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United States securities and exchange commission logo
August 2, 2021
Aaron Rollins
Chief Executive Officer
Airsculpt Technologies, Inc.
400 Alton Road, Unit TH-103M
Miami Beach, FL 33139
Re: Airsculpt
Technologies, Inc.
Draft Registration
Statement on Form S-1
Submitted July 6,
2021
CIK No. 0001870940
Dear Dr. Rollins:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 submitted July 6, 2021
Market and Other Industry Data, page i
1. Your statements that
the accuracy and completeness of third party information is not
guaranteed and that you
have not independently verified any data from third-party sources
may imply an
inappropriate disclaimer of responsibility with respect to the third party
information you have
elected to include in your registration statement. Please either delete
these statements or
specifically state that you are liable for such information.
Aaron Rollins
FirstName LastNameAaron
Airsculpt Technologies, Inc.Rollins
Comapany
August NameAirsculpt Technologies, Inc.
2, 2021
August
Page 2 2, 2021 Page 2
FirstName LastName
Letter from the Founder and CEO, page iii
2. Please provide the basis for your statement that your AirSculpt method
"allows [y]our
surgeons to achieve superior results without the fatigue and strain
that other technologies
cause" and your belief that your treatment results "are firsts in the
industry." Please also
balance your disclosure here, that your method "plucks" ... "one fat
cell at a time," and
your disclosure in your prospectus summary section, that AirSculpt
removes individual
fat cells with a gentle plucking motion, by disclosing, if true, that
your procedure involves
the insertion of cannulae into a treatment area similar to traditional
liposuction.
Our Company, page 1
3. Although we note your disclosure that you use a proprietary and
patented AirSculpt
method, your moat is not clear. For example, we note you disclose that
you "outsource"
the manufacturing of key elements of the tools you use for the
AirSculpt procedures to a
single third-party manufacturer, Euromi, but it is not clear if you,
Euromi or a third-party
developed those elements, who owns the proprietary rights to those
elements, or who
pursued and received FDA approval for those elements. It also unclear
if your competitors
could use elements similar to Euromi s elements that could be used
for laser liposuction
procedures. We note in this regard that Alma Lasers appears to provide
elements that may
be similar. Please revise your disclosure as appropriate to clarify
your moat, competitive
position and what is proprietary to your business.
Prospectus Summary, page 1
4. Please revise your Summary to eliminate repetitive disclosure and
focus on presenting a
balanced discussion of the material aspects of your offering. Please
note that the Summary
should not include a detailed description of your competitive
strengths and growth
strategies. We note that this detailed information is better suited
for the body of the
prospectus and that your Business discussion already contains
substantially the same
presentation. Additionally the discussion of your competitive
strengths and strategies
should be accompanied by an equally prominent discussion of risks and
obstacles to the
strategy. The balancing discussion should be equally prominent in
terms presentation and
level of detail.
5. Please revise your Summary to clearly describe the Company's corporate
structure,
including that the Company is a holding Company that provides practice
management
services to professional associations through management services
agreements. Please
clearly explain the relationship between the Company, its wholly owned
subsidiaries and
the professional associations it contracts with.
Aaron Rollins
FirstName LastNameAaron
Airsculpt Technologies, Inc.Rollins
Comapany
August NameAirsculpt Technologies, Inc.
2, 2021
August
Page 3 2, 2021 Page 3
FirstName LastName
6. We note your disclosure on page F-7 that the Company was formed as a
limited liability
company under the laws of the state of Delaware pursuant to an
agreement effective
October 2, 2018 to facilitate the acquisition of EBS Enterprises, LLC
f/k/a Rollins
Enterprises, LLC. In the appropriate location in the prospectus,
please describe the
material terms of the acquisition that resulted in the formation of
the Company.
7. Please revise to provide the basis for your statements that your
treatment results are "best-
in-class" and your belief that existing fat reduction and body
contouring procedures are
not as effective as AirSculpt.
