What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-09-01 compared with 2025-09-03 · 328 added, 430 removed, 1045 unchanged (42% of the section changed)

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Consolidated Statements of Operations for each of the three years in the period ended June 30, 2026

Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended June 30, 202 5

Consolidated Statements of Comprehensive Income for each of the three years in the period ended June 30, 2026

Consolidated Statements of Shareholders' Equity (Deficit) for each of the three years in the period ended June 30, 2026

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Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Regis Corporation (a Minnesota corporation) and subsidiaries (the “Company”) as of June 30, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity (deficit), and cash flows for each of the three years in the period ended June 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Regis Corporation (a Minnesota corporation) and subsidiaries (the “Company”) as of June 30, 2026 and 2025, the related consolidated statements of operations, comprehensive income, shareholders’ equity (deficit), and cash flows for each of the three years in the period ended June 30, 2026, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

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Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Realizability of deferred tax assets

As described further in Note 1 and 10 to the consolidated financial statements, the Company recognized a change in the deferred tax asset valuation allowance of $116.3 million during the year ended June 30, 2025 primarily related to a partial release of its valuation allowance.

Deferred tax assets are reduced by a valuation allowance, if based on the weight of all available evidence, in management’s judgment it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

During the year ended June 30, 2025, the Company released $116.3 million of its previously recorded valuation allowance.

The Company considered the achievement three years of cumulative income as well as forecasted income to be significant positive evidence.

The Company determined that the positive evidence outweighed the negative evidence and supported a partial release of the valuation allowance.

We identified the release of a portion of the Company’s valuation allowance as a critical audit matter.

The principal consideration for our determination that the partial release of its valuation allowance is a critical audit matter is that auditing management’s assessment of the realizability of the Company’s deferred tax assets involved complex judgments due to the significant assumptions required in measuring the future utilization of deferred tax assets.

Our audit procedures related to the partial release of the valuation allowance included the following, among others.

• We analyzed the significant assumptions used by management, including forecasted revenue and forecasted income to (1) historical results, and (2) current industry trends and evaluated whether economic trends and other factors support the significant assumptions.

• We evaluated management’s historical ability to forecast income.

• We evaluated whether the estimates of forecasted income were consistent with evidence obtained in other areas of the audit.

• With the assistance of professionals with specialized skills and knowledge, we evaluated (1) the application of tax laws in the Company’s scheduling of the release of existing taxable temporary differences and carryforward amounts, and (2) the ability to utilize the deferred tax assets.

Goodwill Quantitative Impairment Assessment – Franchise Reporting Unit

As described further in Note 1 to the consolidated financial statements, the Company’s goodwill balance attributable to their Franchise reporting unit was $173.2 million as of June 30, 2025.

Management performed the Company’s annual quantitative impairment assessment for the Franchise reporting unit as of April 30, 2025, to test goodwill for impairment.

As a result of the assessment performed, the Company determined that the fair value of the Franchise reporting unit was more likely than not greater than the carrying value of the reporting unit as of April 30, 2025.

We identified the goodwill quantitative impairment assessment of the Franchise reporting unit as a critical audit matter.

The principal considerations for our determination that the goodwill quantitative impairment assessment of the Franchise reporting unit is a critical audit matter are that subjective auditor judgment was required to evaluate:

(1) the assumptions used by management engaged professionals with specialized skills and knowledge, including the accuracy of data provided to management’s specialist to determine the fair value;

and (2) the assumptions used by management to calculate the undiscounted cash flows, including assumptions of franchisee store openings and closures.

Our audit procedures related to the annual goodwill quantitative impairment assessment of the Franchise reporting unit included the following, among others.

• We evaluated management’s historical ability to forecast income.

• We evaluated whether the estimates of forecasted income were consistent with evidence obtained in other areas of the audit.

• With the assistance of professionals with specialized skill and knowledge, we tested management’s process for calculating the goodwill impairment assessment, including the reasonableness of the valuation methodology and certain significant assumptions used in the calculations including the discount rate applied to the estimated future cash flows.

We determined there are no critical audit matters.

/s/ GRANT THORNTON LLP

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Deferred tax asset (Note 10)

103,402 102,504

Other assets 14,019 16,757

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Accumulated other comprehensive income 7,617 8,286

Retained earnings (deficit) 101,965 ( 21,571 )

Retained earnings 108,908 101,965

Total shareholders' equity 193,812 185,616

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Cost of product sales to franchisees — — 436

Inventory reserve — — 1,228

General and administrative 42,045 46,764 45,387

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Gain on extinguishment of long-term debt, net — — 94,611

Gain on earn-out liability 1,000 — —

Other, net 1,096 1,849 ( 172 )

Income (loss) from operations before income taxes 1,536 89,936 ( 11,998 )

Income from operations before income taxes 5,871 1,536 89,936

Income tax benefit (expense) 1,072 115,496 ( 869 )

Income (loss) from continuing operations 117,032 89,067 ( 11,343 )

Income from continuing operations 6,943 117,032 89,067

Income from discontinued operations, net of income taxes (Note 3) — 6,504 1,993

Net income (loss) $ 123,536 $ 91,060 $ ( 7,385 )

Net income (loss) per share:

Income (loss) from continuing operations $ 49.51 $ 38.08 $ ( 4.88 )

Net income $ 6,943 $ 123,536 $ 91,060

Net income per share:

Income from continuing operations $ 2.76 $ 49.51 $ 38.08

Income from discontinued operations — 2.75 0.85

Net income (loss) per share, basic (1) $ 52.26 $ 38.93 $ ( 3.18 )

Income (loss) from continuing operations $ 43.67 $ 37.50 $ ( 4.88 )

Net income per share, basic $ 2.76 $ 52.26 $ 38.93

Income from continuing operations $ 2.41 $ 43.67 $ 37.50

Income from discontinued operations — 2.43 0.84

Net income (loss) per share, diluted (1) $ 46.10 $ 38.34 $ ( 3.18 )

Net income per share, diluted $ 2.41 $ 46.10 $ 38.34

Weighted average common and common equivalent shares outstanding:

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_____________________________________________________________________________

(1) 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 Consolidated Financial Statements.

REGIS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

2026 2025 2024

Net income (loss) $ 123,536 $ 91,060 $ ( 7,385 )

Net income $ 6,943 $ 123,536 $ 91,060

Other comprehensive loss, net of tax:

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Other comprehensive loss ( 669 ) ( 298 ) ( 439 )

Comprehensive income (loss) $ 123,238 $ 90,621 $ ( 7,817 )

Comprehensive income $ 6,274 $ 123,238 $ 90,621

_______________________________________________________________________________

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Comprehensive

Income Retained Earnings (Deficit) Total

Income (Loss) Retained Earnings (Deficit) Total

Shares Amount

Balance, June 30, 2023 2,277,828 $ 114 $ 66,764 $ 9,023 $ ( 112,631 ) $ ( 36,730 )

Net loss — — — — ( 7,385 ) ( 7,385 )

Net income — — — — 91,060 91,060

Foreign currency translation (Note 1) — — — ( 321 ) — ( 321 )

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Net restricted stock activity 2,120 — ( 18 ) — — ( 18 )

Stock warrants issued in connection with debt (2) — — 1,292 — — 1,292

Balance, June 30, 2024

2,279,948 $ 114 $ 69,660 $ 8,584 $ ( 21,571 ) $ 56,787

Net income — — — — 123,536 123,536

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Net restricted stock activity 15,481 1 ( 75 ) — — ( 74 )

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

Stock warrants issued in connection with debt (2) — — 1,252 — — 1,252

Balance, June 30, 2025

2,435,981 $ 122 $ 75,243 $ 8,286 $ 101,965 $ 185,616

Net income — — — — 6,943 6,943

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— — — ( 556 ) — ( 556 )

Exercise of stock options

24,564 1 606 — — 607

Stock-based compensation — — 1,175 — — 1,175

Net restricted stock activity 15,481 1 ( 75 ) — — ( 74 )

Recognition of deferred compensation (Note 11)

— — — ( 113 ) — ( 113 )

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

Stock warrants issued in connection with debt (2) — — 1,252 — — 1,252

Net restricted stock activity 25,666 1 ( 160 ) — — ( 159 )

