REGIS CORP 10-Q

Item 1. Financial Statements (Unaudited) REGIS CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) As of March 31, 2026, and June 30, 2025 (Dollars in thousands, except per share data) March 31, 2026 June 30, 2025 ASSETS Current assets: Cash and cash equivalents (Note 7) $ 22,930 $ 16,959 Receivables, net 9,005 9,473 Inventory 2,482 2,798 Other current assets 19,926 21,254 Total current assets 54,343 50,484 Property and equipment, net 9,542 10,085 Goodwill (Note 1) 183,101 183,436 Other intangibles, net 5,471 5,830 Right of use asset (Note 8) 188,206 229,861 Deferred tax asset (Note 5) 100,978 102,504 Other assets 14,957 16,757 Total assets $ 556,598 $ 598,957 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 20,570 $ 20,837 Accrued expenses 15,986 19,066 Long-term debt, current portion (Note 9) 2,550 1,100 Short-term lease liability (Note 8) 52,558 60,685 Total current liabilities 91,664 101,688 Long-term debt, net (Note 9) 112,774 109,693 Long-term lease liability (Note 8) 144,564 179,280 Other non-current liabilities 18,146 22,680 Total liabilities 367,148 413,341 Shareholders' equity: Common stock, $ 0.05 par value; issued and outstanding, 2,498,778 and 2,435,981 common shares at March 31, 2026, and June 30, 2025, respectively 125 122 Additional paid-in capital 76,831 75,243 Accumulated other comprehensive income 7,982 8,286 Retained earnings 104,512 101,965 Total shareholders' equity 189,450 185,616 Total liabilities and shareholders' equity $ 556,598 $ 598,957 _______________________________________________________________________________ The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements. 3 REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three and Nine Months Ended March 31, 2026, and 2025 (Dollars and shares in thousands, except per share amounts) Three Months Ended March 31, Nine Months Ended March 31, 2026 2025 2026 2025 Revenues: Royalties $ 13,224 $ 13,533 $ 40,901 $ 44,019 Fees 1,861 2,402 5,398 7,671 Advertising fund contributions 5,215 5,203 16,086 16,334 Franchise rental income (Note 8) 13,006 16,866 47,597 58,524 Company-owned salon revenue 19,101 18,953 58,500 23,188 Total revenue 52,407 56,957 168,482 149,736 Operating expenses: General and administrative 9,975 11,235 31,590 36,424 Rent (Note 8) 3,622 4,058 10,443 7,271 Advertising fund expense 5,215 5,203 16,086 16,334 Franchise rent expense 13,006 16,866 47,597 58,524 Company-owned salon expense (1) 13,958 13,835 42,453 16,534 Depreciation and amortization 914 739 2,478 1,645 Long-lived asset impairment — — — 352 Total operating expenses 46,690 51,936 150,647 137,084 Operating income 5,717 5,021 17,835 12,652 Other (expense) income: Interest expense ( 5,026 ) ( 5,087 ) ( 15,552 ) ( 14,781 ) Gain on earn-out liability — — 1,000 — Other, net 202 315 961 685 Income (loss) from operations before income taxes 893 249 4,244 ( 1,444 ) Income tax (expense) benefit ( 158 ) 1 ( 1,697 ) 90 Income (loss) from continuing operations 735 250 2,547 ( 1,354 ) Income from discontinued operations (Note 3) — — — 8,396 Net income $ 735 $ 250 $ 2,547 $ 7,042 Net income per share: Basic: Income (loss) from continuing operations $ 0.29 $ 0.10 $ 1.01 $ ( 0.58 ) Income from discontinued operations — — — 3.57 Net income per share (2) $ 0.29 $ 0.10 $ 1.01 $ 3.00 Diluted: Income (loss) from continuing operations $ 0.26 $ 0.08 $ 0.89 $ ( 0.58 ) Income from discontinued operations — — — 3.57 Net income per share, diluted (2) $ 0.26 $ 0.08 $ 0.89 $ 3.00 Weighted average common and common equivalent shares outstanding: Basic 2,539 2,499 2,513 2,350 Diluted 2,864 3,002 2,867 2,350 _______________________________________________________________________________ (1) Includes cost of services and products sold to guests in our company-owned salons. Excludes general and administrative expense, rent, and depreciation and amortization related to company-owned salons . (2) Total is a recalculation; line items calculated individually may not sum to total due to rounding. The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements. 4 REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) For the Three and Nine Months Ended March 31, 2026, and 2025 (Dollars in thousands) Three Months Ended March 31, Nine Months Ended March 31, 2026 2025 2026 2025 Net income $ 735 $ 250 $ 2,547 $ 7,042 Foreign currency translation adjustments ( 233 ) 41 ( 304 ) ( 411 ) Comprehensive income $ 502 $ 291 $ 2,243 $ 6,631 _______________________________________________________________________________ The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements. 