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Example 7.12: Basis of Presentation and Basis of Consolidation: Combined Note The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP). The consolidated financial statements include the accounts of all directly and indirectly owned subsidiaries and variable interest entity. All intercompany transactions and balances have been eliminated in consolidation.

Example 7.13: Basis of Consolidation with Detail The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: NSHL, New Star Peak Health Inc., New Star Healthnet Rehab Limited, Blake Assessments Inc., an 80% interest in New Star Healthnet Rockville Centre, Inc., a Recovery Physical Therapy and Health Centre clinic operated by NSHL, and a 50% stake in a joint venture with the Joseph Coffey Dental Hygiene Professional Corporation operated as New Star Dental. All of the Company's subsidiaries are incorporated under the laws of the Province of Victoria, Australia. All intercompany transactions have been eliminated.

Example 7.14: Basis of Consolidation, Including a VIE The consolidated financial statements include the accounts of the Company, its subsidiaries, and its affiliates. All significant intercompany transactions and balances are eliminated in consolidation. Global Shipping (“Global”), a People's Republic of China (PRC) corporation, is considered a variable interest entity (“VIE”), with the Company as the primary beneficiary. The Company, through Guangzhou Seaway, entered into certain agreements with Global, pursuant to which the Company receives 90% of Global's net income. The Company does not receive any payments from Global unless Global recognizes net income during its fiscal year. These agreements do not entitle the Company to any consideration if Global incurs a net loss during its fiscal year. If Global incurs a net loss during its fiscal year, the Company is not required to absorb such net loss.

As a VIE, Global's revenues are included in the Company's total revenues, and any loss from operations is consolidated with that of the Company. Because of contractual arrangements between the Company and Global, the Company has a pecuniary interest in Global that requires consolidation of the financial statements of the Company and Global.

The Company has consolidated Global's operating results because the entities are under common control in accordance with ASC 805‐10, Business Combinations. The agency relationship between the Company and Global and its branches is governed by a series of contractual arrangements pursuant to which the Company has substantial control over Global. Management makes ongoing reassessments of whether the Company remains the primary beneficiary of Global.

Example 7.15: Noncontrolling Interest The Company follows FASB ASC Topic 810, Consolidation, which governs the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent's ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.

The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income (loss).