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Item 8. Financial Statements and Supplementary Data

2026-03-31 compared with 2025-03-14 · 215 added, 97 removed, 545 unchanged (36% of the section changed)

13 unchanged sentences

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

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, other comprehensive loss, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, other comprehensive loss, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

71 unchanged sentences

82,180 98,880 102,381

Loss on debt modification — — 932

Depreciation and amortization 12,781 11,888 10,253

Loss/(gain) on disposal of long-lived assets (2)

4,575 16 ( 212 )

Cost related to closing location, net (3)

Total operating expenses 163,378 181,933 186,195

2 unchanged sentences

Pre-tax net (loss)/income ( 17,638 ) ( 7,830 ) 3,237

Income tax expense 188 7,477 3,383

Income tax (benefit)/expense ( 5,971 ) 188 7,477

Net loss $ ( 11,667 ) $ ( 8,018 ) $ ( 4,240 )

6 unchanged sentences

(1) During the first quarter of fiscal year 2024, the Company recorded a cumulative reversal of stock compensation expense of $ 10.4 million related to reassessing the probability of achieving the performance target on certain of the Company's performance-based stock units.

See Note 6 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion.

(2) During the fiscal year ended 2025, the Company recorded a $ 4.5 million loss related to the impairment of a portion of the Salesforce implementation project and $ 0.1 million related to the corporate office PPE write-off.

See Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.

(3) During the fiscal year ended 2025, the Company recorded $ 2.2 million in costs related to the closure of the London facility.

Comprising of that amount is a $ 2.4 million loss on London PPE, $ 3.3 million rent expense from accelerated amortization, offset by a $ 3.2 million gain on the deconsolidation as of December 31, 2025 related to net liabilities and $ 0.3 million income from reclassification of CTA.

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

6 unchanged sentences

Net loss $ ( 11,667 ) $ ( 8,018 ) $ ( 4,240 )

Other comprehensive loss:

Other comprehensive income/(loss):

Change in foreign currency translation adjustment 336 ( 275 ) ( 336 )

Total other comprehensive loss:

( 275 ) ( 336 ) ( 76 )

Reclassification of cumulative translation adjustment to income upon sale or liquidation of certain foreign entities (1)

Total other comprehensive income/(loss) 591 ( 275 ) ( 336 )

Comprehensive loss $ ( 11,076 ) $ ( 8,293 ) $ ( 4,576 )

(1) During the year ended December 31, 2025, the Company reclassed currency translation of $ 255 thousand related to the London deconsolidation.

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

7 unchanged sentences

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

Adjustment to opening retained earnings for correction of immaterial errors — — — — ( 1,574 ) ( 1,574 )

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

7 unchanged sentences

Issuance of common stock through unit vesting 1,013,462 1 — — — 1

Distributions — — ( 79 ) — — ( 79 )

Dividends — — 964 — — 964

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Issuance of common stock through unit vesting 309,332 1 — — — 1

Dividends — — 964 — — 964

Issuance of common stock through public offerings, net 5,863,991 5 18,764 — — 18,769

Equity-based compensation — — 2,331 — — 2,331

1 unchanged sentence

Net loss — — — — ( 11,667 ) ( 11,667 )

Other comprehensive loss — — — ( 275 ) ( 275 )

Other — — ( 445 ) 591 — 146

Balance at December 31, 2025 64,542,461 $ 64 $ 128,315 $ ( 96 ) $ ( 40,571 ) $ 87,712

8 unchanged sentences

Net loss $ ( 11,667 ) $ ( 8,018 ) $ ( 4,240 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 12,781 11,888 10,253

2 unchanged sentences

amortization of debt costs 525 339 207

Loss on debt modification — — 932

Deferred income taxes ( 5,914 ) ( 252 ) 1,342

Loss/(gain) on disposal of long-lived assets 16 ( 212 ) 147

Loss on impairment of long-lived assets 4,575 16 ( 212 )

Cost related to closing location 2,152 — —

Changes in assets and liabilities

5 unchanged sentences

Accrued and other liabilities ( 6,786 ) 9,225 2,839

Net cash provided by operating activities 11,350 23,956 24,447

Net cash used in operating activities 3,096 11,350 23,956

Cash flows from investing activities

2 unchanged sentences

Cash flows from financing activities

Payment on term loan ( 2,125 ) ( 12,125 ) ( 84,263 )

Borrowings on term loan, net — — 83,503

Payments on term loan ( 13,793 ) ( 2,125 ) ( 12,125 )

Payments for debt modification ( 393 ) ( 136 ) —

Proceeds from revolving credit facility 5,000 — —

Payments on revolving credit facility ( 5,000 ) 5,000 —

Proceeds from public offerings, net 18,764 — —

Distribution to member — — ( 79 )

2 unchanged sentences

Other financing activity — ( 954 ) ( 569 )

Net cash provided by/(used in) financing activities 630 ( 13,391 ) ( 27,257 )

Net cash used in financing activities ( 478 ) 630 ( 13,391 )

Net decrease in cash and cash equivalents 214 ( 2,027 ) 646

4 unchanged sentences

Cash paid for interest $ 5,562 $ 5,997 $ 6,277

Cash paid for income taxes $ 1,808 $ 4,663 $ 4,932

Supplemental disclosure of non-cash investing information:

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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, Canada, and the United Kingdom.

