SBC Medical Group Holdings Inc 10-K

10-K Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 001-41462 SBC Medical Group Holdings Incorporated (Exact name of registrant as specified in its charter) Delaware 88-1192288 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 200 Spectrum Center Dr. STE 300 Irvine , CA 92618 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: 949 - 593-0250 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.0001 par value per share SBC The Nasdaq Stock Market LLC Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share SBCWW The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of the voting and non-voting common equity held by non-affiliates of the regi strant as of June 30, 2025, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $ 48.2 million, calculated by using the closing price of the Registrant’s Common Stock on such date on the Nasdaq Stock Market LLC of $4.64. The number of shares of registrant’s Common Stock outstanding as of February 28, 2026 was 102,576,943 , after deducting 1,304,308 shares of treasury stock. DOCUMENTS INCORPORATED BY REFERENCE The registrant intends to file a proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2025. Portions of such proxy statement or Form 10-K/A, in lieu thereof, are incorporated by reference into Part III of this Annual Report on Form 10-K. Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company. These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” or similar expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements contained in this Annual Report include, but are not limited to, statements about: • future financial performance of the Company; • changes in the market and level of demand for our products and services; • the expansion plans and opportunities of the Company; • the ability of the Company to access additional capital; • the ability of the Company to maintain the listing of the Company’s common stock on Nasdaq; • public securities’ potential liquidity and trading; • the impact from the outcome of any known and unknown litigation; • the ability of the Company to forecast and maintain an adequate rate of revenue growth and appropriately plan its expenses; • expectations regarding future expenditures of the Company; • the future mix of revenue and effect on gross margins of the Company; • the attraction and retention of qualified directors, officers, employees and key personnel of the Company; • the ability of the Company to compete effectively in a competitive industry; • the ability to protect and enhance the Company’s corporate reputation and brand; • expectations concerning the relationships and actions of the Company and its affiliates with third parties; • the impact from future regulatory, judicial, and legislative changes in the Company’s industry; • the ability to locate and acquire complementary products or product candidates and integrate those into the Company’s business; • future arrangements with, or investments in, other entities or associations; • intense competition and competitive pressures from other companies in the industries in which the Company operates; • the possibility that we may be adversely affected by other economic, business, and/or competitive factors; • changes in applicable laws or regulations; and • other factors detailed under “Part I, Item 1A. Risk Factors.” These forward-looking statements are based on information available as of the date of this Annual Report, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Table of Contents In addition, statements that the Company “believes” and similar statements reflect the Company’s beliefs and opinions on the relevant subject. These statements are based upon information available to the Company as of the date of this Annual Report, and while such party believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and these statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. As a result of a number of known and unknown risks and uncertainties, the actual results or performance of the Company may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause the Company’s actual results to differ include: • the outcome of any legal or regulatory proceedings that have been, or may be, instituted in the future against the Company; • the ability of the Company to grow and manage growth profitably, maintain relationships with customers, compete within its industry and retain its key employees; • risks related to macroeconomic or geopolitical developments; • future exchange and interest rates; • the risk that the Company fails to maintain an effective system of disclosure controls and internal controls over financial reporting, which could impair the Company’s ability to produce timely and accurate financial statements or comply with applicable regulations; and • other risks and uncertainties indicated in this Annual Report, including those under “Part I, Item 1A. Risk Factors” herein, and other filings that have been made or will be made with the SEC by the Company. These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Annual Report are more fully described under “Part I, Item 1A. Risk Factors” and elsewhere in this Annual Report. The risks described under the heading “Part I, Item 1A. Risk Factors” are not exhaustive. Other sections of this Annual Report describe additional factors that could adversely affect the business, financial condition or results of operations of the Company. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company assess the impact of all such risk factors on the business of the Company, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. This is particularly true for a company like the Company that has a limited operating history to reference. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. Summary of Material Risks • We are a holding company and depend upon our operating subsidiaries for our cash flows. • We may need additional capital to execute our business plans, and additional financing may not be available on favorable terms or at all. If we raise additional capital through equity or debt financings, our stockholders may be diluted and our operations may become subject to additional restrictions. • Our business depends significantly on the financial condition, performance and expansion of the MCs, our franchisees and other alliance partners, and we have substantial concentration in a limited number of such partners. We have limited ability to control their operations, their interests may conflict with ours, and their actions or failures to perform may adversely affect our business and expose us to liability. • We may not be able to grow our franchise system, compete effectively, manage our growth, or maintain the strength and reputation of our brand. • Adverse publicity, misconduct, safety concerns, product recalls, product liability claims, or unethical or non-compliant conduct by us, the MCs, our franchisees and other alliance partners, suppliers, business partners or other third parties could harm our reputation, brand and operating results. • Any significant cybersecurity incident, disruption to our operating systems, or failure to safeguard personal information could subject us to significant legal, regulatory, financial, operational and reputational consequences. • Uncertainties with respect to the development and use of artificial intelligence in our business may adversely affect our business and reputation. Table of Contents • Failure by the MCs, other independently operated clinics and physicians, or our clinics and business partners to comply with applicable laws and regulations, including the Medical Care Act in Japan, privacy and personal information laws, and environmental and work safety laws, could subject us to penalties, damage our reputation and brand, and harm our business and results of operations. • Our international operations and expansion outside Japan subject us to additional operational, regulatory, compliance and market risks. • We are subject to risks associated with strategic alliances, acquisitions, minority investments and other investments, including acquisitions involving related party transactions, integration challenges, and the risk that such transactions do not achieve their intended strategic or financial benefits. • We are involved in litigation from time to time and could incur substantial judgments, fines, legal fees or other costs. We and our subsidiaries have limited insurance coverage, and our operations may be interrupted by utility shortages or stoppages, fire, natural disasters or other calamities at or near our facilities. • Challenging macroeconomic conditions, financial or economic crises, and trade tariffs or other trade barriers may adversely affect our franchisees, business partners and customers and could have a material adverse effect on our business, financial condition and results of operations. • Our disclosure controls and procedures were not effective as of December 31, 2025, as a result of material weaknesses in our internal control over financial reporting that had not been fully remediated as of that date. Continued or additional control failures could impair our ability to report our financial results timely and accurately or prevent fraud. • Nasdaq may delist our securities from trading on its exchange, which could limit investors' ability to make transactions in our securities, reduce liquidity and coverage, and adversely affect our ability to obtain additional financing. Table of Contents Table o f Contents Page PART I Item 1. Business. 5 Item 1A. Risk Factors 74 Item 1B. Unresolved Staff Comments. 103 Item 1C. Cybersecurity . 103 Item 2. Properties . 104 Item 3. Legal Proceedings. 104 Item 4. Mine Safety Disclosures. 104 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 105 Item 6. [Reserved]. 105 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 106 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 117 Item 8. Financial Statements and Supplementary Data. F- 1 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. 116 Item 9A. Controls and Procedures. 116 Item 9B. Other Information. 118 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 118 PART III Item 10. Directors, Executive Officers and Corporate Governance. 119 Item 11. Executive Compensation. 119 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 119 Item 13. Certain Relationships and Related Transactions, and Director Independence. 119 Item 14. Principal Accountant Fees and Services. 119 PART IV Item 15. Exhibits and Financial Statement Schedules 120 Item 16. Form 10-K Summary 122 Table of Contents P ART I Item 1. B usiness. Unless the context indicates otherwise, any references herein to the “Company”, “we”, “us” and “our” refer to (i) SBC Medical Group, Inc. (formerly known as SBC Medical Group Holdings Incorporated), a Delaware corporation (“Legacy SBC”), and its consolidated subsidiaries and variable interest entity (“VIE”), prior to the consummation of the Business Combination and to (ii) SBC Medical Group Holdings Incorporated, the Combined Entity and its consolidated subsidiaries and VIE following the Business Combination, and reference herein to “Pono” refers to Pono Capital Two, Inc., the predecessor company prior to the consummation of the Business Combination. Company Overview History We were originally incorporated in Delaware on March 11, 2022 under the name “Pono Capital Two, Inc.,” referred to herein as “Pono,” as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On August 9, 2022, Pono consummated its IPO of 11,500,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares” and with respect to the warrants included in the Units, the “Public Warrants”) (the “Pono IPO”). Simultaneously with the consummation of the closing of the Pono IPO, Pono consummated the private placement of an aggregate of 634,375 units (the “Placement Units”) at a price of $10.00 per Placement Unit in a private placement to the Sponsor (the “Private Placement”). On September 26, 2022, the Class A common stock and Public Warrant included in the Units began separate trading on The Nasdaq Global Market under the symbols “PTWO” and “PTWOW,” respectively. On January 31, 2023, Pono entered into an Agreement and Plan of Merger (as subsequently amended from time to time, the “Merger Agreement”) with Pono Two Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and then a wholly-owned subsidiary of Pono, SBC Medical Group, Inc., then named SBC Medical Group Holdings Incorporated, a Delaware corporation (“Legacy SBC”), Mehana Capital LLC, a Delaware limited liability company (“Sponsor” or “Purchaser Representative”) in its capacity as the representative of the stockholders of Pono, and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of Legacy SBC (“Seller Representative”). On September 17, 2024, the closing (the “Closing”) of the merger (the “Merger”) and other transactions contemplated thereby (collectively, the “Business Combination”) took place and the Merger was consummated with Merger Sub merging with and into Legacy SBC with Legacy SBC surviving the Merger as a wholly-owned subsidiary of Pono, and Pono then changed its name to SBC Medical Group Holdings Incorporated and on September 17, 2024, Legacy SBC changed its name to SBC Medical Group, Inc. Effective September 17, 2024, Pono’s units ceased trading, and effective September 18, 2024, SBC’s common stock began trading on the Nasdaq Global Market under the symbol “SBC” and the public warrants began trading on the Nasdaq Capital Market under the symbol “SBCWW.” As a result of the Closing of the Merger and the Business Combination, the business of SBC Medical Group, Inc. (“Legacy SBC”), became the business of the Company. Business Overview The Company is a management company with offices in Irvine, California and Tokyo, Japan, and, through our subsidiaries, we provide management services to aesthetic clinics in Japan that are owned and operated by medical corporations and other franchisees we support. We also own and operate clinics in Vietnam and Singapore, and we are pursuing U.S. market initiatives primarily through strategic investments and alliances. The history of Legacy SBC began with the establishment of L’Ange Cosmetique Co., Ltd. in 2003 and SBC Japan (formerly Aikawa Medical) in 2017 for the purpose of providing management services to medical corporations and the medical clinics of the medical corporations. The history of the medical corporations and the medical clinics began in 2000 with the opening of Shonan Beauty Clinic in Fujisawa City, Japan, where Dr. Aikawa opened in private practice. Subsequently, Dr. Aikawa opened clinics in Yokohama in 2001 and Shinjuku in 2003, incorporated as Medical Corporation Shobikai in 2004, acquired a medical corporation named Medical Corporation Kowakai in 2009 and Medical Corporation Nasukai in 2009. 5 Table of Contents The Company and its subsidiaries are primarily focused on providing comprehensive management services to franchisee clinics. These services include advertising and marketing across various platforms (such as social media networks), staff management (such as recruitment and training), booking and reservation services for franchisee clinic customers. We also support franchisee clinics through assistance with employee housing rentals and facility rentals, leasehold improvements and design of clinics, medical equipment and medical consumables procurement (resale), the provision of cosmetic products to clinics for resale to clinic customers, licensure of the use of patent-pending and non-patented medical technologies, trademark and brand use, IT software solutions (including but not limited to remote medical consultations), management of the customer rewards program (customer loyalty point program), and payment tools. In 2017, we began providing our management services to our franchisee treatment centers. Unless otherwise indicated, the operational metrics in this section are as of December 31, 2025. As of December 31, 2025, the Company and its subsidiaries provided management services to a total of 237 franchisee treatment centers located in Japan, including 5 independently operated clinics in Japan under separate franchise arrangements. In addition, we operate 21 treatment centers in Singapore through Aesthetic Healthcare Holdings (“AHH”) and its subsidiaries. The Company also (i) owned and operated 1 treatment center under its “SBC” brand name in Ho Chi Minh City, Vietnam, as well as (ii) previously provided management services to 1 treatment center under its “SBC” brand name in Irvine, California in the United States (the “CA Clinic”), which was owned and operated by the related party, until it was permanently closed at the end of May 2025, and we no longer provide management services to any clinic in the United States. However, in the United States, we have pursued market entry through a strategic minority equity investment in OT Midco, through which we hold an indirect minority interest in the OrangeTwist business (“OT”), and we may explore potential commercial arrangements with OT on a non-binding basis. OT operates 24 treatment centers across the United States, rather than through directly owned and operated clinics or management service arrangements. Our franchisee treatment centers in Japan, together with our treatment centers in Singapore and Vietnam, provide an array of surgical and non-surgical medical services that vary based upon location, including cosmetic surgery, dermatology, and dentistry. These medical services include but are not limited to breast augmentation, liposuction, rejuvenation treatments (including treatment of wrinkles, acne, scars, cellulite, excess fat, discoloration, and signs of aging), laser skin toning and spot removal, eyes double fold surgery, rhinoplasty, treatment of osmidrosis and hyperhidrosis, hair transplants, gynecological formation treatments, laser hair removal, face line surgeries, cosmetic dental procedures, tattoo removal, lasik eye surgery, lateral canthoplasty, brow lift procedures, androgenetic alopecia treatment, and cheek sagging prevention methods. To further our growth and global expansion, we have recently completed or announced several strategic transactions and initiatives: • In November 2024, we acquired a 100% equity interest in Aesthetic Healthcare Holdings (“AHH”) and its subsidiaries, which are incorporated in Singapore and principally engaged in medical aesthetics business, for cash consideration of SGD$7.8 million (equivalent to approximately US$5.8 million). As a result of this acquisition, we operate clinics in Singapore owned and operated through AHH and its subsidiaries. • In July 2025, we acquired 100% equity interest in MB career lounge, Co., Ltd. (“MB career lounge”), a company providing comprehensive management supporting services for medical institutions in Japan, including medical professional recruiting and operational consulting, with a cash consideration of JPY 2,040 million (approximately $14.2 million). In the same month, we appointed Dr. Steven R. Cohen as Medical Strategy Advisor to support our global expansion initiatives and enhance our medical quality and physician training programs. • In November 2025, we entered into a consulting agreement with BLEZ ASIA Co., Ltd., which operates more than 20 clinics and pharmacies in Thailand, to support our entry into Thailand, including management support for a new dermatology-focused clinic BLEZ is preparing to open in Bangkok. • In December 2025, we acquired a controlling interest in Waqoo, Inc. (“Waqoo”), a company listed on the Tokyo Stock Exchange Growth Market and a medical research and development company specializing in regenerative medicine technologies. We initially conducted a tender offer for Waqoo’s common stock from November 14, 2025 through December 12, 2025, through which we acquired 575,052 shares, or 16.27% of the voting rights. Concurrently, on December 19, 2025, we acquired additional shares through an off-market transaction from Yoshiyuki Aikawa, the Company's CEO, a related party to the Company and the then-largest shareholder of Waqoo, resulting in our total ownership of Waqoo’s voting rights exceeding 50% and Waqoo becoming our consolidated subsidiary. • Additionally, on December 29, 2025, we acquired an approximately 18.2% voting interest in OT Midco Holdings, LLC (“OT Midco”), a holding company through which we hold an indirect minority interest in the OrangeTwist, LLC and its subsidiaries (collectively, “OrangeTwist”), a lifestyle medicine and medical aesthetics provider operating treatment centers across the United States, for a total cash consideration of $20 million. In addition, we committed to make an additional cash contribution of $5.0 million in December 2026 for newly issued common units of OT Midco. We account for this investment under the equity method due to our board representation and participation in policy-making processes. • As part of our ongoing expansion strategy, we also continuously evaluate other potential investments and acquisitions. For example, in May 2025, we announced that we began reviewing a potential acquisition of Risenet Co., Ltd., and, as of the date of this Annual Report, we have not entered into a definitive agreement. 