, the Company granted 50,000 and 38,775 PSUs, respectively, subject to the achievement of a combination of performance conditions.

In addition to the achievement of the performance conditions, these PSUs are generally subject to the continuing service of the employee over the ratable vesting period from the earned date continuing through the settlement of the shares.

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These awards are structured with one-third vesting at 120 % VWAP, one-third vesting at 145 % VWAP and the final one-third vesting at 175 % VWAP.

During the twelve months ended December 31, 2022, the Company granted 103,936 PSUs subject to the achievement of market-based conditions ("market-based PSUs").

During the twelve months ended December 31, 2023 and 2022, the Company granted 624,846 and 103,936 PSUs, respectively, subject to the achievement of market-based conditions ("market-based PSUs").

The vesting is based on achievement of a total shareholder return relative to a specified peer group (“rTSR”).

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The following table sets forth the assumptions that were used to calculate the fair value of the market-based PSU awards granted during the twelve months ended December 31, 2023, 2022 and 2021.

2023 2022 2021

Expected volatility 89.9 % 82.4 % 66.0 %

15 unchanged sentences

Outstanding at December 31, 2022 3,526,634 14.23

Granted 1,442,107 6.60

Forfeitures ( 30,605 ) 10.83

Vestings ( 1,025,234 ) 13.93

Outstanding at December 31, 2023 3,912,902 $ 11.50

Other information pertaining to equity-based compensation

5 unchanged sentences

Forfeitures are recognized as incurred.

Unrecognized compensation cost related to unvested time-based shares was approximately $ 17.6 million and $ 33.2 million for the twelve months ended December 31, 2022 and 2021, respectively.

During the twelve months ended December 31, 2023, the Company had actual vestings with fair market value of $ 12.9 million and $ 0.8 million related to employees and directors, respectively.

Unrecognized compensation cost related to unvested time-based shares was approximately $ 10.4 million as of December 31, 2023.

Unrecognized compensation cost will be expensed annually based on the number of shares that vest during the year.

Further, the Company has unrecognized compensation cost of $ 12.1 million and $ 29.1 million related to the PSUs for the twelve months ended December 31, 2022 and 2021, respectively, which will be recognized on a graded vesting basis over the requisite service period when it is probable the performance condition will be achieved.

As of December 31, 2023, the weighted average remaining vesting term on the unvested time-based shares was 0.95 years.

Further, the Company has unrecognized compensation cost of $ 10.6 million related to the PSUs as of December 31, 2023, which will be recognized on a graded vesting basis over the requisite service period when it is probable the performance condition will be achieved.

As of December 31, 2023, the weighted average remaining vesting term on the unvested PSUs was 1.55 years.

On August 10, 2022, the board of directors of the Company approved a $ 0.41 per share special cash dividend.

2 unchanged sentences

The Company's unvested stock units participate in dividends and as such, the Company had $ 1.0 million in dividends payable as of December 31, 2023, of which $ 0.3 million is current.

The Company recognized distributions to the Parent of approximately $ 1.2 million, $ 66.9 million, and $ 4.6 million for the twelve months ended December 31, 2022, 2021, and 2020, respectively.

The Company recognized distributions to EBS Parent, LLC (the "Parent") of approximately $ 0.1 million, $ 1.2 million, and $ 66.9 million for the twelve months ended December 31, 2023, 2022, and 2021, respectively.

NOTE 7 – EARNINGS PER SHARE

Basic earnings per share of common stock is computed by dividing net income/loss attributable to AirSculpt Technologies, Inc.

for the twelve months ended December 31, 2022 by the weighted-average number of shares of common stock outstanding during the same period.

for the twelve months ended December 31, 2023 and 2022 by the weighted-average number of shares of common

stock outstanding during the same period.

Diluted earnings per share of common stock is computed by dividing net income/loss attributable to AirSculpt Technologies, Inc.

for the twelve months ended December 31, 2022 by the weighted-average number of shares of common stock adjusted to give effect to potentially dilutive securities.

for the twelve months ended December 31, 2023 and 2022 by the weighted-average number of shares of common stock adjusted to give effect to potentially dilutive securities.

Where the inclusion of potentially dilutive shares would be antidilutive, diluted loss per share equals basic loss per share.