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

5 unchanged sentences

Basis of Presentation

In the opinion of management, the accompanying consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Variable Interest Entities

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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, 2024 and 2023, the Company has $ 2.4 million and $ 1.7 million recorded, respectively, in other long-term assets related to a software as a service hosting arrangement that has not yet been implemented.

As of December 31, 2025 and 2024, the Company has $ 1.3 million and $ 2.6 million recorded, respectively, in prepaids and other current assets, and $ 0.0 million and $ 2.4 million recorded, respectively, in other long-term assets related to a software as a service hosting arrangement that has not yet been implemented.

The software will be used to enhance the sales and marketing process.

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Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

No impairment charges were recognized for the twelve months ended December 31, 2024, 2023 and 2022.

Impairment charges were $ 6.7 million, $ 0.0 million, and $ 0.0 million for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 respectively.

The impairment charges for the year ended December 31, 2025 consisted of approximately $ 4.5 million related to the Salesforce impairment expense and approximately $ 2.2 million impairment expense related to the closure of the London facility.

On September 1, 2025, the Company made the decision to close our facility in the United Kingdom because of its financial performance, which was deemed a triggering event for long-lived asset impairment testing.

As a result of the closure, a loss of $ 2.2 million was recorded primarily related to impairment of the property, plant, and equipment at this location.See Note 12 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.

As of September 30, 2025, the Company determined that a portion of the Salesforce software implementation project will not be completed.

As a result, the Company recorded an impairment charge of $ 4.5 million to adjust the software project to

its fair value.

The Company continues to develop the remaining portion of our software project which focuses on our sales process and anticipate its completion in the second quarter of fiscal year 2026.

ASC Topic 820, Fair Value Measurements and Disclosure s, defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosure requirements about fair value measurements.

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The Company applied the uncertain tax position guidance to all tax positions for which the statute of limitations remained open and determined that there are no uncertain tax positions as of December 31, 2025 or December 31, 2024.

The Company is not subject to U.S.

federal tax examination prior to 2021, when it was formed.

The Company has effective tax rates of approximately ( 33.8 )%, ( 2.3 )% and 249.4 % for the twelve months ended December 31, 2025, 2024 and 2023, respectively, inclusive of all applicable U.S.

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Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures , which requires enhanced disclosures of significant segment expenses.

The ASU is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The amendments in this ASU must be applied retrospectively to all periods presented and early adoption is permitted.

The Company adopted ASU 2023-07 for the fiscal year ended December 31, 2024.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures , which establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid.

1 unchanged sentence

The amendments in this ASU may be applied prospectively or retrospectively to all periods presented and early adoption is permitted.

The Company adopted ASU 2023-09 as of December 31, 2025 using a prospective approach and the adoption did not have a material impact on the Company's consolidated financial statements, except for the disclosure requirements.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses, which requires public business entities (PBEs) to disclose detailed breakdowns of specific expense captions (e.g., COGS, SG&A) in annual and interim notes.

It mandates tabular, disaggregated information—such as employee compensation, depreciation, and amortization—to improve transparency for investors.

The ASU is effective for annual periods beginning after December 15, 2026 and interim period beginning after December 15, 2027.

The Company is evaluating the impact of this ASU on its consolidated financial statements.

1 unchanged sentence

On October 2, 2018, EBS Intermediate acquired a controlling interest in EBS Enterprises, LLC in exchange for total consideration of $ 151.0 million.

The fair value of the net identifiable assets at transaction date was $ 69.3 million, comprised primarily of $ 17.7 million in intangible assets related to the AirSculpt and Elite trademarks and tradenames and $ 53.6 million in intangible assets related to the AirSculpt technology and know-how.

The fair value of the net identifiable assets at transaction date was $ 69.3 million, comprised primarily of $ 17.7 million in intangible assets related to the AirSculpt trademarks and tradenames and $ 53.6 million in intangible assets related to the AirSculpt technology and know-how.

The resulting excess consideration over fair value of identifiable net assets was recorded to goodwill in the amount of $ 81.7 million.

The annual review of goodwill impairment was performed in October 2024 using a qualitative analysis and the Company determined that a quantitative analysis was not required.

The annual review of goodwill impairment was performed on October 1, 2025 using a qualitative analysis and the Company determined that a quantitative analysis was not required.

There were no triggering events during the years ended December 31, 2025, 2024 and 2023.

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On September 29, 2023, the Company voluntarily pre-paid $ 10.0 million of the principal balance of the term loans under the Credit Agreement 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.

If the Company's total leverage ratio is equal to or greater than 1.0 x and less than 2.0 x, the applicable per annum margin is 1.5 % or 2.5 % for base rate or SOFR, respectively.

