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Item 1. Financial Statements

2025-11-12 compared with 2025-05-13 · 278 added, 245 removed, 356 unchanged (59% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

As of March 31, 2025, and June 30, 2024

As of September 30, 2025, and June 30, 2025

(Dollars in thousands, except per share data)

September 30,

2025 June 30,

2 unchanged sentences

Receivables, net 9,220 9,473

Inventory 2,751 2,798

Other current assets 22,873 21,254

2 unchanged sentences

Goodwill (Note 1)

183,082 183,436

Other intangibles, net 5,692 5,830

Right of use asset (Note 8)

224,405 229,861

Deferred tax asset (Note 5) 101,961 102,504

Other assets 15,643 16,757

4 unchanged sentences

Accrued expenses 16,536 19,066

Long-term debt, current portion (Note 9)

Short-term lease liability (Note 8)

59,575 60,685

Total current liabilities 99,955 101,688

Long-term debt, net (Note 9)

109,605 109,693

Long-term lease liability (Note 8)

Other noncurrent liabilities 36,285 40,039

174,309 179,280

Other non-current liabilities 20,695 22,680

Total liabilities 404,564 413,341

1 unchanged sentence

Common stock, $ 0.05 par value;

issued and outstanding 2,435,981 and 2,279,948 common shares at March 31, 2025, and June 30, 2024, respectively

issued and outstanding, 2,461,270 and 2,435,981 common shares at September 30, 2025, and June 30, 2025, respectively

Additional paid-in capital 76,110 75,243

Accumulated other comprehensive income 7,997 8,286

Accumulated deficit ( 14,529 ) ( 21,571 )

Retained earnings 103,321 101,965

Total shareholders' equity 187,551 185,616

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three and Nine Months Ended March 31, 2025, and 2024

For the Three Months Ended September 30, 2025, and 2024

(Dollars and shares in thousands, except per share amounts)

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

Three Months Ended September 30,

Royalties $ 14,036 $ 15,646

Fees 1,784 2,352

Product sales to franchisees — — — 451

Advertising fund contributions 5,573 5,641

Franchise rental income (Note 8)

17,354 21,636

Company-owned salon revenue 20,211 785

1 unchanged sentence

Operating expenses:

Cost of product sales to franchisees — 19 — 436

General and administrative 11,351 14,034

9 unchanged sentences

Interest expense ( 5,271 ) ( 4,846 )

Gain on earn-out liability 1,000 —

Other, net 242 677

Income (loss) from operations before income taxes 1,892 ( 2,035 )

Income tax benefit (expense) 1 ( 54 ) 90 201

Income tax (expense) benefit ( 536 ) 225

Income (loss) from continuing operations 1,356 ( 1,810 )

4 unchanged sentences

Income from discontinued operations — 0.41

Net income (loss) per share, basic (2) $ 0.10 $ ( 1.00 ) $ 3.00 $ ( 0.06 )

Net income (loss) per share (2) $ 0.56 $ ( 0.36 )

Income (loss) from continuing operations $ 0.49 $ ( 0.77 )

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

For the Three and Nine Months Ended March 31, 2025, and 2024

For the Three Months Ended September 30, 2025, and 2024

(Dollars in thousands)

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

Three Months Ended September 30,

Net income (loss) $ 1,356 $ ( 853 )

4 unchanged sentences

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited)

For the Three and Nine Months Ended March 31, 2025, and 2024

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

For the Three Months Ended September 30, 2025, and 2024

(Dollars in thousands)

Three Months Ended March 31, 2025

Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total

Shares Amount

Balance, December 31, 2024 2,435,981 $ 122 $ 73,243 $ 8,132 $ ( 14,779 ) $ 66,718

Net income — — — — 250 250

Foreign currency translation — — — 41 — 41

Stock-based compensation — — 383 — — 383

Stock warrants issued in connection with debt — — 1,252 — — 1,252

Balance, March 31, 2025 2,435,981 $ 122 $ 74,878 $ 8,173 $ ( 14,529 ) $ 68,644

Three Months Ended March 31, 2024

Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total

Shares Amount

Balance, December 31, 2023 2,279,450 $ 114 $ 67,710 $ 9,026 $ ( 110,440 ) $ ( 33,590 )

Net loss — — — — ( 2,332 ) ( 2,332 )

Foreign currency translation — — — ( 230 ) — ( 230 )

Stock-based compensation — — 333 — — 333

Net restricted stock activity 498 — ( 3 ) — — ( 3 )

Balance, March 31, 2024 2,279,948 $ 114 $ 68,040 $ 8,796 $ ( 112,772 ) $ ( 35,822 )

Nine Months Ended March 31, 2025

Three Months Ended September 30, 2025

Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total

Capital Accumulated

Comprehensive

Income (Loss) Retained Earnings Total

Shares Amount

2 unchanged sentences

Foreign currency translation — — — ( 289 ) — ( 289 )

Exercise of stock options 11,000 — 291 — — 291

Stock-based compensation — — 297 — — 297

Net restricted stock activity 1,722 — ( 19 ) — — ( 19 )

Common stock issued in connection with Alline Acquisition (1) 140,552 7 2,993 — — 3,000

Stock warrants issued in connection with debt — — 1,252 — — 1,252

Balance, March 31, 2025 2,435,981 $ 122 $ 74,878 $ 8,173 $ ( 14,529 ) $ 68,644

Nine Months Ended March 31, 2024

Common stock issued in connection with warrant exercise 12,567 1 298 — — 299

Balance, September 30, 2025 2,461,270 $ 123 $ 76,110 $ 7,997 $ 103,321 $ 187,551

Three Months Ended September 30, 2024

Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total

Capital Accumulated

Comprehensive

Income Accumulated Deficit Total

Shares Amount

4 unchanged sentences

Net restricted stock activity 2,447 — ( 23 ) — — ( 23 )

Balance, March 31, 2024 2,279,948 $ 114 $ 68,040 $ 8,796 $ ( 112,772 ) $ ( 35,822 )

Balance, September 30, 2024 2,282,395 $ 114 $ 69,972 $ 8,736 $ ( 22,424 ) $ 56,398

_______________________________________________________________________________

(1) This activity represents the common stock issued in connection with the Alline Acquisition on December 19, 2024.

See Note 13 for additional details.