5 unchanged sentences

Fiscal Year Ended

2023 2022 2021

Net (loss)/income $ ( 4,479 ) $ ( 14,679 ) $ 10,551

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Fiscal Year Ended

2023 2022 2021

Restricted stock units 1,047,501 1,367,558 2,364,703

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Fiscal Year Ended December 31,

2023 2022 2021

Federal $ 4,565 $ 1,235 $ —

3 unchanged sentences

State and Local 431 25 ( 35 )

Foreign ( 281 ) — —

Total deferred income tax (benefit) expense 1,342 1,134 208

3 unchanged sentences

Fiscal Year Ended December 31,

2023 2022 2021

Federal statutory tax rate 21.0 % 21.0 % 21.0 %

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Net deferred tax liabilities $ ( 6,828 ) $ ( 5,484 )

As of December 31, 2022, we had foreign net operating loss carryforwards in the amount of $ 2.1 million.

Of the total carryforwards, $ 1.7 million were generated by the Company’s Canadian based subsidiary and $ 0.4 million were generated by the Company's British subsidiary.

The Canadian-based net operating losses begin to expire in 2039 and the British based net operating losses carry forward indefinitely.

As of December 31, 2023 and 2022, we had foreign net operating loss carryforwards in the amount of $ 4.0 million and $ 2.1 million, respectively.

Of the total carryforwards, $ 1.4 million and $ 1.7 million, respectively, were generated by the Company’s Canadian based subsidiary and $ 2.6 million and $ 0.4 million, respectively, were generated by the Company's United Kingdom based subsidiary.

The Canadian-based net operating losses begin to expire in 2039 and the United Kingdom based net operating losses carry forward indefinitely.

The Company recognizes deferred tax assets to the extent it believes these assets are more likely than not to be realized.

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As of December 31, 2023 and 2022, the Company had no uncertain tax positions.

NOTE 9 – RELATED PARTY TRANSACTIONS

The Company entered into professional services agreements, effective October 2, 2018, with Vesey Street Capital Partners, LLC, JCBI II, LLC, and Dr.

Aaron Rollins (collectively the “Advisors”), where the Advisors provided certain managerial and advisory services to the Company.

Each of the Advisors had an ownership interest in the Parent.

Under the professional services agreements, the Company agreed to pay the Advisors an aggregate annual fee (also referred to as the sponsor management fee) of the greater of $ 500,000 or 2 % of consolidated earnings before interest, tax, depreciation and amortization, payable in advance quarterly installments, and the fee was allocated between the Advisors based on the outstanding Parent Class A Units held.

Under the agreements, the Company also reimbursed the Advisors for any out-of-pocket expenses incurred related to providing their services.

In conjunction with the IPO and Reorganization, the professional services agreements with the Advisors were terminated.

During the twelve months ended December 31, 2022,

2021, and 2020, the Company incurred sponsor management fees of approximately $ — million , $ 1.6 million, and $ 0.5 million, respectively.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The Company believes, based upon a review of pending actions and proceedings, that the outcome of such legal actions and proceedings will not have a material adverse effect on its business, financial condition, results of operations, and cash flows.

The outcome of such actions and proceedings, however, cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.

The outcome of such actions and proceedings, however, cannot be predicted with

certainty and an unfavorable resolution of one or more of them could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.

Although the Company currently maintains liability insurance coverage intended to cover professional liability and certain other claims, the Company cannot assure that its insurance coverage will be adequate to cover liabilities arising out of claims asserted against it in the future where the outcomes of such claims are unfavorable.

5 unchanged sentences

Segment information is presented in the same manner that the Company’s chief operating decision maker (“CODM”) reviews the operating results in assessing performance and allocating resources.

The Company’s CODM is the Company’s chief executive and chief operating officers.

This committee reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.

The Company’s CODM is the Company’s chief executive officer.

The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.

The Company’s CODM reviews revenue, gross profit and Adjusted EBITDA.

Gross profit is defined as revenues less cost of service incurred and Adjusted EBITDA as net income/loss excluding depreciation and amortization, net interest expense, income tax expense/(benefit), loss on debt modification, sponsor management fee, pre-opening de novo and relocation costs, restructuring and related severance costs, IPO related costs, (gain)/loss on disposal of long-lived assets, and equity-based compensation.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Gross profit is defined as revenues less cost of service incurred and Adjusted EBITDA as net loss/income excluding depreciation and amortization, net interest expense, income tax expense, restructuring and related severance costs, IPO related costs, loss/(gain) on disposal of long-lived assets, and equity-based compensation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data