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.

On September 13, 2024, the Company amended the Credit Agreement to modify certain financial condition covenants.

As such, for the period of September 13, 2024 through June 30, 2025, the applicable per annum margin is 2.5 % or 3.5 % for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.0 x.

If the Company's total leverage ratio is equal to or greater than 1.0 x and less than 2.0 x, 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 below 1.0 x, the applicable per annum margin is 1.5 % or 2.5 % for base rate or SOFR, respectively.

As of December 31, 2024, the interest rate was 7.86 %.

On March 12, 2025, the Company amended the Credit Agreement (the "Third Amendment") to modify certain financial covenants made by the Company in the Credit Agreement, such that (i) the Consolidated Fixed Charge Coverage Ratio (as

defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the fiscal quarters ending March 31, 2025 and June 30, 2025 must be no less than 0.50 x and 1.10 x, respectively, and no less than 1.25 x on the last day of the fiscal quarters ending September 30, 2025 and thereafter, instead of 1.10 x as of March 31, 2025 and 1.25 x as of June 30, 2025 and thereafter, as previously set forth in the Credit Agreement;

(ii) the Consolidated Leverage Ratio (as defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the fiscal quarters ending March 31, 2025, June 30, 2025, September 30, 2025, December 31, 2025 and March 31, 2026, must not exceed 4.25 x, 3.50 x, 3.25 x, 3.25 x, and 2.75 x, respectively, and the Consolidated Leverage Ratio as of the last day of each fiscal quarter thereafter must not exceed 2.25 x, instead of 3.25 x as of March 31, 2025, 2.75 x as of June 30, 2025, and 2.25 x thereafter, as previously set forth in the Credit Agreement;

(iii) the Company and its subsidiaries will be required to maintain minimum Liquidity (as defined in the Credit Agreement) of not less than (A) $ 3.0 million as of the last day of the month ending March 31, 2025, (B) $ 5.0 million as of the last day of the month ending April 30, 2025, and (C) $ 7.5 million as of the last day of the months ending May 31, 2025 and thereafter (or the last day of each fiscal quarter thereafter upon the satisfaction of certain financial tests described therein);

and (iv) new liquidity and financial reporting requirements have been added.

In addition to revising the covenants listed above, the Third Amendment revised or added new terms such that (i) for outstanding loans, beginning on or about July 1, 2025, the applicable per annum margin will be increased to 3.75 % or 4.75 % for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 3.00 x, 3.50 % or 4.50 % for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.00 x and less than 3.00 x, and 3.25 % or 4.25 % for base rate or SOFR, respectively, if the Company's total leverage ratio is below 2.00 x, (ii) the term loan and revolving credit facility will mature on May 11, 2027 (instead of November 7, 2027);

(iii) Liquidity in excess of $ 3.0 million will be used to repay the outstanding funds drawn on the revolving credit facility on a monthly basis beginning April 30, 2025;

(iv) revolver draws will be subject to compliance with the minimum Liquidity covenant;

(v) the Company will be required to reimburse SVB for certain fees and expenses relating to the engagement of a financial advisor, and (vi) 100 % of first $ 10.0 million of any equity proceeds will be used to repay the term loan and revolving credit facility, subject to a carve-out of the first $ 3.0 million of equity proceeds;

and any equity proceeds received from Vesey Street Capital Partners, L.L.C., our private equity sponsor (“Sponsor”).

In consideration of the Third Amendment, the Company paid a fee equal to 0.15 % of the outstanding loans to consenting Lenders, and a $ 125 thousand arrangement fee to Silicon Valley Bank.

On March 12, 2025 in connection with the Third Amendment, the Company, SVB and our Sponsor (through certain affiliated entities) entered into that certain Limited Guarantee by and among Vesey Street Capital Partners Healthcare Fund, L.P., Vesey Street Capital Partners Healthcare Fund-A, L.P., SVB, and the Company (the "Limited Guarantee") pursuant to which our Sponsor agreed to provide a $ 10.0 million limited guaranty of the Company’s obligations under the Credit Agreement.

The Limited Guarantee was callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) if the Company had not prepaid the term loan (excluding regularly scheduled amortization) by $ 10.0 million as of such date.On June 13, 2025, the Company made a $ 10.0 million principal payment on the term loan in accordance with the Third Amendment using proceeds from its underwritten public offering completed on June 11, 2025.

The Limited Guarantee automatically terminated on March 12, 2026 following the prepayment of the Term Loan in an aggregate amount of $ 20.0 million since the date of the Limited Guarantee.

As of December 31, 2025, the interest rate under the Credit Agreement was 8.47 %.

Total borrowings as of December 31, 2025 and December 31, 2024 were as follows (in 000’s):

6 unchanged sentences

As of December 31, 2025 and December 31, 2024, the Company had $ 5.0 million and $ 0.0 million available on the revolving credit facility.

The Company had $ 5.0 million drawn on the revolving credit facility as of December 31, 2024.