5 REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) For the Three and Nine Months Ended March 31, 2026, and 2025 (Dollars in thousands) Three Months Ended March 31, 2026 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shares Amount Balance, December 31, 2025 2,498,778 $ 125 $ 76,591 $ 8,215 $ 103,777 $ 188,708 Net income — — — — 735 735 Foreign currency translation — — — ( 233 ) — ( 233 ) Stock-based compensation — — 240 — — 240 Balance, March 31, 2026 2,498,778 $ 125 $ 76,831 $ 7,982 $ 104,512 $ 189,450 Three Months Ended March 31, 2025 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income 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 Nine Months Ended March 31, 2026 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shares Amount Balance, June 30, 2025 2,435,981 $ 122 $ 75,243 $ 8,286 $ 101,965 $ 185,616 Net income — — — — 2,547 2,547 Foreign currency translation — — — ( 304 ) — ( 304 ) Exercise of stock options 24,564 1 606 — — 607 Stock-based compensation — — 844 — — 844 Net restricted stock activity 25,666 1 ( 160 ) — — ( 159 ) Common stock issued in connection with warrant exercise 12,567 1 298 — — 299 Balance, March 31, 2026 2,498,778 $ 125 $ 76,831 $ 7,982 $ 104,512 $ 189,450 Nine Months Ended March 31, 2025 Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Balance, June 30, 2024 2,279,948 $ 114 $ 69,660 $ 8,584 $ ( 21,571 ) $ 56,787 Net income — — — — 7,042 7,042 Foreign currency translation — — — ( 411 ) — ( 411 ) Stock-based compensation — — 1,048 — — 1,048 Net restricted stock activity 15,481 1 ( 75 ) — — ( 74 ) Common stock issued in connection with Alline acquisition (Note 13) 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 _______________________________________________________________________________ The accompanying notes are an integral part of the unaudited Condensed Consolidated Financial Statements. 6 REGIS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Nine Months Ended March 31, 2026, and 2025 (Dollars in thousands) Nine Months Ended March 31, 2026 2025 Cash flows provided by (used in) operating activities: Net income $ 2,547 $ 7,042 Adjustments to reconcile net income to cash provided by operating activities: Gain from sale of OSP (Note 3) — ( 8,396 ) Depreciation and amortization 2,444 1,596 Deferred income taxes 1,442 ( 197 ) Non-cash interest 4,296 3,846 Gain on earn-out liability ( 1,000 ) — Long-lived asset impairment — 352 Stock-based compensation 706 2,043 Amortization of debt discount and financing costs 2,717 2,437 Other non-cash items affecting earnings 43 579 Ad fund ( 365 ) 5,844 Changes in operating assets and liabilities (1) ( 3,912 ) ( 8,160 ) Net cash provided by operating activities 8,918 6,986 Cash flows (used in) provided by investing activities: Capital expenditures ( 1,383 ) ( 769 ) Asset acquisitions, net of cash acquired and certain obligations assumed — ( 18,631 ) Proceeds from sale of OSP, net of fees — 8,463 Net cash used in investing activities ( 1,383 ) ( 10,937 ) Cash flows (used in) provided by financing activities: Borrowings on revolving credit facility — 4,326 Repayments of revolving credit facility — ( 10,238 ) Repayments of long-term debt ( 2,440 ) ( 825 ) Debt refinancing fees ( 41 ) ( 949 ) Proceeds from issuance of common stock in connection with warrant exercise 298 — Proceeds from issuance of common stock for options exercised 606 — Proceeds from issuance of long-term debt — 15,000 Taxes paid for shares withheld ( 161 ) ( 75 ) Net cash (used in) provided by financing activities ( 1,738 ) 7,239 Effect of exchange rate changes on cash and cash equivalents ( 46 ) ( 92 ) Increase in cash, cash equivalents, and restricted cash 5,751 3,196 Cash, cash equivalents, and restricted cash: Beginning of period 35,205 29,312 End of period $ 40,956 $ 32,508 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. 7 REGIS CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. 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 March 31, 2026, and for the three and nine months ended March 31, 2026, and 2025, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of March 31, 2026, and its consolidated results of operations, comprehensive income, 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 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 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 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 and nine months ended March 31, 2026, and 2025, include the results of Alline subsequent to the acquisition date, December 19, 2024. 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 Statement of Operations. Goodwill: 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 nine months ended March 31, 2026. 