airs-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2022

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

For the transition period from __________ to __________.

Commission file number: 001-40973

AirSculpt Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware						87-1471855
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1111 Lincoln Road, Suite 802
Miami Beach, FL						33139
(Address of principal executive offices)						(Zip Code)

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

400 Alton Road, Unit TH-103M

Miami Beach, FL 33139

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

AIRS

The Nasdaq Global Market

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☒

Emerging growth company

☒

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

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

As of November 11, 2022, there were 56,172,447 shares of the registrant’s common stock outstanding.

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TABLE OF CONTENTS


		Page
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements	2





	Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	2
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	3
	Condensed Consolidated Statements of Other Comprehensive Income/(Loss ) for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	4
	Condensed Consolidated Statements of Changes in Member’s/Stockholders' Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28

Signatures		29

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made statements in the sections titled “Quantitative and Qualitative Disclosures About Market Risk” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in other sections of this Quarterly Report on Form 10-Q that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K.

Our future results could be affected by a variety of other factors, including, but not limited to, failure to open and operate new centers in a timely and cost-effective manner; shortages or quality control issues with third-party manufacturers or suppliers; competition for surgeons; litigation or medical malpractice claims; inability to protect the confidentiality of our proprietary information; changes in the laws governing the corporate practice of medicine or fee-splitting; changes in the regulatory, macroeconomic conditions, including inflation and the threat of recession, economic and other conditions of the states and jurisdictions where our facilities are located; and business disruption or other losses from war, pandemic, terrorist acts or political unrest.

The risk factors discussed in “Risk Factors” in our Annual Report on Form 10-K could cause our results to differ materially from those expressed in the forward-looking statements made in this Quarterly Report on Form 10-Q.

There also may be other risks that are currently unknown to us or that we are unable to predict at this time.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Forward-looking statements speak only as of the date they were made, and we are under no duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform our prior statements to actual results or revised expectations.

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PART I FINANCIAL INFORMATION

Item. 1 Financial Statements

AirSculpt Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


	September 30, 2022		December 31, 2021
($000s)	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	7,600	$	25,347
Prepaid expenses and other current assets	2,137		4,093
Total current assets	9,737		29,440
Property and equipment, net	22,295		13,627
Other long-term assets	3,297		1,742
Right of use operating lease assets	24,570		18,159
Intangible assets, net	52,287		55,852
Goodwill	81,734		81,734
Total assets	$	193,920	$	200,554
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	3,090	$	2,670
Accrued payroll and benefits	1,743		2,509
Current portion of long-term debt	850		850
Deferred revenue and patient deposits	2,221		2,810
Accrued and other current liabilities	1,299		4,103
Current right of use operating lease liabilities	4,349		3,473
Total current liabilities	13,552		16,415
Long-term debt, net	81,602		81,755
Deferred tax liability	4,351		4,351
Long-term right of use operating lease liabilities	20,409		14,505
Other long-term liabilities	1,535		—
Total liabilities	121,449		117,026
Commitments and contingent liabilities (Note 10)
Stockholders' equity
Common stock, $0.001 par value; shares authorized - 450,000,000; shares issued and outstanding - 55,640,154	56		56
Additional paid-in capital	80,231		83,865
Accumulated other comprehensive income	64		—
Accumulated deficit	(7,880)		(393)
Total stockholders' equity	72,471		83,528
Total liabilities and stockholders' equity	$	193,920	$	200,554

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

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AirSculpt Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
($000s)	2022		2021		2022		2021
Revenue	$	38,892	$	34,651	$	128,090	$	95,759
Operating expenses:
Cost of service (exclusive of depreciation and amortization shown below)	14,888		11,410		47,042		31,462
Selling, general and administrative	23,397		11,980		73,574		30,926
Loss on debt modification	—		—		—		682
Depreciation and amortization	1,994		1,641		5,842		4,664
(Gain)/loss on disposal of long-lived assets	(12)		—		215		—
Total operating expenses	40,267		25,031		126,673		67,734
(Loss)/income from operations	(1,375)		9,620		1,417		28,025
Interest expense, net	1,770		1,566		4,821		3,323
Pre-tax net (loss)/income	(3,145)		8,054		(3,404)		24,702
Income tax expense	4,232		—		4,083		—
Net (loss)/income	$	(7,377)	$	8,054	$	(7,487)	$	24,702