The scheduled future maturities of long-term debt as of December 31, 2025 is as follows (in 000’s):

1 unchanged sentence

Total maturities $ 56,957

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, 2024 and December 31, 2023.

The Company is in compliance with all covenants and has no letter of credit outstanding as of December 31, 2025 .

NOTE 5 – LEASES

As discussed in Note 13, management identified immaterial errors in the previously issued consolidated financial statements related to the accounting for certain lease arrangements under ASC 842, Leases.

Specifically, the Company determined that right‑of‑use (“ROU”) operating lease assets and corresponding operating lease liabilities were understated due to errors in the subsequent measurement and accounting for certain leases.

The correction of these errors also resulted in immaterial impacts to lease‑related expense in the consolidated statements of operations for the affected periods.

The revised information for the historical periods is reflected herein.

The Company’s operating leases are primarily for real estate, including medical office suites and corporate offices.

For the twelve months ended December 31, 2025, 2024, and 2023, the Company incurred rent expense of $ 10.0 million, $ 6.5 million, and $ 5.8 million, respectively, related to its medical office suites.

The Company ceased use of our leased facility in London on November 15, 2025 and have adjusted the remaining right-of-use asset resulting in accelerated amortization of $ 3.3 million of rent expense for fiscal year 2025, which is classified in selling, general and administrative expenses.

The Company’s rent expense related to its medical office suites is classified in cost of services within the Company’s consolidated statements of operations.

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

Additionally, during the fiscal year ended December 31, 2025 the CEO was granted PSUs, with vesting conditioned on the attainment of a 60-day volume weighted average price ("VWAP") based on market price.

Based on the rTSR, the awards can settle in shares in a range from 0 % to 200 %.

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.

In addition to the achievement of the market 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.

For these PSUs, the shares settle in the first quarter of the year following the year in which the vesting criteria is met.

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The fair values of the PSUs not subject to a market conditions were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date.

2025 Underwritten Follow-On Equity Offering

On June 9, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Leerink Partners LLC (“Leerink Partners”), to issue and sell 3,160,000 shares (the “Firm Shares”) of the Company’s common stock to Leerink Partners, in an underwritten registered public offering (the “Offering”), at a price of $ 3.80 per share.

Pursuant to the Underwriting Agreement, the Company also granted Leerink Partners a 30-day option to purchase up to an additional 474,000 shares of the Company's common stock (the “Additional Shares,” and together with the Firm Shares, the “Shares”), at the same price per share as the Firm Shares.

Leerink Partners exercised in full its option to purchase the Additional Shares on June 10, 2025.

Vesey Street Capital Partners, L.L.C., which is affiliated with two directors and is the largest stockholder of the Company, purchased an aggregate of 1,000,000 Shares in the Offering on the same terms and conditions as purchases by the public in the Offering.

The Offering closed on June 11, 2025, and the Company received net proceeds of approximately $ 13 million from the sale of 3,634,000 Shares, which included the 474,000 Additional Shares, after deducting estimated offering expenses.

The Offering was pursuant to a prospectus supplement dated June 9, 2025, filed with the SEC in connection with the Company’s shelf registration statement on Form S-3 (File 333-285825), filed with the SEC on March 14, 2025 and declared effective on March 24, 2025 and the related prospectus dated March 14, 2025.

At-the-Market Common Offering Program

On March 14, 2025, the Company entered into a sales agreement (the “ATM Agreement”) with Leerink, as sales agent, in connection with an at-the-market offering program under which the Company may offer and sell, from time to time in our sole discretion, shares of our common stock having an aggregate offering price of up to $ 50.0 million at prices and on terms to be determined by market conditions at the time of offering.

The $ 50.0 million of common stock that may be offered, issued and sold under the ATM Agreement is included in the $ 100.0 million of securities that may be offered, issued and sold by us under our Registration Statement on Form S-3 (File 333-285825).

The Company and Leerink each have the right to suspend or terminate the ATM Agreement in each party’s sole discretion at any time.

For the year ended, December 31, 2025, we sold the following quantities of our common stock pursuant to the ATM Agreement for total net proceeds of approximately $ 5.8 million:

Q1 Total 5,618

Q2 Total 118,582

Q4 Total 2,105,791

Total Shares 2,229,991

Restricted and Performance Equity-Based Activity

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Magazine of consulting services to the Company through December 31, 2024, Mr.

Magazine remained eligible to vest in 75,000 RSUs on January 1, 2025, which would have otherwise been forfeited, which resulted in an additional

$ 0.3 million in stock compensation during the twelve months ended December 31, 2024.

Magazine remained eligible to vest in 75,000 RSUs on January 1, 2025, which would have otherwise been forfeited, which resulted in an additional $ 0.3 million in stock compensation during the twelve months ended December 31, 2024.

Further, pursuant to the severance provisions under Section 7.2 of his employment agreement with the Company, Mr.

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As of December 31, 2025, the weighted average remaining vesting term on the unvested PSUs was 0.74 years.

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

The dividend was paid on September 14, 2022, to stockholders of record at the close of business on August 26, 2022.