6 Table of Contents Since our inception, we have been committed to delivering high quality management services to our franchisee clinics and other alliance clinics. We believe our team of highly qualified and experienced professionals has underpinned our strong reputation as we continue to provide multifaceted management services to our franchisee clinics. Business Segments The Company operates in a single operating segment. The Company’s Chief Executive Officer, who serves as the Chief Operating Decision Maker (“CODM”), is responsible for evaluating performance and allocating resources. Our revenues are primarily derived from providing comprehensive management services to franchisee cosmetic treatment centers, including advertising, staffing, procurement, IT solutions, and the licensing of medical technologies and trademarks. For additional details, see Note 21, “Segment Reporting,” in the accompanying notes to our consolidated financial statements. Corporate Structure The Company wholly owns SBC Medical Group, Inc., a Delaware corporation and SBC MEDICAL APAC PTE. LTD., a Singapore corporation that serves as the Asia-Pacific regional headquarters. The Company’s subsidiary, SBC Medical Group, Inc., primarily operates through 15 wholly owned subsidiaries and three majority owned subsidiaries. The wholly owned subsidiaries consist of SBC Medical Group Co., Ltd., a Japanese corporation (“SBC Medical Sub”), Liesta Co., Ltd., a Japanese corporation (“Liesta”), SBC Sealane Co., Ltd., a Japanese corporation (“SBC Sealane”), SBC Marketing Co., Ltd., a Japanese corporation (“SBC Marketing”), SBC Medical Consulting Co., Ltd., a Japanese corporation (“SBC Medical Consulting”), Shoubikai Medical Vietnam Co. Ltd., a Vietnam corporation (“SBC Vietnam”), SBC Healthcare, Inc., a Delaware corporation (“SBC Healthcare”), SBC Irvine, LLC, a Delaware limited liability company (“SBC Irvine”), Aesthetic Healthcare Holdings Pte., Ltd., a Singapore corporation (“AHH”), Wen & Weng Family Clinic Pte., Ltd., a Singapore corporation (“WWFC”), Wen & Weng Medical Group Pte., Ltd., a Singapore corporation (“WWMG”), Rochor Clinic Pte., Ltd., a Singapore corporation (“RCC”), Dermasolutions Pte., Ltd., a Singapore corporation (“DS”), and Dermasolutions Services Pte., Ltd., a Singapore corporation (“DSS”) and MB career lounge Co., Ltd. (“MB career lounge”). The three majority owned subsidiaries are Medical Payment Co., Ltd., a Japanese corporation (“Med Payment”), Waqoo, Inc., a Japanese corporation (“Waqoo”), and Cell Pro Japan Co., Ltd., a Japanese corporation (“Cell Pro Japan”), which is a wholly owned subsidiary of Waqoo. The Company also consolidates Aikawa Medical Management, Inc., which is the Company's variable interest entity. Effective January 1, 2026, the Company effected a merger in which SBC Marketing Co., Ltd. merged with and into SBC Medical Group Co., Ltd. As a result, the separate corporate existence of SBC Marketing Co., Ltd. ceased, with SBC Medical Group Co., Ltd. continuing as the surviving company. Effective January 7, 2026, the Company established SBC Medical M&A Advisory Co., Ltd. to provide healthcare-focused M&A advisory services. Disposal of SBC Kijimadaira Resort Inc. (“Kijima”) and Skynet Academy Co., Ltd. (“Skynet”) On December 17, 2024, the Company entered into definitive agreements to sell and transfer all of the shares in its subsidiaries, Kijima and Skynet, to entities owned by Yoshiyuki Aikawa, CEO of the Company, for cash. The Company pursued the transactions to concentrate business and management resources on its main medical business. The disposal of Kijima and Skynet did not constitute a strategic shift that would have a major effect on the Company’s operations and financial results. The transactions closed on December 23, 2024, subject to customary closing conditions. The Company received total cash consideration of one Japanese Yen (less than $0.01) for Kijima and $446,460 for Skynet. In accounting for the disposals, operating results of Kijima and Skynet are included in the Company’s consolidated financial statements up to the disposal date. The difference between (i) the fair value of the net assets disposed and (ii) the consideration received was recognized as an adjustment to Additional Paid-in Capital (“APIC”). No retrospective adjustments have been made to prior-period consolidated financial statements. Following the completion of these transactions, Kijima and Skynet ceased to be subsidiaries of the Company after December 23, 2024. Their financial results are therefore excluded from the Company’s consolidated financial statements for periods subsequent to the disposal date. Acquisition of AHH On November 20, 2024, the Company completed the payment of SGD 7.8 million in cash for the acquisition of 100% of the voting equity interest in AHH and its subsidiaries, following the execution of a Share Purchase Agreement with Dr. Ewen Chee Yew Wen, Dr. Lee Tee Kit, Dr. Phua Vanessa Mae, Dr. Charlotte Kim Thomas, and Dr. Gary Si Khin Yuen. AHH is based in Singapore and operates aesthetic medical clinics, family clinics, and quick facial aesthetics outlets. The founder, Dr. Ewen Chee, is known as one of the pioneers in the field of aesthetic medicine in Singapore and is a co-chair of the first Asia Pacific Thread Lift Conference (APEM) and a board-certified physician by the American Academy of Aesthetic Medicine. He is a frequent speaker at international conferences and workshops, and his expertise and knowledge have been featured in numerous scientific publications. AHH’s major brands and number of clinics are The Chelsea Clinics, Gangnam Laser Clinic, SkinGo! and Family clinics. Due to AHH’s fiscal year ending on September 30, the financial results of AHH and its subsidiaries have been included in the Company’s consolidated financial statements with a three-month lag. 7 Table of Contents Acquisition of MB career lounge Co., Ltd. (“MB career lounge”) On July 17, 2025, the Company acquired MB career lounge, a Japan-based management support services provider that provides management and operational support services to “JUN CLINIC,” an aesthetic dermatology and plastic-surgery platform. Acquisition of Waqoo, Inc. (“Waqoo”) On December 19, 2025, the Company acquired a controlling interest in Waqoo, Inc. (“Waqoo”), a Japanese corporation listed on the Tokyo Stock Exchange Growth Market. The acquisition was conducted through a tender offer by SBC Medical Group Co., Ltd. (“SBC Japan”) from November 14, 2025 through December 12, 2025, in which SBC Japan acquired 575,052 shares, representing 16.27% of the voting rights. Concurrently, SBC Japan acquired additional shares from Yoshiyuki Aikawa, the Company's CEO, a related party to the Company and the then-largest shareholder of Waqoo through an off-market transaction. As a result of these transactions, SBC Japan’s ownership ratio of the voting rights of Waqoo exceeded 50% as of the settlement date of December 19, 2025. For the fiscal years ended December 31, 2025 and 2024, the Company generated revenues of $173,607,489 and $205,415,542, respectively, reported net income of $51,045,023 and $46,689,892, respectively, and cash flow provided by operating activities of $24,668,496 and $20,582,933, respectively. As of December 31, 2025, the Company had retained earnings of $240,448,620. Our wholly owned subsidiary, SBC Medical Group Co., Ltd., a Japanese corporation (“SBC Medical Sub”, or “SBC Japan”), is designated as a “medical service corporation” in Japan. In Japan, a medical service corporation is a legal entity that provides management services to “medical corporations”. The management services are conducted through franchisor-franchisee contracts and/or service contracts with the medical corporations and/or general incorporated associations that own and operate domestic franchisee treatment centers in Japan. Separately, we also enter into franchise arrangements with certain independently operated clinics in Japan, which differ in certain respects from our arrangements with the medical corporations. In addition, following the acquisition of MB career lounge in July 2025, the Company, through MB career lounge, provides management and operational support services to Medical Corporation Misakikai and General Incorporated Association Miotokai, and the related revenues are included in the Company’s consolidated revenues. The Company's subsidiaries have entered into franchisor-franchisee contracts and service contracts (including business consignment agreements of the same nature) with seven medical corporations, consisting of Medical Corporation Shobikai, Medical Corporation Kowakai, Medical Corporation Nasukai, Medical Corporation Aikeikai, Medical Corporation Jukeikai, and Medical Corporation Ritz Cosmetic Surgery, as amended and restated effective as of April 2025, and Medical Corporation Association Furinkai, effective as of June 2025. In addition, the Company has entered into service contracts since September 2023 with Medical Corporation Association Furinkai and Medical Corporation Association Junikai; and in July 2025 with Medical Corporation Misakikai and General Incorporated Association Miotokai, following the acquisition of MB career lounge Co., Ltd. (collectively with the seven franchisee medical corporations, the “Medical Corporations and/or General Incorporated Associations” or “MCs”). All of the MCs are deemed to be related parties of the Company since relatives of the CEO of the Company are the members (or shain ) of general meetings of members of the MCs. The CEO of the Company was previously a member of the six franchisee MCs until he ceased being a member in July 2023. The Company, through SBC Medical Sub, owns equity interests (or mochibun ) of the six franchisee MCs. Although the Company, through SBC Medical Sub, has an equity interest to the rights to receive a distribution of residual assets in proportion to the amount of contribution in certain circumstances as provided in the Japanese Medical Care Act and the articles of incorporation of each of the six MCs, the Company or SBC Medical Sub does not have voting control over the corporate actions at general meetings of members (or shain ) of the MCs per the requirements of the Japanese Medical Care Act and the MCs’ articles of incorporation. The Company does not hold equity interests (mochibun) in Medical Corporation Misakikai or General Incorporated Association Miotokai; the Company’s arrangements with these entities are based on service contracts. “Members (or shain) of a general meeting of members (or shain)” means constituent members of the general meeting of members (or shain) of a Japanese Medical Corporation. Each member (or shain) has one voting right. “General meeting of members (or shain)” means one of the organs of a Japanese Medical Corporation and the highest decision-making body of the Medical Corporation, the main duties of which include the election and dismissal of directors (or riji) and auditors (or kanji) of the Medical Corporation, and the approval of financial statements and statutory business reports of the Medical Corporation. “Equity interest (or mochibun)” means the right to receive distribution of the residual assets of a Japanese Medical Corporation in proportion to the amount of contribution (Article 10.3.3.2 brackets of the Supplementary Provision of the Japanese Medical Care Act.). However, the procedures for an equity interest (or mochibun) holder to exercise and realize the right to receive distribution of the residual assets of the Medical Corporation is more complicated than that of a stock corporation due to the restrictions under the Medical Care Act. 8 Table of Contents Mission Our primary mission is to provide quality comprehensive management services to the MCs and expand our “Shonan Beauty Clinic” brand. We plan to achieve the mission by maintaining and strengthening our market position and brand in the cosmetic medical treatment management market in Japan, Vietnam, Singapore, while pursuing growth opportunities in the United States through strategic investments and alliances, and by continuing to grow our presence globally. Accordingly, we have entered into franchise agreements and service contracts (including consulting and management service agreements) (collectively, the “Support Agreements”) with the MCs to define the scope of the management services that we provide to the MCs as well as the franchise operational provisions that the MCs must comply with. Separately, we have entered into partner doctor independence support program agreements with certain independent practitioners. The Support Agreements generally have one-year terms and are subject to renewal unless either party provides notice of non-renewal in accordance with the applicable agreement. We receive a portion of our overall compensation for providing management services with the following MCs: • Medical Corporation Shobikai: from September 29, 2017 • Medical Corporation Kowakai: from September 29, 2017 • Medical Corporation Nasukai: from September 29, 2017 • Medical Corporation Aikeikai: from September 29, 2017 • Medical Corporation Jukeikai: from February 21, 2020 • Medical Corporation Ritz Cosmetic Surgery: from May 31, 2021 Effective as of April 1, 2025, the Company revised the fee structure to pursue a long-term growth strategy aimed at expanding and stabilizing the business foundation by creating an environment that can better facilitate the establishment of new clinics by MCs. This updated fee structure introduces a more tailored, performance-based approach to determining service fees for each clinic, based on several key criteria: 1. Medical service category (facility type): The type of medical services provided by the clinic (for example, cosmetic medicine, dermatology, hair restoration (AGA) treatment, fertility treatment, insured medical care, or other specialized fields). 2. Operational tenure: The length of time since the clinic’s opening (with newly established clinics in their first year of operation recognized in a dedicated category). 3. Monthly revenue: The clinic’s revenue for the given month. 4. Patient volume: The number of patients the clinic has served over the past year. These factors collectively determine each clinic’s tier classification (e.g., as a small, medium, or large clinic), as defined in the updated service agreement’s appendix. Under this system, each clinic is assigned to an appropriate tier based on its profile, and a corresponding fixed monthly fee is applied according to the schedule set forth in the contract. Notably, clinics offering cosmetic medical services are categorized using a more granular tier system reflecting their scale, with tiers ranging from newly opened clinics in their first year up to “super-large” clinics. In contrast, clinics focusing on other types of medical services (such as dermatology, AGA hair restoration, fertility treatments, or dental and orthopedic care) are classified into the standard small, medium, or large clinic tiers. This tiered approach ensures that service fees are aligned with each clinic’s size and performance, supporting newer and smaller clinics as they grow while accommodating the higher capacities of larger established clinics. Following the acquisition of MB career lounge in July 2025, we entered into new service contracts for the first time with Medical Corporation Misakikai and General Incorporated Association Miotokai. Material Contracts between the Company and MCs The Company has entered into Support Agreements (franchise agreements and service contracts) and an SBC Operating Agreement with each of the MCs. Separately, the Company has entered into Partner Doctor Independence Support Program Agreements (“PDISPA”) with certain independent practitioners. The term of the PDISPA is for a period of 5 years from September 1, 2021, to August 31, 2026. The PDISPA will be renewed under the same terms for successive one-year periods upon conclusion of the initial term unless either party requests in writing to terminate the PDISPA 6 months prior to the expiration date of the PDISPA. Pursuant to the PDISPA, the Company permits such independently operated clinics to use (i) the “Shonan Beauty Clinic” name and (ii) certain trade names associated with our clinic network, including those of Medical Corporation Shobikai, Medical Corporation Kowakai, Medical Corporation Nasukai, Medical Corporation Aikeikai, L’Ange Cosmetique Co., Ltd. and Shobikai Co., Ltd. (collectively, “SBC Medical”). The Company also grants such independently operated clinics the right to use the “SBC Medical Group” name, our know-how of clinic operation, trademarks, trade names, and to provide the treatments designated by the Company and conduct business activities as a partner of the SBC Medical Group under a unified brand image. 9 Table of Contents PDISPA does not charge a franchise fee or a deposit fee, instead the independently operated clinics are to pay fees to the Company, which are to be calculated as follows: total amount of sales at the clinic multiplied by 12% excluding consumption tax. If the total sales amount exceeds 100,000,000 yen per clinic, the maximum fee amount will be 10,000,000 yen. For the purposes of the PDISPA the total amount of sales means the amount of sales after discounting preferential tickets, and other campaigns and discounts. SBC’s Operating Agreement The Company previously entered into an SBC Operating Agreement (the “SBCOA”) with each of the MCs. The original term of the SBCOA was from April 1, 2023, to March 31, 2025, and the term was extended until March 31, 2026. Pursuant to the SBCOA the Company agreed to provide the MCs with the following consulting services related to: (i) marketing related services for developing new clients (ii) aiming to ensure stable performance and increase customer satisfaction through the creation of repeat customers (iii) the establishment and operation of a system seeking to ensure medical safety (iv) securing attorneys and medical institutions to transport in the event of claims or medical accidents, (v) measures to improve employee satisfaction, and design of organizational chart and personnel evaluation system (vi) the selection of medical equipment and materials, (vii) the acquisition of properties for new medical facilities (trade area survey, area selection, lease agreement signing, etc.) (viii) various types of general skills training for healthcare facility employees (ix) specialized and advanced skills training in leadership, motivation, communication, etc., for chiefs, leaders, and other employees with subordinates (x) development of new type of medical facilities (xi) development of new treatment methods (xii) hiring employees with national certifications, professional skills, and interpersonal skills, such as doctors, nurses, and reception counselors (xiii) performance management, business analysis, and management decision making utilizing financial statements such as income statements, cash flow statements, and balance sheets (xiv) use of the likeness of the Company’s officers or employees on websites, commercials, and other advertising media and (xv) efficient operation methods that allow for more customer service during the same clinic hours. Under the SBCOA in effect prior to April, 2025, in exchange for the foregoing services, each MC is required to pay the Company 3,000,000 yen per month (excluding consumption tax) for each medical facility at which such MC provides medical services to its clients. In light of the current challenging competitive environment, we are pursuing a long-term growth strategy aimed at expanding and stabilizing our business foundation by creating an environment that can better facilitate the establishment of new clinics by MCs. In line with this objective, effective April 1, 2025, we amended and renewed the SBCOA with each MC. Under the revised SBCOA, if neither party expresses an intention not to renew the agreement before the expiration of the effective period, the agreement will be renewed for successive one-year periods under the same terms and conditions. The main revisions include: 1. Revised Fee Structure • First-Year Fee Reduction for Newly Opened Clinics: Fees will be reduced during the first year of operation for newly established clinics, significantly reducing initial cost burdens at a stage when clinics have yet to fully establish their customer base. • Fees Based on Service Utilization from the Second Year Onward: Starting from the second year of operation, fees will be calculated based on the scale of services utilized and the operational size of each clinic. 2. Changes to Provided Consulting Services Following the revision, consulting services provided by the Company to MCs will include: • Management consulting for medical corporations and facilities • Human resources and labor management services • Recruitment-related services • General administrative services • Information system management services • Customer relations services • Accounting, finance, and taxation services • Legal services • Clinic establishment and facilities management services • Infrastructure introduction, improvement, and operational support services related to insurance-covered medical treatments 10 Table of Contents Service Contracts We entered into service contracts with Medical Corporation Association Furinkai (the service contract regarding operation on November 22, 2023 and the service contract regarding management consulting on November 25, 2023 respectively) and Medical Corporation Association Junikai (the service contract regarding operation and the service contract regarding management consulting both on November 16, 2023). On June 30, 2025, we entered into renewed business consignment agreements with Medical Corporation Association Furinkai and Medical Corporation Association Junikai, each effective as of June 1, 2025, which superseded the prior service contracts. The scope of work (“SOW”) under the renewed agreements includes management consulting and operational support services (including, among others, marketing support, procurement support for medical equipment and materials, operational process support, human resources and recruitment-related support (for Junikai), and information system management services). Business Consignment Agreement for Management Consulting and Operational Support Services to Medical Corporation Association Furinkai The material terms of our renewed business consignment agreement with Medical Corporation Association Furinkai are as follows: • Signing Date: o June 30, 2025 • management consulting and operational support services relating to the operation of medical facilities of Medical Corporation Association Furinkai, including: o marketing support for developing new clients; o selection and procurement support for medical equipment and medical materials; o measures to ensure stable performance and increase customer satisfaction through the creation of repeat customers; o planning and consulting for management and operational strategies; o renewal of existing treatment methods and development of new treatment methods and manuals, and support for implementation; o establishment and operation support for systems intended to help ensure medical safety; o support for the integration and improvement of accounting and management processes through the introduction of new accounting systems and related tools; and o information system management services, including advisory services relating to information security, IT networks, data centers and communication tools, account management, and business process automation support. • Effective Period o June 1, 2025 until May 31, 2026 o If neither party expresses an intention not to renew the agreement before the expiration of the effective period, the agreement will be renewed for successive one (1) year periods under the same terms and conditions. • Fees Payable Under the Agreement o On June 30, 2025, we entered into two separate business consignment agreements with Medical Corporation Association Furinkai, both effective as of June 1, 2025. Under both agreements, the monthly service fee for the applicable month is payable for each medical facility and is determined based on the facility’s tier classification set forth in the applicable appendix, considering the length of time since the facility’s opening, the facility’s monthly revenue, and patient volume over the past year. The specific fee ranges are as follows: • For medical facilities that use the terms “Shonan Beauty” or “SBC” as part of their facility name (such as SBC Beauty Dermatology Clinics): The monthly service fee ranges from JPY 300,000 to JPY 6,230,000 per facility (excluding consumption tax). • For other medical facilities (excluding any medical facility that uses the terms “Shonan Beauty” or “SBC” as part of its facility name): The monthly service fee ranges from JPY 1,700,000 to JPY 5,800,000 per facility (excluding consumption tax). 