Common stock issued in connection with warrant exercise

12,567 1 298 — — 299

Balance, June 30, 2026 2,498,778 $ 125 $ 77,162 $ 7,617 $ 108,908 $ 193,812

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Cash flows from operating activities:

Net income (loss) $ 123,536 $ 91,060 $ ( 7,385 )

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

Net income $ 6,943 $ 123,536 $ 91,060

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

Gain from sale of OSP (Note 3) — ( 8,396 ) ( 2,000 )

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Deferred income taxes ( 1,051 ) ( 113,891 ) 519

Inventory reserve — — 1,228

Non-cash interest 5,726 5,299 3,418

Gain on extinguishment of long-term debt, net — — ( 94,611 )

Gain on earn-out liability

( 1,000 ) — —

Stock-based compensation 849 1,940 1,558

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Capital expenditures ( 1,973 ) ( 1,295 ) ( 376 )

Net proceeds from sale of OSP 8,463 2,000 4,500

Business acquisitions, net of cash acquired and certain obligations assumed ( 18,621 ) — —

Asset acquisitions, net of cash acquired and certain obligations assumed

— ( 18,621 ) —

Proceeds from sale of OSP, net of fees

— 8,463 2,000

Net cash (used in) provided by investing activities:

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Cash flows from financing activities:

Proceeds from issuance of long-term debt 15,000 105,000 —

Repayments of long-term debt ( 1,125 ) ( 96,499 ) ( 11,083 )

Borrowings on revolving credit facility — 4,326 14,238

Repayments of revolving credit facility — ( 13,534 ) —

Repayments of long-term debt ( 2,740 ) ( 1,125 ) ( 96,499 )

Debt refinancing fees ( 262 ) ( 1,003 ) ( 14,360 )

Proceeds from issuance of common stock in connection with warrant exercise

Proceeds from issuance of common stock for options exercised

Proceeds from issuance of long-term debt — 15,000 105,000

Taxes paid for shares withheld ( 161 ) ( 75 ) ( 16 )

Net cash provided by (used in) financing activities:

Net cash (used in) provided by financing activities:

( 2,257 ) 3,589 8,363

Effect of exchange rate changes on cash and cash equivalents ( 83 ) 13 ( 31 )

Increase (decrease) in cash, cash equivalents and restricted cash 5,893 7,916 ( 6,068 )

Increase in cash, cash equivalents, and restricted cash

8,790 5,893 7,916

Cash, cash equivalents, and restricted cash:

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Franchise salons in operation decreased from 3,647 at June 30, 2025, to 3,448 at June 30, 2026.

Company-owned salons in operation increased from 17 at June 30, 2024, to 294 at June 30, 2025, primarily due to the Company's strategic acquisition of Alline Salon Group as described below.

See Note 15 and Note 16 to the Consolidated Financial Statements for information regarding our Segments and Acquisitions, respectively.

Company-owned salons in operation decreased from 294 at June 30, 2025, to 264 at June 30, 2026.

See Note 15 to the Consolidated Financial Statements for information regarding our Segments.

Salons are located in leased space in strip center locations, malls, or Walmart stores.

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Refer to Note 16 to the Consolidated Financial Statements for additional information regarding the acquisition.

The Company’s financial results for the fiscal year ended June 30, 2025, include the results of Alline subsequent to the December 19, 2024, acquisition date.

The Company’s financial results for the fiscal years ended June 30, 2026, and 2025, include the results of Alline subsequent to the December 19, 2024, acquisition date.

Acquisition-Related Costs:

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These costs were recorded within general and administrative expenses in the Consolidated Statements of Operations for the year ended June 30, 2025.

COVID-19 Impact:

The global coronavirus pandemic (COVID-19) had an adverse impact on operations.

As a result, the Company received funds in prior years, including a grant from the state of North Carolina of $ 1.1 million in fiscal year 2023, which was recorded within Other, net on the Consolidated Statements of Operations.

No funds were received in fiscal years 2025, or 2024.

Consolidation:

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Such entities, known as variable interest entities (VIE), are required to be consolidated by its primary beneficiary.

The Company evaluates whether it is the primary beneficiary for each VIE using a qualitative assessment that considers the VIE's purpose and design, the involvement of each of the interest holders and the risk and benefits of the VIE.

As of June 30, 2026, the Company has no VIE's where the Company is the primary beneficiary.

The Company previously held an investment in Empire Education Group, Inc.

On May 2, 2024, the Company sold its interest in EEG to the other shareholder.

The sale did not have a significant impact on the Company's operations or financial position.

When the Company held a majority ownership interest in EEG it was a co-signatory to the Title IV program participation agreements of the EEG schools with the Department of Education.

As a co-signatory to the Title IV program participation agreements, the Department of Education could hold the Company responsible for EEG's Title IV program liabilities.

In connection with the sale, Regis is no longer a co-signatory to the Title IV program participation agreements of the EEG schools with the Department of Education.

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 6 to the Consolidated Financial Statements for further discussion of such obligations guaranteed.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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Inventories are stated at the lower of cost or net realizable value, with cost determined on a weighted average cost basis.

The Company has inventory valuation reserves for excess and obsolete inventories, or other factors that may render inventories unmarketable at their historical costs.

In fiscal year 2021, the Company announced it would transition away from its wholesale product distribution model in favor of a third-party distribution model.

As a result, the Company exited its two distribution centers in fiscal year 2022 and previously stored inventory at a third-party facility through the second quarter of fiscal year 2024.

To facilitate the exit of the distribution centers, the Company sold inventory at discounts.

The inventory valuation reserve as of June 30, 2025, and 2024 was $ 0.0 million and $ 0.3 million, respectively.

During fiscal year 2023, the Company recorded a total inventory reserve charge of $ 1.2 million, which was recorded in inventory reserve in the Consolidated Statements of Operations.

Property and Equipment:

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All other expenditures for renewals and betterments are capitalized.

The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income (loss).

The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in operating income.

Fully depreciated or amortized assets remain in the accounts until retired from service.

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The Company leases its company-owned salons and corporate facilities under operating leases.

The original terms of the salon leases range from one to 11 years with many leases renewable for an additional five to 10-year term at the option of the Company.

The original terms of the salon leases range from one to ten years with many leases renewable for an additional five to ten-year term or terms at the option of the Company.

In addition to the obligation to make fixed rental payments for the use of the salons, the Company also has variable lease payments that are based on sales levels.

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

Certain leases provide for contingent rents that are determined as a percentage of revenues in excess of specified levels.

Certain company-owned salon leases provide for contingent rents that are determined as a percentage of revenues in excess of specified levels.

The Company records a contingent rent liability in accrued expenses on the Consolidated Balance Sheets, along with the corresponding rent expense in the Consolidated Statements of Operations, when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable.

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The Company has identified its asset groups at the individual salon level as this represents the lowest level that identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.

Poor salon performance in fiscal years 2025, 2024, and 2023 resulted in ASC 360-10-35-21 triggering events.

As a result, management assessed underperforming salon asset groups, which included the related ROU assets, for impairment in accordance with ASC 360.

Management assesses underperforming salon asset groups, which include the related ROU assets, for impairment in accordance with ASC 360.

The Company assesses impairment of long-lived salon assets and ROU assets at the individual salon level, as this is the lowest level for which identifiable cash flows are largely independent of other groups of assets and liabilities, when events or changes in circumstances indicate the carrying value of the assets or the asset grouping may not be recoverable.

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The fair value of the ROU asset is estimated by determining what a market participant would pay over the life of the primary asset in the group, discounted back to June 30, 2026.

During fiscal years 2025, 2024, and 2023, the Company recognized long-lived asset impairment charges of $ 0.4 million, $ 0.8 million, and $ 0.1 million, respectively, related to ROU assets on the Consolidated Statements of Operations.

During fiscal years 2026, 2025, and 2024, the Company recognized long-lived asset impairment charges of $ 0.1 million, $ 0.4 million, and $ 0.8 million, respectively, on the Consolidated Statements of Operations.

The impairment loss for each salon asset group that was recognized was allocated among the long-lived assets of the group on a pro-rata basis using their relative carrying amounts.

Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including the ROU assets included in the salon asset groups.

Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including the assets included in the salon asset groups.

Assessing the long-lived assets for impairment requires management to make assumptions and to apply judgment which can be affected by economic conditions and other factors that can be difficult to predict.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As further described in Note 16, the acquisition of Alline resulted in the recognition of approximately $ 10.3 million in goodwill, which was assigned to the company-owned operating segment.

As of June 30, 2025, and 2024, the franchise reporting unit had goodwill of $ 173.2 million and $ 173.1 million, respectively, and the company-owned reporting unit had $ 10.3 million and $ 0.0 million goodwill as of June 30, 2025, and 2024, respectively.

As of June 30, 2026, and 2025, the franchise reporting unit had goodwill of $ 172.4 million and $ 173.1 million, respectively, and the company-owned reporting unit had $ 10.3 million of goodwill as of June 30, 2026, and 2025.

See Note 5 to the Consolidated Financial Statements for changes to the goodwill balance.

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However, if the reporting unit's fair value is less than the carrying value, an impairment charge is recorded for the difference between the fair value and carrying value of the reporting unit.

In applying the goodwill impairment assessment, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting units was less than its carrying value (Step 0).

Qualitative factors could include, but are not limited to, economic, market and industry conditions, cost factors, and overall financial performance of the reporting unit.

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The following is a description of the goodwill impairment assessments for each of the fiscal years:

The Company engaged a third-party valuation specialist to perform its annual impairment assessment as of April 30.

Fiscal 2026 and Fiscal 2025

The Company engaged a third-party valuation specialist to perform its annual impairment assessment as of April 30 of each respective fiscal year.

For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the reporting units.

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The Company compared the carrying value of the reporting units, including goodwill, to their estimated fair values.

The results of this assessment indicated that the estimated fair values of the Company's franchise and company-owned reporting units exceeded the carrying values, resulting in no goodwill impairment charge.

The company-owned reporting unit had substantial headroom and the franchise reporting unit had headroom of approximately 5 %.

The fair value of the franchise reporting unit was determined based on a discounted cash flow analysis and comparable market multiples.

The assumptions used in determining fair value were the number of salons in operation, projected salon generated royalties, projected salon closures, projected salon development, weighted average cost of capital, general and administrative expenses and utilization of net operating loss benefits.

We selected the assumptions by considering our historical financial performance and trends, historical same store sales, and estimated same store sales.

The preparation of our fair value estimate includes uncertain factors and requires significant judgments and estimates which are subject to change.

A 100 basis point increase in our weighted average cost of capital within the franchise reporting unit would result in a reduction in headroom to approximately 3 %.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other uncertain factors or events exist which may result in a future triggering event and require us to perform an interim impairment analysis with respect to the carrying value of goodwill for the franchise reporting unit prior to our annual assessment.

These internal and external factors include but are not limited to the following:

• Changes in the company-owned and franchise salon strategy,

• Future market earnings multiples deterioration,

• Our financial performance falls short of our projections due to internal operating factors,

• Economic recession,

• Reduced salon traffic,

• Deterioration of industry trends,

• Increased competition,

• Inability to reduce general and administrative expenses, or

• Other factors causing our cash flow to deteriorate.

If the triggering event analysis indicates the fair value of the franchise reporting unit has potentially fallen below the 5 % headroom, we may be required to perform an updated impairment assessment which may result in a non-cash impairment charge to reduce the carrying value of goodwill.

As of June 30, 2025, the Company's estimated fair value, as determined by the sum of our reporting units' fair values, fell within a reasonable range of our market capitalization, which included an assumed control premium of 23.7 %.

Assessing goodwill for impairment requires management to make assumptions and to apply judgment, including forecasting future sales and expenses, and selecting appropriate discount rates, which can be affected by economic conditions and other factors that can be difficult to predict.

The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses of goodwill.

However, if actual results are not consistent with the estimates and assumptions used in the calculations, or if there are significant changes to the Company's planned strategy for franchise salons, the Company may be exposed to future impairment losses that could be material.

The Company determined a triggering event occurred related to a decrease in the Company's stock price, resulting in a quantitative impairment test performed over goodwill.

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As a result of the impairment testing, the franchise reporting unit was determined to have a fair value in excess of its carrying value, resulting in no goodwill impairment charge.

The Company performed its annual impairment assessment as of April 30.

For the goodwill impairment analysis, management utilized a combination of both a discounted cash flows approach and market approach to evaluate the franchise reporting unit.

The discounted cash flows model reflects management's assumptions regarding revenue growth rates, economic and market trends, cost structure, and other expectations about the anticipated short-term and long-term operating results.

The results of this assessment indicated that the estimated fair value of the Company's franchise reporting unit exceeded the carrying value.

During fiscal year 2023, the Company did not experience any triggering events that required an interim goodwill analysis.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company performed its annual impairment assessment as of April 30.

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The discount rate of 17.0 % was also a key assumption utilized in the discounted cash flows.

The results of this assessment indicated that the estimated fair value of the Company's franchise reporting unit exceeded the carrying value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reverse Stock Split:

On November 29, 2023, the Company effected a one-for-20 reverse stock split of its outstanding common stock, par value $ 0.05 per share.

As a result of the reverse stock split, every 20 shares of common stock issued and outstanding was converted into one share of common stock.

The reverse stock split affected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s equity.

No fractional shares were issued in connection with the reverse stock split.

Shareholders who would otherwise be entitled to a fractional share of common stock were instead entitled to receive a proportional cash payment.

All common share and per share amounts presented in the consolidated financial statements and accompanying notes have been retroactively adjusted to reflect the reverse stock split.

The reverse stock split affected all issued and outstanding shares of the Company’s common stock, as well as the number of shares of common stock available for issuance under the Company’s outstanding stock options and stock unit awards.

The reverse stock split reduced the number of shares of common stock issuable upon the exercise of stock options outstanding and the vesting of stock unit awards outstanding immediately prior to the reverse stock split and correspondingly increased the respective exercise prices or other price dependent terms.

Tax Benefits Preservation Plan:

On January 28, 2024, the Board authorized and declared a dividend of one preferred stock purchase right (a Right) for each outstanding share of common stock.

The dividend was payable on February 9, 2024 (the Record Date) to the holders of record of shares of common stock as of the close of business on the Record Date.

The description and terms of the Rights are set forth in a Tax Benefits Preservation Plan (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 will submit the Extension to its shareholders for ratification at the next annual or special meeting of its shareholders.

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.

Self-Insurance Accruals:

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As of June 30, 2025, the Company had $ 1.2 million and $ 3.5 million recorded in current liabilities and non-current liabilities, respectively, related to the Company's workers' compensation and general liability self-insurance accruals.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue Recognition and Deferred Revenue:

Franchise revenues primarily include royalties, fees, product sales to franchisees, and advertising fund fees.

Franchise revenues primarily include royalties, fees, and advertising fund fees.

Royalties and advertising fund revenues represent sales-based royalties that are recognized as revenue in the period in which the sales occur.

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See Note 2 to the Consolidated Financial Statements.

Product sales by the Company to its franchisees are recorded at the time product is delivered to franchise locations.

Company-owned salon revenues are recognized at the time when the services are provided, or the guest receives and pays for merchandise.

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Cost of product sales to franchisees - Direct cost of inventory and freight and other costs of sales.

Advertising fund expense - Expenses related to sales-based advertising fund contributions received from franchisees.

Franchise rental expense - Expense incurred as a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees.

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Excluded from this caption are general and administrative expense, rent and depreciation and amortization related to company-owned salons.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Consideration Received from Vendors:

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A quarterly analysis is performed in order to ensure the estimated rebate accrued is reasonable and any necessary adjustments are recorded.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Advertising and Advertising Funds:

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_____________________________________________________________________________

(1) Included in general and administrative in the Consolidated Statements of Operations.

(1) Included in company-owned salon expense in the Consolidated Statements of Operations.

(2) Corporate funded advertising costs for fiscal year 2024 relates to a credit received.

The Company records all advertising funds as assets and liabilities within the Company's Consolidated Balance Sheets.

As of June 30, 2025, approximately $ 17.4 million, and as of June 30, 2024, approximately $ 8.8 million, representing the advertising funds' assets and liabilities, were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheets.