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Nine Months Ended March 31, 2025, and 2024

For the Three Months Ended September 30, 2025, and 2024

(Dollars in thousands)

Nine Months Ended March 31,

Three Months Ended September 30,

Cash flows provided by (used in) operating activities:

1 unchanged sentence

Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:

Gain from sale of OSP ( 8,396 ) ( 2,000 )

Gain from sale of OSP (Note 3) — ( 957 )

Depreciation and amortization 758 425

Long-lived asset impairment 352 170

Deferred income taxes 462 ( 221 )

Non-cash interest 1,404 1,264

Gain on earn-out liability ( 1,000 ) —

Long lived asset impairment — 352

Stock-based compensation 629 1,430

1 unchanged sentence

Other non-cash items affecting earnings 198 ( 80 )

Changes in operating assets and liabilities, excluding the effects of asset sales and business acquisitions ( 2,316 ) ( 12,298 )

Ad fund 1,069 2,840

Changes in operating assets and liabilities (1) ( 3,499 ) ( 6,263 )

Net cash provided by (used in) operating activities 2,283 ( 1,344 )

1 unchanged sentence

Capital expenditures ( 395 ) ( 16 )

Proceeds from sale of OSP 8,463 2,000

Business acquisitions, net of cash acquired and certain obligations assumed ( 18,631 ) —

Proceeds from sale of OSP, net of fees — 957

Net cash (used in) provided by investing activities ( 395 ) 941

Cash flows provided by (used in) financing activities:

Proceeds from issuance of long-term debt 15,000 —

Repayments of long-term debt ( 825 ) ( 2,499 )

Cash flows (used in) provided by financing activities:

Borrowings on revolving credit facility — 4,326

Repayments of revolving credit facility — ( 10,237 )

Repayments of long-term debt ( 1,840 ) ( 263 )

Debt refinancing fees ( 8 ) ( 298 )

Proceeds from issuance of common stock, net of offering costs 589 —

Taxes paid for shares withheld ( 19 ) ( 23 )

Net cash provided by (used in) financing activities 7,239 ( 1,067 )

Net cash used in financing activities ( 1,278 ) ( 6,495 )

Effect of exchange rate changes on cash and cash equivalents ( 48 ) 27

Increase (decrease) in cash and cash equivalents, restricted cash and restricted cash equivalents 3,196 ( 6,580 )

Cash, cash equivalents and restricted cash and restricted cash equivalents:

Increase (decrease) in cash, cash equivalents, and restricted cash 562 ( 6,871 )

Cash, cash equivalents and restricted cash:

Beginning of period 35,205 29,312

End of period $ 35,767 $ 22,441

Supplemental non-cash disclosure

Stock issued in connection with Alline Acquisition $ 3,000 $ —

_______________________________________________________________________________

(1) Changes in operating assets and liabilities exclude ad fund and assets and liabilities sold or acquired.

The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION OF UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited interim Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of March 31, 2025 and for the three and nine months ended March 31, 2025, and 2024, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2025, and its consolidated results of operations, comprehensive income (loss), shareholders' equity (deficit) and cash flows for the interim periods.

BASIS OF PRESENTATION OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The unaudited Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of September 30, 2025, and for the three months ended September 30, 2025, and 2024, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of September 30, 2025, and its consolidated results of operations, comprehensive income (loss), shareholders' equity and cash flows for the interim periods.

Adjustments consist only of normal recurring items, except for any discussed in the notes below.

The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).

Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP).

The unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2024, and other documents filed or furnished to the SEC during the current fiscal year.

The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, 2025, and other documents filed or furnished to the SEC during the current fiscal year.

Alline Salon Group Acquisition:

On December 19, 2024, the Company completed the previously announced transaction to acquire 100 percent ownership of Super C Group, LLC, doing business as Alline Salon Group (Alline).

Under the terms of the agreement, the Company paid cash consideration of approximately $ 19 million, stock consideration valued at $ 3.0 million, and additional amounts for working capital adjustments and transaction-related fees.

Refer to Note 13 to these unaudited Condensed Consolidated Financial Statements for additional information regarding the acquisition.

The Company’s financial results for the three and nine months ended March 31, 2025, include the results of Alline subsequent to the December 19, 2024, acquisition date.

On December 19, 2024, the Company completed the transaction to acquire 100 percent ownership of Super C Group, LLC, doing business as Alline Salon Group (Alline).

Refer to Note 13 to the unaudited Condensed Consolidated Financial Statements for additional information regarding the acquisition.

The Company’s financial results for the three months ended September 30, 2025, include the results of Alline.

The Company assesses goodwill impairment on an annual basis, during the Company's fourth fiscal quarter, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

An interim impairment analysis was not required in the three or nine months ended March 31, 2025.

As further described in Note 13 of these unaudited Condensed Consolidated Financial Statements, the acquisition of Alline resulted in a preliminary recognition of approximately $ 12.1 million in goodwill, which was assigned to the company-owned operating segment.

As of March 31, 2025, and June 30, 2024, the franchise reporting unit had goodwill of $ 172.2 million and $ 173.1 million, respectively, and the company-owned reporting unit had $ 12.1 million of goodwill at March 31, 2025.

Acquisition-Related Costs:

Acquisition-related costs of $ 0.2 million and $ 1.4 million were incurred during the three and nine months ended March 31, 2025, respectively, and primarily represent third-party consulting and legal expenses associated with the acquisition of Alline completed on December 19, 2024.

These costs were recorded within general and administrative expenses on the March 31, 2025, unaudited Condensed Consolidated Statements of Operations.

Other current assets includes an inventory balance of $ 2.9 million and $ 0.8 million as of March 31, 2025, and June 30, 2024, respectively, in the unaudited Condensed Consolidated Balance Sheets.

Inventory primarily consists of beauty products sold and used in serving our customers in our company-owned salons.

The preliminary inventory balance acquired in connection with the Alline Acquisition consists of shampoo, conditioner, hair care tools, and various other hair care and beauty products available for sale to salon customers and used in the servicing of our customers.

The inventory is valued at the lower of cost or net realizable value, with cost determined using a weighted average.

An interim impairment analysis was not required in the three months ended September 30, 2025.

As further described in Note 13 of these unaudited Condensed Consolidated Financial Statements, the acquisition of Alline resulted in recognition of approximately $ 10.3 million in goodwill, which was assigned to the company-owned operating segment.

As of September 30, 2025, and June 30, 2025, the franchise reporting unit had goodwill of $ 172.8 million and $ 173.2 million, respectively, and the company-owned reporting unit had goodwill of $ 10.3 million.

Tax Benefits Preservation Plan:

4 unchanged sentences

1 to the Plan, extending the expiration date of the Plan from January 29, 2025, to January 29, 2028 (the Extension).

Pursuant to the terms of the Plan, the Company will submit the Extension to its shareholders for ratification at the next annual or special meeting of its shareholders.

Pursuant to the terms of the Plan, the Company submitted the Extension to its shareholders for ratification at the October 28, 2025 annual shareholders meeting, and the shareholders ratified the Plan.

The Rights and the Plan will now expire on the earliest of (i) the close of business on January 29, 2028 (or such later date as may be established by the Board of Directors prior to the expiration date as long as the Extension is submitted to the shareholders of the Company for ratification at the next annual or special meeting of shareholders succeeding such extension), (ii) the time at which the Rights are redeemed or exchanged pursuant to the Plan, (iii) the time at which the Rights (other than Rights owned by an Acquiring Person, as defined by the Plan) are exchanged pursuant to the Plan, (iv) the repeal of Section 382 of the U.S.

Internal Revenue Code of 1982, as amended, or any successor statute if the Board determines that the Plan is no longer necessary or desirable for the preservation of certain unrecognized tax benefits, or (v) the beginning of a taxable year to which the Board determines that no tax benefits may be carried forward.

Internal Revenue Code of 1982, as amended (the Code), or any successor statute if the Board determines that the Plan is no longer necessary or desirable for the preservation of certain unrecognized tax benefits, or (v) the beginning of a taxable year to which the Board determines that no tax benefits may be carried forward.