Cash dividends paid totaled $ 0.3 million for the twelve months ended December 31, 2024.

The Company's unvested stock units participate in dividends and as such, the Company had no dividends payable as of December 31, 2024.

The Company recognized distributions to EBS Parent, LLC (the "Parent") of approximately $ 0.0 million, $ 0.1 million, and $ 1.2 million for the twelve months ended December 31, 2025, 2024, and 2023, respectively.

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NOTE 8 – INCOME TAXES

The components of loss before income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows (in 000's):

Fiscal Year Ended

December 31, 2025 Fiscal Year Ended

December 31, 2024 Fiscal Year Ended

December 31, 2023

Domestic $ ( 11,473 ) $ ( 6,293 ) $ 5,145

Foreign ( 6,165 ) ( 1,537 ) ( 1,908 )

Total $ ( 17,638 ) $ ( 7,830 ) $ 3,237

Significant components of income tax expense were as follows (in 000’s):

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Total $ ( 5,971 ) $ 188 $ 7,477

A reconciliation of income taxes computed at the U.S.

federal statutory income tax rate of 21% to the Company’s income tax (expense) was as follows:

Fiscal Year Ended December 31,

The effective tax rates for the fiscal years ended December 31, 2025, 2024 and 2023 were ( 33.8 )%, ( 2.3 )% and 249.4 %.

The most significant items impacting the effective tax rate during fiscal years 2025, 2024 and 2023 are non-deductible officer compensation expense and the items listed in the tables below.

The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S.

federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025 (in 000's):

Fiscal Year Ended

December 31, 2025

Income tax expense/(benefit) computed at federal statutory rate $ ( 3,704 ) 21.0 %

State taxes, net of federal benefit (1)

( 1,181 ) 6.7 %

Foreign tax effects

United Kingdom

Statutory tax rate difference between UK and US 125 ( 0.7 ) %

Deferred tax write-offs ( 958 ) 5.4 %

Valuation allowance changes 2,142 ( 12.1 ) %

Other foreign jurisdictions (2)

Nontaxable or nondeductible items

Worthless stock deduction ( 2,422 ) 13.7 %

Other permanent items 156 ( 0.9 ) %

Other reconciling items ( 133 ) 0.7 %

Total $ ( 5,971 ) ( 33.8 ) %

(1) State and local taxes in California, Florida, and New York City made up the majority (greater than 50%) of the tax effect in this category.

(2) Includes Canada

A reconciliation of income taxes computed at the U.S.

federal statutory income tax rate of 21% to the Company's income tax benefit/(expense) was as follows (in 000's):

Fiscal Year Ended December 31, Fiscal Year Ended December 31,

Federal statutory tax rate $ ( 1,710 ) 21.0 % $ 629 21.0 %

State income taxes 212 ( 2.6 ) % 1,670 55.7 %

Pass-through income — % — % — %

Nondeductible Reorganization and IPO costs — % — % — %

Nondeductible officer compensation 1,381 ( 17.0 ) % 4,769 159.1 %

1 unchanged sentence

Total $ 188 ( 2.3 ) % $ 7,477 249.4 %

The effective tax rates for the fiscal years ended December 31, 2024, 2023 and 2022 were - 2.3 %, 249.4 % and ( 29.9 )%.

The most significant items impacting the effective tax rate during fiscal years 2023, 2022 and 2021 are due to the Reorganization, non-deductible officer compensation expense, and the items below.

The Company’s deferred tax assets (liabilities) consisted of the following (in 000’s):

The Company’s deferred taxes consisted of the following (in 000’s):

Deferred tax assets

Accrued liabilities $ 110 $ 39

Net operating loss 1,368 827

Net operating losses 2,950 1,368

Operating lease liability 7,185 7,181

Equity-based compensation 1,087 887

State bonus depreciation 735 425

163 (j) limitation 3,176 1,837

State bonus depreciation 705 735

Other 750 614

Total deferred tax assets 15,963 12,661

4 unchanged sentences

Intangible assets ( 5,574 ) ( 4,722 )

Right-of-use asset ( 6,588 ) ( 6,014 )

Right-of-use assets ( 5,894 ) ( 6,588 )

Prepaid expenses and other current assets — ( 690 )

Total deferred tax liabilities ( 16,635 ) ( 18,464 )

Net deferred tax liabilities $ ( 6,596 ) $ ( 6,828 )

As of December 31, 2024 and 2023, we had foreign net operating loss carryforwards in the amount of $ 1.0 million and $ 4.0 million, respectively.

Of the total carryforwards, $ 0.2 million and $ 1.4 million, respectively, were generated by the Company’s Canadian based subsidiary and $ 0.8 million and $ 2.6 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.

Valuation allowances have been established with regard to the tax benefits of our foreign net operating losses.

In making such a determination, the Company considers 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.

After considering all of those factors, management recorded a $ 0.8 million and $ 0.5 million valuation allowance for the deferred tax assets related to the foreign net operating losses which are not more likely than not to be realized as of December 31, 2024 and 2023.