Approximately $ 16.5 million and $ 17.4 million representing the advertising funds' assets and liabilities, were recorded within total assets and total liabilities in the Company's Consolidated Balance Sheets as of June 30, 2026, and 2025, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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Interest Expense:

During fiscal years 2023 and 2024, the Company’s credit agreement had variable interest rates over the term of the debt.

During fiscal year 2024, the Company’s credit agreement had variable interest rates over the term of the debt.

Accordingly, interest expense was recorded using a weighted average effective interest rate by estimating total future cash flows related to the debt to determine interest expense.

2 unchanged sentences

Management applied the weighted average rate to the debt balance to record interest expense for the period.

Due to the interest rate increases over the debt term, the Company recorded more interest expense than interest paid in cash in fiscal years 2023 and 2024.

Due to the interest rate increases over the debt term, the Company recorded more interest expense than interest paid in cash in fiscal year 2024.

On June 24, 2024, Regis entered into a new credit agreement with a variable interest rate based on SOFR plus margin which was amended on December 19, 2024.

1 unchanged sentence

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

In either scenario, 4.5 % 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.

In either scenario, the Company has elected the option to pay 4.5 % 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 interest rate applicable to any letter of credit is 5.25 % and paid currently in cash.

13 unchanged sentences

The Company has a valuation allowance on its deferred tax assets of $ 57.7 million and $ 60.5 million at June 30, 2026, and 2025, respectively.

The significant change to the valuation allowance which occurred during fiscal year 2026 is as follows:

• As of June 30, 2026, we determined that an additional $ 3.2 million of our U.S.

tax credit carryforwards will be realizable.

Therefore, we released the associated valuation allowance and recorded a corresponding tax benefit.

Significant changes to the valuation allowance which occurred during fiscal year 2025 are as follows:

• We have determined that it is more likely than not that the majority of our U.S.

federal and state deferred tax assets will be realizable as of June 30, 2025.

In determining the need, or continued need, for a valuation allowance, we considered the weighting of the positive and negative evidence, which includes, among other things, recent historical income and losses, future growth, forecasted earnings and future taxable income.

As of June 30, 2025, we achieved three years of cumulative U.S.

income when considering pre-tax income adjusted for permanent differences and other comprehensive losses.

Based on all available positive and negative evidence, having demonstrated sustained profitability, which is objective and verifiable, and taking into account anticipated future earnings, we concluded that it is more likely than not that the majority of our U.S.

• As of June 30, 2025, we determined that it is more likely than not that the majority of our U.S.

federal and state deferred tax assets will be realizable.

1 unchanged sentence

federal and state deferred tax assets.

A valuation allowance will remain on certain US tax credit carryforwards and state deferred tax assets in which we have concluded that it is more likely than not that they will expire unused.

• We have determined that it is more likely than not that a portion of our Canadian deferred tax assets will be realizable as of June 30, 2025, and released $ 6.1 million of our Canadian valuation allowance.

A valuation allowance remains on certain US tax credit carryforwards and state deferred tax assets in which we have concluded that it is more likely than not that they will expire unused.

• As of June 30, 2025, we determined that it is more likely than not that a portion of our Canadian deferred tax assets will be realizable, and released $ 6.1 million of our Canadian valuation allowance.

The Company reserves for unrecognized tax benefits, interest and penalties related to anticipated tax audit positions in the U.S.

6 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net Income (Loss) 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 awards.

Net Income 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 awards.

The Company's dilutive earnings per share is calculated as net income divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's stock option plan and long-term incentive plan and dilutive securities, including warrants issued in connection with the Company's credit agreement.

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

Comprehensive Income (Loss):

Components of comprehensive income (loss) include net income (loss), foreign currency translation adjustments and recognition of deferred compensation, net of tax within shareholders' equity (deficit).

Comprehensive Income:

Components of comprehensive income include net income, foreign currency translation adjustments and recognition of deferred compensation, net of tax within shareholders' equity.

Foreign Currency Translation:

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Assets and liabilities of these subsidiaries are translated at the exchange rates in effect at each Consolidated Balance Sheet date.

Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity (deficit).

Translation adjustments arising from the use of differing exchange rates from period to period are included in accumulated other comprehensive income within shareholders' equity.

Consolidated Statements of Operations accounts are translated at the average rates of exchange prevailing during the year.

During fiscal years 2025, 2024, and 2023, the Company recorded foreign currency losses of $ 0.1 million, $ 0.5 million, and $ 0.3 million in income (loss) from continuing operations, respectively, in the Consolidated Financial Statements.

During fiscal years 2026, 2025, and 2024, the Company recorded foreign currency losses of $ 0.6 million, $ 0.1 million, and $ 0.5 million in income from continuing operations, respectively, in the Consolidated Financial Statements.

Accounting Standards Recently Adopted by the Company:

On June 30, 2025 the Company adopted Accounting Standards Update (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.

On June 30, 2026, the Company adopted Accounting Standards Update (ASU) 2023-09, “Income Taxes (Topic 740):

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

The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial statements.

See Note 10 to the Consolidated Financial Statements for required disclosures.

On June 30, 2026, the Company also adopted 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 adoption of ASU 2025-05 did not have a material impact on its financial statements and disclosures.

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 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 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.

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.

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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 .

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.

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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 24-month basis.

In the fourth quarter of fiscal year 2024, the Company revised its estimate related to the gift card breakage and recognized $ 1.3 million of non-cash gift card revenue.

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

1 unchanged sentence

2026 June 30,

2025 June 30,

2024 Balance Sheet Classification

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

10 unchanged sentences

_____________________________________________________________________________

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

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

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

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 Consolidated Statements of Operations.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in thousands)

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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.

During the fiscal year ended June 30, 2026, the Company issued gift cards totaling $ 0.2 million that remained unredeemed as of period end, and recognized $ 0.2 million of revenue from the gift card liability outstanding at the beginning of the fiscal year.

Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement but are evaluated for immediate revenue recognition when a salon is acquired by Regis or closed.

Franchise fee revenue for fiscal years 2026, 2025, and 2024 was $ 4.0 million, $ 6.8 million, and $ 6.5 million, respectively.

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

Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of June 30, 2026, is as follows (Dollars in thousands):

Thereafter 879

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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 $ 13.0 million in proceeds in June 2022 and received an additional $ 5.0 million in proceeds in fiscal year 2023, offset by a $ 0.5 million transaction fee.

In fiscal year 2024, the Company received $ 2.0 million of proceeds that had been previously held back for general indemnity provisions.

In fiscal year 2025, the Company received additional proceeds of $ 8.5 million related to the number of salons migrating to Soham's Zenoti product.

Cash (used in) provided by investing activities for the years ended June 30, 2025, 2024, and 2023, includes $ 8.5 million, $ 2.0 million, and $ 4.5 million respectively, of cash from discontinued operations.

In fiscal year 2025, the Company received additional proceeds of $ 8.5 million related to the number of salons that migrated to Soham's Zenoti product.

Cash (used in) provided by investing activities for the years ended June 30, 2025, and 2024, includes $ 8.5 million, and $ 2.0 million respectively, of cash from discontinued operations.

The Zenoti migration was successfully completed in fiscal year 2025, and therefore no income from discontinued operations was recorded in fiscal year 2026.

The following summarizes the results of discontinued operations for the periods presented:

2025 2024 2023

(Dollars in thousands)

Discontinued operations:

Fees $ — $ — $ ( 226 )

General and administrative — — ( 27 )

Rent — — ( 351 )

Gain from sale of OSP $ 8,396 $ 1,993

5 unchanged sentences

The tax expense in fiscal year 2025 is due to a GAAP and tax difference in timing of the gain recognition and does not reflect a current or cash tax liability.

There was no tax impact in fiscal years 2024, or 2023, due to a valuation allowance.

There was no tax impact in fiscal year 2024, due to a valuation allowance.

The following summarizes the gain from the sale of OSP for the periods presented:

2025 2024 2023

(Dollars in thousands)

Cash proceeds $ 8,463 $ 2,000

Software write-off (1) — — ( 64 )

Hardware write-down (2) — — ( 367 )

Other, net, including professional fees ( 67 ) ( 7 )

Gain from sale of OSP $ 8,396 $ 1,993

_______________________________________________________________________________

(1) Write-off of internally developed capitalized software.