Recently Issued Accounting Standards Not Yet Adopted:

In November 2023, the FASB issued ASU No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and a description of other segment items (the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment, as well as disclosure of the title and position of the entity’s CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The pronouncement is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and for interim periods in fiscal years beginning after December 15, 2024.

We do not expect the adoption of this pronouncement to impact our consolidated financial statements beyond the expansion of our reportable segment disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The ASU is effective for fiscal years beginning after December 15, 2024, and shall be applied prospectively.

The Company is evaluating the standard and determining the extent of additional disclosures that will be required.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued the ASC 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement of Expenses" which requires additional disclosure of the nature of expenses included in the income statement in response to requests from investors for more information about an entity’s expenses.

The ASU is effective for annual reporting periods beginning after December 15, 2024, and shall be applied prospectively.

The Company is currently evaluating the impact this new guidance will have on its annual disclosures for the current fiscal year.

In November 2024, the FASB issued the ASC 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement of Expenses" which requires additional disclosure of the nature of expenses included in the income statement in response to requests from investors for more information about an entity’s expenses.

The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as disclosures about selling expenses.

3 unchanged sentences

The Company is currently evaluating the impact this new guidance will have on its financial statements and disclosures.

In July 2025, the FASB issued the ASC 2025-05 "Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets." The ASU includes amendments which provide entities with a practical expedient to assume that current conditions as of the balance sheet date will remain unchanged for the remaining life of the assets, effectively simplifying credit loss estimations for certain situations.

The guidance is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within fiscal years beginning after that date.

The Company does not believe the guidance will have a material impact on its financial statements and disclosures.

REVENUE RECOGNITION:

3 unchanged sentences

Generally, royalty and advertising fund revenues are billed and collected monthly in arrears.

Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the unaudited Condensed Consolidated Statements of Operations.

Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the Condensed Consolidated Statements of Operations.

The treatment increases both the gross amount of reported revenue and expense and generally has no impact on operating income and net income.

Franchise fees are billed and received upon the signing of the franchise agreement.

Recognition of these fees is deferred until the salon opens and is then recognized over the term of the franchise agreement, which is typically 10 years .

Recognition of these fees is deferred until the salon opens and typically recognized over 10 years .

Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees.

6 unchanged sentences

Product sales to franchisees are recorded at the time product is delivered to the franchisee.

Information about receivables, broker fees and deferred revenue subject to the current revenue recognition guidance is as follows:

Information about receivables, broker fees, and deferred revenue subject to the revenue recognition guidance is as follows:

September 30,

2025 June 30,

7 unchanged sentences

Total current deferred revenue $ 4,092 $ 4,308

Deferred franchise fees unopened salons $ 1,530 $ 1,783 Other noncurrent liabilities

Deferred franchise fees open salons 10,532 14,972 Other noncurrent liabilities

Deferred franchise fees unopened salons $ 1,396 $ 1,475 Other non-current liabilities

Deferred franchise fees open salons 8,466 9,394 Other non-current liabilities

Total non-current deferred revenue $ 9,862 $ 10,869

Receivables relate primarily to payments due for royalties, advertising fees and rent.

The receivables balance is presented net of an allowance for expected credit losses (i.e., doubtful accounts).

The Company monitors the financial condition of its franchisees and records provisions for estimated losses on receivables when it believes franchisees are unable to make their required payments based on factors such as delinquencies and aging trends.

The allowance for credit losses is the Company's best estimate of the amount of probable credit losses related to existing accounts and notes receivable.

The Company offers financing to SmartStyle ® franchisees when they remodel their salons.

Included in other assets is a receivable of $ 0.8 million, partially offset by a credit loss reserve of $ 0.2 million, related to this financing program.

Receivables relate primarily to payments due for royalties, advertising fees, rent, and sales of salon services and product paid by credit card.

The receivables balance is presented net of an allowance for expected credit losses (i.e., doubtful accounts), related to receivables from franchisees.

Management estimates the allowance based on the age of the receivable and creditworthiness of the franchisee.

The following table is a rollforward of the allowance for credit losses for the periods indicated:

Nine Months Ended March 31,

Three Months Ended September 30,

(Dollars in thousands)

4 unchanged sentences

Write-offs ( 398 ) ( 142 )

Other (1) ( 68 ) ( 77 )

Balance at end of period $ 4,628 $ 6,907

________________________________________________________________________________________

(1) Includes currency fluctuation.

(1) The provision for doubtful accounts is recognized as general and administrative expense in the Condensed Consolidated Statements of Operations.

(2) The provision for franchisee rent is recognized as rent in the Condensed Consolidated Statements of Operations.

Broker fees are the costs associated with using external brokers to identify new franchisees.

These fees are paid upon the signing of the franchise agreement and recognized as general and administrative expense over the term of the franchise agreement.

These fees are paid upon the signing of the franchise agreement and recognized as general and administrative expense over the term of the franchise agreement in the Condensed Consolidated Statements of Operations.

The following table is a rollforward of the broker fee balance for the periods indicated:

Nine Months Ended March 31,

Three Months Ended September 30,

(Dollars in thousands)

3 unchanged sentences

Balance at end of period $ 5,505 $ 8,560

________________________________________________________________________________________

(1) In the nine months ended March 31, 2025, broker fees of $ 0.9 million were written off in connection with the Alline Acquisition.

Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons.

Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement.

Franchise fee revenue for the three months ended March 31, 2025, and 2024, was $ 1.8 million and $ 1.7 million, respectively, and for the nine months ended March 31, 2025, and 2024, was $ 5.5 million and $ 5.0 million, respectively.

Deferred franchise fees of $ 0.7 million were recognized in connection with the acquisition of Alline in the nine months ended March 31, 2025.

Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2025, is as follows (dollars in thousands):

Franchise fee revenue for the three months ended September 30, 2025, and 2024, was $ 1.0 million and $ 1.6 million, respectively.

Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of September 30, 2025, is as follows (dollars in thousands):

Remainder of 2026 $ 2,766

4 unchanged sentences

As a result of the sale, the Company classified the OSP business as discontinued operations in the financial statements for all periods presented.

During the three and nine months ended March 31, 2025, the Company received $ 0.0 million and $ 8.5 million, respectively, of proceeds related to the number of salons migrating to Soham's Zenoti product.

During the nine months ended March 31, 2024, the Company received $ 2.0 million of proceeds that had been previously held back for general indemnity provisions.

No income taxes have been allocated to discontinued operations based on the methodology required by accounting for income taxes guidance.

Cash (used in) provided by investing activities for the nine months ended March 31, 2025, and 2024, includes $ 8.5 million and $ 2.0 million, respectively, of cash from discontinued operations.

SHAREHOLDERS' EQUITY (DEFICIT):

The Company received no proceeds from the sale in the three months ended September 30, 2025.

In the three months ended September 30, 2024, the Company received $ 1.0 million of proceeds related to the number of salons migrating to Soham's Zenoti product.

Income taxes have been allocated to continuing and discontinued operations based on the methodology required by accounting for income taxes guidance.

There was no tax impact in the prior year quarter, due to a valuation allowance.

Cash provided by operations includes $ 1.0 million of cash from discontinued operations in the prior year period.