Our foreign pre-tax loss was $( 1.5 ) million, $( 1.9 ) million, and $( 1.4 ) million, for the fiscal years ended December 31, 2024, 2023 and 2022, respectively.

There were no valuation allowance releases in the current year.

The Company maintains a full valuation allowance related to its UK subsidiary and has no other valuation allowances.

Net deferred taxes $ ( 672 ) $ ( 6,596 )

As of December 31, 2025, the Company had federal, state, and foreign net operating loss carryforwards in the amount of $ 9.6 million, $ 13.6 million, and $ 0.8 million, and $ 1.6 million, $ 0.9 million and $ 5.0 million, respectively.

Certain losses have an indefinite carryforward period, while other loss carryforwards will expire in years 2039 through 2045.

The deferred tax asset related to foreign operations, $ 0.2 million, is recorded on the consolidated balance sheet as of December 31, 2025.

Our deferred tax assets have been evaluated for realization based on historical taxable income, tax planning strategies, the expected timing of reversals of existing temporary differences and future taxable income anticipated.

Our deferred tax assets are more likely than not to be realized in full due to the existence of sufficient taxable income of the appropriate character under the tax law.

The valuation allowance was reduced in the current year by $( 0.8 ) million as the related deferred tax asset for the foreign NOLs of $ 0.8 million was written off during the current year due to the closure of the London entity.

Management recorded an increase of $ 0.8 million to the valuation allowance for the deferred tax assets related to the foreign net operating losses which are not more likely than not to be realized as of December 31, 2024.

We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025.

The components of income taxes paid were as follows (in 000's):

Fiscal Year Ended

December 31, 2025

Federal $ ( 1,899 )

Other State 66

Income taxes paid, net of refunds $ ( 1,833 )

Cash paid for income taxes for the years ended December 31, 2024 and December 2023 was $ 1.8 million and $ 4.6 million, respectively.

Uncertain Tax Positions

ASC 740 prescribes a recognition threshold of more-likely-than not to be sustained upon examination as it relates to the accounting for uncertainty in income tax benefits recognized in an enterprise’s financial statements.

The Company is subject to income taxation at the federal, foreign, and various state levels.

The Company is no longer subject to U.S.

tax examinations for tax years before 2022, and with few exceptions, the Company is not subject to examination by foreign or state tax authorities for tax years which ended before 2022.

Loss carryforwards and credit carryforwards generated or utilized in years earlier than 2022 are also subject to examination and adjustment.

As of December 31, 2025 and 2024, the Company had no uncertain tax positions.

11 unchanged sentences

This segment is made up of facilities and medical staff that provide the Company’s patented AirSculpt® procedures to patients.

The accounting policies of the direct medical procedure services segment are the same as those presented in Note 1 - Organization and Summary of Significant Accounting Policies.

The accounting policies of the direct medical procedure services segment are the same as those presented in Note 1 - Organization and Summary of Key Accounting Policies.

The Company’s chief operating decision maker (“CODM”) is the Company’s chief executive officer.

2 unchanged sentences

The CODM uses Adjusted EBITDA as the primary profit metric to evaluate income generated from operations in deciding where to spend additional marketing dollars or allocate additional resources.

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

Segment information is presented below showing revenue, significant expenses and net income/(loss) (the closest GAAP measure to Adjusted EBITDA), in the same manner that the CODM reviews the operating results in assessing performance and allocating resources.

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

Segment information is presented below showing revenue, significant expenses and net loss (the closest GAAP measure to Adjusted EBITDA), in the same manner that the CODM reviews the operating results in assessing performance and allocating resources.

Twelve Months Ended

7 unchanged sentences

Corporate selling, general, and administrative expense (2) (3)

Loss on debt modification — — 932

33,775 42,518 51,749

Depreciation and amortization 12,781 11,888 10,253

Loss/(gain) on disposal of long-lived assets 16 ( 212 ) 147

Loss on impairment of long-lived assets (3)

4,575 16 ( 212 )

Cost related to closing facility, net (4)

Total operating expenses 163,378 181,933 186,195

(Loss)/income from operations ( 1,816 ) 9,483 ( 4,545 )

Loss from operations ( 11,560 ) ( 1,583 ) 9,722

Interest expense, net 6,078 6,247 6,485

Pre-tax net (loss)/income ( 8,063 ) 2,998 ( 11,296 )

Income tax expense 188 7,477 3,383

Pre-tax net loss ( 17,638 ) ( 7,830 ) 3,237

Income tax (benefit)/expense ( 5,971 ) 188 7,477

Net loss $ ( 11,667 ) $ ( 8,018 ) $ ( 4,240 )

1 unchanged sentence

(1) Cost of services includes the costs of physicians, nursing, supplies and rent directly related to the performance of procedures at the facility level.