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 March 31, 2026, and June 30, 2025, the franchise reporting unit had goodwill of $ 172.8 million and $ 173.1 million, respectively, and the company-owned reporting unit had goodwill of $ 10.3 million. Guarantees: The Company, as a guarantor, is required to recognize, at inception of the guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. See Note 8 for further discussion of such obligations guaranteed. 8 Recently Issued Accounting Standards Not Yet Adopted: 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 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 ASU 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 well as disclosures about selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact this new guidance will have on its financial statements and disclosures. In July 2025, the FASB issued ASU 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. 9 2. REVENUE RECOGNITION: Revenue Recognition and Deferred Revenue: Revenue recognized over time Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. 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 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 typically recognized over 10 years , but is evaluated for immediate revenue recognition when a salon is acquired by Regis or closed. Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees. The Company recognizes franchise rental income and expense when it is due to the landlord. Revenue recognized at point of sale Company-owned salon revenues are recognized at the time when the services are provided, or the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the guest. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized based on gift card balances with no activity over a 36-month basis. 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 revenue recognition guidance is as follows: March 31, 2026 June 30, 2025 Balance Sheet Classification (Dollars in thousands) Receivables from contracts with customers, net $ 7,493 $ 7,378 Receivables, net Broker fees 4,572 5,997 Other assets Deferred revenue: Current Gift card liability $ 419 $ 476 Accrued expenses Deferred franchise fees open salons 3,454 3,832 Accrued expenses Total current deferred revenue $ 3,873 $ 4,308 Non-current Deferred franchise fees unopened salons $ 984 $ 1,475 Other non-current liabilities Deferred franchise fees open salons 6,975 9,394 Other non-current liabilities Total non-current deferred revenue $ 7,959 $ 10,869 10 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, 2026 2025 (Dollars in thousands) Balance at beginning of period $ 5,015 $ 6,227 Provision for doubtful accounts (1) 1,109 2,234 Provision for franchisee rent (2) 515 784 Recoveries ( 1,209 ) ( 1,495 ) Other 33 ( 68 ) Write-offs ( 1,058 ) ( 2,755 ) Balance at end of period $ 4,405 $ 4,927 ________________________________________________________________________________________ (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, capitalized, and expensed over the term of the franchise agreement as general and administrative expense 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, 2026 2025 (Dollars in thousands) Balance at beginning of period $ 5,997 $ 9,369 Amortization ( 1,425 ) ( 1,820 ) Write-offs (1) — ( 1,150 ) Balance at end of period $ 4,572 $ 6,399 ________________________________________________________________________________________ (1) Broker fees of $ 0.9 million were written off in connection with the Alline acquisition for the nine months ended March 31, 2025. 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 but is evaluated for immediate revenue recognition when a salon is acquired by Regis or closed. Franchise fee revenue for the three months ended March 31, 2026, and 2025, was $ 1.0 million and $ 1.8 million, respectively, and for the nine months ended March 31, 2026, and 2025, was $ 3.0 million and $ 5.5 million, respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of March 31, 2026, is as follows (dollars in thousands): Remainder of 2026 $ 863 2027 3,255 2028 2,464 2029 1,157 2030 419 Thereafter 2,271 Total $ 10,429 11 3. DISCONTINUED OPERATIONS: On June 30, 2022, the Company sold its Opensalon ® Pro (OSP) software-as-a-service solution to Soham, Inc. As a result of the sale, the Company classified the OSP business as discontinued operations in the financial statements for all periods presented. The Company received no proceeds from the sale in the three and nine months ended March 31, 2026. During the three and nine months ended March 31, 2025, the Company received zero dollars and $ 8.5 million, respectively, 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 recorded for the three and nine months ended March 31, 2025, due to a valuation allowance. Cash provided by (used in) investing activities for the nine months ended March 31, 2025, includes $ 8.5 million of cash from discontinued operations. 