(2) Prior to the sale, hardware used to run OSP was sold to franchisees.

As a result of the sale, the Company wrote down the value of the hardware to its net realizable value and the charge is included in the gain on the sale of OSP.

The Company exited its office space in Fremont, California, but was liable for lease payments through September 2024.

The related liability is included in accrued expenses as of June 30, 2024, in the Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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Other non-current liabilities:

Deferred income taxes $ — $ 11,402

Insurance $ 2,842 $ 3,450

11 unchanged sentences

Franchise agreements 20 7,187 ( 6,826 ) 361 20 7,402 ( 6,910 ) 492

Lease intangibles (3) 8 1,380 ( 93 ) 1,287 N/A — — —

Reacquired rights (3) 4 2,400 — 2,400 N/A — — —

Lease intangibles (3) 8 1,380 ( 251 ) 1,129 8 1,380 ( 93 ) 1,287

Reacquired rights (3) 4 2,400 ( 600 ) 1,800 4 2,400 — 2,400

Other 20 276 ( 256 ) 20 20 280 ( 251 ) 29

16 unchanged sentences

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

_______________________________________________________________________________

(1) The Company also received a $ 1.1 million COVID-19 relief grant from the State of North Carolina in fiscal year 2023.

The grant is included in Other, net on the Consolidated Statements of Operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7 unchanged sentences

_______________________________________________________________________________

(1) The change in the gross carrying value of goodwill relates to the $ 10.3 million of goodwill obtained through the Alline Acquisition (Note 16) and foreign currency translation adjustments.

(1) The change in the gross carrying value of goodwill relates to foreign currency translation adjustments.

The table below contains details related to the Company's goodwill:

8 unchanged sentences

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 also has variable lease payments that are based on sales levels.

The original terms range from one to ten years with many leases renewable for an additional five to ten-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.

9 unchanged sentences

_______________________________________________________________________________

(1) Rental income associated with the sublease of corporate office space is recorded in other income and was $ 1.2 million and $ 0.2 million for the years ended June 30, 2025, and 2024, respectively.

(1) Rental income associated with the sublease of the corporate office space is recorded in other income and was $ 1.3 million and $ 1.2 million for the years ended June 30, 2026, and 2025, respectively.

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

1 unchanged sentence

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 Alline salons acquired in December 2024.

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

See Note 16 to the Consolidated Financial Statements.

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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 any accrued lease payments and unamortized lease incentives received, if any.

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.

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 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 (in thousands):

As of June 30, 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 Commitments Sublease Income to be Received from Franchisees Net Rent Commitments

18 unchanged sentences

Other than leases with Walmart, franchisees pay landlords directly.

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 June 30, 2026, the maximum potential amount of future payments the Company could be required to make under these guarantees is approximately $ 4.6 million, and no liability has been recognized in the Consolidated Balance Sheets for these guarantees, as the probability of default is considered remote.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7 unchanged sentences

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 Consolidated Balance Sheets within other noncurrent liabilities, totaling $ 1.0 million at June 30, 2025.

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

The estimated fair value of the contingent consideration liability is included in the Consolidated Balance Sheets within other noncurrent liabilities, totaling zero dollars and $ 1.0 million at June 30, 2026, and 2025, respectively.

The earn-out liability is adjusted at fair value quarterly until settled utilizing the Monte Carlo simulation, which is a Level 3 input, and changes in fair value are reported in our Consolidated Statements of Operations.

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

1 unchanged sentence

Earn-out liability at June 30, 2025

Addition for acquisition 1,000

gain on earn-out liability ( 1,000 )

Earn-out liability at June 30, 2026

The following provides information regarding fair value measurements for our remaining contingent earn-out liability as of June 30, 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 $ — $ — $ 1,000 $ 1,000

Total $ — $ — $ 1,000 $ 1,000

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

9 unchanged sentences

FINANCING ARRANGEMENTS

The Company's financing arrangements consist of the following:

The Company's debt consists of the following:

Twelve months ended June 30,

13 unchanged sentences

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 is set to expire on 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.

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).

(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 related 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 is set to expire on 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.

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 14 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 June 30, 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 June 30, 2025, total available liquidity and available credit under the $ 25.0 million revolving credit facility, as defined by the 2024 Credit Agreement Amendment, were $ 25.9 million and $ 19.0 million, respectively.

As of June 30, 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 $ 35.0 million and $ 19.0 million, respectively.

The Company was in compliance with its covenants and other requirements of the financing arrangements as of June 30, 2026.

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

The interest rate on the 2024 Credit Agreement is based on 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 new term loan and revolving credit facility is 9.00 %.

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, 4.5 % 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 interest rate applicable to any letter of credit is 5.25 % and paid currently in cash.

The previous credit agreement utilized an interest rate margin that was subject to annual increases.

The margin applicable to term SOFR loans was 3.875 % through March 27, 2023.

Effective March 27, 2023, the margin increased to 6.25 %, of which 4.25 % was paid currently in cash and 2.00 % was PIK interest (added to the principal balance and thereafter accruing interest).

Effective March 27, 2024, the margin increased to 7.25 %, of which 4.25 % was paid currently in cash and 3.00 % was PIK interest.

The margin previously applicable to base rate loans will be 100 basis points ( 1.00 %) less than the margin applicable to term SOFR loans.

Interest expense is recorded based on a weighted average effective interest rate method.

The significant assumptions used in the weighted average estimate are the future SOFR rates and debt balance, as well as the length of time the debt will be outstanding.

Due to the interest rate increasing over the debt term, the Company recorded more interest expense than interest paid in cash in fiscal years 2024 and 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 and there is a balloon payment required upon maturity of the agreement in 2029.

The 2024 Credit Agreement includes scheduled payments totaling $ 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 fiscal year ended June 30, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11 unchanged sentences

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 large retail employers, the Company has faced, and may continue to face, allegations of purported class-wide consumer and wage and hour violations.

Further, similar to other large retail employers, the Company has faced, and may continue to face, allegations of purported patent, consumer, and wage and hour violations, some of which involve class actions.

Legal costs are expensed as incurred.

The company recorded the following charges related to litigation and settlements:

2025 2024 2023

(Dollars in thousands)

Litigation expense $ 32 $ 192 $ 978

Fees related to settlements of claims $ 27 $ 256 $ 1,464

Litigation is inherently unpredictable, and the outcome of these matters cannot presently be determined.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of income (loss) from continuing operations before income taxes are as follows:

The components of income from continuing operations before income taxes are as follows:

2026 2025 2024

4 unchanged sentences

$ 5,871 $ 1,536 $ 89,936

The (benefit) provision for income taxes consists of:

2025 2024 2023

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which expands income tax disclosure requirements, primarily related to the effective tax rate reconciliation and income taxes paid.

We adopted the standard prospectively in fiscal year 2026.

The (benefit) provision for income taxes for the fiscal year ended 2026 differs from the amount of income tax determined by applying the applicable U.S.

statutory rate to income from continuing operations before income taxes, as a result of the following:

Tax Rate Reconciliation Amount Percentage

(Dollars in thousands)

$ 252 $ 427 $ ( 219 )

International — ( 77 ) ( 428 )

Deferred (1):

( 109,886 ) 531 ( 270 )

International ( 5,862 ) ( 12 ) 262

$ ( 115,496 ) $ 869 $ ( 655 )

_______________________________________________________________________________

(1) The deferred income tax benefit in fiscal year 2025 is primarily due to the release of a prior year valuation allowance in the U.S.

of $ 110.2 million and Canada of $ 6.1 million.