NOTE 11 – SUBSEQUENT EVENTS

On March 12, 2025, the Company, EBS Intermediate Parent LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (“EBS Parent”), EBS Enterprises LLC, a Delaware limited liability company and wholly-owned subsidiary of EBS Parent (“Borrower”), Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as the administrative agent (“SVB”), and the lenders a party thereto entered into a Third Amendment to the Credit Agreement (the “Third Amendment”).

Under the terms of the Third Amendment, the parties thereto agreed to modify certain financial condition covenants made by the Company in the Credit Agreement, such that (i) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the

fiscal quarters ending March 31, 2025 and June 30, 2025 must be no less than 0.50 x and 1.10 x, respectively, and no less than 1.25 x on the last day of the fiscal quarters ending September 30, 2025 and thereafter, instead of 1.10 x as of March 31, 2025 and 1.25 x as of June 30, 2025 and thereafter, as previously set forth in the Credit Agreement;

(iii) the Company and its subsidiaries will be required to maintain minimum Liquidity (as defined in the Credit Agreement) of not less than (A) $ 3,000,000.00 as of the last day of the month ending March 31, 2025, (B) $ 5,000,000 as of the last day of the month ending April 30, 2025, and (C) $ 7,500,000.00 as of the last day of the months ending May 31, 2025 and thereafter (or the last day of each fiscal quarter thereafter upon the satisfaction of certain financial tests described therein);

and (iv) new liquidity and financial reporting requirements have been added.

In addition to revising the covenants listed above, the Third Amendment revised or added new terms such that (i) for outstanding loans, beginning on or about July 1, 2025, the applicable per annum margin will be increased to 3.75 % or 4.75 % for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 3.00 x, 3.50 % or 4.50 % for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.00 x and less than 3.00 x, and 3.25 % or 4.25 % for base rate or SOFR, respectively, if the Company's total leverage ratio is below 2.00 x, (ii) the maturity Term Loan and Revolving Credit Facility will mature on May 11, 2027 (instead of November 7, 2027);

(iii) Liquidity in excess of $ 3.0 million will be used to repay the outstanding funds drawn on the revolving credit facility on a monthly basis beginning April 30, 2025;

(iv) revolver draws will be subject to compliance with the minimum Liquidity covenant;

(v) the Company will be required to reimburse SVB for certain fees and expenses relating to the engagement of a financial advisor, and (vi) 100 % of first $ 10.0 million of any equity proceeds will be used to repay the Term Loan and Revolving Credit Facility, subject to a carve-out of the first $ 3.0 million of equity proceeds;

and any equity proceeds received from Sponsor.

In consideration of the Third Amendment, the Company paid a fee equal to 0.15 % of the outstanding loans to consenting Lenders, and a $ 125,000 arrangement fee to SVB.

On March 12, 2025 connection with the Third Amendment, the Company, SVB and our Sponsor (through certain affiliated entities) entered into that certain Limited Guarantee by and among Vesey Street Capital Partners Healthcare Fund, L.P., Vesey Street Capital Partners Healthcare Fund-A, L.P., SVB, a related party and who with their affiliates hold a 50.1 % ownership interest in the Company, and the Company (the "Limited Guarantee") pursuant to which our Sponsor agreed to provide a $ 10.0 million limited guaranty of the Company’s obligations under the Credit Agreement.

The Limited Guarantee is callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) if the Company has not prepaid the Term Loan (excluding regularly scheduled amortization) by $ 10.0 million as of such date.

Under the terms of the Limited Guarantee, if Sponsor is required to make any payment under the Limited Guarantee (other than as a result of a bankruptcy event), then Sponsor will be deemed to have purchased shares of common stock of the Company having an aggregate value equal to the amount of such payment.

The Company has agreed to issue a subordinated note to Sponsor if a payment occurs under the Limited Guarantee, to the extent such payment does not result from the issuance of shares of common stock by the Company to Sponsor.

(2) During the first quarter of fiscal year 2024, the Company recorded a cumulative reversal of stock compensation expense of $ 10.4 million related to reassessing the probability of achieving the performance target on certain of the Company's performance-based stock units.

See Note 6 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.

(3) During the fiscal year ended 2025, the Company recorded a $ 4.5 million loss related to the impairment of a portion of the Salesforce implementation project and $ 0.1 million related to the corporate office PPE write-off.

See Note 1 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.

(4) During the fiscal year ended 2025, the Company recorded $ 2.2 million in costs related to the closure of the London facility.

NOTE 11 – ACCRUED AND OTHER CURRENT LIABILITIES

6 unchanged sentences

Accrued and other current liabilities $ 5,298 $ 8,304

NOTE 12 - DECONSOLIDATIONS

As a result of the closure, a loss of $2.4 million was recognized related to impairment of the property, plant, and equipment at this location.

Additionally, the Company ceased use of our leased facility on November 15, 2025, and adjusted the remaining right-of-use asset

resulting in accelerated amortization of approximately $ 3.3 million of rent expense from accelerated amortization during the year ended December 31, 2025.

During the fourth quarter of 2025, the Company completed the dissolution of operations at the London facility in the United Kingdom.