12 4. SHAREHOLDERS' EQUITY: Authorized Shares and Designation of Preferred Class: The Company has 5.0 million shares of capital stock authorized, par value $ 0.05 , of which all outstanding shares, and shares available under the Stock Option Plans, have been designated as common stock. Stock-Based Employee Compensation: During the three and nine months ended March 31, 2026, and 2025, the Company granted restricted stock units as follows: Three Months Ended March 31, Nine Months Ended March 31, 2026 2025 2026 2025 Restricted stock units (RSUs) 17,239 3,002 56,944 81,802 The RSUs granted during the three and nine months ended March 31, 2026, and 2025, vest after one year or in equal amounts over a three-year period subsequent to the grant date. Total compensation cost for stock-based payment arrangements totaling $( 0.2 ) million and $ 0.4 million, and $ 0.7 million and $ 2.0 million for the three and nine months ended March 31, 2026, and 2025, 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 common stock of the Company, par value $ 0.05 per share (Common Stock), at an exercise price equal to $ 7.00 per share. In December 2024, the Company amended the 2024 Credit Agreement. The Company issued additional warrants to affiliates of TCW Asset Management Company, LLC, and Asilia Investments. 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 June 24, 2024, and December 19, 2024, respectively. 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. 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 upon issuance. 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 . 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 March 31, 2026, 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: 13 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). 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. 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 Company valued the warrants, based on a Black-Scholes model, 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. The remaining $ 190,000 of the Initial Warrant expired on October 31, 2025. Tax Benefits Preservation Plan: The Company adopted a Tax Benefits Preservation Plan (the Plan) intended to help protect the availability of certain tax attributes (including net operating loss carryforwards) by deterring acquisitions of the Company’s common stock above a specified ownership threshold. In connection with the adoption of the Plan, the Company declared a dividend distribution of one preferred stock purchase right (a Right) for each outstanding share of common stock to shareholders of record as of February 9, 2024. The dividend had a de minimis value. The Rights are set forth in the Plan, dated as of January 29, 2024, as the same may be amended from time to time between the Company and Equiniti Trust Company, LLC, as Rights Agent. On January 27, 2025, the Company entered into Amendment No. 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 submitted the Extension to its shareholders for ratification at the October 28, 2025 annual shareholders meeting, and the shareholders ratified the Plan. The material terms of the Rights include, among others: (i) the ownership threshold that generally triggers the Rights becoming exercisable (an Acquiring Person) is 4.95 % beneficial ownership, subject to customary exemptions, grandfathering, and Board discretion as set forth in the Rights Agreement; (ii) prior to the Distribution Date (as defined in the Rights Agreement), the Rights trade together with the Company’s common stock and are not exercisable; (iii) upon the Distribution Date, the Rights detach and become exercisable to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an initial purchase price of $ 73.00 , subject to adjustment; (iv) if a person becomes an Acquiring Person, each Right (other than Rights held by the Acquiring Person, which become void) generally entitles its holder to purchase, for the exercise price, a number of shares of the Company’s common stock having a market value of two times the exercise price (a “flip-in” feature), subject to the terms and limitations in the Rights Agreement; (v) upon certain business combination transactions following the occurrence of an Acquiring Person, Rights holders may have the right to purchase common stock of the acquiring company at a discount (a “flip-over” feature), subject to the terms of the Rights Agreement; (vi) the Rights are redeemable by the Board at $ 0.0001 per Right prior to the time a person becomes an Acquiring Person, and the Board may exchange the Rights for shares of common stock (or other consideration) under specified circumstances; and (vii) the Rights expire on January 29, 2028, unless earlier redeemed or exchanged in accordance with the Rights Agreement. The Company evaluated the Rights under applicable U.S. GAAP, including the guidance for freestanding financial instruments indexed to, and potentially settled in, an entity’s own equity. The Company concluded that the declaration and distribution of the Rights did not result in recognition of an asset or liability and did not have an impact on the Company’s consolidated balance sheets as of June 30, 2025 or consolidated statements of operations or cash flows for the three years ended June 30, 2025 because (i) the Rights were issued to existing shareholders as a dividend with no proceeds received, (ii) the Rights were not exercised during the nine months ended March 31, 2026, and (iii) the Rights are contingently exercisable only upon the occurrence of specified events and, based on their terms, are intended to be classified in shareholders’ equity rather than as liabilities. Costs directly attributable to the adoption of the Plan (e.g., external legal, advisory, and filing fees) were recorded in general and administrative expense as incurred, consistent with the nature of the costs. 14 5. INCOME TAXES: A summary of the income tax (expense) benefit and corresponding effective tax rate is as follows: Three Months Ended March 31, Nine Months Ended March 31, 2026 2025 2026 2025 (Dollars in thousands) Income tax (expense) benefit $ ( 158 ) $ 1 $ ( 1,697 ) $ 90 Effective tax rate 17.7 % ( 0.4 ) % 40.0 % 6.2 % The increase in the Company’s effective tax rate for the three and nine months ended March 31, 2026, primarily relates to the change in the Company's valuation allowance position during the year ended June 30, 2025, current period discrete tax expense related to share-based compensation, and the impact of tax credits. The income tax provision for the three and nine months ended March 31, 2026, 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 three and nine months ended March 31, 2026. 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. 6. COMMITMENTS AND CONTINGENCIES: The Company is a plaintiff or defendant in various lawsuits and claims arising out of the normal course of business. Like certain other franchisors, the Company has faced allegations of franchise regulation and agreement violations. Additionally, because the Company may be the tenant under a master lease for a location subleased to a franchisee, the Company has faced allegations of nonpayment of rent and associated charges. Further, similar to other retail employers, the Company has faced, and may continue to face, allegations of purported class-wide consumer and wage and hour violations. Litigation is inherently unpredictable, and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could incur judgments in the future or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period. 7. 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 Condensed Consolidated Balance Sheets to the amount of cash, cash equivalents, and restricted cash reported on the Condensed Consolidated Statements of Cash Flows: March 31, 2026 June 30, 2025 (Dollars in thousands) Cash and cash equivalents $ 22,930 $ 16,959 Restricted cash, included in other current assets (1) 18,026 18,246 Total cash, cash equivalents, and restricted cash $ 40,956 $ 35,205 _______________________________________________________________________________ (1) Restricted cash within other current assets primarily relates to consolidated advertising cooperatives funds, which can only be used to settle obligations of the respective cooperatives, and contractual obligations to collateralize the Company's self-insurance programs. 15 8. LEASES At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and its corporate facilities under operating leases. The original terms range from one to 11 years with many leases renewable for an additional five to 10-year term at the option of the Company. In addition to the obligation to make fixed rental payments for the use of the salons, the Company has variable lease payments that are based on sales levels. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent includes the following: Three Months Ended March 31, Nine Months Ended March 31, 2026 2025 2026 2025 (Dollars in thousands) Office rent (1) $ 672 $ 737 $ 2,105 $ 2,164 Lease termination expense (2) 227 70 432 149 Lease liability benefit (3) ( 54 ) ( 81 ) ( 165 ) ( 209 ) Franchise salon rent 298 313 346 1,264 Company-owned salon rent (4) 2,479 3,019 7,725 3,903 Total $ 3,622 $ 4,058 $ 10,443 $ 7,271 _______________________________________________________________________________ (1) Rental income associated with the sublease of the corporate office space is recorded in other income and was $ 0.3 million for both three month periods ended March 31, 2026, and 2025, and $ 0.9 million for both nine month periods ended March 31, 2026, and 2025. (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. (4) Includes rent related to the salons acquired in the December 2024 Alline acquisition. See Note 13. 