Loss per share of common stock
Basic	$	(0.13)	N/A		$	(0.13)	N/A
Diluted	$	(0.13)	N/A		$	(0.13)	N/A
Weighted average shares outstanding
Basic	55,640,154		N/A		55,640,154		N/A
Diluted	55,640,154		N/A		55,640,154		N/A

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

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AirSculpt Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Other Comprehensive Income/(Loss) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
($000s)	2022		2021		2022		2021
Net (loss)/income	$	(7,377)	$	8,054	$	(7,487)	$	24,702
Other comprehensive income:
Change in foreign currency translation adjustment	64		—		64		—
Total other comprehensive income	64		—		64		—
Comprehensive (loss)/income	(7,313)		8,054		(7,423)		24,702

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AirSculpt Technologies, Inc. and Subsidiaries

Condensed Consolidated Statement of Changes in Member's/Stockholders' Equity (Unaudited)


			Common Stock				Additional Paid-in Capital		Accumulated Other Comprehensive Income
($000s)	Member’s Equity		Shares		Amount						Accumulated Deficit		Total














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

Distributions	(3,658)		—		—		—		—		—		(3,658)
Equity-based compensation	86		—		—		—		—		—		86
Net income	6,621		—		—		—		—		—		6,621
Balance at March 31, 2021	$	126,725	$	—	$	—	$	—	$	—	$	—	$	126,725
Distributions	(60,120)		—		—		—		—		—		(60,120)
Equity-based compensation	86		—		—		—		—		—		86
Net income	10,027		—		—		—		—		—		10,027
Balance at June 30, 2021	$	76,718	$	—	$	—	$	—	$	—	$	—	$	76,718
Distributions	(2,844)		—		—		—		—		—		(2,844)
Equity-based compensation	86		—		—		—		—		—		86
Net income	8,054		—		—		—		—		—		8,054







Balance at September 30, 2021	$	82,014	$	—	$	—	$	—	$	—	$	—	$	82,014


			Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income
($000s)	Member’s Equity		Shares	Amount						Accumulated Deficit		Total














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









Distributions	—		—	—		(282)		—		—		(282)
Equity-based compensation	—		—	—		7,316		—		—		7,316
Net loss	—		—	—		—		—		(693)		(693)
Balance at March 31, 2022	$	—	55,640,154	$	56	$	90,899	$	—	$	(1,086)	$	89,869
Distributions	—		—	—		(294)		—		—		(294)
Equity-based compensation	—		—	—		7,275		—		—		7,275
Net income	—		—	—		—		—		583		583
Balance at June 30, 2022	$	—	55,640,154	$	56	$	97,880	$	—	$	(503)	$	97,433
Distributions	—		—	—		(156)		—		—		(156)
Dividends	—		—	—		(24,863)		—		—		(24,863)
Equity-based compensation	—		—	—		7,370		—		—		7,370
Net loss	—		—	—		—		—		(7,377)		(7,377)
Other	—		—	—		—		64		—		64

Balance at September 30, 2022	$	—	55,640,154	$	56	$	80,231	$	64	$	(7,880)	$	72,471

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

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AirSculpt Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Nine Months Ended September 30,
($000s)	2022		2021
Cash flows from operating activities
Net (loss)/ income	$	(7,487)	$	24,702
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization	5,842		4,664
Equity-based compensation	21,961		258
Non-cash interest expense; amortization of debt costs	706		399
Loss on debt modification	—		682