Our Market Opportunity, page 2
8. You disclose that the global body fat reduction industry was estimated
to be $9.8 billion in
2020 and the North American body fat reduction industry was estimated
to be $2.6 billion
in 2020. You also disclose on page 66 that your revenue is derived
from the delivery of
specialty, minimally invasive liposuction services. Please tell us
what the global body fat
reduction industry encompasses and why it would not be more
appropriate to disclose the
addressable market for laser or traditional liposuction, or a more
targeted market that you
address.
Our amended and restated certificate of incorporation after this offering will
designate courts in
the State of Delaware as the sole, page 47
9. Please revise your risk factor to disclose that there is also a risk
that your exclusive forum
provision may result in increased costs for investors to bring a
claim.
Use of Proceeds, page 48
10. We note your disclosure that you intend to use a portion of the net
proceeds from this
offering to fund your de novo growth strategy and that you intend to
use the balance of the
net proceeds for general corporate purposes and working capital.
Please revise to provide
more specific disclosure of the planned expenditures to fund your
growth strategy, as well
as the approximate amounts intended to be used for each such purpose.
For example, we
note your disclosure on page 63 that you plan to spend approximately
$5.0-6.0 million in
expenditures related to adding procedure rooms to existing locations
and opening de novo
centers during fiscal year 2021. Additionally, to the extent proceeds
will be used to
service debt, please specify the interest rates and maturity of the
debt. Refer to Instruction
4 to Item 504 of Regulation S-K.
Overview, page 54
11. Please revise to provide the basis for your statements that you have
continued to solidify
your position as "the market leader" in fat removal and fat transfer.
Aaron Rollins
FirstName LastNameAaron
Airsculpt Technologies, Inc.Rollins
Comapany
August NameAirsculpt Technologies, Inc.
2, 2021
August
Page 4 2, 2021 Page 4
FirstName LastName
The Reorganization, page 54
12. Please revise to add a diagram showing the Company's corporate
structure before and
after the reorganization.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Key Operational and Business Metrics, page 57
13. Please address the following:
We note from page 12 that "Same-center revenue growth" of 9.8%
(2020) and N/A
(2019) appears to be the same measure as "Case Growth" from page
58. Please revise
or advise.
At the top of page 58 for the table of Same-Center Information,
you state "we define
same-center growth as the growth at facilities that we owned and
operated since
January 1, 2019", but do not present or quantify "same-center
growth." Please revise
or advise.
Please revise to explain what the "Number of same store
facilities" and "Number of
same store procedure rooms" represents (page 58) and how it
differs from "Number
of total facilities" and "Number of total procedure rooms" (page
58). We note that
you opened four centers in 2020 (page 55) and three in 2019 (page
62).
We note from pages 13 and 59 that Adjusted EBITDA is reconciled to
Income from
operations. Please revise to reconcile to Net income (loss). Refer
to Question
103.02 of the SEC Staff s Compliance and Disclosure
Interpretations on Non-
GAAP Financial Measures.
Adjusted EBITDA and Adjusted EBITDA Margin, page 58
14. Please explain to us in detail why you believe the adjustment for
pre-opening de novo
costs used in calculating Adjusted EBITDA is appropriate in light of
your growth
strategy. Please refer to Question 100.01 of the SEC Staff s
Compliance and Disclosure
Interpretations on Non-GAAP Financial Measures. In addition, please
expand the
description of the tabular disclosure on pages 13 and 59 to include
"Non-GAAP financial
measures."
Components of Results of Operations, page 60
15. You disclose cost of services also includes credit card fees. Please
explain your basis in
GAAP for including such costs within cost of services.
Aaron Rollins
FirstName LastNameAaron
Airsculpt Technologies, Inc.Rollins
Comapany
August NameAirsculpt Technologies, Inc.
2, 2021
August
Page 5 2, 2021 Page 5
FirstName LastName
Critical Accounting Policies and Estimates
Revenue Recognition, page 65
16. You disclose on page 66 that "customer contracts generally do not
include more than one
performance obligation", which is the "delivery of specialty,
minimally invasive
liposuction services." Noting from pages 3 and 72 that 24% of
procedures performed in
2020 and in the first quarter of 2021 included a fat transfer, please
address how you have
appropriately determined that a procedure including fat removal and
one or more fat
transfers represents only one performance obligation. Refer to ASC
606-10-25-14
through 25-15 and 606-10-25-19.