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 Condensed Consolidated Statements of Operations. For the three and nine months ended March 31, 2026, and 2025, franchise rental income and franchise rent expense were $ 13.0 million and $ 16.9 million, and $ 47.6 million and $ 58.5 million, respectively. These leases generally have lease terms of approximately five years . 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. All the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The ROU asset is initially and subsequently measured throughout the expected lease term at the carrying amount of the lease liability, plus initial direct costs, less accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable. 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 expected lease term. The weighted average remaining lease term was 4.72 and 4.68 years, and the weighted average discount rate was 6.88 % and 6.45 % for all salon operating leases as of March 31, 2026, and June 30, 2025, respectively. 16 As of March 31, 2026, 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 Remainder of 2026 $ 14,469 $ 1,886 $ 347 $ 16,702 $ ( 14,469 ) $ 2,233 2027 53,895 6,513 1,401 61,809 ( 53,895 ) 7,914 2028 45,598 4,806 1,436 51,840 ( 45,598 ) 6,242 2029 36,097 3,055 1,472 40,624 ( 36,097 ) 4,527 2030 24,836 1,817 1,509 28,162 ( 24,836 ) 3,326 Thereafter 29,162 756 — 29,918 ( 29,162 ) 756 Total future obligations $ 204,057 $ 18,833 $ 6,165 $ 229,055 $ ( 204,057 ) $ 24,998 Less amounts representing interest 29,448 1,974 511 31,933 Present value of lease liability $ 174,609 $ 16,859 $ 5,654 $ 197,122 Less short-term lease liability 45,365 6,008 1,185 52,558 Long-term lease liability $ 129,244 $ 10,851 $ 4,469 $ 144,564 As a result of having assigned our interest in obligations under certain real estate leases directly to our franchisees, the Company is secondarily liable on such lease agreements as guarantor. These leases have varying terms, the latest of which expires in 2035. As of March 31, 2026, the maximum potential amount of future payments the Company could be required to make under these guarantees is approximately $ 4.8 million, and no liability has been recognized in the Consolidated Balance Sheets for these guarantees, as the probability of default is considered remote. 17 9. FINANCING ARRANGEMENTS: The Company's debt consists of the following: Nine Months Ended March 31, 2026 Fiscal Year 2026 Balance at March 31, 2026 Balance at June 30, 2025 (Average cash interest rate %) (Dollars in thousands) Term loan (1) 8.49 % 9.14 % $ 116,435 $ 118,875 Paid-in-kind interest 9,671 5,376 Deferred financing fees (2) ( 9,932 ) ( 12,174 ) Term loan, net 116,174 112,077 Revolving credit facility (1) 8.49 % 9.14 % 1,030 1,030 Fair value of warrants issued to lenders ( 1,880 ) ( 2,314 ) Total debt, net 115,324 110,793 Less: long-term debt, current portion ( 2,550 ) ( 1,100 ) Total long-term debt, net $ 112,774 $ 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. (2) Deferred financing fees, inclusive of $ 4.3 million of Original Issue Discount fees, are amortized on a straight-line basis over the term of the agreement. The Company's credit agreement, as amended, (the 2024 Credit Agreement) includes a $ 120.0 million term loan and a $ 25.0 million revolving credit facility, with a $ 10.0 million minimum liquidity covenant, is secured by the Company's assets, and expires June 24, 2029. The debt refinancing in June of 2024, was 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. In connection with the 2024 Credit Agreement, the Company issued detachable stock warrants to the debt lenders. See Note 4 for additional details. As of March 31, 2026, 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 March 31, 2026, 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 $ 31.9 million and $ 19.0 million, respectively. The Company was in compliance with its covenants and other requirements of the financing arrangements as of March 31, 2026. The interest rate on the 2024 Credit Agreement is based on the secured overnight financing rate (SOFR) plus margin. The margin 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 %. If the Company's leverage ratio is less than 3.75 to 1.00, the margin rate is 8.50 %. In either scenario, the Company has elected the option to pay 4.50 % of the margin as 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 interest rate applicable to any letter of credit is 5.25 % and paid currently in cash. The 2024 Credit Agreement includes scheduled quarterly payments totaling $ 1.1 million in fiscal year 2026 and $ 3.0 million in each of fiscal years 2027, 2028 and 2029, plus a balloon payment at maturity. Additionally, excess cash is swept annually per the terms of the agreement. In the nine months ended March 31, 2026, 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. 