SHAREHOLDERS' EQUITY:

Stock-Based Employee Compensation:

During the three and nine months ended March 31, 2025, the Company granted restricted stock units as follows:

Three Months Ended March 31, 2025 Nine Months Ended March 31, 2025

During the three months ended September 30, 2025, and 2024, the Company granted restricted stock units as follows:

Three Months Ended September 30,

Restricted stock units (RSUs) 24,100 —

The RSUs granted during the three and nine months ended March 31, 2025, vest in equal amounts over a one or three-year period subsequent to the grant date.

Total compensation cost for stock-based payment arrangements totaling $ 0.4 million and $ 0.3 million, and $ 2.0 million and $ 1.2 million for the three and nine months ended March 31, 2025, and 2024, respectively, were recorded within general and administrative expense on the unaudited Condensed Consolidated Statements of Operations.

Alline Acquisition:

In connection with the Alline Acquisition, the Company issued 140,552 shares of common stock to affiliates of Alline, which are subject to a one-year lock-up following the closing.

The RSUs granted during the three months ended September 30, 2025, vest in equal amounts over a three-year period subsequent to the grant date.

Total compensation cost for stock-based payment arrangements totaling $ 0.6 million and $ 1.4 million for the three months ended September 30, 2025, and 2024, respectively, was recorded within general and administrative on the Condensed Consolidated Statements of Operations.

Stock Warrants Issued in Connection with Long-Term Debt:

In connection with the 2024 Credit Agreement (as defined in Note 9 to the unaudited Condensed Consolidated Financial Statements), the Company issued detachable warrants to affiliates of TCW Asset Management Company, LLC, and Asilia Investments.

Pursuant to the warrants, the holders can purchase up to an aggregate 407,542 shares of the Company’s common stock, par value $ 0.05 per share, at an exercise price equal to $ 7.00 per share.

Pursuant to the warrants, the holders can purchase up to an aggregate 407,542 shares of common stock of the Company, par value $ 0.05 per share (Common Stock), at an exercise price equal to $ 7.00 per share.

The warrants are exercisable for a seven-year period beginning June 24, 2024.

The warrants may also be exercised on a cashless basis under certain circumstances under the agreement.

In addition, in connection with the issuance of the warrants, the Company granted an exemption in favor of each holder pursuant to Section 36 of the Plan, dated January 29, 2024, among the Company and Equiniti Trust Company, LLC, such that neither holder was deemed to be an Acquiring Person solely in connection with (i) the issuance of the warrants nor (ii) the acquisition of beneficial ownership of securities of the Company pursuant to the exercise of the warrants.

In December 2024, the Company amended the 2024 Credit Agreement.

1 unchanged sentence

In connection with this amendment, the warrant holders can purchase up to an aggregate 64,372 shares of Common Stock, at an exercise price equal to $ 23.86 per share.

The warrants are exercisable for a seven-year period beginning December 19, 2024 (the "Issue Date”).

The warrants are exercisable for a seven-year period beginning December 19, 2024.

The warrants may also be exercised on a cashless basis if, at the time of exercise, there is no effective registration statement registering, or the prospectus therein is not available for, the issuance of the shares of Common Stock underlying the warrants.

Prior to the second anniversary of the Issue Date, the Company may call for cancellation up to an aggregate 32,186 shares of common stock underlying the warrants for consideration equal to $ 51.13 per share;

provided necessary requirements are met.

These warrants were valued at $ 1.3 million at March 31, 2025.

The warrants and the shares of common stock issuable upon the exercise of such warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), and may not be sold absent registration or an applicable exemption from the registration requirements of the Securities Act.

In addition, in connection with the issuance of the warrants, the Company granted an exemption in favor of each holder pursuant to Section 36 of the Tax Benefits Preservation Plan, dated January 29, 2024, as the same may be amended from time to time, among the Company and Equiniti Trust Company, LLC (the Plan), such that neither holder was deemed to be an “Acquiring Person” (as defined in the Plan) solely in connection with (i) the issuance of the warrants nor (ii) the acquisition of beneficial ownership of securities of the Company pursuant to the exercise of the warrants.

The warrants and the shares of Common Stock issuable upon the exercise of such warrants have not been registered under the Securities Act of 1933, as amended (Securities Act), and may not be sold absent registration or an applicable exemption from the registration requirements of the Securities Act.

Based in part upon the representations of each holder in each warrant, the offering and sale of each warrant is exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.

The combined value of these warrants was valued at $ 2.8 million using a relative fair value method and accounted for through additional paid-in capital.

Further, the related financing fees incurred as a result of warrant issuance is recorded through a contra-equity account and amounts to $ 0.2 million.

Prior to the second anniversary of the issue date, the Company may call for cancellation up to an aggregate 203,771 shares of common stock underlying the warrants for consideration equal to $ 15.00 per share;

Further, the related financing fees incurred as a result of warrant issuance are recorded through a contra-equity account and amounted to $ 0.2 million.

For the warrants originally issued in June 2024, prior to the second anniversary of the issue date, the Company may call for cancellation up to an aggregate 203,771 shares of Common Stock underlying the warrants for consideration equal to $ 15.00 per share;

provided, that the volume weighted average price on the trading day immediately preceding the date the Company delivers a written call notice to a holder exceeds $ 20.00 .

As of March 31, 2025, the Company has no intention of exercising this call provision.

The Company will reassess this provision on a quarterly basis.

For the warrants issued in December 2024, prior to the second anniversary of the issue date, the Company may call for cancellation up to an aggregate 32,186 shares of Common Stock underlying the warrants for consideration equal to $ 51.13 per share;

provided, that the volume weighted average price on the trading day immediately preceding the date the Company delivers a written call notice to a holder exceeds $ 68.17 .

As of September 30, 2025, the Company has no intention of exercising either call provision.

The Company will reassess this intention on a quarterly basis.

Stock Warrants Issued in Connection with Consulting Services Agreement:

On August 1, 2025, as part of a consulting services agreement, the Company issued two warrants to purchase Common Stock of the Company to Forum3 Inc., consisting of:

(i) a warrant, exercisable through October 31, 2025, to purchase up to $ 490,000 in aggregate value of shares of Common Stock at an exercise price of the greater of $ 22 per share and the 10 -day average closing price immediately prior to any exercise (the Initial Warrant);

and (ii) a warrant to purchase up to an additional 35,000 shares of Common Stock, at an exercise price of $ 24.20 per share (the Coverage Warrant).

At issuance, the fair value of these warrants was determined to be $ 0.5 million using the Black-Scholes model as described below.

The warrant is not remeasured in future periods as it meets the conditions for equity classification.

The Coverage Warrant is eligible to vest proportionally to the extent the Initial Warrant is exercised, and, to the extent vested, will remain exercisable until August 1, 2028.

The Company valued the warrants, based on a Black-Scholes Option Pricing Method, using the life of the warrants as the expected term, expected volatility of 177 % , a risk-free interest rate of 4.03 %, and a forfeiture rate of 38.8 % under the assumption that only $ 0.3 million of the Initial Warrant would be exercised.

On September 11, 2025, Forum3 Inc.

exercised $ 300,000 of the Initial Warrant at the 10 -day average closing price of $ 23.87 per share for a total of 12,567 shares .