11 Table of Contents Business Consignment Agreement for Management Consulting Services to Medical Corporation Association Junikai The material terms of our renewed business consignment agreement for management consulting services to Medical Corporation Association Junikai are as follows: • Signing Date o June 30, 2025 • management consulting and operational support services relating to the operation of medical facilities of Medical Corporation Association Junikai, including: o advisory services to strengthen branding and develop new clients; o selection and procurement support for medical equipment and medical materials; o renewal of existing treatment methods and development of new treatment methods and manuals, and support for implementation; o establishment and operation support for systems intended to help ensure medical safety; o planning and consulting for management and operational strategies; o support for the integration and improvement of accounting and management processes through the introduction of new accounting systems and related tools; o human resources and labor management support (including consultations on employment rules and internal policies and initiatives to improve employee engagement); o recruitment-related advisory and support (including strategic recruiting and support for retention and onboarding); and o information system management services, including advisory services relating to information security, IT networks, data centers and communication tools, account management, and business process automation support. • Effective Period o June 1, 2025 until May 31, 2026 o if neither party expresses an intention not to renew the agreement before the expiration of the effective period, the agreement shall be renewed for another one (1) year under the same terms and conditions. • Fees Payable Under the Agreement o The monthly service fee for the applicable month is payable for each medical facility where Medical Corporation Association Junikai provides medical services, and is determined based on the facility’s tier classification set forth in the appendix, considering the length of time since the facility’s opening, the facility’s monthly revenue, and patient volume over the past year. o The monthly service fee ranges from JPY 450,000 to JPY 1,440,000 per facility (excluding consumption tax). Consumption tax is charged separately. The use and regulatory status of certain products The Company acts in the capacity of a purchasing agent by reselling medical supplies, cosmetic products, and medical equipment to the MCs for use in their clinics. The Company acts as a purchasing agent, for the following cosmetic products: MT Stem Eye Cream, MT Cleansing Gel, MT Contour Lotion, MT Essential Serum, MT Contour B Cream, MT Premium Coffret 2025, MT Facial Foaming Wash, MT Protect UV Gel, MT Condense C Serum, MT Crystal Shot. These products are used to enhance the attractiveness, change the appearance, or maintain the health of the skin or hair of a person and more specifically are used as eye cream, cleanser, toner, serum, moisturizing cream, skincare set, face wash, and sunscreen gel. The following table describes the primary use and regulatory status of each of the products that we resell: Available for Sale In 12 Table of Contents Product Category Product Line Primary Use United States Vietnam Thailand Japan Cosmetics MT Stem Eye Cream Eye cream P P P P Cosmetics MT Cleansing Gel Cleanser P P P P Cosmetics MT Contour Lotion Toner P P P P Cosmetics MT Essential Serum Serum P P P P Cosmetics MT Contour B Cream moisturizing cream P P P P Cosmetics MT Premium Coffret 2025 Skincare Set P P P P Cosmetics MT Facial Foaming Wash face wash P P P P Cosmetics MT Protect UV Gel sunscreen gel P P P P Cosmetics MT Condense C Serum Serum P P P P Cosmetics MT Crystal Shot Serum P P P P The Company acts as a purchasing agent, for the following medical equipment: Embryo Scope, PQX Pico Laser, Nordlys, Coolsculpting ELITE, Stellar M22 IPL, General-purpose video scope for upper gastrointestinal tract GIF-1200N, Sperm motility analyzer with SMAS Biological Microscope, Surgitron DualEMC, Gas Sterilizer CT-540C, Centrifugal Separator H-36α, and G-RO (automated vitrification system). This equipment is used for the diagnosis, treatment, or prevention of human or animal diseases, or to affect the structure or function of the human or animal body, and more specifically is used for observation of fertilized eggs, skincare treatment, fat removal, observation, imaging, diagnosis, and treatment of the upper gastrointestinal tract, analysis of sperm motility, skin incision and coagulation for surgical use, sterilization of medical supplies vulnerable to high pressure, separation of aspirated fat. 13 Table of Contents The following table describes the primary use and regulatory status of each of the products that we resell: Available for Sale In Product Category Product Line Primary Use United States* Vietnam** Thailand*** Japan Incubator EmbryoScope Observation of fertilized eggs An incubator for growing fertilized eggs of patients. A camera takes pictures at regular intervals, and the division can be observed like a movie on the monitor. Time-lapse incubator No No No P Laser Therapy Machine PQX Pico Laser Skin Care Treatment Picotoning, Picolaser Fractional No No No P Laser Therapy Machine Nordlys Skin Care Treatment IPL Light Therapy (Photo Double/Photo Triple) No No No P Slimming equipment coolsculpting ELITE fat reduction Fat cooling (slimming) No No No P Laser Therapy Machine Stellar M22 IPL Skin Care Treatment IPL Light Therapy (Photo Double Photo Triple) No No No P Endoscope General-purpose video scope for upper gastrointestinal tract GIF-1200N Observation, imaging, diagnosis, and treatment of the upper gastrointestinal tract No No No P Analyzer Sperm motility analyzer with SMAS Biological Microscope Analysis of sperm motility The system automatically tracks moving sperm and displays and outputs a number of measurement results accurately and quickly, including the number of moving sperm, their movement trajectories, discrimination from immobile sperm, and various types of motility. No No No P Electrosurgical instrument Surgitron DualEMC Skin incision and coagulation for surgical use MD-style minimal downtime No No No P Sterilizer Gas sterilizer CT-540C Sterilization of medical supplies vulnerable to high pressure Sterilizer, low temperature up to 40°C No No No P Centrifugal separator Centrifugal separator H-36 α Separation of aspirated fat condense rich face No No No P The Company does not distribute the products above in the US, Vietnam, or Thailand for the following reasons. 14 Table of Contents * A foreign entity must apply to Food and Drug Administration, “FDA,” with regard to medical equipment in advance in order to import and distribute it in the U.S., and needs to pass examination by the FDA. In addition, the entity must register the equipment after passing examination. Accordingly, while the Company pursues growth opportunities in the United States through strategic investments and alliances, it does not currently distribute these specific products in the U.S. ** A foreign entity should apply to Ministry of Health, “MOH”, with regard to medical equipment in advance in order to import and distribute it in Vietnam. In particular, the entity should obtain circulation number and declaration of eligibility to trade medical equipment. However, the Company has not applied yet and has no current intention to apply and accordingly does not distribute any of the above products in Vietnam. *** A foreign entity must apply to the Thai Food and Drug Administration (Thai FDA) to import and distribute medical equipment in Thailand. Although the Company announced its entry into the Thai market in November 2025 through a strategic alliance, it does not currently distribute the specific products listed above in Thailand. The Company acts as a purchasing agent for the following medical supplies: Coolsculpting Elite Reorder Pack, Allergan VISTA, Juv Voluma, Condense Rich Syringe, Juv Volift, MiraDry BioChips, Juv Volbella, VISTA Ultra Plus XC, Juv Volux, and Cellution Disposable Kit. The supplies are used for the diagnosis, treatment or prevention of human or animal diseases and are not quasi-drugs, regenerative medicine products, or machinery and equipment such as dental materials and hygiene products; and more specifically, are used for treatment to reduce fat cells and improve body contours, wrinkle-improving injections, medical consumables, and hyperhidrosis treatment. The following table describes the primary use and regulatory status of each of the products that we resell: Available for Sale In Product Category Product Line Primary Use United States* Vietnam** Thailand *** Japan coolsculpting coolsculpting Elite reorder pack Body Contouring Equipment Consumables; Reduces fat cells and improves body contours; No No No P Botox injections Allergan VISTA Wrinkle-improving injections No No No P hyaluronic acid injections Juv Voluma Wrinkle-improving injections No No No P fat injections condense rich syringe medical consumables No No No P hyaluronic acid injections Juv Volift Wrinkle-improving injections No No No P MiraDry MiraDry BioChips hyperhidrosis treatment No No No P hyaluronic acid injections Juv Volbella Wrinkle-improving injections No No No P hyaluronic acid injections VISTA Ultra Plus XC Wrinkle-improving injections No No No P hyaluronic acid injections Juv Volux Wrinkle-improving injections No No No P fat injections Cellution Disposable Kit medical consumables No No No P The Company does not distribute the products above in the US, Vietnam or Thailand for the following reasons. * A foreign entity must register its facility, such as a clinic, drug store, etc., with the Food and Drug Administration, “FDA,” in order to distribute medical supplies in advance in the US. The Company has not yet registered its facilities for such distribution. Accordingly, while the Company pursues growth opportunities in the United States through strategic investments and alliances, it does not currently distribute these specific products in the U.S. ** A foreign entity should obtain the pharmaceutical approval in order to distribute medical supply in advance in Vietnam. However, the Company has not obtained approval yet and has no current intention to seek approval and accordingly does not distribute any of the above products in Vietnam. *** A foreign entity must apply to the Thai Food and Drug Administration (Thai FDA) to import and distribute medical supplies in Thailand. Although the Company announced its entry into the Thai market in November 2025 through a strategic alliance, it does not currently distribute the specific products listed above in Thailand. 15 Table of Contents Types of Services Provided Advertising and Marketing Services. The Company, through its subsidiary SBC Marketing (which was merged into SBC Medical Group Co., Ltd. effective January 1, 2026), provides advertising and marketing services primarily to the MCs, including but not limited to the promotion of the MCs’ clinics’ services and brand on social media networks. We use various marketing and advertising methods to increase awareness of the “Shonan Beauty Clinic” brand. The marketing services that we provide to the MCs include raising the profile of products and services, creating demand, promoting sales, and building brand image. Our public relations staff has set up target audiences, created promotional materials, and understand customer characteristics and needs, and continue to deliver effective messages to target audiences. Additionally, we utilize social media platforms such as Instagram and YouTube to establish a direct connection with end-users and foster a community. We also believe it is important to measure the effectiveness of marketing advertising and analyze the results. Our public relations staff evaluates the effectiveness of our advertising and makes the necessary adjustments to maximize the MC’s return on investment (ROI) and optimize it on a frequent basis, including but not limited to focusing on the types of services that are popular in each specific geographical location of our franchisee clinics. Staff Recruitment, Training, and Management. The Company, through its subsidiary SBC Medical Consulting and SBC Medical Sub, provides staff recruitment and management services to the MCs. The Company maintains a working relationship with SBC Tokyo Medical University, previously known as Ryotokuji University, a medical professional education institution located in Urayasu City of Chiba Prefecture in Japan, which acts as a platform for our recruitment management services. The university provides instruction and professional education to the students of the educational institution, including but not limited to physicians and nurses. We work directly with the university in an effort to recruit students that have completed the applicable education course, to work at one of our franchisee treatment centers. This allows our franchisee treatment centers to reduce recruitment costs by having access to a continuous flow of employee candidates that are newly trained for positions that the franchisee treatment centers need to fill. It also increases employee retention rates at our franchisee treatment centers since we have assisted in the recruitment of an employee that is trained for a specific position at the franchisee treatment center. Our staff recruitment service provides our franchisee clinics with access to a pool of skilled professionals who are well-prepared to make meaningful contributions to their respective healthcare environments. This allows for cost-effective talent acquisition, talent mobility, and enhanced retention rates. We also provide training program services for all of the employees of our franchisee clinics. This training program is designed to provide employees with the knowledge and skills needed in our franchisee clinic operations, and is intended to improve employee competence and overall company productivity. The content of the training program is wide-ranging. First, we provide team-building training to strengthen cooperation and communication skills among employees. By fostering teamwork, we ensure that cooperation among staff members is smooth and efficient store operations are achieved. We also provide training on clinic hygiene standards to help the MCs’ employees understand the importance of clinic hygiene. Adherence to strict standards in clinic hygiene is essential, and we ensure that the MCs’ employees are well-informed to protect the health and safety of the franchisee clinics’ patients. The program also provides training on the basic operating rules and protocols. We train the MCs’ employees to make appropriate decisions in order to provide appropriate services to the patients of the franchisee clinics. In a further effort to improve the work environment and promote respect for employees, we also provide sexual harassment training services. We emphasize the importance of creating a safe working environment for all staff. 16 Table of Contents Customer Management. The Company, through its subsidiary Medical Payment, provides payment management services to the MCs. These services include but are not limited to the use of payment tools at the point of sale for the MC’s collection of payment from customers of the franchisee clinics. Additionally, we earn revenue through our points services, which involve managing the customer rewards program offered to customers of the franchisee clinics. Effective June 1, 2025, the Company revised the customer rewards program, and the description below reflects the program in effect as of December 31, 2025. The customer rewards program gives customers points for their birthday, certain referrals, and purchasing products or services at the franchisee clinic locations. The customers also receive additional loyalty benefits in connection with their accumulated points once they reach a certain number of visits to our franchisee clinics or reach certain spending thresholds, as further described below. The three tiers of the customer points ranking system are silver, gold, and diamond. The silver tier rank is the lowest tier rank and is generally achieved once an eligible payment occurs at a participating clinic (subject to certain exclusions and the existence of certain clinics that do not participate in the program), and does not require a specific number of visits or spending amount to obtain. Silver tier rank customers receive 1,000 points on their birthday, 0.5% of the total spending amount back in points (provided that certain items, such as insurance-covered medical care and certain fees, may be excluded from point accrual and/or point usage). For purposes of determining visit counts and spending thresholds, the Company generally counts amounts before point or ticket discounts, and a “visit” is counted when the pre-discount amount is at least JPY 30,000 (tax included). The gold tier rank is achieved when the customer visits the franchisee clinics 6 or more times or spends 500,000 yen or more in a two-year period. Gold tier rank customers receive 10,000 points on their birthday, 1% of the total spending amount back in points (subject to the same exclusions described above). The diamond tier rank is achieved when the customer visits the franchisee clinics 8 or more times or spends 1,000,000 yen or more in a two-year period. Diamond tier rank customers receive 15,000 points on their birthday, 3% of the total spending amount back in points (subject to the same exclusions described above). The customers may use the earned points for discounts on select services and products offered by our franchisee clinics, and each point may be used for a discount amount equal to 1 yen. The customer’s points expire if the customer does not make any additional eligible payment at a participating clinic within one year from the customer’s last eligible payment. Accordingly, at the time that a customer’s points expire, the Company earns 1 yen for each customer point that expires. Employee Services. The Company, through its subsidiary Liesta, provides employee management services to the MCs, including assistance with the location and securement of rental housing in Japan for employees of the MCs as well as facility rentals in Japan for the MCs. Leasehold improvements and Design. The Company, through its subsidiary SBC Sealane, provides leasehold improvements and design management services to the MCs, by coordinating engagement with our preferred general contractors for the clinic leasehold improvements and design, as well as overseeing the process. Medical Equipment and Supplies. The Company acts in the capacity of a purchasing agent by supplying medical devices, medical equipment (including through leases of such equipment), implants, injection materials, other medical consumables, as well as skin care and beauty products that we resell to the MCs for use in their clinics. Licensure of Intellectual Property and Technologies. The Company licenses the use of patent-pending and non-patented intellectual property, including but not limited to medical technologies, trademark, trade names, and brand use, to the MCs. Many of the clinics owned by the MCs license the use of our brand name, “Shonan Beauty Clinic”, and/or the right to use the name “SBC Medical Group”, subject to the terms of the applicable agreements. We have also granted the MCs the right to use the know-how of the clinic operations, offer the procedures designated by us, conduct business activities under our brand name, and utilize our specialized technologies for procedures. We license the use of our highly standardized operational procedures, developed through years of industry experience and accumulated know-how, to the MCs. Our specialized technologies for procedures enhance the safety and efficiency of these cosmetic surgery procedures and include, but are not limited to, puncture devices for buried double eyelid procedures, simplified buried method surgical equipment, proprietary surgical sutures, silicone bags for breast augmentation simulations, and microscopic hair volume evaluation method for the treatment of androgenetic alopecia. Additionally, we license the use of patent-pending and non-patented safety management methods to the MCs for procedures such as full-incision double eyelid surgery, lateral canthoplasty, brow lift procedures, cheek sagging prevention methods, hair removal safety management methods, tattoo removal treatments, and hyperhidrosis procedures. 17 Table of Contents The Company licenses the use of simulation technology to the MCs aimed at enhancing the skills, standardization, and education of professional staff that are providing medical services at the MCs’ clinics, and licenses the use of such technologies to the MCs. By utilizing our collection of medical cases and artificial intelligence (“AI”), we employ technologies such as virtual reality, rendering, computing, 5G/6G, and Web3.0 to create simulators for the services that the MCs’ treatment centers provide. For example, SBC AI is the industry’s first double AI simulation service. The highly accurate double AI simulation service has been achieved by learning from actual case data of franchisee’s clinic, which totals 600,000 double layer cases, using an AI model based on the most advanced AI technology, GAN (adversarial generative network). This service enables a 10-step simulation of double layer width on “your own face”, whereas double layer surgery has generally been studied using photographs of other people’s cases. These new technologies offer benefits to our franchisee treatment centers, such as efficient education, knowledge sharing, improved procedural accuracy, proactive support, and remote operations. Through simulation technology, medical professionals can simulate various scenarios and anticipate potential complications, enabling them to develop proactive strategies and responses. We believe this improves the level of patient safety and care at our franchisee clinics. The integration of advanced technologies, such as 5G/6G, allows for remote operations and consultations, enabling medical experts at our franchisee clinics to provide guidance and perform procedures from a distance, expanding access to specialized care and expertise. Supplementary information regarding other business activities and service overview diagram Subsidiaries within our group operate businesses beyond our core medical business services. Subsidiaries whose sales account for less than 1% of consolidated net sales are omitted. Our revenues Franchising Revenue The Company generates franchising revenue by licensing its intellectual properties, including but not limited to the Company’s brand name (“Shonan Beauty Clinic”), trade name, patents, and trademarks, and by providing consulting services to enhance the value of “Shonan Beauty Clinic” brand, as a franchisor pursuant to franchise agreements with the medical corporations (the “MCs”) in Japan. Prior to April 2023, revenue was based on a percentage of sales and recognized at the time when the related sales occur; beginning in April 2023, the Company transitioned to a standardized monthly fee arrangement (as subsequently refined in September 2023) in accordance with the applicable agreements, and recognizes over time as services are rendered. Starting in April 2025, the Company revised its fee model, reducing fees for clinics in their first year of operation to better reflect the lower service utilization during the initial period, before transitioning to a performance-based structure thereafter. This change aims to create a more sustainable long-term revenue model while aligning fees with the actual operations of newly opened clinics. Procurement Services Revenue The Company generates procurement services revenue by purchasing primarily advertising services and medical materials from qualified vendors on behalf of MCs to maintain brand quality consistency. Procurement services revenue is recognized at the point in time upon the delivery of products or over time as services are performed. Occasionally, the Company receives vendor discounts on certain large purchases. It recognizes revenue based on actual payments. Prior to June 2025, any over-collection resulting from such discounts was returned to MCs; since June 2025, it is retained for future transactions. Management Services Revenue The Company provides loyalty program management services, labor supporting services, function supporting services, and management consulting services to MCs. Loyalty program management services The Company awards loyalty points on behalf of MCs to MCs’ customers, who earn loyalty points from each qualified purchase made at the loyalty program participating clinics of MCs, in exchange for a handling fee. The revenue is based on a percentage of the related payment amount made by MCs’ customers and is recognized when the loyalty points are awarded. At the time loyalty points are awarded, a MC pays the Company cash in an amount equivalent to the awarded loyalty points, which is recorded as advances from customers. When a MC’s customers redeem the loyalty points, the Company returns the cash back to the MC in an amount equivalent to the redeemed loyalty points. The awarded loyalty points expire if a MC’s customer does not make any additional qualified purchase at a participating clinic within a year. The Company accumulates and tracks the points on behalf of MCs until the loyalty points expire, at which time the Company recognizes an amount equivalent to the expired loyalty points as revenue. 