The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable U.S.

statutory rate to income (loss) from continuing operations before income taxes, as a result of the following:

federal statutory rate $ 1,233 21.0 %

State income taxes, net of federal income tax benefit (1) ( 79 ) ( 1.4 )

Foreign tax effects

Changes in valuation allowance 1,288 21.9

Return to provision true-up ( 178 ) ( 3.0 )

Other ( 26 ) ( 0.4 )

United Kingdom 6 0.1

FICA tip credit ( 911 ) ( 15.5 )

Other tax credits ( 26 ) ( 0.5 )

Changes in valuation allowances ( 3,136 ) ( 53.4 )

Nontaxable or nondeductible items

Stock-based compensation 529 9.0

FICA tip credit 191 3.2

Gain on earn-out liability ( 210 ) ( 3.6 )

Changes in unrecognized tax benefits ( 175 ) ( 3.0 )

Other reconciling items

Federal return to provision true-up 333 5.7

Other items 51 0.9

Effective tax rate $ ( 1,072 ) ( 18.3 ) %

_______________________________________________________________________________

(1) State taxes in Illinois, Florida, Michigan, Pennsylvania, and Minnesota contributed to the majority of the tax effect in this category.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The (benefit) provision for income taxes for the years prior to the adoption of ASU 2023-09 differs from the amount of income tax determined by applying the applicable U.S.

statutory rate to income from continuing operations before income taxes, as a result of the following:

statutory rate 21.0 % 21.0 %

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(2) The tax attribute expiration primarily relates to the expiration of a capital loss generated in fiscal year 2020, which was not offset by subsequent capital gains and is subject to a five-year carryforward period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) The 8.7 % of other, net in fiscal year 2025 includes the rate impact of the federal provision to return true-up and permanent adjustments of 6.2 % and 2.5 %, respectively.

The ( 0.3 )% of other, net in fiscal year 2024 does not include the rate impact of any items in excess of 5% of computed tax.

The 1.9 % of other, net in fiscal year 2023 includes the rate impact of the federal provision to return true-up and miscellaneous items of 1.3 % and 0.6 %, respectively.

Income tax (benefit) expense was comprised of the following:

2026 2025 2024

(Dollars in thousands)

Federal $ 37 $ — $ —

State ( 82 ) 252 427

International — — ( 77 )

Deferred (1):

Federal ( 1,877 ) ( 102,079 ) 294

State ( 45 ) ( 7,807 ) 237

International 895 ( 5,862 ) ( 12 )

Income tax (benefit) expense $ ( 1,072 ) $ ( 115,496 ) $ 869

_______________________________________________________________________________

(1) The deferred income tax benefit in fiscal year 2025 is primarily due to the release of a prior year valuation allowance in the U.S.

of $ 110.2 million and Canada of $ 6.1 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income taxes paid, net of refunds, for fiscal year 2026 were as follows (Dollars in thousands):

State and local taxes

Pennsylvania 96

Total income taxes paid

The components of the net deferred tax assets and liabilities are as follows:

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Total deferred tax liabilities ( 81,271 ) ( 93,662 )

Net deferred tax asset (liability) $ 102,504 $ ( 11,402 )

Net deferred tax asset $ 103,402 $ 102,504

At June 30, 2026, the Company has tax-effected federal, state, Canada, and U.K.

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The Company's tax credit carryforward of $ 38.4 million primarily consists of Work Opportunity Tax Credits that will expire from fiscal years 2031 to 2044.

The Company's prior year capital loss carryforward of $ 5.9 million expired in fiscal year 2025.

The current year capital loss carryforward will expire in fiscal year 2030.

In addition, the Company generated FICA Tip Tax Credits totaling $ 0.9 million in fiscal year 2026, which is included in this total.

The Company's capital loss carryforward will expire in fiscal year 2030.

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

The OBBBA makes

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 year ended June 30, 2026.

The Company considers the earnings of certain non-U.S.

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Accordingly, we have not recorded deferred taxes related to the U.S.

federal and state income taxes and foreign withholding taxes on approximately $ 0.02 million of undistributed earnings of foreign subsidiaries, which have been reinvested outside the U.S.

As a result of the Tax Cuts and Jobs Act of 2017, taxes payable on the remittance of such earnings is expected to be minimal.

federal and state income taxes and foreign withholding taxes on undistributed earnings of foreign subsidiaries, which have been reinvested outside the U.S.

As a result of the Tax Cuts and Jobs Act of 2017, taxes payable on the remittance of such earnings are expected to be minimal.

The Company files tax returns and pays tax primarily in the U.S., Canada, and the U.K., as well as states, cities, and provinces within these jurisdictions.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A rollforward of the unrecognized tax benefits is as follows:

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Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense.

The Company recorded interest and penalties of approximately $ 0.1 million, $ 0.1 million, and $ 0.1 million, as reductions to the accrual, net of the respective reversal of previously accrued interest and penalties during fiscal years 2025, 2024, and 2023, respectively.

The Company recorded interest and penalties of approximately $ 0.1 million as reductions to the accrual, net of the respective reversal of previously accrued interest and penalties, during each of the fiscal years ended June 30, 2026, 2025, and 2024.

As of June 30, 2026, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 0.6 million.

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The Company has an employee stock purchase plan (ESPP) available to qualifying employees.

Under the terms of the ESPP, eligible employees may purchase the Company's common stock through payroll deductions.

The Company contributes an amount equal to 15.0 % of the purchase price of the stock to be purchased on the open market and pays all expenses of the ESPP and its administration, not to exceed an aggregate contribution of $ 14.0 million or when 0.2 million shares registered under the SEC for issuance under the plan have been purchased.

As of June 30, 2025, the Company's cumulative contributions to the ESPP totaled $ 11.2 million.

Under the terms of the ESPP, eligible employees may contribute up to $ 20,000 through payroll deductions per calendar year to purchase the Company's common stock.

The Company contributes an amount equal to 15.0 % of the purchase price of the stock to be purchased on the open market until all shares reserved for issuance under the ESPP have been purchased and pays all administrative expenses of the ESPP, including, without limitation, brokerage commissions, transfer fees, and similar costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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Total $ 1,706 $ 1,934

The accumulated other comprehensive income (loss) for the deferred compensation contracts, consisting of primarily unrecognized actuarial income, was $ 0.5 million and $ 0.6 million at June 30, 2025, and 2024, respectively.

The accumulated other comprehensive income for the deferred compensation contracts, consisting of primarily unrecognized actuarial income, was $ 0.4 million and $ 0.5 million at June 30, 2026, and 2025, respectively.

Additionally, the Company had previously agreed to pay the former Vice Chairman and his spouse an annual benefit for life.

Costs associated with this benefit included in general and administrative expense on the Consolidated Statements of Operations totaled $ 0.6 million, $ 0.6 million, and $ 0.6 million for fiscal years 2025, 2024, and 2023, respectively.

The fair value of the related obligations totaled $ 2.2 million and $ 2.3 million at June 30, 2025, and 2024, respectively, with $ 0.6 million and $ 0.6 million within accrued expenses at June 30, 2025, and 2024, respectively, and the remainder included in other non-current liabilities on the Consolidated Balance Sheets.

Costs associated with this benefit included in general and administrative expense on the Consolidated Statements of Operations totaled $ 0.6 million, for each of the fiscal years ended June 30, 2026, 2025, and 2024.

The fair value of the related obligations totaled $ 2.2 million as of June 30, 2026, and 2025, with $ 0.6 million within accrued expenses at June 30, 2026, and 2025, and the remainder included in other non-current liabilities on the Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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), outstanding 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 (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 agreement.

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), outstanding 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 agreement.

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 2004 Plan provided for the granting of non-qualified SOs, SARs, RSAs, RSUs and PSUs, as well as cash-based performance grants, to employees and non-employee directors of the Company.

Under the Amended and Restated 2018 Plan, 2016 Plan, and the 2004 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant.

Under the Amended and Restated 2018 Plan, 2016 Plan, and the 2004 Plan, stock-based awards are granted at an exercise price or initial value equal to the fair market value on the date of grant for employees.

Beginning with grants in fiscal year 2025, the number of shares subject to stock-based awards in the form of RSUs for non-employee directors was determined by dividing the dollar value of such awards by the twenty-day average share price preceding the grant date.

Using the fair value of each grant on the date of grant, the weighted average fair values per stock-based compensation award granted during fiscal years 2026, 2025, and 2024 were as follows:

2026 2025 2024

SARs $ — $ — $ 30.40

SOs — — 28.60

RSUs $ 25.11 $ 22.20 $ 21.20

_______________________________________________________________________________

(1) The fair value of cash-settled SARs granted are estimated on the date of grant using a Black-Scholes valuation model, with the fair value recalculated on a quarterly basis.