Loss on disposal of long-lived assets	215		—
Changes in assets and liabilities
Prepaid expense and other current assets	2,079		(604)
Other assets	(8,165)		(1,585)
Accounts payable	(287)		291
Deferred revenue and patient deposits	(589)		1,100
Accrued and other liabilities	3,532		2,432
Net cash provided by operating activities	17,807		32,339
Cash flows from investing activities
Purchases of property and equipment, net	(10,726)		(4,726)
Net cash used in investing activities	(10,726)		(4,726)
Cash flows from financing activities
Payment on term loan	(637)		(626)
Borrowings on term loan, net	—		49,994
Distribution to member	(1,159)		(66,622)
Dividends paid to shareholders	(22,812)		—
Payment of deferred loan costs	(220)		—
Net cash used in financing activities	(24,828)		(17,254)
Net (decrease)/increase in cash and cash equivalents	(17,747)		10,359
Cash and cash equivalents
Beginning of period	25,347		10,379
End of period	$	7,600	$	20,738

Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,116	$	2,722
Cash paid for taxes	$	4,368	$	—

Supplemental disclosure of non-cash investing information:
Property and equipment included in accounts payable and accrued expenses	$	695	$	—

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

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AirSculpt Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 – ORGANIZATION AND SUMMARY OF KEY ACCOUNTING POLICIES

AirSculpt Technologies, Inc. (“AirSculpt” or the "Company"), was formed as a Delaware corporation on June 30, 2021. On October 28, 2021, AirSculpt completed an initial public offering (“IPO”) of 8,050,000 shares of common stock at an initial public offering price of $11.00 per share. Immediately following the IPO, AirSculpt’s total outstanding shares were 55,640,154. Pursuant to a reorganization (the “Reorganization”) among entities under common control immediately prior to the IPO, AirSculpt became a holding company with its principal asset being 100% of the ownership interests in EBS Intermediate Parent LLC. The Company's revenues are concentrated in the specialty, minimally invasive liposuction market. The operations of the Company prior to the IPO represent the predecessor to AirSculpt. The Company and its consolidated subsidiaries are referred to collectively in this Quarterly Report on Form 10-Q (“10-Q Report”) as “we,” “our,” and “us.” Solely for convenience, some of the copyrights, trade names and trademarks referred to in this 10-Q Report 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. The Company owns and operates non-clinical assets and provides its management services to the PAs through management services agreements (“MSAs”). Management services provide for the administration of the non-clinical aspects of the medical operations and include, but are not limited to, financial, administrative, technical, marketing, and personnel services. Pursuant to the MSA, the PA is responsible for all clinical aspects of the medical operations of the practice.

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.

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

Basis of Presentation

The condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and member's/stockholders' equity for the three and nine months ended September 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of September 30, 2022 and the results of operations and cash flows for the three and nine months ended September 30, 2022 and 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The financial data and the other financial information disclosed in these notes to the condensed consolidated financial statements related to the three and nine months ended September 30, 2022 and 2021 are also unaudited. The

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consolidated results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any other future annual or interim period.

The condensed consolidated balance sheet as of December 31, 2021 is derived from the Company’s annual audited consolidated financial statements for the year ended December 31, 2021, which should be read in conjunction with these condensed consolidated financial statements and which are included in the Company’s Annual Report dated March 11, 2022 filed with the Securities and Exchange Commission ("SEC") pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, as well as interests in PAs controlled by the Company through rights granted to the Company by contract to manage and control the affiliate’s business (as described in “Variable Interest Entities” above). All significant intercompany balances and transactions are eliminated in consolidation.

Revenue Recognition

Revenue consists primarily of revenue earned for the provision of the Company’s patented AirSculpt® procedures. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company’s performance obligations are delivery of specialty, minimally invasive liposuction services.

The Company assists patients, as needed, by providing third-party financing options to pay for procedures. The Company has arrangements with various financing companies to facilitate this option. There is a financing transaction fee based on a set percentage of the amount financed and the Company recognizes revenue based on the expected transaction price which is reduced for financing fees.

Revenue for services is recognized when the service is performed. Payment is typically rendered in advance of the service. Customer contracts generally do not include more than one performance obligation.