18 Table of Contents The Company also awards certain points to MCs’ customers on behalf of MC for free in order to increase the volume of MCs’ sales, from which the Company earns other types of revenues, such as royalty income. When a MC’s customers redeem such points, the Company reimburses MC in an amount equivalent to the used free points. The redemption of such points is recorded as a reduction of the revenue recognized. The Company is an agent in the management of loyalty programs, and as a result, revenues are recognized net of the cost of redemptions. Labor supporting services The Company generates revenue by dispatching staff to MCs to provide a range of services, primarily including IT and administrative services. The Company recognizes the revenue over the time when services are rendered. Starting from April 2025, the monthly fee for each clinic is determined using the same key criteria described above under “Franchising Revenue.” Function supporting services The revenue is derived from providing functional supporting services to MCs, such as accounting and human resources services. The Company recognizes the revenue over the time when services are rendered. Starting from April 2025, the monthly fee for each clinic is determined using the same key criteria described above under “Franchising Revenue.” Management consulting services The Company generates revenue by providing consulting services to MCs in relation to business operations of cosmetic dermatology. The Company recognizes the revenue over the time when services are rendered. Rental Services Revenue The Company generates rental income from operating leases and sales-type leases, which is accounted for under ASC Topic 842. Operating lease revenue is generally recognized on straight-line basis over the terms of the lease agreements, and sales-type leases revenue is generally recognized on the lease commitment date. Other Revenues The Company generates other miscellaneous revenues such as beauty and health services revenue, leasehold improvement services revenue, real estate brokerage service revenue, interest income, etc. These revenues are recognized when the Company satisfies performance obligations. Revenues generated from these different revenue streams by the Company consist of the following: For the Years Ended December 31, 2025 2024 Franchising revenue $ 45,943,241 $ 61,033,032 Procurement revenue 56,053,171 54,814,399 Management services revenue 29,628,534 53,113,155 Rental services revenue 23,032,651 16,141,714 Others 18,949,892 20,313,242 Total $ 173,607,489 $ 205,415,542 19 Table of Contents Our Strengths Brand. Our group’s brand name “Shonan Beauty Clinic” has been developed for over 20 years in the medical industry on the basis of safe and reliable medical services that are primarily cosmetic in nature. We maintain high standards for quality control and customer service in our franchisee and other alliance clinics in Japan, as well as our directly owned and operated clinics in Vietnam and Singapore in order to continue to build upon this foundation. In addition, some of the doctors that provide services at our franchisee clinics also publish medical related articles and participate in conferences in Japan and overseas. We believe that this cohesive approach and consistent quality of service promotes global recognition of our brand name. Comprehensive Medical Services. The Company’s franchisee and other alliance clinics in Japan, as well as our directly owned and operated clinics in Vietnam and Singapore, provide a variety of medical treatments to meet customers’ needs. We, together with the operators of our franchisee and other alliance clinics, focus on building long-term relationships with customers, and customer satisfaction rate ranks highly among Japanese beauty medical service providers. Based on internal management reports from our franchisee and other alliance clinics and our directly owned and operated clinics, our global customer base has grown from 3.0 million customer visits in 2021 to a total of over 6.6 million customer visits globally for the year ended December 31, 2025, and the franchisee clinics have an average repeat customer rate of over 72%. Accordingly, we have been able to continue to provide a high level of management services to the MCs while benefiting from the increasing number of clinics. Technology. The Company focuses on developing and licensing simulation technology aimed at enhancing the skills, standardization, and education of professional doctors that are providing medical services at our franchisee clinics. By utilizing our collection of medical cases and AI, we employ technologies such as virtual reality, rendering, computing, 5G/6G, and Web3.0 to create simulators for the services that our treatment centers provide. These simulators offer benefits to our treatment centers, such as efficient education, knowledge sharing, improved procedural accuracy, proactive support, and remote operations. Through simulation technology, medical professionals can simulate various scenarios and anticipate potential complications, enabling them to develop proactive strategies and responses. We believe this improves the level of patient safety and care at our franchisee clinics. Our goal is to achieve standardized medical techniques through the development of these technological advancements. The integration of advanced technologies, such as 5G/6G, allows remote consultations (including telemedicine) and remote clinical decision support, enabling medical experts to provide guidance remotely to on-site medical professionals and patients, expanding access to specialized care and expertise. Management Services. The management services that we provide to our franchisee clinics, through our subsidiaries, include but are not limited to advertising and marketing needs across various platforms (such as social media networks), staff management (such as recruitment and training), booking and reservation services for franchisee customers, assistance with franchisee employee housing rental, facility rentals, leasehold improvements and design, medical equipment procurement ( resale ), the provision of cosmetic products to franchisees for resale at the franchise locations ( resale ), licensure of the use of patented, patent-pending and non-patented medical technologies, trademark and brand use, IT software solutions for remote medical consultations, and payment tools for franchisee customers. We believe that our advertising and marketing services (including but not limited to promotion on social media networks) help create effective campaigns that promote our franchisee clinic services and attract a wider audience of customers. We also believe that our maintenance and operation of the booking and reservation process for customers ensures a seamless user experience when booking services at our franchisee clinic locations. These services provide valuable guidance and expertise to our franchisee clinics, helping them optimize their operations, improve customer experience, and enhance overall performance. We believe this to be a crucial component of fostering our franchisees’ growth and success. Internal Processes and Protocols. To promote high standards of quality and service, we have implemented internal processes and protocols. These measures include ongoing training and education programs for our employees and the employees of our franchisee clinics, continuous monitoring of treatment outcomes, and adherence to industry guidelines and regulations. By upholding these standards, we aim to maintain and enhance our franchisees’ reputation as a trusted provider of cosmetic medical services. 20 Table of Contents Our Growth Strategies Pursue New Clinic Development. We have pursued a disciplined new clinic growth strategy, having expanded our concept and franchisee model across varying clinic sizes and geographies. We plan to leverage our expertise in opening new clinics and our success in the Japan market to fill in existing markets and expand into new geographies with the same careful planning as we have demonstrated in the past. We will continue to utilize our existing strategy of exploring opportunities for additional franchisee and other alliance clinics, as well as directly owned and operated clinics (including but not limited to merger and acquisition transactions). See also our real estate strategy under “Site Development and Expansion — Site Selection Process.” We believe that our revenue will increase if we are able to increase the number of franchisee and other alliance clinics that we provide management services to, since we would be providing our services to additional locations. We believe that we have the potential to increase global recognition of our brand. However, we cannot predict the time period over which we can achieve any level of franchisee and other alliance clinic growth or whether we will achieve this level of growth at all. Our ability to achieve new franchisee and other alliance clinic growth is impacted by a number of risks and uncertainties beyond our control, including those described in “Part I, Item 1A. Risk Factors”. Deliver Consistent Comparable Franchisee Clinic Sales Growth. We believe we will be able to generate comparable franchisee clinic growth by growing our customer base through increased brand awareness, consistent delivery of quality surgical and non-surgical medical services by our franchisee clinics and our clinics in Vietnam and Singapore, acquiring and developing cutting edge medical services to be licensed to our franchisee clinics, and franchisee clinic renovations. We will continue to manage our franchisee clinics and pricing as part of our overall strategy to increase the number of customers and the average amount spent by customers. We continue to explore initiatives to increase skin care product sales, enhance the services offered by our franchisee clinics and our clinics in Vietnam and Singapore, and improve our appointment booking process. Our franchisee client rewards program, which has been rolled out across the entire franchisee clinic base in Japan, tracks customers’ spending and awards customers with points based upon such spending (generally calculated as a percentage of the spending amount). The rewards program also gives customers points for their birthday and certain referrals. The customers also receive additional loyalty benefits in connection with their accumulated points once they reach a certain number of visits to our franchisee clinics (tiers for a total of 6 or more visits and 8 or more visits in 2 years) or reach certain spending thresholds (tiers for 500,000 yen or more and 1,000,000 yen or more in 2 years). The customers may use the earned points for discounts on select services offered by our franchisee clinics. Increase Profitability. During our expansion, we have invested in our infrastructure and personnel, which we believe positions us to continue to scale our business operations. As we continue to grow, we expect to drive higher profitability at the corporate level by leveraging our existing support infrastructure, as we believe that as the number of the franchisee clinics that we provide management services to grows, our general and administrative costs over several years will increase at a slower rate than our revenues. Heighten Brand Awareness. We intend to continue to pursue targeted local and global marketing efforts and plan to increase our brand awareness (including but not limited to advertising on social media platforms). We intend to continue to promote limited time discounts on services provided by the franchisee clinics through our advertising services to build customer loyalty and brand awareness. Our steadily expanding global customer base reflects the growing demand for cosmetic surgery procedures and the confidence that customers have in our brand and services. Procedure and Product Development. We intend to continue to collect and analyze extensive medical data, develop innovative procedures and products, and obtain intellectual property rights to new products and procedure methodologies relating to skin care and the medical services provided by our franchisee clinics. These assets are then provided to our franchisees. We intend to continue to offer guidance and technical training to our franchisee clinics’ employees with respect to these new products and procedure methodologies in order to stay at the forefront of medical advancements. Expand Through Multi-Brand Strategy. In 2025, we accelerated a multi-brand strategy designed to capture a broader range of customer segments within the aesthetic and dermatological markets in Japan beyond our flagship “Shonan Beauty Clinic” brand. In April 2025, our affiliated medical corporation launched “SBC NEO Skin Clinic” in Ebisu, Tokyo, a new brand specializing in non-invasive aesthetic dermatology that leverages advanced laser devices and dermatological treatments widely adopted in South Korea and Western markets. This brand is designed to attract customers who previously sought such treatments abroad, particularly in South Korea, by providing comparable services domestically. In October 2025, our affiliated medical corporation launched “Hada no Aozora Clinic” in Tokyo, a hybrid dermatology model that integrates insurance-covered general dermatology with private-pay aesthetic treatments, creating a lower entry barrier for customers new to aesthetic medicine. Together with our existing brands, including “JUN CLINIC” (acquired through MB career lounge in July 2025), we believe this multi-brand approach enables us to serve customer segments ranging from entry-level to advanced users and to build a diversified, multi-tier service portfolio. These new brands complement the core “Shonan Beauty Clinic” brand and we believe they will contribute to our continued growth in average revenue per customer visit and overall market share. 21 Table of Contents Site Development and Expansion Site Selection Process We consider franchisee clinic site selection to be critical to our success. As part of our strategic site selection process, our team receives potential site locations from networks of local real estate brokers, which are then reviewed by our development and senior management teams. This review includes site visits, key deal terms, and analyses of the estimated profitability of clinics at the proposed properties for our franchisee clinics. Our current real estate strategy focuses on high-traffic markets with a diverse population and above-average household income. In site selection, we also consider factors such as visibility, traffic patterns, accessibility, parking, and competition when considering approval of a location for a franchisee clinic. We also utilize site analytics tools for demographic analysis and data collection for both existing and new market areas, which we believe allows us to further understand the market area (including but not limited to the types of services desired by the local residents) and set clear market development strategies. Our existing framework and experienced management team allow us to efficiently manage the opening of new franchisee clinics on behalf of the MCs in desired locations and penetrate markets in both suburban and urban areas. Expansion Strategy and Market Share The strong market share presence of our franchisee clinics in the Japanese cosmetic surgery industry reflects the success of our brand and customer satisfaction. With our cutting-edge technology, the MC’s skilled medical professionals, and the comprehensive range of services offered at our franchisee clinics, we have established our brand as a trusted and preferred choice among customers seeking cosmetic enhancements. We plan to pursue a two-pronged expansion strategy by opening new clinics in both new and existing markets through our franchisee partners and directly. We believe this expansion will be crucial to executing our growth strategy, as well as building awareness of “Shonan Beauty Clinic” as a global brand and provider of surgical and non-surgical medical services and skin care products. Expansion into new markets occurs in parallel with ongoing growth in existing markets, with the goal of maintaining a pipeline of top-tier development opportunities. Upon selecting a new market, we typically manage the opening of one or two clinics to prove concept viability in that market. We have a remote management system whereby our operations team can monitor clinics in real-time from our headquarters to maintain operational quality in new markets. When selecting sites, we look to replicate the site attributes, trade area quality, and co-tenant mix of our most successful clinics. We frequently reevaluate our market area development plan (targeted areas and pacing for development) and our site selection strategy within those targeted areas. Clinic Design Franchisee clinic design is handled by our in-house development team on behalf of the MCs in conjunction with outsourced vendor relationships. Our franchisee clinics’ sizes currently average approximately 4,000 square feet. Our average customer capacity per franchisee clinic varies greatly depending upon the services being provided at the time. Our franchisee clinic layout evokes a relaxing experience characterized by an efficient use of staff and customer areas as well as modern furniture. Renovation of a new franchisee clinic takes approximately 6 months. We oversee and coordinate engagement with our preferred general contractors on behalf of the MCs for the franchisee clinic renovation process. On average, our franchisee clinics opened during fiscal year 2025 required a cash build-out cost of approximately $486 thousand per clinic, net of landlord tenant improvement allowances, excluding projects that involved only renovations or operational format changes without relocation; however, this amount could be materially higher or lower depending on the utilization of union labor, market, clinic size, and condition of the premises upon landlord delivery. The franchisee MCs are responsible for paying for the build-out cost of the respective franchisee location. Human Capital Management As of December 31, 2025, we had approximately 863 regular employees globally (excluding employees of the managed clinics/medical corporations we support), a majority of which are located in Japan, Singapore, Vietnam, and the United States. For purposes of this disclosure, “regular employees” includes employees on reduced working-hour arrangements and excludes non-regular employees (such as part-time, temporary, and fixed-term staff). As of December 31, 2025, there were no unions represented within our employee base. We anticipate that we will continue to expand our workforce as our company grows. We believe that empowered employees make a difference in our ability to execute our strategy. As such, we strive to provide an inclusive, rewarding and engaging environment for employees to develop professionally and contribute to our success. 22 Table of Contents Competition Management Service Competition. With respect to our management services, we generally do not face significant competition from third parties because substantially all of our management service revenue is derived from our relationship with the MCs, which are related parties. Clinic and Brand Competition Our franchisee clinics face significant competition from a variety of locally owned beauty clinics and Japanese chain beauty clinics offering both cosmetic medical services, as well as cosmetic products. Major competitors of our franchisee clinics include those in Japan but also in the global cosmetic surgery market such as Aesthetic Medispa, Alma Lasers, B. Braun SE, Cynosure Lutronic, Evolus, Inc., Galderma S.A., Genesis Biosystems, Inc., Inmode Ltd., IRIDEX Corporation, Lumenis Be Ltd., Sinclair Pharma Limited, Stryker Corporation, and Surgery Partners. To further strengthen our competitive position in the international market, we acquired a Singapore-based cosmetic surgery group in November 2024. In November 2025, our wholly owned subsidiary commenced a tender offer for shares of Waqoo, Inc., which concluded in December 2025. Settlement commenced on December 19, 2025, and Waqoo became a consolidated subsidiary of SBC Medical Group Co., Ltd. Separately, on December 29, 2025, we completed a strategic minority equity investment in OrangeTwist to support our U.S. market expansion initiatives. In connection with this investment, we agreed to explore potential commercial arrangements. Our clinic in Vietnam is still in the early stages of development in our efforts to penetrate global competition. In the United States, we are pursuing market entry through strategic investments and alliances, including our strategic minority equity investment in OrangeTwist completed on December 29, 2025 and our agreement to explore potential commercial arrangements with it. However, we believe that our franchisee clinics, clinics in Singapore, a clinic in Vietnam and our strategic partners in the United States compete primarily based on service quality, customer experience, ambience, location, convenience, value perception, and price. The competition continues to intensify as competitors to our clinics in Vietnam and Singapore and our franchisee clinics increase the breadth and depth of their cosmetic medical service and cosmetic product offerings, and open new clinics. A decrease in the revenue of the managed clinics (including the franchisee and other alliance clinics) as a result of such increased competition would directly result in a reduction of the Company’s revenue since we receive substantial revenue from the MCs as part of our compensation for management services. We investigate the brand image and concept of competitors to our clinic and our franchisee clinics from the viewpoint of brand and awareness. It is important to understand the franchisee clinic’s impact on its customers because each competitor offers unique characteristics and value. Also, famous chain clinics and locally popular clinics can be a competitive factor. In terms of pricing strategies, we compare pricing strategies from competitors to our clinic and our franchisee clinics, such as price ranges, extent of services provided, and discount campaigns. Because prices have a significant impact on consumer choice, we understand price competition with competitors and consider our own pricing strategy when we set the guidelines for the pricing of services for our franchisee clinics and our clinics in Vietnam and Singapore. However, it is important to strike a balance, because customers value quality and service as well as price. In terms of quality and service, we evaluate the quality of service provided by and the working experience of our franchisee clinics’ competitors’ employees. Because customers want high quality service and highly experienced staff members (such as doctors and nurses), the aim is to understand the quality provided by competitors and to find the point of differentiation of the company. We use review sites and word-of-mouth information to gather customer opinions and understand the potential for improvement of our franchised brand. In terms of the number of clinics and development, we evaluate our regional competitiveness by comparing the number of clinics and the regions in which the franchisee clinics’ competitors operate. We track franchisee clinics’ competitors’ plans to open new clinics and their expansion strategies to understand the status of competition in the market. This provides us with useful information to consider when determining franchisee clinic growth opportunities. In terms of customer satisfaction and feedback, we analyze customer satisfaction surveys and feedback from the patients of (i) our clinics in Vietnam and Singapore, (ii) the clinics operated by the MCs (including franchisee clinics) in Japan, and (iii) certain independently operated clinics as part of our management services to the MCs and, where applicable, under our partner doctor independence support program arrangements. The goal is to understand the customers’ assessments and find ways to improve the “Shonan Beauty Clinic” brand and the overall customer experience across the clinic network. We compare the customer experience at the franchisee clinics against that offered by competitors and consider differentiation strategies and service improvement measures in order to preserve our franchised brand integrity. Considering the above points of view, we analyze competitors to understand our strengths and competitive challenges, and conduct strategic decision making. By comparing customer experience metrics and service offerings at (i) the clinics operated by the MCs in Japan and (ii) our clinics in Vietnam and Singapore against those of competitors, we are determining the direction to improve the competitiveness of our brand and clinic network in the market. 