18 10. FAIR VALUE MEASUREMENTS: Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). Assets and Liabilities Measured at Fair Value on a Recurring Basis As of March 31, 2026, 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. Upon the acquisition of Alline, the Company recorded the estimated fair value of the contingent consideration liability assumed 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 March 31, 2026, 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 $ 1,000 Less: gain on earn-out liability 1,000 Earn-out liability at March 31, 2026 $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We measure certain assets, including the Company's tangible fixed and other assets, and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined, when applicable, based on valuation techniques using the best information available, and may include quoted market prices, market comparables and discounted cash flow projections. 11. EARNINGS PER SHARE: The Company's basic earnings per share is calculated as net income divided by weighted average common shares outstanding, excluding unvested outstanding stock options (SOs), stock appreciation rights (SARs), restricted stock units (RSUs), and stock-settled performance units (PSUs). The Company's diluted earnings per share is calculated as net income 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. The computation of weighted average shares outstanding, assuming dilution, excluded stock-based awards as detailed below, as they were not dilutive under the treasury stock method. 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, 2026 2025 2026 2025 (Shares in thousands) Denominator for basic EPS - weighted average common shares 2,539 2,499 2,513 2,350 Dilutive shares associated with option plans 325 503 354 — Denominator for diluted EPS - weighted average common shares and dilutive potential common shares 2,864 3,002 2,867 2,350 Options excluded from EPS calculation - anti-dilutive 116 188 127 191 19 12. 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 (CODM) is our President and Chief Executive Officer. Revenue, expenses, and operating income (loss) by segment are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments, assess current performance, and forecast future performance. Our CODM manages our business primarily by reviewing consolidated results by segment on a quarterly basis and using those results along with forecasts and other non-financial information in our annual budgeting process. The Company's CODM does not evaluate reportable segments using assets and capital expenditure information. 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 March 31, 2026 Nine Months Ended March 31, 2026 (Dollars in thousands) (Dollars in thousands) Franchise Company-owned Total Franchise Company-owned Total Total revenue $ 33,306 $ 19,101 $ 52,407 $ 109,982 $ 58,500 $ 168,482 Expenses (1) General and administrative $ 8,626 $ 1,349 $ 28,017 $ 3,573 Rent 894 2,728 2,234 8,209 Other expenses (2) 18,221 — 63,683 — Company-owned salon expense — 13,958 — 42,453 Depreciation and amortization 196 718 610 1,868 Operating income $ 5,369 $ 348 $ 5,717 $ 15,438 $ 2,397 $ 17,835 Unallocated expense, net ( 4,982 ) ( 15,288 ) Total net income $ 735 $ 2,547 _______________________________________________________________________________ (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within the amounts shown. (2) Other 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. 20 Three Months Ended March 31, 2025 Nine Months Ended March 31, 2025 (Dollars in thousands) (Dollars in thousands) Franchise Company-owned Total Franchise Company-owned Total Total revenue $ 38,004 $ 18,953 $ 56,957 $ 126,548 $ 23,188 $ 149,736 Expenses (1) General and administrative $ 9,863 $ 1,372 $ 33,644 $ 2,780 Rent 962 3,096 3,198 4,073 Other expenses (2) 22,069 — 74,858 — Company-owned salon expense — 13,835 — 16,534 Depreciation and amortization 270 469 938 707 Long-lived asset impairment — — 352 — Operating income (loss) $ 4,840 $ 181 $ 5,021 $ 13,558 $ ( 906 ) $ 12,652 Unallocated expenses, net ( 4,771 ) ( 5,610 ) Total net income $ 250 $ 7,042 _______________________________________________________________________________ (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Intersegment expenses are included within the amounts shown. (2) Other 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. 