The Company’s policy is to require payment for services in advance. Payments received for services that have yet to be performed as of September 30, 2022 and December 31, 2021 are included in deferred revenue and patient deposits.

Deferred Financing Costs, Net

Loan costs and discounts are capitalized in the period in which they are incurred and amortized on the straight-line basis over the term of the respective financing agreement which approximates the effective interest method. These costs are included as a reduction of long-term debt on the condensed consolidated balance sheets. Total amortization of deferred financing costs was approximately $0.2 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively, and $0.7 million and $0.4 million for the nine months ended September 30, 2022 and 2021, respectively. Amortization of loan costs and discounts is included as a component of interest expense.

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 350, Intangibles – Goodwill and Other. 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. 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. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. 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 three and nine months ended September 30, 2022 and 2021.

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Fair Value

ASC Topic 820, Fair Value Measurements and Disclosures, 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.

ASC Topic 820 defines three categories for the classification and measurement of assets and liabilities carried at fair value:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or observable inputs that are corroborated by market data.

Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.

The fair value of financial instruments is generally estimated through the use of public market prices, quotes from financial institutions and other available information. Judgment is required in interpreting data to develop estimates of market value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange.

Short-term financial instruments, including cash, prepaid expenses and other current assets, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, for which the fair value, based on management’s estimates, approximates their carrying values. Borrowings bear interest at what is estimated to be current market rates of interest, accordingly, carrying value approximates fair value.

Earnings Per Share

Basic earnings per share of common stock is computed by dividing net income/(loss) attributable to AirSculpt Technologies, Inc. for the three and nine months ended September 30, 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 three and nine months ended September 30, 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.

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 condensed consolidated financial statements for the three and nine months ended September 30, 2021.

Advertising Costs

Advertising costs are expensed in the period when the costs are incurred and are included as a component of selling, general and administrative costs. Advertising expenses were approximately $5.4 million and $4.3 million for the three months ended September 30, 2022 and 2021, respectively, and $15.4 million and $9.4 million for the nine months ended September 30, 2022 and 2021, respectively.

Income Taxes

Prior to the Reorganization, the Company was organized as a limited liability company and had elected to be treated as a partnership for federal and state income tax purposes. Accordingly, the tax consequences of the Company’s profits and losses were passed through to the members of the Company and were reported in their respective income tax returns. Therefore, historically no provision for income taxes has been provided in the accompanying condensed consolidated financial statements for the periods prior to the Reorganization.

As a result of the Reorganization, the Company became subject to taxation as a C corporation for periods after October 28, 2021.

The Company applies the provisions of ASC 740-10, Accounting for Uncertain Tax Positions (“ASC 740-10”). Under these provisions, companies must determine and assess all material positions existing as of the reporting date, including all significant uncertain positions, for all tax years that are open to assessment or challenge under tax statutes. Additionally,

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those positions that have only timing consequences are analyzed and separated based on ASC 740-10’s recognition and measurement model.

ASC 740-10 provides guidance related to uncertain tax positions for pass-through entities and tax-exempt not-for profit entities. 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. 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 September 30, 2022 or December 31, 2021. 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 (134.6)% and (119.9)% for the three and nine months ended September 30, 2022, respectively, and —% and —% for the three and nine months ended September 30, 2021, respectively, inclusive of all applicable U.S. federal and state income taxes. Prior to the Reorganization, the Company was not subject to federal taxation.

NOTE 2 – GOODWILL AND INTANGIBLES, NET

The annual review of goodwill impairment will be performed in October 2022. There were no triggering events during the three and nine months ended September 30, 2022 and 2021.

The Company had goodwill of $81.7 million at September 30, 2022 and December 31, 2021.

Intangible assets consisted of the following at September 30, 2022 and December 31, 2021 (in 000’s):


	September 30, 2022		December 31, 2021		Useful Life
Technology and know-how	$	53,600	$	53,600

SEC Form 10-Q filed by AirSculpt Technologies Inc.