INCOME TAXES:

A summary of the income tax benefit (expense) and corresponding effective tax rate is as follows:

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

A summary of the income tax (expense) benefit and corresponding effective tax rate is as follows:

Three Months Ended September 30,

(Dollars in thousands)

Income tax benefit (expense) $ 1 $ ( 54 ) $ 90 $ 201

Income tax (expense) benefit $ ( 536 ) $ 225

Effective tax rate 28.3 % 11.1 %

The recorded tax provision and effective tax rate for the three and nine months ended March 31, 2025, and 2024, were different than what would normally be expected, primarily due to the impact of the deferred tax valuation allowance.

The Company’s effective tax rate differed from the U.S.

federal statutory tax rate primarily due to the impact of non-deductible items, certain nonrecurring discrete tax items, and the impact of tax credits.

The income tax provision for the quarter ended September 30, 2025, is primarily a non-cash deferred tax expense, which is no longer offset by a valuation allowance as a result of the valuation allowance release that occurred for the year ended June 30, 2025.

On July 4, 2025, legislation known as the One Big Beautiful Bill Act (OBBBA) was signed into law.

The OBBBA makes changes to the United States corporate income tax system, including, among other provisions, the modification of the limitation on business interest deductions under Section 163(j) of the Code, 100 percent bonus depreciation on qualified property and expansion of the 45B FICA Tip Tax Credit provisions applicable to the beauty salon industry.

The impacts of the OBBBA are reflected in our results for the quarter ended September 30, 2025.

With limited exceptions, due to net operating loss carryforwards, our federal, state, and foreign tax returns are open to examination for all years since 2014, 2013, and 2016, respectively.

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CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

The table below reconciles the cash and cash equivalents balances and restricted cash balances recorded within other current assets on the unaudited Condensed Consolidated Balance Sheets to the amount of cash, cash equivalents and restricted cash reported on the unaudited Condensed Consolidated Statements of Cash Flows:

The table below reconciles the cash and cash equivalents balances and restricted cash balances recorded within other current assets on the Condensed Consolidated Balance Sheets to the amount of cash, cash equivalents and restricted cash reported on the Condensed Consolidated Statements of Cash Flows:

September 30,

2025 June 30,

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Total rent includes the following:

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

Three Months Ended September 30,

(Dollars in thousands)

Office rent (1) $ 754 $ 726

Lease termination expense (benefit) 70 ( 39 ) 149 122

Lease termination expense (2) 123 52

Lease liability benefit (3) ( 56 ) ( 62 )

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_______________________________________________________________________________

(1) Rental income associated with the sublease of corporate office space is recorded in other income and was $ 0.3 million and $ 0.9 million for the three and nine months ended March 31, 2025, respectively.

(2) Upon termination of previously impaired leases, the Company derecognizes the corresponding right of use (ROU) assets and lease liabilities, which results in a net gain.

(1) Rental income associated with the sublease of the corporate office space is recorded in other income and was $ 0.3 million and $ 0.2 million for the three months ended September 30, 2025, and 2024, respectively.

(2) Costs incurred to exit salons before the lease end date in order to relieve the company of future lease obligations.

(3) Upon termination of previously impaired leases, the Company derecognizes the corresponding ROU assets and lease liabilities which results in a net gain.

In addition, the Company recognizes a benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired.

(3) Franchise salon rent is lower in the nine months ended March 31, 2024, due to settlements with landlords for less than previously accrued.

(4) Includes rent related to the Alline salons acquired December 2024.

(4) Includes rent related to the Alline salons acquired in December 2024.

The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees.

All lease-related costs are passed through to the franchisees.

The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the unaudited Condensed Consolidated Statements of Operations.

For the three and nine months ended March 31, 2025, and 2024, franchise rental income and franchise rent expense were $ 16.9 million and $ 23.8 million, and $ 58.5 million and $ 72.5 million, respectively.

The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the Condensed Consolidated Statements of Operations.

For the three months ended September 30, 2025, and 2024, franchise rental income and franchise rent expense were $ 17.4 million and $ 21.6 million, respectively.

These leases generally have lease terms of approximately five years .

The Company expects to renew the SmartStyle master lease and some leases for locations subleased to our franchisees upon expiration of those leases.

The Company expects to renew the SmartStyle master lease and certain leases for locations subleased to our franchisees upon expiration of those leases.

Other leases are expected to be renewed by the franchisee upon expiration.

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The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined.

The Company uses the portfolio approach in applying the discount rate based on the original lease term.

The weighted average remaining lease term was 4.82 years and 5.05 years, and the weighted average discount rate was 5.93 % and 5.13 % for all salon operating leases as of March 31, 2025, and June 30, 2024, respectively.

As of March 31, 2025, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (dollars in thousands):

The Company uses the portfolio approach in applying the discount rate based on the original expected lease term.

The weighted average remaining lease term was 4.73 and 4.68 years, and the weighted average discount rate was 6.61 % and 6.45 % for all salon operating leases as of September 30, 2025, and June 30, 2025, respectively.

As of September 30, 2025, future operating lease commitments, including one renewal option for leases expected to be renewed, to be paid and received by the Company were as follows (dollars in thousands):

Fiscal Year Leases for Franchise Salons Leases for Company-Owned Salons Corporate Leases Total Operating Lease Payments Sublease Income to be Received from Franchisees Net Rent Commitments

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The Company's debt consists of the following:

Three Months Ended March 31, 2025 Fiscal Year Balance at March 31, 2025 Balance at

Three Months Ended September 30, 2025 Fiscal Year Balance at

September 30, 2025 Balance at

June 30, 2025

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Fair value of warrants issued to lenders ( 2,170 ) ( 2,314 )

Total debt, net 111,255 110,793

long-term debt, current portion ( 1,650 ) ( 1,100 )

Total long-term debt, net $ 109,605 $ 109,693

_______________________________________________________________________________

(1) The term loan and revolving credit facility mature on June 24, 2029.

The interest rate applicable to any letter of credit is 5.25 % and paid currently in cash.

In June 2024, the Company entered into a new credit agreement (the 2024 Credit Agreement).

The 2024 Credit Agreement includes a $ 105.0 million term loan and a $ 25.0 million revolving credit facility, with a $ 10.0 million minimum liquidity covenant and matures June 24, 2029.

The 2024 Credit Agreement includes a $ 105.0 million term loan and a $ 25.0 million revolving credit facility, with a $ 10.0 million minimum liquidity covenant and is set to expire June 24, 2029.

The Company incurred $ 14.2 million of refinancing fees (including $ 3.9 million of Original Issue Discount fee) that will be amortized on a straight-line basis over the term of the agreement.

As of March 31, 2025, the Company had outstanding standby letters of credit under the revolving credit facility of $ 9.3 million, primarily related to the Company's self-insurance program.

As of March 31, 2025, total available liquidity and available credit under the $ 25.0 million revolving credit facility, as defined by the 2024 Credit Agreement Amendment, were $ 19.0 million and $ 15.7 million, respectively.

The 2024 Credit Agreement is considered a troubled debt restructuring, which resulted in a $ 94.6 million ($ 39.83 per weighted average diluted share) gain on the extinguishment of the prior agreement.