All remaining net assets were turned over to a liquidator in accordance with the applicable laws and regulations in the United Kingdom and the Company will have no further continuing involvement.

Deconsolidation of the entity was recognized due to loss of control which resulted in a gain of $ 3.2 million related to net liabilities absolved and reclassification of the currency translation adjustment from other comprehensive income.

These transactions are included in cost related to closing location, net.

The transactions consist of $ 2.4 million loss on London PPE, $ 3.3 million rent expense from accelerated amortization, offset by a $ 3.2 million gain on the deconsolidation as of December 31, 2025 related to net liabilities and $ 0.3 million income from reclassification of CTA.

NOTE 13 - CORRECTION OF IMMATERIAL ERRORS

During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025, management identified immaterial errors in the previously issued consolidated financial statements related to the accounting for certain lease arrangements under ASC 842, Leases.

The correction of these errors also resulted in immaterial impacts to lease‑related expense in the consolidated statements of operations for the affected periods.

In accordance with the Staff Accounting Bulletin (“SAB”) No.

99, Materiality and SAB No.

108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in the Current Year Financial Statements , the Company evaluated both the quantitative and qualitative factors associated with these errors and determined that impacts were not material, individually or in the aggregate, to the Company’s previously issued consolidated financial statements.

As a result, the Company has revised its prior period consolidated financial statements and related disclosures for the years ended December 31, 2024 and 2023 to correct the errors.

The following tables summarize the impacts of the corrections on the Company’s consolidated financial statements for the annual periods ended December 31, 2023 and December 31, 2024 (all presented in thousands):

Consolidated Balance Sheets

As of December 31, 2024

As Previously Filed Revision As Revised

Right of use operating lease assets $ 25,669 $ 3,770 $ 29,439

Other long term assets 6,413 ( 985 ) 5,428

Total Assets 209,996 2,785 212,781

Current operating lease liabilities 6,099 340 6,439

Total Current Liabilities 28,609 340 28,949

Long-term operating lease liabilities 24,248 3,547 27,795

Total Liabilities 130,706 3,887 134,593

Accumulated deficit ( 27,802 ) ( 1,102 ) ( 28,904 )

Total stockholders' equity 79,290 ( 1,102 ) 78,188

Total liabilities and stockholders' equity 209,996 2,785 212,781

Consolidated Statements of Operations

Year Ended December 31, 2024 Year Ended December 31, 2023

As Previously Filed Revision As Revised As Previously Filed Revision As Revised

Cost of Service $ 71,382 $ ( 233 ) $ 71,149 $ 74,012 $ ( 239 ) $ 73,773

(Loss)/Income from operations ( 1,816 ) 233 ( 1,583 ) 9,483 239 9,722

Net Loss ( 8,251 ) 233 ( 8,018 ) ( 4,479 ) 239 ( 4,240 )

Basic EPS $ ( 0.14 ) — $ ( 0.14 ) $ ( 0.08 ) $ — $ ( 0.08 )

Diluted EPS $ ( 0.14 ) — $ ( 0.14 ) $ ( 0.08 ) $ — $ ( 0.08 )

Consolidated Statements of Other Comprehensive Loss

Year Ended December 31, 2024 Year Ended December 31, 2023

As Previously Filed Revision As Revised As Previously Filed Revision As Revised

Net Loss $ ( 8,251 ) $ 233 $ ( 8,018 ) $ ( 4,479 ) $ 239 $ ( 4,240 )

Comprehensive Loss ( 8,526 ) 233 ( 8,293 ) ( 4,815 ) 239 ( 4,576 )

Consolidated Statements of Changes in Stockholders' Equity

Year Ended December 31, 2024 Year Ended December 31, 2023

Accumulated Deficit - As Previously Filed Accumulated Deficit - Revision Accumulated Deficit - As Revised Accumulated Deficit - As Previously Filed Accumulated Deficit - Revision Accumulated Deficit - As Revised

Adjustment to opening retained earnings for correction of immaterial errors $ — $ — $ — $ — $ ( 1,574 ) $ ( 1,574 )

Net Loss ( 8,251 ) 233 ( 8,018 ) ( 4,479 ) 239 ( 4,240 )

Total - Accumulated Deficit ( 27,802 ) ( 1,102 ) ( 28,904 ) ( 19,551 ) ( 1,335 ) ( 20,886 )

Total - Stockholders' equity 79,290 ( 1,102 ) 78,188 83,992 ( 1,335 ) 82,657

Consolidated Statements of Cash Flows

Year Ended December 31, 2024 Year Ended December 31, 2023

As Previously Filed Revision As Revised As Previously Filed Revision As Revised

Net loss $ ( 8,251 ) $ 233 $ ( 8,018 ) $ ( 4,479 ) $ 239 $ ( 4,240 )

Changes in assets and liabilities:

Other assets ( 1,011 ) ( 1,871 ) ( 2,882 ) ( 3,814 ) ( 897 ) ( 4,711 )

Accrued and other liabilities 7,587 1,638 9,225 2,181 658 2,839

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

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