Unit-Based Compensation, page 67
17. Please revise to disclose whether you have granted any awards of
Profit Interest Units
during 2021 and the amount of compensation expense you expect to
recognize in 2021.
Clarify whether the weighted average fair value of $278.99 of awards
granted in 2019
(page F-16) is the fair value of the actual award or the underlying
member units.
Our Technique, Training and Equipment, page 77
18. We note your disclosure that in connection with the AirSculpt method,
you currently use
an FDA-approved handpiece manufactured by Euromi S.A. Please revise to
clarify the
significance of the handpiece used in connection with the five step
process outlined on
pages 76-77. For example, it is currently not clear how use of this
handpiece results in an
improvement over traditional liposuction procedures.
19. We note your disclosure that your proprietary fat removal process uses
industry accepted,
FDA approved tools to grab, separate, and remove fat cells. Please
clarify whether the
procedure itself required any FDA review or approval.
Our Intellectual Property, page 79
20. Please revise your disclosure regarding your U.S. patents to specify
the type of patent
protection granted.
Surgeon Practice Structure, page 80
21. Please discuss the terms of the agreements and arrangements with your
professional
associations. If the material terms of these arrangements vary, please
describe the range of
such terms. To the extent that these agreements are standard in
format, please file
a form of the agreement as an exhibit.
Aaron Rollins
FirstName LastNameAaron
Airsculpt Technologies, Inc.Rollins
Comapany
August NameAirsculpt Technologies, Inc.
2, 2021
August
Page 6 2, 2021 Page 6
FirstName LastName
Management, page 84
22. Please include the required disclosure for your directors.
Employment Agreements with Dr. Rollins and Mr. Zelhof, page 89
23. Please file the Employment Agreements with Dr. Rollins and Mr. Zelholf
as exhibits to
your registration statement. Alternatively, please explain to us why
the filing of those
agreements is not required.
Professional Services Agreement, page 92
24. Please clarify if the terms of the agreements described in this
section, including
the sponsor management fee, will continue after your public offering.
Principal Stockholders, page 94
25. Please identify the natural person or persons who directly or
indirectly exercise sole or
shared voting and/or dispositive power with respect to the common
stock held by Vesey
Street Capital Partners. Please also revise to include the address for
Vesey Street Capital
Partners. Refer to Item 403 of Regulation S-K.
Consolidated Financial Statements
Consolidated Statements of Operations, page F-4
26. We note that you present a functional statement of operations. Please
revise to disclose
which functional categories rent expense relates to, and if it is a
component of more than
one category, provide a breakdown of the categories.
Note 1 - Organization and Summary of Key Accounting Policies, page F-7
27. Regarding the section entitled "Recently Issued Accounting
Pronouncements" on page F-
12, you state "on January 1, 2019, the FASB issued Accounting
Standards Update
( ASU ) No. 2014-09, Revenue from Contracts with Customers (
Topic 606 ) using the
modified retrospective approach." Please revise to clearly state the
correct date the
standard was issued and, separately, the date you adopted it.
Note 2 - Goodwill and Intangibles, Net, page F-12
28. Please revise to disclose the transactions giving rise to your
goodwill and intangible
assets, which account for approximately 80% of your total assets at
December 31, 2020.
Aaron Rollins
FirstName LastNameAaron
Airsculpt Technologies, Inc.Rollins
Comapany
August NameAirsculpt Technologies, Inc.
2, 2021
August
Page 7 2, 2021 Page 7
FirstName LastName
General
29. Please provide us with copies of all written communications, as
defined in Rule 405 under
the Securities Act, that you, or anyone authorized to do so on your
behalf, present to
potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they
retain copies of the communications.
You may contact Jenn Do at 202-551-3743 or Lynn Dicker at 202-551-3616
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Deanna Virginio at 202-551-4530 or Tim Buchmiller at 202-551-3635 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Richard S. Bass, Esq.