Any unamortized financing fees that existed at the date of the new agreement were written off upon the signing date of the 2024 Credit Agreement.

On December 19, 2024, the Company amended the 2024 Credit Agreement for an additional $ 15.0 million in long-term debt in the form of a term loan (the 2024 Credit Agreement Amendment).

In connection with the 2024 Credit Agreement, the Company issued detachable stock warrants to the debt lenders.

The Company issued additional warrants to affiliates of TCW Asset Management Company, LLC, and Asilia Investments in connection with the 2024 Credit Agreement Amendment.

See Note 4 for additional details.

The term loan was provided on the same terms as the original term loan, with respect to maturity and interest rate margins.

The $ 15.0 million in proceeds were used as consideration for the Alline Acquisition.

The Company incurred $ 0.4 million of Original Issue Discount fee that will be amortized on a straight-line basis over the term of the agreement.

As of September 30, 2025, the Company had outstanding standby letters of credit under the revolving credit facility of $ 6.0 million, primarily related to the Company's self-insurance program.

As of September 30, 2025, total available liquidity, net of the $ 10.0 million minimum liquidity covenant, and available credit under the $ 25.0 million revolving credit facility, as defined by the amended agreement, were $ 25.5 million and $ 19.0 million, respectively.

The Company was in compliance with its covenants and other requirements of the financing arrangements as of September 30, 2025.

The Company's assets serve as collateral to the 2024 Credit Agreement.

The interest rate on the 2024 Credit Agreement is based on the secured overnight financing rate (SOFR) plus margin.

The margin applicable to the 2024 Credit Agreement is subject to change based on the Company's total leverage ratio, remeasured annually on a predetermined date set by the lender.

When the Company's total leverage ratio is greater than or equal to 3.75 to 1.00, the margin applicable to the term loan and revolving credit facility is 9.00 %.

When the Company's total leverage ratio is greater than or equal to 3.75 to 1.00, the margin applicable to the new term loan and revolving credit facility is 9.00 %.

If the Company's leverage ratio is less than 3.75 to 1.00, the margin rate is 8.50 %.

In either scenario, 4.50 % of the margin is paid-in-kind (PIK) interest (added to the principal balance and thereafter accruing interest), and the remainder is paid in cash.

In either scenario, 4.50 % of the margin is paid-in-kind (PIK) interest (added to the principal balance and thereafter accruing interest), and the remainder is paid currently in cash.

The SOFR base rate applicable to the debt has a floor of 2.50 % per annum.

The margin applicable to any letter of credit is 5.25 % and paid in cash.

The agreement contains typical provisions and financial covenants regarding maximum leverage and minimum fixed-charge coverage and a minimum liquidity threshold of $ 10.0 million.

In connection with the 2024 Credit Agreement, the Company issued detachable stock warrants to the debt lenders.

The Company was in compliance with its covenants and other requirements of the financing arrangements as of March 31, 2025.

The Company's assets serve as collateral to the credit facility.

The agreement includes scheduled payments totaling $ 1.1 million in fiscal years 2025 and 2026, payable quarterly.

The interest rate applicable to any letter of credit is 5.25 % and paid currently in cash.

The 2024 Credit Agreement includes scheduled payments totaling $ 1.1 million in fiscal year 2026, payable quarterly.

In fiscal years 2027, 2028 and 2029, scheduled payments total $ 3.0 million.

Additionally, excess cash is swept annually per terms of the agreement.

On December 19, 2024, the Company amended the 2024 Credit Agreement (the 2024 Credit Agreement Amendment) for an additional $ 15.0 million in long-term debt in the form of a term loan.

In connection with this 2024 Credit Agreement Amendment, the Company issued warrants as discussed in Note 4.

The term loan was provided on the same terms as the original term loan, with respect to maturity and interest rate margins.

The $ 15.0 million in proceeds were used as consideration for the Alline Acquisition.

The Company incurred $ 0.4 million of Original Issue Discount fee that will be amortized on a straight-line basis over the term of the agreement.

As of March 31, 2025, the Company had cash and cash equivalents of $ 13.3 million and current liabilities of $ 101.0 million.

Additionally, excess cash is swept annually per the terms of the agreement and there is a balloon payment required upon maturity of the agreement in 2029.

In the three months ended September 30, 2025, the Company paid $ 1.5 million to satisfy the annual mandatory prepayment of 75 % of excess cash flow as defined in the 2024 Credit Agreement.

This amount was applied as a prepayment of the term loan and reduced the Company's unrestricted cash balance accordingly.

FAIR VALUE MEASUREMENTS:

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and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Changes in the earn-out liability measured at fair value using Level 3 inputs were as follows:

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of September 30, 2025, and June 30, 2025, the estimated fair value of the Company's cash, cash equivalents, restricted cash, receivables, inventory, deferred compensation assets, accounts payable and debt approximated their carrying values.

The Company recorded the estimated fair value of the contingent consideration liability assumed with the acquisition of Alline.

The estimated fair value of the contingent consideration liability is included in the Condensed Consolidated Balance Sheets within other noncurrent liabilities.

The earn-out liability is adjusted at fair value quarterly until settled utilizing the Monte Carlo simulation, and changes in fair value are reported in our Condensed Consolidated Statements of Operations.

As of September 30, 2025, management's revised estimates indicated a fair value of zero dollars.

The change in the earn-out liability measured at fair value using significant unobservable inputs (Level 3) is as follows:

(Dollars in thousands)

Earn-out liability at June 30, 2025

Addition for acquisition 3,000

Earn-out liability at March 31, 2025

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of March 31, 2025, and June 30, 2024, the estimated fair value of the Company's cash, cash equivalents, restricted cash, receivables, inventory, deferred compensation assets, accounts payable and debt approximated their carrying values.

The Company recorded the estimated fair value of the contingent consideration liability assumed with the acquisition of Alline on a preliminary basis.

The estimated fair value of the contingent consideration liability is included in the unaudited Condensed Consolidated Balance Sheets within accrued expenses and other noncurrent liabilities, totaling $ 3.0 million at March 31, 2025.

The earn-out liability is adjusted at fair value quarterly until settled, and changes in fair value will be reported in our unaudited Condensed Consolidated Statements of Operations.

The following provides information regarding fair value measurements for our remaining contingent earn-out liability as of March 31, 2025, according to the three-level fair value hierarchy:

(Dollars in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

Recurring Fair Value Measurements:

Earn-out liability $ — $ — $ 3,000 $ 3,000

Total $ — $ — $ 3,000 $ 3,000

gain on earn-out liability 1,000

Earn-out liability at September 30, 2025

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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EARNINGS PER SHARE:

The Company's basic earnings per share is calculated as net income (loss) divided by weighted average common shares outstanding, excluding unvested outstanding stock options (SOs), stock appreciation rights (SARs), and RSUs.

The Company's diluted earnings per share is calculated as net income (loss) divided by weighted average common shares and common share equivalents outstanding, which include shares issued under the Company's stock-based compensation plans and warrants issued in connection with the Company's credit agreement.

The Company's diluted earnings per share is calculated as net income (loss) divided by weighted average common shares and common share equivalents outstanding, which includes shares issued under the Company's stock-based compensation plans and warrants issued in connection with the Company's credit and consulting services agreements.