23 Table of Contents Business Trends In the cosmetic medical service and product industry, customer preferences and needs are very important. Service trends and customer interests can change. For example, there is a growing demand for non-invasive cosmetic services. The key to success is for our clinics in Vietnam and Singapore, and our franchisee and other alliance clinics to offer cosmetic services and products tailored to customers’ needs and preferences. The success of the managed clinics (including the franchisee and other alliance clinics) would directly impact our success since we receive substantial revenue from the MCs as part of our compensation for management services. The cosmetic medical industry is highly dependent on general economic conditions. During economic boom times, customer discretionary income tends to increase and demand for cosmetic medical services and products tends to increase. In particular, due to inflation, costs and wages are on an upward trend. In the event of rapid inflation, there is a risk of deterioration in business performance, such as inability to pass on higher purchase costs and other costs to price. While we have observed rising operational costs, to date, inflationary pressures have not had a material adverse effect on our operations. On the other hand, during economic downturns, demand may fall due to economic uncertainty and the impact of spending cuts, especially since many of the cosmetic medical services our franchisee clinics and our clinic are elective. Depending on economic conditions and individual circumstances, customer discretionary spending priorities may change, and some patients may place a higher priority on obtaining cosmetic services and products and actively allocate their budget accordingly. Other patients may be more likely to refrain from buying elective cosmetic services and products to save money. These trends have a significant impact on the demand for our franchisee clinics’ cosmetic services and products. A decrease in the revenue of the managed clinics (including the franchisee and other alliance clinics) as a result of such adverse economic conditions would directly result in a reduction of the Company’s revenue since we receive substantial revenue from the MCs as part of our compensation for management services. Demographic trends, such as changes in population age structure, family structure, and lifestyle, are also important factors. For example, younger and middle-aged generations may be more willing to undergo elective cosmetic procedures and purchase cosmetic products. Older generations, on the other hand, may be more likely to be apprehensive about undergoing elective cosmetic procedures. Competitive presence is an important factor in the cosmetic clinic industry. The presence of competitors in the same category or an increase in new entrants can increase customer choices and diversify demand. Differentiation and uniqueness from competitors are required, especially in high income geographical locations. These factors also directly or indirectly affect consumer confidence. Customers choose beauty clinics they trust based on economic and competitive conditions. Newly opened clinics, especially in new geographical locations, also tend to have an initial revenue peak, known as the honeymoon period, followed by a decline. While these factors influence the success of the beauty clinic industry, it is important to understand trends and customer needs across the industry, and to develop flexible strategies and appropriate measures for preserving our brand integrity. Focusing on improving clinic quality, service, and customer experience is required to maintain our franchised brand. Suppliers As of December 31, 2025, we had a large and diverse network of suppliers, providing us with a diverse selection of medical equipment, supplies and medical consumables. We facilitate the sale of medical equipment, supplies and medical consumables to the MCs as part of our management services. Our suppliers fall into five key categories: medical devices, medical equipment, implants, injection materials and other medical consumables. We have a system for selecting reliable and quality suppliers, with a selection and review process based on qualification of the business and/or products, pricing, reputation, service quality, delivery schedule and product offerings. We maintain multiple suppliers for key categories of purchases to ensure continuity and quality of supply. Payment terms with the majority of our suppliers are on open account. Certain suppliers grant us credit periods ranging from 20 to 60 days, although we generally pay on delivery. We have not previously encountered any major problems in sourcing despite not having long-term contracts with our suppliers, nor did we encounter any business disruption due to supply shortages or delays. In any event, we believe any shortage or delay in the supply of implants, injection materials and medical consumables will not have any material impact on us as we are able to switch to other suppliers with comparable quality and prices. If these third parties experience shutdowns or continued business disruptions, our ability to conduct our business and facilitate the sale of medical equipment, supplies and medical consumables to the MCs in the manner and on the timelines presently planned could be materially and negatively impacted, including but not limited to delays in our supply chain which could delay or otherwise impact our business. A decrease in the revenue of the managed clinics (including the franchisee and other alliance clinics) as a result of supply chain delays and a decrease in the volume of purchases of medical equipment, supplies and medical consumables by the MCs would directly result in a reduction of the Company’s revenue. 24 Table of Contents Our customers The majority of the customers of our franchisee and other alliance clinics, as well as our directly owned and operated clinics, are individuals aged between their 20s through 40s. The Company generates a substantial majority of its revenue from provision of management services to the MCs pursuant to the franchisor-franchisee agreements and/or service agreements. For the Years Ended December 31, Revenues, net 2025 2024 Medical Corporation Shobikai $ 40,953,913 $ 53,862,520 Medical Corporation Kowakai 37,101,866 46,756,189 Medical Corporation Nasukai 39,559,694 46,355,437 Medical Corporation Aikeikai 13,519,257 17,997,072 Medical Corporation Jukeikai 4,140,162 5,666,907 Medical Corporation Ritz Cosmetic Surgery 4,353,503 7,435,446 Japan Medical & Beauty Inc. 40,514 39,620 Hariver Inc. 20,050 19,810 SBC Inc.* 760 2,512 Public Interest Foundation SBC Medical Promotion Foundation 67 107 General Incorporated Association SBC — 801 SBC Tokyo Medical University 93,068 45,286 SBC Shonan Osteopathic Clinic Inc. 3,884 56,740 Yoshiyuki Aikawa 39,781 98,445 AI Med Inc. 377 787 SBC Irvine MC 239,538 1,204,107 Medical Corporation Association Furinkai 11,092,065 11,708,183 Medical Corporation Association Junikai 7,272,431 3,923,228 General Incorporated Association Taiseikai — 692 Skynet Academy Co., Ltd. 26,734 — SBC Kijimadaira Resort Inc.* 78 — Medical Corporation Misakikai 373,152 — General Incorporated Association Miotokai 30,076 — $ 158,860,970 $ 195,173,889 * In July 2025, SBC Kijimadaira Resort Inc. merged into SBC Inc. Government Regulation and Environmental Matters In General The MCs and the Company are subject to extensive and varied federal, state, and local government regulations globally, including regulations relating, among others, to public and occupational health and safety, product labeling, healthcare, medical aesthetics and, to the extent applicable, regenerative medicine technologies, the environment, sanitation, and fire prevention. The MCs operate the franchisee and other alliance clinics, and we operate our clinic in accordance with standards and procedures designed to comply with applicable codes and regulations. However, an inability to obtain or retain health department or other licenses by the MCs or us would adversely affect our operations. Although the MCs and the Company have not experienced any significant difficulties, delays or failures in obtaining required licenses, permits or approvals to date, any such problem could delay or prevent the opening of, or adversely impact the viability of, a particular clinic or group of clinics. Additionally, difficulties, delays or failure to retain or renew licenses, permits or approvals, or increased compliance costs due to changed regulations, by the MCs or us, could adversely affect operations at the MCs' franchisee and other alliance clinics, and our clinic. A decrease in the revenue of the MCs’ franchisee and other alliance clinics as a result of such difficulties, delays, or failure would directly result in a reduction of the Company’s revenue since we receive substantial revenue from the MCs as part of our compensation for management services. 25 Table of Contents The MCs and the Company are subject to federal, state and local environmental laws and regulations globally concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling, release and disposal of, or exposure to, hazardous or toxic substances (“environmental laws”). These environmental laws can provide for significant fines and penalties for non-compliance and liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances. Third parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances. We are not aware of any environmental laws that will materially affect our earnings or competitive position, or result in material capital expenditures relating to our franchisee and other alliance clinics, or our clinic. However, we cannot predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered, interpreted or enforced, or the amount of future expenditures that we may need to make to comply with, or to satisfy claims relating to, environmental laws. It is possible that the MCs and the Company will become subject to environmental liabilities, and any such liabilities could materially affect our business, financial condition or results of operations. We are also subject to laws and regulations globally relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud, and any failure or perceived failure to comply with these laws could harm our reputation or lead to litigation, which could adversely affect our business, financial condition or results of operations. Furthermore, we are subject to import laws and tariffs globally which could impact our ability to source and secure medical products, other supplies and equipment necessary to supply the MCs' franchisee and other alliance clinics, and our clinic. In addition, as part of managing the development and renovation of franchisee clinics for the MCs, we must ensure that the applicable zoning, land use and environmental regulations in the applicable jurisdiction are being complied with. The process of obtaining regulatory approvals and the compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is possible that some of our business activities now and in the future could be subject to challenge under one or more of these laws. If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant penalties, including criminal and significant civil monetary penalties, damages, fines, imprisonment, exclusion of products from reimbursement under government healthcare programs, integrity oversight and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. To the extent that any of our cosmetic products are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate compliance programs and reporting of payments or transfers of value to healthcare professionals. As our business continues to expand in the U.S. and other jurisdictions, including through our strategic initiatives in the United States, and as laws and regulations continue to be passed and their interpretations continue to evolve in numerous jurisdictions, additional laws and regulations may become relevant to us. Japan Laws and Regulations Personal Information Protection In Japan, the Act on the Protection of Personal Information (the “APPI”) and its related guidelines impose various requirements on businesses, including us, that use databases containing personal information. Under the APPI, the MCs and the Company are required to lawfully use personal information we have obtained within the purpose of use we have specified and taken appropriate measures to maintain the security of such personal information. The MCs and the Company are also restricted from providing the personal information of a person (the “principal”) to third parties without the consent of the principal. The APPI also includes regulations relating to the handling of sensitive personal data and anonymized personal information and the transfer of personal information to foreign countries. A Personal Information Handling Business Operator (as defined below) shall not transfer a person’s personal data to third parties, including its affiliated entities without the prior consent of the principal unless an exception applies (Article 27, Paragraph 1 of the APPI). 26 Table of Contents A “Personal Information Handling Business Operator” is defined as a person (including a judicial person and excluding any administrative organizations) providing a personal information database for use in business (Article 16, Paragraph 2). The Company’s business collects personal information from customers, thereby subjecting the Company to the provisions applicable to the Personal Information Handling Business Operator. Under the APPI, the prior consent of the principal to a transfer of such person’s personal data (including Sensitive Information (as defined below)) is not required if the transfer: (a) is specifically required or authorized by any laws or regulation; (b) is necessary for protecting the life, health, or property of an individual and consent of the principal is difficult to obtain; (c) is necessary for improving public health and sanitation, or promoting the sound upbringing of children, and the consent of the principal is difficult to obtain; or (d) is made in a case where there is a need to cooperate in regard to a central government organization or a local government, or a person entrusted by them performing affairs prescribed by laws and regulations, and when there is a possibility that obtaining the principal’s consent would interfere with the performance of the said affairs. Furthermore, the Personal Information Handling Business Operator shall, unless an exception listed above applies, not acquire Sensitive Information (such as personal information relating to physical or mental disabilities, medical records, and medical and pharmacological treatment) without obtaining prior consent from the principal (Article 2, Paragraph 3 and Article 20, Paragraph 2 of the APPI). The MCs gather personal information from customers through questionnaires and other methodologies in connection with the provision of medical services. Some of the information that the MCs collect could fall under the category of sensitive personal data under the APPI. In addition, the MCs gather personal information including diagnosis records, which is understood to typically fall under the Sensitive Information. Therefore, the MCs are required to obtain consent from the customers prior to the transfer of their information. When storing personal information, it is necessary to manage it safely so that it will not be leaked or the database breached. For the safe management, the APPI requires the Personal Information Handling Business Operator to establish an information security system. It includes establishment of the fundamental rule of personal information management, appointment of personnel responsible for personal information management, provisions of regular training courses on privacy and security breach, and physical security control. A failure by the MCs to comply with the APPI may harm our franchised brand and directly result in a reduction of the Company’s revenue, since we receive substantial revenue from the MCs as part of our compensation for management services. Regulations Governing our Franchises Japan has antitrust laws that protect consumers and regulate how companies operate their businesses. Among the various Japanese antitrust laws, the seminal antitrust law is the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947, as amended) (which we refer to as the “Antimonopoly Act”). The Antimonopoly Act prohibits certain activities that inappropriately induce or mislead persons into entering into a business relationship with us through our granting of seemingly preferable trade terms and conditions that could create false impressions in relation to other franchisors we compete with. The Japan Fair Trade Commission (which we refer to as the “JFTC”) enforces the Antimonopoly Act and other Japanese antitrust laws. The JFTC issued the “Guidelines Concerning the Franchise System Under the Antimonopoly Act” on April 24, 2002 (last amended on April 28, 2021) (which we refer to as the “Guidelines”), under which the JFTC suggests that, prior to entering into a franchise relationship, a franchisor should adequately disclose and explain material trade terms to a potential franchisee in order to prevent any misunderstanding of the material trade terms, and to prevent such potential franchisee from being misled or improperly induced into entering into such franchise relationship. Material trade terms include terms relating to the following: • the supply of products after the party becomes a franchisee (such as a system for recommending suppliers); • guidance, procedures, frequency, and cost to the franchisee relating to the business activities of the franchise; • nature and amount of payments to be collected when the party joins the franchise, whether the payments are refundable or may be returned, and the conditions for refunding or returning the payments; • royalties that the franchisee pays to the franchisor for use of trademarks and trade names and for guidance relating to management procedures, including the amount of, procedure for calculating, and the time and method of payment, of royalties; 27 Table of Contents • loans the franchisor extends to the franchisee, including the interest rate and the mechanism and conditions of settlement; • compensation for any losses the business incurs, including the details of such compensation and whether there is management support from the franchisor in the event of a decline in business; • terms of the franchise agreement and the conditions and procedures for renewing or terminating the franchise agreement, including early termination prior to the expiration of its term; and • restrictions with respect to the franchisor or other franchisees of the franchise setting up an identical or similar business near the proposed business of the potential party to join the franchise, including whether there are any plans to set up additional businesses and the details of such plans. In addition, when a franchisor markets its franchise, in the event such franchisor provides a prospective franchisee with an estimate of the revenue or profit that could possibly be generated upon becoming a franchisee, such estimated revenue or profit must be based on a reasonable method of calculation and established facts, such as the results of an existing franchise operating in a similar environment. The franchisor is required to present to the prospective franchisee such methods and facts. If the JFTC finds any activities that violate the Antimonopoly Act, including any “deceptive customer inducement”, then the JFTC may order the offending franchisor to cease and desist from engaging in such unlawful activities, delete any applicable unlawful clauses from the franchise contract, or carry out any other measures necessary to eliminate such unlawful activities. In the event the JFTC suspects any violation of the Antimonopoly Act or alleges that we have misled or wrongly induced any of our franchisees based upon any particular trade terms, we could be exposed to risks, including governmental action against us. Regulations Governing Medical Care and Services The MCs provide services strictly in accordance with the medical-related laws and regulations of the Medical Care Act (Law No. 205) adopted on July 30, 1948, as amended. The Medical Care Act defines rights and obligations regarding medical treatment, advertisement, authority, license, treatment of information, safety and security for patients, doctors and other individuals and organizations engaged in medical activities. The purpose of the Medical Care Act is to protect the health of the nation by safeguarding the interests of medical care recipients and ensuring a system that efficiently delivers high quality and well-suited medical care, by means of providing for the necessary particulars to support well-suited choices about medical care by the recipients thereof, to ensure the safety of medical care, concerning the establishment and management of hospitals, clinics, and birthing centers, and to develop such facilities and promote the sharing of functions and cooperation between medical institutions. The MCs also comply with other laws such as the Medical Practitioners’ Act, Dental Practitioners Act, Radiology Technician Act, Clinical Trials Act, Industrial Safety and Health Act when providing relevant services. A failure by the MCs and other independently operated clinics and physicians to comply with the Medical Care Act may harm our franchised brand and directly result in a reduction of the Company’s revenue, since we receive substantial revenue from the MCs as part of our compensation for management services. Regulations Governing our Recruiting License In November 2022, we obtained a recruiting agency license (which we refer to as a “Recruiting License”) from the Ministry of Health, Labor and Welfare of Japan under the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers (which we refer to as the “Dispatch Act”). We are required to obtain the Recruiting License because we assist with the placement of staff and employee training at the managed clinics (including the franchisee and other alliance clinics). Regulations Governing our Use of Certain Substances The MCs are required to comply with the Poisonous and Deleterious Substances Control Act (Act No. 303 of December 28, 1950, as amended) of Japan. The purpose of this Act is to provide for the necessary control of poisonous and deleterious substances from the standpoint of health and hygiene and regulates the use of deleterious substances. The aforementioned regulations apply to the clinics operated by the MCs (including franchisee and other alliance clinics) handling of such substances in Japan. A failure by the MCs to comply with the Poisonous and Deleterious Substances Control Act may harm our franchised brand and directly result in a reduction of the Company’s revenue, since we receive substantial revenue from the MCs as part of our compensation for management services. Regulations on Intellectual Property In Japan, patents are protected by the Patent Act and the Utility Model Act of Japan (Act No. 123 of 1959 as amended). Designs are protected by the Design Act of Japan (Act No. 125 of 1959 as amended), and trademarks by the Trademark Act (Act No. 127 of 1959 as amended). Copyrights are protected by the Copyrights Act (Act No. 48 of 1970 as amended). Trade secrets are protected by the Unfair Competition Prevention Act (Act No. 47 of 1993 as amended). The aforementioned regulations apply to our intellectual property rights in Japan, and accordingly we are subject to complying with such regulations. 