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 Holiday Hair operating in the U.S. are generally within the company-owned salons segment. 21 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: March 31, 2026 June 30, 2025 FRANCHISE SALONS: Supercuts 1,648 1,711 SmartStyle/Cost Cutters in Walmart stores 998 1,049 Portfolio Brands 779 816 Total North American salons 3,425 3,576 Total International salons (1) 72 71 Total franchise salons 3,497 3,647 as a percent of total franchise and company-owned salons 92.8 % 92.5 % COMPANY-OWNED SALONS: Supercuts 96 100 Portfolio Brands 177 194 Total company-owned salons 273 294 as a percent of total franchise and company-owned salons 7.2 % 7.5 % Total franchise and company-owned salons 3,770 3,941 _______________________________________________________________________________ (1) Canadian and Puerto Rican salons are included in the North American salon totals. 13. ACQUISITIONS: On December 19, 2024, the Company transferred consideration to acquire 100 percent of the equity interests of Alline (the Alline acquisition), its largest franchisee, consisting of 314 salons. 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 Statements of Operations 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 using information available as of December 19, 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 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 and nine months ended March 31, 2026. The fair value of total consideration transferred by the Company upon acquisition is $ 22.6 million, as detailed below. 22 Consideration (Dollars in thousands) Cash, net of cash acquired (1) $ 18,621 Equity instruments ( 140,552 of Regis common shares) (2) 3,000 Contingent consideration arrangement (3) 1,000 Fair value of total consideration $ 22,621 _______________________________________________________________________________ (1) Includes cash transferred of $ 20.0 million, net of cash acquired of $ 1.4 million. (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 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 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 March 31, 2026, the Company determined the value of the contingent consideration arrangement is $ 0 . The Company recognized a gain on earn-out liability of $ 1.0 million in a prior quarter which is included in our Condensed Consolidated Statements of Operations for the nine months ended March 31, 2026. 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, as needed, 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. 23 The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date: (Dollars in thousands) Current assets $ 3,630 Property and equipment 7,976 Goodwill (1) 10,252 Intangible assets (2) 3,780 Right of use assets 7,292 Other assets 56 Assumed current liabilities ( 2,352 ) Assumed lease liabilities ( 8,013 ) Fair value of total consideration $ 22,621 _______________________________________________________________________________ (1) 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. Specifically, the goodwill that will be recorded as part of the acquisition of Alline includes the following: a. the expected synergies and other benefits that we believe will result from combining the operations of Alline with the operations of Regis; and b. any intangible assets that do not qualify for separate recognition. Goodwill is not amortized and is deductible for tax purposes. All the goodwill related to the acquisition of Alline is related to our company-owned operating segment. (2) Intangible assets includes $ 2.4 million related to the fair value of reacquired rights and $ 1.4 million related to the fair value of favorable leasehold interests, net. a. 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. b. Upon acquisition, the Company assumed lease agreements with lease payments fixed at a rate below the current market rate. 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 following table provides revenues and operating income from Alline that are included in our Condensed Consolidated Financial Statements: Three Months Ended March 31, Nine Months Ended March 31, 2026 2025 2026 2025 (Dollars in thousands) Total revenues $ 18,552 $ 18,290 $ 56,638 $ 20,993 Operating income 601 786 2,696 1,266 The following table presents pro forma information as if the Alline acquisition had occurred on July 1, 2024: Three Months Ended March 31, 2025 Nine Months Ended March 31, 2025 Total revenues $ 56,957 $ 182,676 Operating income 5,021 15,703 24