Stock-based awards with exercise prices greater than the average market price of the Company's common stock are excluded from the computation of diluted earnings per share.

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The following table sets forth the presentation of shares outstanding used in the calculation of basic and diluted earnings per share (EPS):

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

Three Months Ended September 30,

(Shares in thousands)

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Denominator for diluted EPS - weighted average common shares and dilutive potential common shares 2,781 2,343

Stock-based awards excluded from EPS calculation - anti-dilutive 188 219 191 217

Options excluded from EPS calculation - anti-dilutive 180 195

SEGMENT INFORMATION:

Segment information is presented on the same basis that the Company internally organizes the business for assessing performance and making decisions regarding allocation of resources.

The Company's Chief Operating Decision Maker's (CODM) primary measures of segment performance are revenue and segment adjusted EBITDA.

The Company’s Chief Executive Officer is the CODM.

Revenue and segment adjusted EBITDA are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments, assess current performance, and forecast future performance.

The Company's CODM does not evaluate reportable segments using assets and capital expenditure information.

Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation, amortization, and impairment.

Consistent with our internal management reporting, unallocated expenses include certain items impacting comparability.

These unallocated items are not defined terms within GAAP.

They are based on how management views the business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment.

Unallocated fees include one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired ROU assets, lease termination fees, asset retirement obligation costs, goodwill and long-lived asset impairment charges, and the benefit from the Company's debt refinancing.

Financial information concerning the Company's reportable operating segments is shown in the tables below.

Three Months Ended September 30, 2025

(Dollars in thousands)

Franchise Company-owned Consolidated

Total revenue $ 38,747 $ 20,211 $ 58,958

General and administrative $ 10,209 $ 1,142 $ 11,351

Rent 430 2,793 3,223

Non-margin expenses (1) 22,927 — 22,927

Company-owned salon expense — 14,768 14,768

Depreciation and amortization 210 558 768

Operating income $ 4,971 $ 950 $ 5,921

Unallocated expense, net ( 4,565 )

Total net income $ 1,356

Segment adjusted EBITDA $ 6,384 $ 1,581 $ 7,965

_______________________________________________________________________________

(1) Non-margin expenses include advertising fund and franchise rent expenses which are offset in total revenue and, as such, not used as a primary measure of performance by our CODM.

Financial information reconciling the Company's reportable operating segments Operating income to Adjusted EBITDA is shown in the table below.

Three Months Ended September 30, 2025

(Dollars in thousands)

Franchise Company-owned Consolidated

Operating income $ 4,971 $ 950 $ 5,921

Depreciation and amortization 210 558 768

Other, net 242 — 242

Gain on earn-out liability 1,000 — 1,000

Stock-based compensation expense 629 — 629

Discrete items (1) ( 668 ) 73 ( 595 )

Segment adjusted EBITDA $ 6,384 $ 1,581 $ 7,965

_______________________________________________________________________________

(1) Discrete items include one-time professional fees and legal settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired right of use asset, lease termination fees and asset retirement obligation costs.

Three Months Ended September 30, 2024

(Dollars in thousands)

Franchise Company-owned Consolidated

Total revenue $ 45,275 $ 785 $ 46,060

General and administrative $ 13,982 $ 52 $ 14,034

Rent 723 341 1,064

Non-margin expenses (1) 27,277 — 27,277

Company-owned salon expense — 753 753

Depreciation and amortization 361 85 446

Long-lived asset impairment 352 — 352

Operating income (loss) $ 2,580 $ ( 446 ) $ 2,134

Unallocated expenses, net ( 2,987 )

Total net loss $ ( 853 )

Segment adjusted EBITDA $ 7,986 $ ( 349 ) $ 7,637

_______________________________________________________________________________

(1) Non-margin expenses include advertising fund and franchise rent expenses which are offset in total revenue and, as such, not used as a primary measure of performance by our CODM.

Financial information reconciling the Company's reportable operating segments Operating income (loss) to Adjusted EBITDA is shown in the table below.

For the Three Months Ended September 30, 2024

(Dollars in thousands)

Franchise Company-owned Consolidated

Operating income (loss) $ 2,580 $ ( 446 ) $ 2,134

Depreciation and amortization 361 85 446

Long lived asset impairment 352 — 352

Other, net 677 — 677

Stock-based compensation expense 1,430 — 1,430

Discrete items (1) 2,586 12 2,598

Segment adjusted EBITDA $ 7,986 $ ( 349 ) $ 7,637

_______________________________________________________________________________

The Franchise reportable operating segment is comprised of franchise salons located mainly in strip center locations and Walmart stores.

Franchise salons offer high quality, convenient and value-priced hair care and beauty services and retail products.

This segment operates primarily in the U.S., Puerto Rico, and Canada and primarily includes the Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters, and Magicuts concepts.

The company-owned salons reportable operating segment is comprised of company-owned salons located mainly in strip center locations.

Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products.

Supercuts, Cost Cutters and other regional trade names operating in the U.S.

are generally within the company-owned salons segment.

Segment information is prepared on the same basis that the CODM reviews financial information for operational decision-making purposes.

The Company's reportable operating segments consisted of the following salons:

September 30,

2025 June 30,

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COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart stores

Portfolio Brands

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Total franchise and company-owned salons

(1) Canadian and Puerto Rican salons are included in the North American salon totals.

(2) Salon counts as of March 31, 2025, include salons acquired as part of the Alline Acquisition.

See Note 13 to these unaudited Condensed Consolidated Financial Statements for further details on the transaction.

Financial information concerning the Company's reportable operating segments is shown in the table below.

Segment information is presented in the same way that the Company internally organizes the business for assessing performance and making decisions regarding allocation of resources.

The CODM’s primary measures of segment performance are revenue and segment adjusted EBITDA.

Revenue and segment adjusted EBITDA are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments, assess current performance, and forecast future performance.

Asset information by segment is not provided to the CODM.

Segment adjusted EBITDA is defined as income from continuing operations before interest, income taxes, depreciation, amortization, and impairment.

Beginning in fiscal year 2025, management determined that stock-based compensation expenses will be excluded from adjusted EBITDA.

This change has been retrospectively applied to all prior periods presented in this report.

C onsistent with our internal management reporting, unallocated expenses include certain items impacting comparability.

These unallocated items are not defined terms within U.S.

They are based on how management views the business, makes financial, operating and planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment.

Three Months Ended March 31, Nine Months Ended March 31,

_______________________________________________________________________________

(Dollars in thousands)

Franchise $ 38,004 $ 47,857 $ 126,548 $ 148,567

Company-owned 18,953 1,324 23,188 5,039

Total revenue 56,957 49,181 149,736 153,606

Segment adjusted EBITDA:

Franchise 6,282 6,125 20,683 21,346

Company-owned 843 ( 773 ) 1,219 ( 1,606 )

Total 7,125 5,352 21,902 19,740

Unallocated expenses (1) ( 611 ) ( 247 ) ( 4,525 ) ( 215 )

Depreciation and amortization ( 739 ) ( 1,009 ) ( 1,645 ) ( 2,056 )

Long-lived asset impairment — — ( 352 ) ( 170 )

Stock-based compensation ( 439 ) ( 310 ) ( 2,043 ) ( 1,201 )

Interest expense ( 5,087 ) ( 6,153 ) ( 14,781 ) ( 18,529 )

Income tax benefit (expense) 1 ( 54 ) 90 201

Income from discontinued operations — 89 8,396 2,089

Total net income (loss) (2) $ 250 $ ( 2,332 ) $ 7,042 $ ( 141 )

(1) Unallocated expenses for the three and nine months ended March 31, 2025, include severance expenses of $ 0.4 million and $ 2.7 million, respectively.