The fair value of market-based SOs granted are estimated on the date of grant using a Black-Scholes valuation model.

The fair value of market-based RSUs granted are estimated on the date of grant using the closing stock price on the date of grant.

The significant assumptions used in determining the estimated fair value of the market-based awards held during fiscal years 2026, 2025, and 2024 were as follows:

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_______________________________________________________________________________

(1) The credit balance in fiscal year 2024 is due to adjustments made for quarterly revaluations resulting from a decrease in stock price during the year.

(2) Federal statutory income tax rate of 21% utilized in fiscal year 2025.

Federal statutory income tax rate of 0 % utilized due to a valuation allowance in fiscal years 2024 and 2023.

(1) The credit balance in fiscal years 2026 and 2024 is due to adjustments made for quarterly revaluations, as well as the expiration of a portion of the SARs in fiscal year 2026.

(2) Federal statutory income tax rate of 21% utilized in fiscal years 2026 and 2025.

Federal statutory income tax rate of 0 % utilized due to a valuation allowance in fiscal year 2024.

Starting in fiscal year 2026, Stock-based compensation on our Consolidated Statements of Cash Flows includes stock-based compensation paid to a third-party vendor which is not included in the above table.

Stock Appreciation Rights:

SARs granted under the 2018 Plan, 2016 Plan, and the 2004 Plan generally vest 20 %, 20 %, and 60 % over a three-year period subsequent to the grant date or vest ratably over a three to five-year period on each of the annual grant date anniversaries and expire 10 years from the grant date.

SARs granted under the 2018 Plan, 2016 Plan, and the 2004 Plan generally vested at 20 %, 20 %, and 60 % over a three-year period subsequent to the grant date or vested ratably over a three to five-year period on each of the annual grant date anniversaries and expire ten years from the grant date.

SARs awarded to the Company's executives are liability-classified awards that vest ratably over a three-year period and are revalued each reporting period.

SARs granted prior to fiscal year 2023 vest 20 %, 20 %, and 60 % over a three-year period or vest ratably over a three-year period, with the exception of the April 2017 grant to the former Chief Executive Officer, which vested in full after two years .

SARs granted prior to fiscal year 2023 vested 20 %, 20 %, and 60 % over a three-year period or vest ratably over a three-year period.

Activity for all the Company's outstanding SARs is as follows:

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Outstanding balance at June 30, 2023 105 $ 129.00

Outstanding balance at June 30, 2024 105 129.00

Forfeited/Expired ( 9 ) 40.32

Outstanding balance at June 30, 2025 96 137.69

Forfeited/Expired ( 19 ) 49.34

Outstanding balance at June 30, 2026 77 159.18 2.54 $ —

Exercisable at June 30, 2026 77 159.18 2.54 —

Unvested awards, net of estimated forfeitures — — —

As of June 30, 2025, there was $ 0.0 million of unrecognized expense related to SARs that is to be recognized over a weighted average period of zero years .

As of June 30, 2026, all outstanding SARs are fully vested and there is no remaining unrecognized expense related to SARs to be recognized.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock Options:

SOs granted under the Amended and Restated 2018 Plan, 2016 Plan, and the 2004 Plan generally vest 20 %, 20 %, and 60 % over a three-year period subsequent to the grant date or vest ratably over a three to five-year period on each of the annual grant date anniversaries and expire 10 years from the grant date.

The SOs granted during fiscal year 2023 were awarded to the Company's executives and vest ratably over a three-year period and SOs granted to non-employee directors vest in equal amounts over a one-year period from the Company's previous annual shareholder meeting date and exercises are deferred until the director's board service ends.

SOs granted under the Amended and Restated 2018 Plan, 2016 Plan, and the 2004 Plan generally vested 20 %, 20 %, and 60 % over a three-year period subsequent to the grant date or vested ratably over a three to five-year period on each of the annual grant date anniversaries and expire ten years from the grant date as long as the participant remains active.

The SOs granted during fiscal year 2023 were awarded to the Company's executives which vested ratably over a three-year period and to non-employee directors which vested in equal amounts over a one-year period from the Company's previous annual shareholder meeting date.

Activity for all the Company's outstanding SOs is as follows:

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Outstanding balance at June 30, 2024 149 32.29

Forfeited/Expired ( 24 ) 32.91

Outstanding balance at June 30, 2025 125 32.17

Forfeited/Expired ( 24 ) 40.64

Exercised ( 49 ) 25.38

Outstanding balance at June 30, 2026 52 34.77 6.01 $ —

Exercisable at June 30, 2026 52 34.77 6.01 —

Unvested awards, net of estimated forfeitures 11 $ 30.40 7.16 $ ( 89 )

As of June 30, 2025, there was $ 0.0 million of unrecognized expense related to SOs that is to be recognized over a weighted average period of zero years .

As of June 30, 2026, all outstanding SOs are fully vested and there is no remaining unrecognized expense to be recognized.

Restricted Stock Units:

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RSUs granted to non-employee directors under the Amended and Restated 2018 Plan, 2016 Plan, and 2004 Plan generally vest in equal monthly amounts over a one-year period from the Company's previous annual shareholder meeting date and distributions are deferred until the director's board service ends.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Activity for all the Company's RSUs is as follows:

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Outstanding balance at June 30, 2024 48 101.48

Granted 82 22.20

Forfeited ( 8 ) 22.18

Vested ( 19 ) 79.06

Outstanding balance at June 30, 2025 103 48.79

Granted 73 25.11

Forfeited ( 34 ) 22.97

Vested ( 32 ) 72.33

Outstanding balance at June 30, 2026 110 34.28 $ 3,080

Vested at June 30, 2026 25 39.22 700

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SHAREHOLDERS' EQUITY (DEFICIT)

SHAREHOLDERS' EQUITY

Authorized Shares and Designation of Preferred Class:

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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.

Stock Warrants Issues in Connection with Long-Term Debt:

In connection with the 2024 Credit Agreement, 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.

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

Stock Warrants Issued in Connection with Long-Term Debt:

In connection with the 2024 Credit Agreement (as defined in Note 8 to the 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.

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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 warrants issued in connection with the 2024 Credit Agreement and the amendment thereto 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 has granted an exemption in favor of each holder pursuant to Section 36 of the Tax Benefits Preservation Plan, dated January 29, 2024, 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 (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 are recorded through a contra-equity account and amount to $ 0.2 million.

The combined value of these warrants was $ 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 .

The Company did not exercise this call provision prior to the second anniversary of the issue date, and the call provision expired in June 2026.

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

As of June 30, 2026, the Company has no intention of exercising the remaining 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).

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 warrants are not remeasured in future periods because they meet the conditions for equity classification.

As a result of the partial exercise of the Initial Warrant, the Coverage Warrant vested with respect to 21,429 shares of Common Stock and the remaining 13,571 shares of Common Stock subject to the Coverage Warrant did not vest.

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 of Common Stock.

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 intended to help protect the availability of certain tax attributes (including net operating loss carryforwards) by deterring acquisitions of 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.

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 Plan;

(ii) prior to the Distribution Date (as defined in the Plan), 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 Plan;

(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 Plan;

(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 Plan.

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, 2026 or Consolidated Statements of Operations or Consolidated Statements of Cash Flows for the three years ended June 30, 2026 because (i) the Rights were issued to existing shareholders as a dividend with no proceeds received, (ii) the Rights were not exercised during the fiscal year ended June 30, 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.

Share Repurchase Program

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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 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.

Segment adjusted EBITDA is defined as income (loss) 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.

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

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

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 distribution center wind down fees, inventory reserve, 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.

Figures for prior reporting periods have been restated to conform with the accounting requirements of the current period.

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.

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Rent 2,708 10,744

Non-margin expenses (1) 98,523 — 98,523

Other expenses (2)

Company-owned salon expense — 56,041

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Long-lived asset impairment — 52

Operating income (loss) $ 20,152 $ ( 213 ) $ 19,939

Unallocated income, net (2) 103,597

Total net income $ 123,536

Segment adjusted EBITDA $ 28,362 $ 3,213 $ 31,575

Segment profit

$ 21,050 $ 3,398 $ 24,448

(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.