28 Table of Contents Japanese Employment and Labor Laws There are various labor-related laws in Japan, including the Labor Standards Act (Act No. 49 of April 7, 1947, as amended), the Industrial Safety and Health Act (Act No. 57 of June 8, 1972, as amended), and the Labor Contracts Act (Act No. 128 of December 5, 2007). The Labor Standards Act regulates, among others, minimum standards for working conditions such as working hours, leave period, and leave days. The Industrial Safety and Health Act requires, among others, the implementation of measures to secure employee safety and protect the health of workers in the workplace. The Labor Contracts Act regulates, among others, the change of terms of employment contracts and working rules, and dismissal and disciplinary action. A portion of our personnel in Japan are paid at rates related to the applicable minimum wage, and further increases in the minimum wage or other changes in these laws could increase our labor costs. Our ability to respond to minimum wage increases by increasing service and product prices will depend on the responses of our competitors and customers. Our distributors and suppliers also may be affected by higher minimum wage and benefit standards, which could result in higher costs of goods and services supplied to us. We may also be subject to lawsuits from our employees, Labor Standards Inspection Office, or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters. Regulations on Lease Agreements Our lease agreements are generally subject to the Civil Code (Act No. 89 of April 27, 1896, as amended) and Act on Land and Building Leases (Act No. 90 of October 4, 1991, as amended). We believe that the terms and conditions of our lease agreements are consistent with these laws and are valid and enforceable as provided for in these agreements. Regulations regarding Maintenance of Websites and E-commerce The Act on Special Provisions to the Civil Code Concerning Electronic Consumer Contracts and Electronic Acceptance Notice (Act No. 95 of June 29, 2001, as amended) and the Act on Specified Commercial Transactions (Act No. 57 of June 4, 1976, as amended) regulate sales of goods through e-commerce within Japan. For example, under these acts, we as a seller must explicitly show prices of products, timing and method of payment, timing of delivery, conditions for return of goods, our name and contact information, and name of representative person, among others. We comply with these regulations. Regulations regarding Product Quality and Customer Protection We are subject to laws and regulations, as well as pending legislative and regulatory proposals, regarding product quality and customer protection, which could affect us in jurisdictions in which we sell our products. In Japan, the Product Liability Act (Act No.85 of July 1, 1994, as amended) and Consumer Contract Act (Act No. 61 of May 12, 2000, as amended) mainly regulate the product quality and customer protection. The Product Liability Act sets forth the liabilities of a manufacturer, processor, or importer for damages caused by defects in a product. A seller who was not involved in the manufacturing, processing, or import of a product could still be liable under this act if its name, trade name, or trademark, etc. was indicated on the product as the manufacturer, processor, or importer, such indications on the product might mislead others into believing that the seller was the manufacturer, processor, or importer, or such indications on the product might be recognized by others as those of the substantial manufacturer, processor, or importer. Liability under this act can be imposed even if the manufacturer, processor, or importer (and the said seller) was not negligent. The Consumer Contract Act invalidates certain provisions in contracts with consumers, such as exemption of compensation for damages to consumers and restrictions of termination by consumers due to the seller’s breach of contract. We comply with these regulations. Vietnam Laws and Regulations Regulations regarding the Environment We are required to comply with the Environmental Protection Law No. 72/2020/QH14 adopted by the National Assembly on November 17, 2020 (as amended from time to time), which regulates environmental protection activities, including the rights, duties, and responsibilities of authorities, organizations, residential communities, households, and individuals involved in environmental protection activities. Specifically, it establishes certain regulations regarding the protection of the environment in medical activities and the control of the effects of environmental pollution on human health. Regulations regarding Labor and Health We are required to comply with several labor-related standards prescribed by the local laws and regulations. The principal statute is the Labor Code No. 45/2019/QH14 adopted by the National Assembly on November 20, 2019 (as amended from time to time), which provides for labor standards, the rights, duties, and responsibilities of employees, employers, employees’ representative organizations at establishment, and employers’ representative organizations in labor-management relations, other relations directly related to labor-management relations, as well as state control over labor. 29 Table of Contents Law on Occupational Safety and Hygiene The Law on Occupational Safety and Hygiene No. 84/2015/QH13 adopted by the National Assembly on June 25, 2015 (as amended from time to time) regulates measures to ensure occupational safety and hygiene, policies and compensation for victims of occupational accidents and diseases, responsibilities and rights of organizations and individuals regarding occupational safety and hygiene activities, and state control over occupational safety and hygiene. The Law on Social Insurance No. 41/2024/QH15 adopted by the National Assembly on July 1, 2025 (as amended from time to time) regulates mandatory social insurance benefits and policies, the rights and responsibilities of employees and employers, other institutions, organizations, and individuals involved in social insurance, representative organizations of employees, representative organizations of employers, social insurance authorities, social insurance funds, social insurance implementation procedures, and state administration of social insurance. The Law on Health Insurance No. 25/2008/QH12 adopted by the National Assembly on November 14, 2008 (as amended from time to time, including, among others, the Law on Amendment to the Law on Health Insurance No. 51/2024/QH15, which took effect from July 1, 2025) regulates mandatory health insurance system and policies regarding health insurance, health insurance funds, and the rights and responsibilities of parties involved in health insurance, including enrollees, premium rates, health insurance premium sharing and payment methods, health insurance cards, health insurance beneficiaries, medical care for insured persons, and the payment of medical expenses. Regulations regarding Business Activities We are required to comply with several regulations regarding investments and company-related activities such as (a) the Investment Law No. 61/2020/QH14 adopted by the National Assembly on June 17, 2020 (as amended from time to time and replaced by the Investment Law No. 143/2025/QH15, which took effect from March 1, 2026) providing regulations on business investment activities in Vietnam and business investment activities from Vietnam to foreign countries and (b) the Law on Enterprises No. 59/2020/QH14 adopted by the National Assembly on June 17, 2020 (as amended from time to time) regulating the formation, management, reorganization, dissolution and related activities of companies consisting of limited liability companies, joint stock companies, partnership companies and private companies, and groups of companies. Since our beauty clinic service is considered as a commercial activity in general, we are also required to comply with the Commercial Law No. 36/2005/QH11 adopted by the National Assembly on June 14, 2005 (as amended from time to time). This law applies to commercial activities (including the sale and purchase of goods, provision of services, investment, commercial promotion and other commercial activities) in the territory of Vietnam. In Vietnam, (a) massage services (comprising the use of physical therapies for massage or manual therapies to improve human health) and (b) plastic surgery services (comprising using medical techniques to perform surgery for the purpose of alteration of shape or appearance of body parts) are deemed to be “sensitive” services and therefore must comply with Decree No. 96/2016/ND-CP (as amended, including by Decree No. 56/2023/ND-CP) adopted by the Government on July 1, 2016 regarding security and order conditions for a number of conditional business sectors. Regulations regarding Medical Treatment We are also subject to the Law on Medical Examination and Treatment No. 15/2023/QH15 adopted by the National Assembly on January 9, 2023 (as amended from time to time), which defines the rights and obligations of patients, physicians, and clinics in relation to matters such as technical expertise in health diagnosis and treatment, health diagnosis and treatment provided by traditional medicine and by a combination of traditional and modern medicine, humanitarian or non-profit health diagnosis and treatment, transfer of technical expertise, the application of new technologies and methods and clinical trials, errors of technical expertise in medicine, operating assumptions, as well as the mobilization and dispatch of resources to be used for medical examination and treatment in the event of natural disasters, catastrophes, Group A infectious diseases, and emergency situations. Regulations regarding Liability In principle, our relationship with customers is a civil transaction and therefore governed by the Civil Code No. 91/2015/QH13 adopted by the National Assembly on November 24, 2015 (as amended from time to time). This fundamental code specifies the legal status and legal standards for the conduct of natural and juridical persons, as well as the rights and obligations of natural and juridical persons in their civil relations. In addition, we are subject to the Law on Product and Goods Quality No. 05/2007/QH12 adopted by the National Assembly on November 21, 2007 (as amended from time to time, including, among others, the Law on Amendment to the Law on Product and Goods Quality No. 78/2025/QH15, which took effect on January 1, 2026), which is a specialized legislation regulating the product liability of manufacturers and traders (i.e., importers, exporters, sellers, service suppliers). Under this law, enterprises engaging in manufacturing and/or trading products are required to provide customers with accurate information on products, recover and remedy defective products, and compensate for losses due to defective products. 30 Table of Contents We are also subject to the Law on Protection of Consumers’ Rights No. 19/2023/QH15 adopted by the National Assembly on June 20, 2023 (as amended from time to time), which provides for principles and policies for protecting consumers’ rights, the rights and obligations of consumers, traders’ responsibility to consumers, consumer right protection activities by agencies and organizations, settlement of disputes between consumers and traders, as well as state management of protection of consumers’ rights. Regulations regarding Fire and Rescue The Law on Fire and Rescue No. 55/2024/QH15 adopted by the National Assembly on July 1, 2025 (as amended from time to time) regulates fire prevention, firefighting, human rescue, property rescue, assurance of operating conditions, as well as the rights, obligations, and responsibilities of relevant agencies, organizations, households, and individuals in fire and rescue operations. Regulations on Personal Data Protection, Data and Cybersecurity We are required to comply with the Law on Personal Data Protection No. 91/2025/QH15 adopted by the National Assembly on June 26, 2025 (as amended from time to time) and took effect on January 1, 2026, given that we may collect and process personal data of its suppliers, customers and other third parties to serve its business operation. This new law regulates, among others, type of personal data, measures of personal data protection as well as rights and obligations of onshore and offshore entities directly participating in or involved in the processing of personal data of Vietnamese citizens and persons of Vietnamese origin without determined nationality residing in Vietnam who have been issued with identification certificates. In the context of data processing in Vietnam’s cyberspace, we are also subject to (a) the Data Law No. 60/2024/QH15, adopted by the National Assembly on November 30, 2024 (as amended from time to time) and took effect on July 1, 2025 and (b) the Cyberinformation Security Law No. 86/2015/QH13 and the Cybersecurity Law No. 24/2018/QH14, adopted by the National Assembly on November 19, 2015 and June 12, 2018, respectively (both regulations will be consolidated and replaced by the new Cybersecurity Law No. 116/2025/QH15, which was adopted by the National Assembly on December 10, 2025 and will come into force on July 1, 2026). These regulations impose strict requirements for data processing and management and ensuring information security in Vietnam’s cyberspace, including, among other things, technical and security standards, account verification, data localization, and the requirement to maintain a local business presence. United States Laws and Regulations As our business continues to expand in the United States, including through strategic initiatives and potential future clinic operations, we may become subject to a broad range of federal, state, and local laws and regulations, including accessibility requirements under the Americans with Disabilities Act, labor and employment laws (including minimum wage and workplace safety requirements), and privacy and data security laws. To the extent we create, receive, maintain, or transmit protected health information in connection with any U.S. operations or collaborations, we may also be subject to requirements under HIPAA and related state privacy laws. Compliance with these laws may increase our costs, constrain our operations, and expose us to penalties and litigation in the event of noncompliance. For a discussion of the various risks we face from regulation and compliance matters, see “Part I, Item 1A. Risk Factors”. Singapore Laws and Regulations Licensing, Operations, and Compliance We are subject to the Healthcare Services Act 2020 (“ HCSA ”) and the regulations promulgated under it, which govern the licensing, regulation, and operation of private healthcare institutions, including aesthetic clinics. We are required to obtain a license under this legislation to operate our clinics. The Healthcare Services (General) Regulations 2021 also require licensed healthcare service providers to adhere to strict standards of patient care and service (including for the protection of patient privacy), and we must meet the necessary standards of infrastructure, medical equipment, and operational procedures, as well as the maintenance of a safe and hygienic clinical environment. 31 Table of Contents Regulation of Our Doctors In Singapore, the Medical Registration Act 1997 regulates the registration and professional conduct of medical practitioners. This legislation mandates that only doctors who are properly registered as medical practitioners and holding a valid practising certificate may perform medical procedures in aesthetic clinics. In addition, doctors performing aesthetic procedures are expected to comply with applicable professional and clinical guidelines, including the Singapore Medical Council’s Guidelines on Aesthetic Practices for Doctors (“SMC Guidelines”). Under the SMC Guidelines, medical practitioners who are non-specialists or specialists not indicated in the SMC Guidelines are required to have performed the requisite number of procedures during the relevant period or obtain a Certificate of Competence (“COC”) to perform specific types of aesthetic procedures. Procedures that involve medical risks, such as injectable treatments (e.g., botulinum toxin and dermal fillers) and laser treatments, are expected to be performed by registered medical practitioners holding a valid practising certificate who have obtained a COC (if required). Health Products and Medicines The Health Products Act 2007 (“ HPA ”) governs the regulation of health products (including, inter alia , medical devices and therapeutic products) used in clinical settings, including aesthetic clinics. Under this legislation, we are required to ensure that health products used in our clinics are registered health products under the HPA, as listed in the Register of Health Products maintained by the Health Sciences Authority of Singapore (“ HSA ”), as applicable. If a product is found to be defective or harmful, this legislation requires us to comply with any product recalls or safety notices issued by the HSA. We are also obligated to report any adverse events or complications related to the use of medical devices and health products in our clinics as applicable. The Medicines Act 1975 (“ MA ”) regulates the importation, manufacture, and sale of medicinal products, including drugs, vaccines, and injectable products used in aesthetic treatments in Singapore. Under this legislation, aesthetic clinics are prohibited from using any unapproved or substandard medicines and must ensure that all prescription products are licensed and approved by the HSA. This legislation also covers the distribution of medicines and medicinal products, and aesthetic clinics must ensure that any injectable or medicinal product used in their treatments is legally sourced, licensed, and approved by the HSA for use in Singapore. Advertisements We are subject to strict advertising requirements under the HCSA and the Healthcare Services (Advertisement) Regulations 2021, administered by the Ministry of Health (“MOH”). Advertising materials, including brochures, websites, and social media content, must comply with ethical advertising standards set by the MOH, and cannot be false, misleading, deceptive, unsubstantiated, or contain exaggerated claims about medical treatments. We are prohibited from using testimonials or endorsements that violate patient confidentiality, and are required to provide accurate, clear, and truthful information about the services we offer, the potential risks of treatments, and the expected outcomes. The HPA also regulates the advertising of health products, including medical devices and therapeutic products. Under this legislation, we are required to ensure that all advertisements for products such as dermal fillers, botulinum toxin, and lasers are not misleading, do not overstate the efficacy of treatments, and clearly communicate any risks associated with such procedures. The Health Products (Advertisement of Specified Health Products) Regulations 2016 also strictly prohibit the direct advertising of prescription-only medicines to the general public, to ensure that treatments are only administered following proper medical consultation. The MA also imposes restrictions on the advertising of medicinal products, including prescription-based treatments like botulinum toxin, which are commonly used in aesthetic clinics and require oversight by licensed medical professionals. This legislation prohibits false or misleading advertisements and representations of medicinal products. Consumer Protection We are also required to comply with the Consumer Protection (Fair Trading) Act 2003, which regulates the trade practices of businesses, protects consumers from unfair practices which include, inter alia : (a) misleading or deceiving a consumer, (b) falsifying claims to a consumer, and (c) taking advantage of a consumer who may not be in a position to protect their interests due to not understanding the nature of the transaction, and provide consumers with the right to seek remedies if they have been wronged. If a beauty product is found to be defective or unsafe after purchase, consumers are entitled under this legislation to request a refund, replacement, and/or repair (if applicable). This legislation prohibits practices such as false advertising, misleading statements, or failing to disclose important information about products or services. 