(2) Total is a recalculation;

line items calculated individually may not sum to total due to rounding.

(1) Canadian and Puerto Rican salons are included in the North American salon totals.

ACQUISITIONS:

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The transaction provides Regis with a turn-key operating infrastructure and gets the Company closer to salon operations alongside franchisees and the salon portfolio provides a testing ground for brand and operational initiatives.

The transaction terminated the existing franchise arrangements between Regis and Alline, which resulted in the Company recognizing a loss of $ 0.2 million upon settlement, which is included in the unaudited Condensed Consolidated Financial Statements as a component of operating income for the nine months ended March 31, 2025.

The acquisition was accounted for as a business combination with the purchase price allocated on a preliminary basis using information available as of December 31, 2024.

The acquisition was accounted for as a business combination with the purchase price allocated using information available as of December 31, 2024.

Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable.

As of March 31, 2025, the purchase price and related allocation have been revised as a result of additional information obtained and revisions to the provisional estimates of fair value, including, but not limited to, the completion of independent appraisals and valuations related to property and equipment, intangible assets, right of use assets and corresponding lease obligations.

Management is continuing to analyze the data and as such, the final valuations of assets acquired and liabilities assumed may be materially different from the estimated values shown below.

The preliminary fair value of total consideration transferred by the Company upon acquisition is $ 24.6 million, as detailed below.

As of June 30, 2025, the purchase price and related allocation were revised as a result of additional information obtained and revisions to the provisional estimates of fair value, including, but not limited to, the completion of independent appraisals and valuations related to property and equipment, intangible assets, right of use assets and corresponding lease obligations.

There were no adjustments made to these allocations in the three months ended September 30, 2025.

The fair value of total consideration transferred by the Company upon acquisition is $ 22.6 million, as detailed below.

Consideration (Dollars in thousands)

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Equity instruments ( 140,552 of Regis common shares) (2)

Contingent consideration arrangement (preliminary estimate) (3) 3,000

Contingent consideration arrangement (3) 1,000

Fair value of total consideration $ 22,621

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(2) The number of common shares ( 140,552 ) issued as part of the consideration paid for Alline was determined by dividing the $ 3.0 million by the 30 -trading day volume weighted average price of the common stock as reported on the Nasdaq Global Market as of and including December 17, 2024.

(3) The contingent consideration arrangement requires Regis to pay the former owners of Alline additional cash consideration if certain 4-Wall EBITDA or Adjusted EBITDA thresholds are met for each of the three subsequent annual earnout periods as well as a cumulative 4-Wall EBITDA or Adjusted EBITDA threshold for the cumulative three subsequent annual earnout periods.

(3) The contingent consideration arrangement requires Regis to pay the former owners of Alline additional cash consideration if certain 4-Wall EBITDA or Adjusted EBITDA thresholds are met for each of the three subsequent annual earn-out periods as well as a cumulative 4-Wall EBITDA or Adjusted EBITDA threshold for the cumulative three subsequent annual earn-out periods.

The potential undiscounted amount of all future payments that Regis could be required to make under the contingent consideration arrangement is between $ 0 and $ 3.0 million.

Regis recognized a provisional fair value of $ 3.0 million on the acquisition date and as of March 31, 2025, which is included in accrued expenses ($ 1.0 million) and other noncurrent liabilities ($ 2.0 million) in the unaudited Condensed Consolidated Balance Sheets.

The fair value of the contingent consideration arrangement is provisional while the Company completes its fair value assessment.

Regis recognized a fair value of $ 1.0 million as of June 30, 2025, which is included in other noncurrent liabilities in the Consolidated Balance Sheets in the Company's Annual Report on Form 10-K for the year ended June 30, 2025.

As of September 30, 2025, the Company determined the value of the contingent consideration arrangement is $ 0 , and recognized a gain on earn-out liability of $ 1.0 million in our Condensed Consolidated Statements of Operations for the three months ended September 30, 2025.

4-Wall EBITDA is defined as earnings before interest, tax, depreciation and amortization and excluding corporate general and administrative expenses for acquired salons.

The earn-out liability is adjusted at fair value quarterly until settled utilizing the Monte Carlo simulation, and changes in fair value will be reported in our Condensed Consolidated Statements of Operations.

Refer to Note 10 to the Condensed Consolidated Financial Statements for additional information regarding the valuation.

The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed as of the acquisition date:

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Fair value of total consideration $ 22,621

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(1) Preliminary Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

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All the goodwill related to the acquisition of Alline is related to our company-owned operating segment.

The Company has not yet obtained all the information required to finalize the valuations of the assets acquired and liabilities assumed.

The Company has obtained all the information required to finalize the valuation of the assets acquired and liabilities assumed, except for information related to certain assumed liabilities.

As such, we expect that goodwill could change from the amount noted above.

(2) Intangible assets includes $ 2.4 million related to the preliminary fair value of reacquired rights and $ 1.4 million related to the preliminary fair value of favorable leasehold interests, net.

The reacquired rights were preliminarily valued using a form of the income approach where the asset's value is determined by its ability to generate future cash flows by isolating and discounting the cash flows attributable to the asset.

(2) Intangible assets includes $ 2.4 million related to the preliminary fair value of reacquired rights and $ 1.4 million related to the fair value of favorable leasehold interests, net.

The reacquired rights were valued using a form of the income approach where the asset's value is determined by its ability to generate future cash flows by isolating and discounting the cash flows attributable to the asset.

The Company assumed a four-year life based on the weighted average remaining contract term, assuming no renewals.

Upon acquisition, the Company assumed lease agreements with lease payments fixed at a rate below the current market rate.

As a result, a preliminary favorable lease asset of $ 1.4 million has been recorded on the balance sheet.

As a result, a favorable lease asset of $ 1.4 million was recorded on the balance sheet.

This asset represents the benefit the Company receives from having lease payments below market and will be amortized to rent expense on a straight-line basis over the remaining terms of the respective leases.

The Company incurred $ 0.2 million and $ 1.4 million of acquisition related costs which are included in general and administrative expense in Regis’s unaudited Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2025, respectively.

The following table provides revenues and operating income from Alline that are included in our unaudited Condensed Consolidated Financial Statements:

Three Months Ended March 31, 2025 Nine Months Ended March 31, 2025

The following table provides revenues and operating income from Alline that are included in our Condensed Consolidated Financial Statements:

Three Months Ended September 30, 2025

(Dollars in thousands)

Total revenues $ 19,529

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The following table presents pro forma information as if the Alline Acquisition had occurred on July 1, 2024:

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

Three months ended September 30,

(Dollars in thousands)

Total revenues $ 58,958 $ 64,208

1 unchanged sentence

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-Q

Item 1. Financial Statements