(2) Unallocated income, net includes release of valuation allowance.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

For the Year Ended June 30, 2025

(Dollars in thousands)

Franchise Company-owned Consolidated

Operating income (loss) $ 20,152 $ ( 213 ) $ 19,939

Depreciation and amortization 1,194 1,772 2,966

Other, net 1,624 — 1,624

Discrete items (1) 5,392 1,654 7,046

Segment adjusted EBITDA $ 28,362 $ 3,213 $ 31,575

Unallocated expenses, net ( 18,577 )

Income from operations before income taxes

_______________________________________________________________________________

(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.

(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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended June 30, 2025

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Total revenue $ 166,403 $ 43,731 $ 210,134

Cost of product sales to franchisees $ 436 $ — $ 436

General and administrative 42,769 3,995

Rent 3,413 7,074

Non-margin expenses (1) 120,921 — 120,921

Other expenses (2) 98,523 —

Company-owned salon expense — 31,103

1 unchanged sentence

Long-lived asset impairment 352 —

Operating income (loss) $ 22,181 $ ( 1,291 ) $ 20,890

Unallocated income, net (2) 70,170

Total net income $ 91,060

Segment adjusted EBITDA $ 27,815 $ ( 323 ) $ 27,492

_______________________________________________________________________________

(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.

(2) Unallocated income, net includes extinguishment of long-term debt.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

For the Year Ended June 30, 2024

(Dollars in thousands)

Franchise Company-owned Consolidated

Operating income (loss) $ 22,181 $ ( 1,291 ) $ 20,890

Depreciation and amortization 3,095 850 3,945

Other, net ( 172 ) — ( 172 )

Discrete items (1) 2,711 118 2,829

Segment adjusted EBITDA $ 27,815 $ ( 323 ) $ 27,492

Segment profit (loss) $ 20,152 $ ( 213 ) $ 19,939

Unallocated expenses, net ( 18,403 )

Income from operations before income taxes

_______________________________________________________________________________

(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.

For the Year Ended June 30, 2024

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Cost of product sales to franchisees $ 436 $ —

Inventory reserve — 1,228 1,228

General and administrative 44,778 609

Rent 3,450 2,075

Non-margin expenses (1) 143,188 — 143,188

Other expenses (2) 120,921 —

Company-owned salon expense — 5,080

1 unchanged sentence

Long-lived asset impairment 798 —

Operating income (loss) $ 14,751 $ ( 5,972 ) $ 8,779

Segment profit (loss) $ 22,181 $ ( 1,291 ) $ 20,890

Unallocated income, net (3) 69,046

Total net loss $ ( 7,385 )

Segment adjusted EBITDA $ 25,107 $ ( 1,788 ) $ 23,319

Income from operations before income taxes

_______________________________________________________________________________

(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.

(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.

(3) Unallocated income, net includes extinguishment of long-term debt.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

For the Year Ended June 30, 2023

(Dollars in thousands)

Franchise Company-owned Consolidated

Operating income (loss) $ 14,751 $ ( 5,972 ) $ 8,779

Depreciation and amortization 6,919 797 7,716

Other, net ( 86 ) 1,450 1,364

Discrete items (1) 3,523 1,937 5,460

Segment adjusted EBITDA $ 25,107 $ ( 1,788 ) $ 23,319

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(1) Discrete items include one-time professional fees and legal settlements, inventory reserve, 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.

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

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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 and Walmart stores.

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.

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

and Canada are generally within the company-owned salons segment.

Supercuts, Cost Cutters, and Holiday Hair 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:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FRANCHISE SALONS:

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COMPANY-OWNED SALONS:

SmartStyle/Cost Cutters in Walmart stores

Portfolio Brands

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

(2) Salon counts as of June 30, 2025, include salons acquired as part of the Alline Acquisition.

See Note 16 to the Consolidated Financial Statements.

Total revenues and property and equipment, net associated with business operations in the U.S.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ACQUISITIONS:

FOOTNOTE OPEN PENDING FINALIZATION OF VALUATION

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 Consolidated Financial Statements as a component of operating income for the year ended June 30, 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 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 Consolidated Statements of Operations as a component of operating income for the year ended June 30, 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 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.

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 year ended June 30, 2026.

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

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Cash, net of cash acquired (1) $ 18,621

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

Equity instruments ( 140,552 of Common Stock) (2)

Contingent consideration arrangement (3) 1,000

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(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 earnout periods as well as a cumulative 4-Wall EBITDA or Adjusted EBITDA threshold for the cumulative three subsequent annual earnout periods.

(2) The number of Common Stock ( 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.

As of June 30, 2026, the Company determined the value of the contingent arrangement is $ 0 .

The Company recognized a gain on earn-out liability of $ 1.0 million in the year ended June 30, 2026, which is included in our Consolidated Statements of Operations.

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 Consolidated Statements of Operations.

Refer to Note 7 to the Consolidated Financial Statements for additional information regarding the valuation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

(Dollars in thousands)

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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.

(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:

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

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 include $ 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.

2 unchanged sentences

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 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 $ 1.4 million of acquisition related costs which are included in general and administrative expense in Regis’s Consolidated Statements of Operations for the year ended June 30, 2025, respectively.

The following table provides revenues and operating income from Alline that are included in our Consolidated Financial Statements since the date of acquisition:

Fiscal Year Ended June 30, 2026

December 19, 2024 Through June 30, 2025

(Dollars in thousands)

Total revenues $ 75,872 $ 40,813

Operating income 3,840 2,424

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents pro forma information as if the Alline Acquisition had occurred on July 1, 2022:

For the Fiscal Year Ended June 30,

2025 2024 2023

The following table presents information for the Company as if the Alline Acquisition had occurred on July 1, 2023:

Actuals Pro forma

For the Year Ended June 30, 2026 For the Year Ended June 30, 2025

For the Year Ended June 30, 2024

(Dollars in thousands)

Total revenues $ 224,485 $ 239,350 $ 277,210

Operating income 24,448 24,066 22,575

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SUBSEQUENT EVENTS:

Chief Executive Officer Transition:

On June 20, 2025, Matthew Doctor, the President and Chief Executive Officer and a member of the Board of Directors (the "Board") of the Company notified the Board that he would resign his positions, effective June 30, 2025.

Upon receiving such notice, the Board appointed Jim Lain, the Company’s Executive Vice President, Brand Operations - Supercuts and Cost Cutters, to serve as Interim President and Chief Executive Officer, effective July 1, 2025, after which Mr.

Doctor continued to provide services to the Company as a part-time employee through August 31, 2025, pursuant to a Resignation and Transition Letter Agreement between the Company and Mr.

The Board has commenced a comprehensive search for a permanent successor.

The Board has formed a Succession Planning Committee and has engaged a leading executive search firm to help identify the next CEO, from among both internal and external candidates.

In the interim, Jim Lain, current EVP Brand Operations – Supercuts and Cost Cutters, will work closely with the executive team and Board to ensure a seamless transition and continued execution of the Company’s strategic priorities.

Lain joined the Company in 2013, bringing with him more than 30 years of operations leadership experience.

Since then, he has spearheaded initiatives that drove operational excellence and enhanced the performance of iconic brands including Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters, and other legacy names within the Company's portfolio.

Prior to joining the Company, Mr.

Lain made significant contributions at Gap, Inc., where he served as Vice President of Operations for Gap Specialty Stores in the U.S.

In this role, he was responsible for steering a $ 2.5 billion business across 750 stores, enhancing operational efficiency and driving growth in a highly competitive market.

Prior to his experience with Gap, Inc., Mr.

Lain was Vice President of Operations at Galyan’s Trading Company, Inc.

/ Dick’s Sporting Goods and held several field management positions at Target Stores, Inc.

Warrant Issuance:

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 of the Company 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 of the Company, at an exercise price of $ 24.20 per share (the Coverage Warrant).

The fair value of the warrants has not yet been determined.

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.

Legislative Impacts:

On July 4, 2025, H.R.

1, commonly known as the “One Big Beautiful Bill Act” (OBBBA), was enacted into law.

OBBBA is a reconciliation bill impacting businesses as it includes a broad range of tax reform provisions.

The Company does not expect any material net impact to its consolidated financial statements as a result of OBBBA.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data