32 Table of Contents Product Quality In addition to the HPA and the MA, we are also subject to the Sale of Goods Act 1979 (Cap. 393) (as amended from time to time), which governs the sale of goods in Singapore, including beauty products sold at aesthetic clinics. This legislation provides a framework for the contractual obligations between buyers and sellers and implies certain terms and conditions into contracts for the sale of goods, including that goods supplied under the contract are among other things, of satisfactory quality (including safety where relevant), and fit for their intended purpose. Personal Data Protection The Personal Data Protection Act 2012 governs, among other things, the collection, use, and protection of personal data in Singapore. As a healthcare provider, we are required to comply with this legislation to safeguard the privacy and confidentiality of our patients’ personal and medical information, including obtaining consent from patients before collecting their personal information, such as contact details, medical histories, and treatment records, implementing strict measures to protect patient data from unauthorized access, loss, or misuse, and facilitating our patients’ right to access their personal data, request corrections, and withdraw consent for the use of their information. This legislation also requires healthcare providers to make reasonable efforts to ensure the accuracy of the personal data collected from the patients as the personal data will likely be used to make a decision that affects the patient. If there are reasons to believe in data breaches that affect a patient’s personal data, the healthcare provider has a duty to assess the severity of said breach. Given the confidentiality of the patients’ medical information, should a breach be severe enough to result in, or is likely to result in, significant harm to the patient, or is of a significant scale, there will be a duty to notify the Personal Data Protection Commission. Employment and Workplace Safety We are subject to the Employment Act 1968, the key legislation governing employment practices in Singapore. This legislation outlines the minimum terms and conditions of employment, covering aspects such as wages (including when and how they should be paid), working hours and overtime, rest days, and employee benefits. It ensures the protection of employees’ rights and provides a framework for fair and lawful employment practices. We are also subject to the Employment of Foreign Manpower Act 1990, which governs the employment of foreign workers in Singapore. This legislation regulates the employment pass system and ensures that businesses that hire foreign workers comply with specific requirements related to work passes, employment conditions, and other related responsibilities. Under this legislation, all foreign employees must hold a valid work pass to work in Singapore and the onus lies on the employer to ensure that the foreign employee is permitted to work in Singapore. The Workplace Safety and Health Act 2006 applies to all businesses in Singapore, including aesthetic clinics. Under this legislation, we are required to adhere to stringent health and safety protocols to protect both our patients and staff, including maintaining work environments that are safe and without risks to health, ensuring proper waste disposal, implementing emergency procedures, and training all staff members in basic health and safety measures, including infection control and proper use of medical equipment. Intellectual Property and Trademarks As of December 31, 2025, the Company and its subsidiaries together had filed a significant number of patent and trademark applications in Japan, as well as a substantial number of trademark applications with the International Bureau of the World Intellectual Property Organization. The Company also holds registered patents and trademarks in Japan. Additionally, through the subsidiary acquired in 2024, the Company also holds several trademarks in Singapore. The Company does not have any registered trademarks, domain names, or patents in Vietnam or the United States. Our registered trademarks include, but are not limited to, “SBC”, “Shonan Beauty Clinic”, “SBCLABO”, “Hair Renaissance”, “SBC MEDISPA”, and “ACNEED”, and are further described in the table below. Material Contract with Intellectual Property and Trademarks The MCs and the Company have each entered into a contract with regard to intellectual property as set forth below. The entry dates of these agreements are all September 1, 2023. Regarding the patents, the term of patent agreements is for a period from September 1, 2023 to December 31, 2025. However if neither party makes a written request at least 3 months prior to the expiration of the term, the term of these patent agreements will continue for successive 2 year terms going forward unless terminated by either party. Regarding the trademarks, the term of the trademark agreements is for a period from September 1, 2023 to the expiration dates of the respective trademarks. Pursuant to these agreements, the Company grants the MCs a non-exclusive right to use Company’s trademarks, as listed in the agreements for the goods and services offered by the MCs in Japan and the U.S. (including U.S. territories) for the duration of the agreement. Pursuant to the Agreements, the MCs cannot grant a sublicense to a third party without the Company’s written consent. 33 Table of Contents Pursuant to these agreements, the MCs agreed to pay the Company royalties for the license granted, in the form of monthly fees consisting of patent royalties and trademark royalties. The total monthly royalties payable by each MC range from 900,000 yen (excluding tax) to 100,000,000 yen (excluding tax) (comprised of patent royalties ranging from 700,000 yen to 53,000,000 yen and trademark royalties ranging from 200,000 yen to 60,000,000 yen). The aggregate monthly royalties under these agreements are 273,900,000 yen (excluding tax). However, the parties may change such monthly fee by mutual agreement through consultation. The agreements may be terminated by the Company without notice or demand in certain circumstances as listed out in the agreement, including but not limited to, if a MC has their business license revoked or suspended by regulatory authorities, becomes insolvent or when one of the notes or checks that they have drawn or accepted is dishonored, when a petition for commencement of bankruptcy proceedings, civil rehabilitation proceedings, corporate reorganization proceedings, or special liquidation proceedings has been filed, against or when a MC itself has filed such a petition or when there has been a material breach by a MC of their agreement with the Company. Additionally, either party can terminate the agreements if the other party breaches the agreement and such breach is not corrected within 14 days after written notice. Additionally, the parties can terminate the agreement mid-term by mutual agreement through consultation. Upon termination of an agreement, regardless of the reason for such termination, or if the term of the agreement expires, a MC must immediately cease using the Company’s intellectual property and must destroy all information in its possession regarding the Company’s intellectual property. As a result of these agreements, the Company collects the following monthly royalty fees from each of the following MCs. Patent Trademark Total Medical Corporation Shobikai 53,000,000 yen 14,000,000 yen 67,000,000 yen Medical Corporation Kowakai 43,000,000 yen 57,000,000 yen 100,000,000 yen Medical Corporation Nasukai 24,000,000 yen 60,000,000 yen 84,000,000 yen Medical Corporation Aikeikai 13,000,000 yen 4,000,000 yen 17,000,000 yen Medical Corporation Jukeikai 700,000 yen 200,000 yen 900,000 yen Medical Corporation Ritz Cosmetic Surgery 2,000,000 yen 3,000,000 yen 5,000,000 yen Total 135,700,000 yen 138,200,000 yen 273,900,000 yen 34 Table of Contents List of Trademarks Jurisdiction Application No./ Office’s Reference No. Registration No. Trademark Reference Translation: Trademark Japan JP2004-113837 4872872 リッツ・メディカルクリニック Ritz Medical Clinic Japan JP2005-118409 4960547 湘南美容外科クリニック Shonan Beauty Surgery Clinic Japan JP2007-068373 5137474 ＳＢＣ SBC Japan JP2007-087297 5154425 根こそぎ脂肪吸引 Thoroughly　liposuction Japan JP2008-006713 5188529 心のプチ整形 Petit Plastic Surgery of the Mind Japan JP2011-018430 5432190 うるおい女神 goddess of (lucky) directions Japan JP2011-027111 5446903 1ＤＡＹ リフト 1DAY Lift Japan JP2012-004740 5504628 根こそぎベイザーシェービング法 Thoroughly Vaser Shaving Method Japan JP2012-035980 5532879 六本木レディースクリニック Roppongi Ladies Clinic Japan JP2012-070102 5554735 マルチプラセンタ Multi-placenta Japan JP2015-076589 5827834 § ＳＢ ∞ Ｃ § Ｓ Ｂ ∞ Ｃ Japan JP2015-123949 5862075 アクセル ＋ ブレーキ療法 Gas pedal + brake therapy Japan JP2016-065374 5922799 VARIO desigin 手術 VARIO design surgery Japan JP2016-065380 5922800 サーマアップ Therma up Japan JP2016-108172 5967546 東京リッツ美容クリニック Tokyo Ritz Cosmetic Clinic Japan JP2016-108174 5967547 東京リッツ美容形成外科 Tokyo Ritz Cosmetic Plastic Surgery Japan JP2018-005037 6135218 フォーエバー二重術 Forever Double Surgery Japan JP2018-109281 6246705 ＳＢＣ　ＭＥＤＩＳＰＡ SBC MEDISPA Japan JP2007-068373 6258359 ＳＢＣ SBC Japan JP2019-006775 6219739 Ｈａｉｒ　Ｒｅｎａｉｓｓａｎｃｅ Hair Renaissance Japan JP2019-095442 6316271 レグノクリニック Regno Clinic Japan JP2019-116526 6311044 ＳＢＣ／ＭＥＤＩＳＰＡ SBC/MEDISPA Japan JP2020-007680 6440611 リバスト Rebast Japan JP2020-007681 6440612 週末二重 Weekend Double Surgery Japan JP2020-007682 6440613 腫れずらいスクエア二重 Square bifold surgery with minimal swelling Japan JP2020-007719 6411821 湘南美容クリニック Shonan Beauty Clinic Japan JP2020-007686 6442941 リッチフェイス Rich face Japan JP2020-007689 6440614 湘南二重 Shonan bifid surgery Japan JP2020-007697 6442942 プリマリフト PrimaLift Japan JP2020-007698 6452042 ３ D注入豊胸 3D Injection Breast Augmentation Japan JP2020-007699 6442943 プレミアム注入豊胸 Premium Injection Breast Augmentation Japan JP2020-087298 6489169 パシャ助 Pashazo Japan JP2020-106484 6427255 フィナス Finas Japan JP2021-057107 6531258 YELLクリニック YELL Clinic Japan JP2021-057108 6531259 湘南美容YELLシリーズ Shonan Beauty YELL Series Japan JP2021-057101 6531256 メディカルサイズダウン Medical Size Down Japan JP2021-057102 6531257 フィナス治療 Finas　Medical Treatment Japan JP2021-057109 6531260 ベビースキンライト Baby Skin Light Japan JP2021-057110 6571732 シミ取り10 Stain Removal 10 Japan JP2021-057111 6531261 ワンデーリフトアップ One Day Lift Up Japan JP2021-057112 6551007 ピュアグラフト1UP Pure Graft 1UP Japan JP2021-104550 6554074 ミスト脱毛 Mist hair removal 35 Table of Contents Japan JP2022-022482 6753631 湘南美容皮フ科 Shonan Beauty Dermatology Japan JP2022-022483 6611984 メディカルサイズダイエット Medical-size diet Japan JP2022-022488 6668667 Teen二重 Teen double Japan JP2022-067044 6858201 SBCイテウォンビューティークリニック SBC Itaewon Beauty Clinic Japan JP2022-067045 6858202 SBC梨泰院ビューティークリニック SBC Itaewon Beauty Clinic Japan JP2022-076824 6673722 ミストシャワー脱毛 Mist shower hair removal Japan JP2022-135452 6693235 ＡＣＮＥＥＤ ACNEED Japan JP2022-143153 6772456 Ｓｈｏｎａｎ　Ｂｅａｕｔｙ　Ｃｌｉｎｉｃ Shonan Beauty Clinic Japan JP2022-143155 6826211 ＳＢＣ　Ｍｅｄｉｃａｌ　Ｇｒｏｕｐ SBC Medical Group Japan JP2007-068373 6896314 ＳＢＣ SBC Japan JP2022-143158 6826212 ＳＢＣ メディカルグループ SBC Medical Group Japan JP2022-143167 6701665 HRスプレー HR Spray Japan JP2022-143168 6711815 ギャラ・ドクターライト Gala Dr. Light. Japan JP2022-143191 6702890 プラチナカクテル Platinum Cocktail Japan JP2022-143150 6793985 ＳＢＣ (logo) SBC (logo) Japan JP2022-143201 6793624 ＳＢＣ　ＡＲＴＭＡＫＥ　ＳＣＨＯＯＬ SBC ARTMAKE SCHOOL Japan JP2022-143151 6735600 湘南美容外科 Shonan Beauty Surgery Japan JP2020-007719 6735601 湘南美容クリニック Shonan Beauty Clinic Japan JP2022-143156 6735602 ＳＢＣＬＡＢＯ SBCLABO Japan JP2018-109281 6711813 ＳＢＣ　ＭＥＤＩＳＰＡ SBC MEDISPA Japan JP2011-018430 6711814 うるおい女神 goddess of (lucky) directions Japan JP2022-143165 6701663 HRタブレット HR Tablet Japan JP2022-143166 6701664 HRアクア HR Aqua Japan JP2022-143169 6711816 スソドライ soot-dry Japan JP2022-143171 6702889 うる艶美髪カクテル Lush and beautiful hair cocktail Japan JP2022-143173 6711817 ジュリエット Juliet Japan JP2022-143179 6711818 スマートシェイプリフト Smart Shape Lift Japan JP2022-143181 6708518 アクネソニック acnesonic Japan JP2022-143184 6708519 脂肪溶解リニア Lipolysis Linear Japan JP2022-143189 6708521 ボディスッキリQ ＋ Body Refresh Q+ Japan JP2022-143190 6708522 フォトダブル photo double Japan JP2022-143194 6708523 スマートメソセラピー smart mesotherapy Japan JP2022-143196 6708524 リポフラット Lipo flat Japan JP2022-143197 6708525 ジェットメソセラピー Jet Mesotherapy Japan JP2022-143199 6722690 ＳＢＣ メディカルグループホールディングス SBC Medical Group Holdings, Inc. Japan JP2022-143200 6722691 ＳＢＣ　Ｍｅｄｉｃａｌ　Ｇｒｏｕｐ　Ｈｏｌｄｉｎｇｓ SBC Medical Group Holdings Japan JP2022-143187 6708520 輪郭スッキリQ＋ Contouring Q+ Japan JP2022-147132 6861583 ノンシェーブン non-shaven Japan JP2022-147133 6861584 スマートFUE Smart FUE Japan JP2022-147134 6861585 シークレットシェイブン secret shaven Japan JP2022-147135 6861586 ダブルマトリックス double matrix Japan JP2022-147136 6861587 スマートメソ smart method Japan JP2022-147137 6861588 クイックメソ Quick Meso Japan JP2022-147138 6861589 ジェットメソ jet meso Japan JP2022-147140 6829876 クイックコスメティーク Quick Cosmetics Japan JP2022-147144 6829877 SBC Ｔｅｅｎ 二重 SBC Teen Double 36 Table of Contents Japan JP2022-147145 6829878 SBC Ｔｅｅｎ 脱毛 SBC Teen Hair Removal Japan JP2022-147142 6711819 SBC MEDISPA ホワイトサプリメント SBC MEDISPA White Supplement Japan JP2022-135452 6702894 ACNEED ACNEED Japan JP2022-147146 6711820 SBCハイブリッドセラミック SBC Hybrid Ceramic Japan JP2022-147147 6711821 SBCマウスピース SBC Mouthpiece Japan JP2022-147139 6757836 女優注射 Actress Injection Japan JP2022-147141 6702893 ナノメソッドHQ Nano Method HQ Japan JP2022-150060 6774385 Fat Padリフト Fat Pad Lift Japan JP2022-150061 6774386 週末リフト Weekend Lift Japan JP2022-150065 6774387 エイジングリフト Aging Lift Japan JP2022-150047 6751859 リバース小顔 Reverse face Japan JP2022-150056 6751864 1DAYリッチフェイス 1DAY Rich Face Japan JP2022-150048 6751860 リバース二重 Reverse double Japan JP2022-150052 6751861 1DAYモデル小顔 1DAY Model Small Face Japan JP2022-150053 6751862 1DAYフル梨泰院 1DAY Full Itaewon Japan JP2022-150054 6751863 1DAYモデル体型 1DAY Model Body Shape Japan JP2023-038088 6782966 目袋3脂肪 Eye bag 3 fat Japan JP2023-038089 6782967 ぽろぽろ脱毛 Poroporo Hair Removal Japan JP2023-038090 6782968 リバスト注射 Livestock Injection Japan JP2023-038092 6782969 余髪 extra hair Japan JP2023-038087 6744631 SBC AI SBC AI Japan JP2023-040937 6737348 ＨＡＩＲＳＰＡ HAIRSPA Japan JP2023-073150 6777865 SBC DreamMeeting SBC DreamMeeting Japan JP2023-073151 6777866 DreamMeeting DreamMeeting Japan JP2023-076804 6826221 ＳＢＣ４ 方向リフト SBC 4-way lift Japan JP2007-068373 6826225 ＳＢＣ SBC Japan JP2023-080594 6826229 Ｑｕｉｃｋ　ｃｏｓｍｅｔｉｃ　ｄｏｕｂｌｅ Quick cosmetic double Japan JP2023-080595 6826230 Ｓｈｏｎａｎ　Ｂｅａｕｔｙ　Ｃｌｕｂ Shonan Beauty Club Japan JP2023-080584 6826223 湘南美容 Shonan Aesthetic Japan JP2023-080584 6889988 湘南美容 Shonan Aesthetic Japan JP2022-143200 6826224 ＳＢＣ　Ｍｅｄｉｃａｌ　Ｇｒｏｕｐ　Ｈｏｌｄｉｎｇｓ SBC Medical Group Holdings Japan JP2005-118409 6889983 湘南美容外科クリニック Shonan Beauty Surgery Clinic Japan JP2022-143151 6889984 湘南美容外科 Shonan Beauty Surgery Japan JP2022-143156 6826226 ＳＢＣＬＡＢＯ SBCLABO Japan JP2018-109281 6826227 ＳＢＣ　ＭＥＤＩＳＰＡ SBC MEDISPA Japan JP2020-007719 6889985 湘南美容クリニック Shonan Beauty Clinic Japan JP2022-143153 6889986 Ｓｈｏｎａｎ　Ｂｅａｕｔｙ　Ｃｌｉｎｉｃ Shonan Beauty Clinic Japan JP2023-080593 6826228 ＱＣＷ QCW Japan JP2023-123325 6858214 ＳＢＣ　ＡＲＴ SBC ART Japan JP2023-143680 6858240 ＳＢＣ　ＴＩＭＥＬＥＳＳ　Ｃ SBC TIMELESS C Japan JP2024-010669 6907834 リッツ美容外科 Ritz Cosmetic Surgery Japan JP2024-033024 6902614 脂肪細胞ズ(logo) Fat Cells(logo) Japan JP2024-033025 6902615 脂肪細胞ズ(logo) Fat Cells(logo) Japan JP2024-033026 6902616 脂肪細胞ズ(logo) Fat Cells(logo) Japan JP2024-033027 6902617 脂肪細胞ズ Fat Cells Japan JP2024-068007 6907835 週末豊胸 Weekend Breast Augmentation Japan JP2024-068008 6990454 ママ豊胸 Mom Breast Augmentation Japan JP2024-064654 6891119 ＬＩＦＴＹ LIFTY 37 Table of Contents Japan JP2024-077907 6847738 韓流肌 Hallyu Skin Japan JP2024-077906 6847737 韓流肌(logo) Hallyu Skin(LOGO) Japan JP2024-092611 6923687 悪玉M字ホルモン Bad M Hormone Japan JP2024-100228 - ナチュラル脂肪注射 Natural Fat Injection Japan JP2024-111773 6921116 白玉タチオン Shiratama Tathion Japan JP2025-017863 - 情熱経営 Jonetsu (Passion)-Driven Management Japan JP2025-017864 - 情熱美容 Jonetsu (Passion) Beauty Japan JP2025-017865 - 情熱美容医療 Jonetsu (Passion) Aesthetic Medicine Japan JP2025-017866 - 情熱美容液 Jonetsu (Passion) Serum Japan JP2025-026648 6968498 白玉習慣 Shiratama Habit Japan JP2025-049518 - ラインクロス二重術 Line Cross Double Surgery International registration - 1753626 ＳＢＣ　ＭＥＤＩＳＰＡ SBC MEDISPA International registration - 1753629 ＱＣＷ QCW International registration - 1753670 Ｑｕｉｃｋ　ｃｏｓｍｅｔｉｃ　ｄｏｕｂｌｅ Quick cosmetic double International registration - 1753627 Ｓｈｏｎａｎ　Ｂｅａｕｔｙ　Ｃｌｉｎｉｃ Shonan Beauty Clinic International registration - 1753628 Ｓｈｏｎａｎ　Ｂｅａｕｔｙ　Ｃｌｕｂ Shonan Beauty Club International registration - 1754273 湘南美容クリニック Shonan Beauty Clinic International registration - 1754406 ＳＢＣ (logo) SBC (logo) International registration - 1754407 湘南美容 Shonan Aesthetic International registration - 1753672 ＳＢＣ　Ｍｅｄｉｃａｌ　Ｇｒｏｕｐ　Ｈｏｌｄｉｎｇｓ SBC Medical Group Holdings International registration - 1754271 湘南美容外科クリニック Shonan Beauty Surgery Clinic International registration - 1753673 ＳＢＣ SBC International registration - 1754272 湘南美容外科 Shonan Beauty Surgery International registration - 1753625 ＳＢＣＬＡＢＯ SBCLABO Singapore 2017/3591939103Q 40201708950W N/A The Chelsea Clinic Singapore 2017/292151539X 40201618496V N/A Gangnam Laser Clinic Singapore TM/19/05/2849 40201910975V N/A SkinGO! (Singapore) Singapore TM/2021/09/036 40202123160R N/A Bio White Indonesia JID2019080729 IDM000859320 N/A SkinGO! (Indonesia) Australia TM/19/11/040 2055203 N/A SkinGO! (Australia) Our patents and patent applications, as further described in the table below, include, but are not limited to, specialized technologies for procedures such as puncture devices for buried double eyelid procedures, simplified buried method surgical equipment, proprietary surgical sutures, silicone bags for breast augmentation simulations, and microscopic hair volume evaluation method for the treatment of androgenetic alopecia. Additionally, we have developed patent-pending safety management methods for procedures such as full-incision double eyelid surgery, lateral canthoplasty, brow lift procedures, cheek sagging prevention methods, and hair removal safety management methods. Furthermore, we have established unique safety management methods for tattoo removal treatments and hyperhidrosis procedures. By leveraging these patented and patent-pending technologies, our franchisee clinics enhance the safety and efficiency of these cosmetic surgery procedures. The English “Reference Translation” included in the trademark table above is provided for reference purposes only to assist readers and does not represent our official English-language trademarks or trade names. We do not claim any rights in such reference translations independent of the trademarks as registered or used in their original form. 38 Table of Contents List of Patent Rights Name of Patent right Type Jurisdiction Date of Application Application No. Status Feature and Content Microscope-Based Hair Quantity Evaluation Method Patent Japan 8/25/2023 JP2023-136711 Application Pending Invention of a medical audit system using a microscope and machine learning to observe and analyze hospital procedures Hair Quantity Evaluation Method Patent Japan 8/25/2023 JP2023-136712 Application Pending Machine learning model trained on beauty clinic procedure videos to auto-evaluate correct performance Utilization of Pre-Consultation Educational Videos for AGA Examination Patent Japan 8/25/2023 JP2023-136713 Application Pending Medical auditing system uses machine learning to evaluate procedural correctness in beauty clinics Case Imaging System Patent Japan 8/25/2023 JP2023-136714 Application Pending Medical audit system using image-based machine learning for procedural conformance Treatment Progress History Management System Patent Japan 8/25/2023 JP2023-136715 Application Pending Invention for documenting treatment procedures in beauty clinics using continuous image or video capture, supporting understanding, diagnoses, training of machine learning models, and auditing of procedure compliance. AGA Oral Treatment Drug Patent Japan 8/25/2023 JP2023-136716 Application Pending An invention harnessing machine learning for evaluating procedural accuracy based on video data AGA Topical Treatment Drug Patent Japan 8/25/2023 JP2023-136717 Application Pending Machine Learning-Based Medical Audit System for Evaluating Hospital Procedures AGA Topical Treatment Drug Patent Japan 8/25/2023 JP2023-136718 Application Pending A method that uses deep learning to verify procedural compliance in aesthetic clinics User Burden Reduction Method in Hair Transplant Surgery Patent Japan 8/25/2023 JP2023-136719 Application Pending Patented medical audit system for hair transplant surgery which includes cutting and collection of hair roots, video recording of the procedure, and use of a learning model for audit. User Burden Reduction Method in Hair Transplant Surgery Patent Japan 8/25/2023 JP2023-136720 Application Pending System that captures and analyzes videos of the donor hair shaving process at aesthetic clinics to ensure procedure compliance, and provides a wig to reduce psychological stress. 39 Table of Contents User Burden Reduction Method in Hair Transplant Surgery Patent Japan 8/25/2023 JP2023-136721 Application Pending An invention involving a procedure of hair follicle collection, concealed by remaining hair, integrated with an algorithm for auditing surgical compliance User Positioning Guide Method Patent Japan 8/25/2023 JP2023-136722 Application Pending Surgical Audit System for Hair Transplantation Using Machine Learning Treatment Efficiency and Safety Management Methods Patent Japan 8/25/2023 JP2023-136723 Application Pending AI technology applied to auditing cosmetic clinic procedures for monitoring the appropriateness of specific treatments Treatment Efficiency and Safety Management Methods Patent Japan 8/25/2023 JP2023-136724 Application Pending The present invention is a medical audit system that collects image data, generates a machine learning model for correct hair loss treatment using Botox, and evaluates newly acquired treatment videos using this model to assess the correctness of the procedure. Treatment Efficiency and Safety Management Methods Patent Japan 8/25/2023 JP2023-136725 Application Pending Medical procedures are photographed, features extracted, and using machine learning, models are created to determine conformity of new procedure recordings, suggesting improvements when necessary. Treatment Efficiency and Safety Management Methods Patent Japan 8/25/2023 JP2023-136726 Application Pending Machine Learning Based Audit of Hair Growth Treatments Using DermaPen, Growth Factors and Minoxidil Treatment Efficiency and Safety Management Methods Patent Japan 8/25/2023 JP2023-136727 Application Pending Machine Learning utilization for medical procedure compliance and improvement Management Method for Hair Transplant Cells Patent Japan 8/25/2023 JP2023-136728 Application Pending Invention for assessing medical procedures through machine learning models generated from video imagery Photo Capture Method for Hair Medical Purposes Patent Japan 8/25/2023 JP2023-136729 Application Pending The invention initially involves photographing the user from various angles in a bright room, using the captured images to generate a machine learning model, which evaluates if the treatment procedure is carried out as per the procedure in new images or videos. 40 Table of Contents Hair Growth Composition Patent Japan 8/25/2023 JP2023-136730 Application Pending Invention of a medical auditing system using machine learning to validate procedures from images taken during treatments at beauty clinics Hair Growth Composition Patent Japan 8/25/2023 JP2023-136731 Application Pending An invention for auditing procedural compliance in a medical system using a learning model inclusive of IV drip mixture ratios and their impacts on health Information Processing System, Information Processing Method, and Program Patent Japan 2/24/2023 JP2023-027740 Application Pending Technology capable of verifying the effects of double-eyelid surgery Information Processing System, Information Processing Method, and Program Patent Japan 2/24/2023 JP2023-027741 Application Pending Technology capable of verifying the effects of double-eyelid surgery Safety Management Method for Hair Removal Treatment Patent Japan 8/25/2023 JP2023-136732 Application Pending Invention involves creating a learning model using images of handpiece operation, incorporating relationships between energy hertz number and moving speed along with the overlapping process at the large head, auditing new treatments based on this model. Safety Management Method for Hair Removal Treatment Patent Japan 8/25/2023 JP2023-136733 Application Pending Machine learning model generated from hair removal procedure videos for auditing procedural correctness and preventing hair growth Safety Management Method for Hair Removal Treatment Patent Japan 8/25/2023 JP2023-136734 Application Pending The invention involves capturing hospital procedure activities, identifying procedural issues from the images, using these images as training data for machine learning models, and analyzing new videos with the model to ensure proper procedure adherence. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136735 Application Pending A system that learns surgical procedures from images to generate a model for auditing and preventing omissions in future surgeries 41 Table of Contents Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136736 Application Pending A method involving image capturing of hospital procedures, creating a learning model from those images using machine learning algorithms, and auditing new footage based on this model, with feedback provision for quality improvement if required. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136737 Application Pending Invention monitoring procedural operations in hospitals via learning model from activity images, checking correct execution of operations with specific procedures. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136738 Application Pending Procedure for creating a learning model from surgical operation images for surgery evaluation and feedback Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136739 Application Pending The invention is an audit system using machine learning algorithms to verify and guide surgical procedures, ensuring that newly acquired procedure videos are following defined procedures. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136740 Application Pending System for auditing hospital procedures through machine learning analysis of captured images Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136741 Application Pending Machine learning model generated from recorded procedures to evaluate new treatments for pain and acne Safety Management Method for Ion Introduction Treatment Patent Japan 8/25/2023 JP2023-136742 Application Pending Invention creating machine-learning models from hospital procedure videos for treatment accuracy and quality control Safety Management Method for Ion Introduction Treatment Patent Japan 8/25/2023 JP2023-136743 Application Pending A system for managing, guiding, verifying, and automating needleless therapy procedures, using learning models from existing treatment videos Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136744 Application Pending Invention of a medical audit system that uses machine learning to ensure adherence to correct hospital procedures 42 Table of Contents Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136745 Application Pending Machine-learning algorithms are used to create a therapeutic protocol for phototherapy procedures, auditing new videos of the procedure for correctness and safety, reducing workload and ensuring effective treatment. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136746 Application Pending Patent for a skin treatment method and process analysis using specific wavelength light and machine learning procedure adherence verification Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136747 Application Pending Using Machine Learning for Auditing Beauty Treatment Procedures Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136748 Application Pending Machine learning model for quality auditing of ThermaCool procedure Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136749 Application Pending Invention of process using machine learning model to analyze hospital procedure images for automatic procedural audit. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136750 Application Pending Invention on creating a learning model using machine learning methods for auditing procedures in beauty clinics, particularly the ‘Thermacool Eye’ procedure, based on sequential image data. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136751 Application Pending A medical audit system for beauty clinics utilizing machine learning for procedure adherence and quality improvement Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136752 Application Pending Machine learning based auditing and feedback on beauty clinic procedures by using treatment images and analysis Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136753 Application Pending Enlighton’s laser treatment procedure learning model based on hospital images and machine learning for auditing treatment alignment Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136754 Application Pending System using machine learning to recognize and audit treatment procedures in clinics 43 Table of Contents Safety Management Method for Tattoo Removal Treatment Patent Japan 8/25/2023 JP2023-136755 Application Pending The invention is a medical audit system that employs machine learning to formulate a hospital action model based on videos of treatment procedures, and verifies the appropriateness of spot size selection and wavelength utilization. Safety Management Method for Hyperhidrosis Treatment Patent Japan 8/25/2023 JP2023-136756 Application Pending A medical audit system using machine learning to analyze MiraDry beauty treatments, alerting deviations from normal procedures and improving from irregularities. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136757 Application Pending An invention of an automated auditing procedure using a machine learning model created from filmed medical procedures, specifically for snoring treatments using a YAG laser Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136758 Application Pending Documentation of Device Power Setup, Filming and Light Exposure Procedure with Sterispot Handpiece for Training Model Creation Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136759 Application Pending System Produces Learning Model for Medical Procedures from Hospital Images and Audits New Videos for Protocol Adherence Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136760 Application Pending Medical Audit System Utilizing Machine Learning for Procedure Adherence Analysis Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136761 Application Pending Invention embodying a machine learning model analyzing hospital surgery procedures from video data for adherence verification and progress monitoring Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136762 Application Pending Invention records and analyses videos of HIFU shower treatment procedures in hospitals using a deep learning model. 44 Table of Contents Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136763 Application Pending Invention proposes the use of machine learning to monitor medical procedures via camera recordings, generating a model from recorded images for safe evaluation, and auditing new video content according to the model Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136764 Application Pending Patent for a method in beauty clinics using machine learning to ensure correct procedure during High-Intensity Focused Ultrasound treatment Safety Management Method for Salicylic Acid Facial Peeling Treatment Patent Japan 8/25/2023 JP2023-136765 Application Pending Machine learning used to ensure accuracy and safety in chemical peeling procedures with salicylic acid macrogol Safety Management Method for Salicylic Acid Body Peeling Treatment Patent Japan 8/25/2023 JP2023-136766 Application Pending The invention is a medical audit system that uses machine learning techniques to create a model from surgery images, analyzes new surgical procedures for guideline adherence, and suggests corrective measures for inappropriate procedures, thus improving procedure quality and safety. Safety Management Method for Skin Treatment Using Plant-Based Activated Charcoal and Lactic Acid Patent Japan 8/25/2023 JP2023-136767 Application Pending Invention relating to a learning model for recognition and adherence to correct black peel application procedure Safety Management Method for Skin Treatment Using Plant-Based Activated Charcoal and Lactic Acid Patent Japan 8/25/2023 JP2023-136768 Application Pending A system that records and analyzes medical activities in a hospital using machine learning to detect specific patterns and improve accuracy. Safety Management Method for Skin Treatment Patent Japan 8/25/2023 JP2023-136769 Application Pending Invention of a medical audit system that generates a learning model from images of specific beauty clinic procedures and evaluates new treatments Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136770 Application Pending Automated Medical Audit System for Beauty Clinics 45 Table of Contents Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136771 Application Pending Machine Learning System Developed to Enhance Quality of Medical Procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136772 Application Pending Video analysis method for performance evaluation in beauty clinics using machine learning Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136773 Application Pending The system generates a learning model from pre-operative images, trains it using deep learning for ProShock Shape procedures, analyzes real-time videos for correctness, reports any anomalies, and counters the long tail problem using diverse treatment image datasets. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136774 Application Pending Invention of a medical auditing system that uses machine learning to analyze procedural adherence in clinics Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136775 Application Pending Procedure for auditing treatments using machine learning models derived from filmed treatment procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136776 Application Pending Machine Learning System for Safety and Quality Assurance in Beauty Clinics Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136777 Application Pending A procedural audit system for cosmetic treatments using machine learning model based on video footage of procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136778 Application Pending System creates a learning model for medical procedures using image recognition, information extraction, and machine learning, and compares new procedures against this model for accuracy and appropriateness. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136779 Application Pending Patent covers a machine learning method to ensure procedural standards in beauty clinics Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136780 Application Pending Invention uses machine learning model to analyze images or video frames from hospital actions to deduce correctness of procedures 46 Table of Contents Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136781 Application Pending An innovative surgical procedure combining cooling, disinfection, needle insertion, hemostasis, and various other techniques, with automatic auditing and learning models for improving treatment efficiency. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136782 Application Pending Medical auditing system using AI to verify adherence to cosmetic treatment procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136783 Application Pending Medical audit system using machine learning for validating skin treatments Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136784 Application Pending AI used for learning and verifying adherence to medical procedures in hospitals using collected image data. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136785 Application Pending A medical audit system employing image recognition and machine learning to ensure correct hospital procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136786 Application Pending Invention of a Learning Model for Treatment Procedure Recognition and Surveillance in Beauty Clinics Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136787 Application Pending The invention documents beauty clinic procedures, especially HIFU treatments, creates a learning model using the recorded data and deep learning, using it for predictive analysis of new video data for real-time treatment auditing. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136788 Application Pending Patent for a machine learning model generated from a three-step procedure, used to audit the adherence of treatment videos to the established procedure Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136789 Application Pending A processing device audits beauty clinic procedures by extracting and learning from past treatment videos, evaluating new videos, reporting inaccuracies, and continually updating its learning model for accurate future audits. 47 Table of Contents Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136790 Application Pending Invention creates a learning model for auditing adherence to procedural steps in skin disease treatments using machine learning Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136791 Application Pending Beauty clinic procedure involving liver-spot treatment via pulsed needle oscillation being audited through a machine learning model. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136792 Application Pending System for recording and analyzing treatment processes using machine learning Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136793 Application Pending Patent for a medical procedure using botulinum toxin, featuring a machine learning tool which audits the treatment process using filmed visual data Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136794 Application Pending Medical audit system uses deep learning to analyze and monitor cosmetic clinic procedures Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136795 Application Pending Invention uses machine learning to evaluate the accuracy of acne treatment procedures in a beauty clinic. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136796 Application Pending Machine learning model developed for analyzing fat freezing procedure videos to detect complications Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136797 Application Pending A three-step procedure at a beauty clinic uses photographic evidence collected during a fat cooling treatment to create a machine learning model that assesses procedure compliance and symptom occurrence. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136798 Application Pending Learning model developed from hyaluronic acid injection videos monitors for side effects and provides response instructions 48 Table of Contents Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136799 Application Pending A medical audit system learns from images of various treatments in hospitals, and uses this learning model to evaluate and update treatment procedures for ailments such as liver spots, red face, and pores, using devices such as VISIA_Evolution. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136800 Application Pending Invasive short pulse bipolar high-frequency device utilizes a single-use chip with 25 micro needle electrode pins for facial treatments, with machine learning enhancing auditing of the process. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136801 Application Pending Application of Machine Learning in Auditing and Improving RF Microneedling Therapeutic Procedures Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136802 Application Pending An invention that incorporates a machine learning model for assessing adherence to body contouring procedures in Asian patients using RF and BioEMS devices, coupled with image capture methods such as CT scan or ultrasound, through videos from beauty clinic treatments. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136803 Application Pending This invention is a method for deploying a medical audit system using a Radio Frequency (RF) micro needling device to monitor and review treatment procedures. Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136804 Application Pending Invention for auditing medical procedures using a learning model generated from collected images Evaluation and Effect Measurement Method for Aesthetic Medicine Patent Japan 8/25/2023 JP2023-136805 Application Pending Invention utilizes machine learning to analyze and validate procedure of age spot treatments in beauty clinics 49 Table of Contents Method for Accelerating Recovery of Motor Ability After Anesthesia Patent Japan 8/25/2023 JP2023-136806 Application Pending A staged auditing system utilizing machine learning from past surgical videos to provide guidelines on procedural technique, anesthetic dosage, and post-procedure recovery measures Estimation Method for Recovery Time of Motor Ability Patent Japan 8/25/2023 JP2023-136807 Application Pending Machine learning model using in-hospital images and parameters to estimate anesthetic duration and ensure procedural adherence Estimation Method for Anesthesia Effect Patent Japan 8/25/2023 JP2023-136808 Application Pending Patent for a system capturing and analyzing video footage of treatments in beauty clinics for machine-learning-based auditing of anesthesia administration. Device for Puncturing Buried Double Eyelids Patent Japan 8/25/2023 JP2023-136809 Application Pending Deep learning model for evaluating surgical procedures at beauty clinics Simplified Buried Suture Surgery Apparatus Patent Japan 8/25/2023 JP2023-136810 Application Pending Method and System for Auditing Surgical Procedures through Machine Learning Surgical Thread Patent Japan 8/25/2023 JP2023-136811 Application Pending Medical audit system using machine learning to assess the appropriateness of medical procedures in cosmetic clinics from images Silicone Bag for Breast Augmentation Simulation Patent Japan 8/25/2023 JP2023-136812 Application Pending Invention of a silicone bag for simulating breast augmentation surgery that assists in visualizing post-surgery appearance and monitoring surgical progress using a learning model. Clinic Reservation Reception System Patent Japan 8/25/2023 JP2023-136813 Application Pending Invention for optimizing medical services by matching users with suited physicians using a personalized database Surgery Applicability Determination System Patent Japan 8/25/2023 JP2023-136814 Application Pending A system utilizing a database of medical histories and a machine learning model based on hospital video data to ascertain surgical feasibility and process understanding 50 Table of Contents Surgery Applicability Determination System Patent Japan 8/25/2023 JP2023-136815 Application Pending Automated System for Managing Treatment Intervals Using a Learning Model Information Sharing Fixed System Patent Japan 8/25/2023 JP2023-136816 Application Pending Machine learning method to monitor and analyze hospital procedures through images and video data Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136817 Application Pending Invention that tracks and verifies the number of cotton balls used in surgery via image analysis and deep learning algorithms Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136818 Application Pending Invention of a Medical Audit System Using Machine Learning for Procedure Verification and Reoperation Decision-Making Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136819 Application Pending Method for auditing medical procedures through machine learning from hospital images Safety Management Method for Full Incision Method Double Eyelid Surgery Patent Japan 8/25/2023 JP2023-136820 Application Pending An invention of an auditing system that uses a machine learning model to analyze medical procedures through images, ensuring procedures are carried out correctly without human visual inspection. Safety Management Method for Outer Corner Cutting Surgery Patent Japan 8/25/2023 JP2023-136821 Application Pending Machine learning model generated from past surgical images to automatically audit new surgical videos for correct procedure Safety Management Method for Brow Lift Surgery Patent Japan 8/25/2023 JP2023-136822 Application Pending Invention for a Learning Model to Monitor and Assess Correctness of Beauty Clinic Procedures Using Filmed Footage and Machine Learning Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136823 Application Pending Invention uses Machine Learning to Evaluate the Compliance of Procedure Performance Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136824 Application Pending A machine learning model based on medical procedure steps for analyzing and verifying procedural adherence in new videos 51 Table of Contents Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136825 Application Pending A medical audit system using machine learning to map surgical images to pre-surgical procedures, identify procedures in new surgical images, and verify their sequence against therapeutic procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136826 Application Pending Innovation in a Surgical Procedure: Monitoring Compliance through Machine Learning Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136827 Application Pending Invention of a learning model using recorded actions from blepharoptosis surgery to analyze new surgical videos Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136828 Application Pending Machine Learning Model for Quality Analysis of Epicanthoplasty Procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136829 Application Pending A medical audit system for ophthalmological procedures that uses a machine learning model to analyze surgical videos for procedural adherence. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136830 Application Pending System that creates learning model based on surgical images to audit newly recorded surgical procedures and provide detailed surgical records for future medical care Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136831 Application Pending Technology that uses surgical videos for machine learning to standardize medical procedures. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136832 Application Pending Machine learning model using Convolutional Neural Network identifies actions in beauty clinic treatment videos to ensure predetermined procedures are being followed. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136833 Application Pending A medical audit system that uses machine learning to analyze image data and ensure procedural compliance in surgical operations Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136834 Application Pending A system that uses machine learning to audit and improve surgical procedures in a beauty clinic 52 Table of Contents Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136835 Application Pending The medical audit system employs two methods; the first one uses a micropore and a Denver splint, while the second method uses an Orfit and hot water combined with a series of taping procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136836 Application Pending Invention of an audit system for capturing and analyzing physician’s procedural steps during nose tip surgery Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136837 Application Pending Invention involves a surgical procedure with application of machine learning model trained by deep learning to verify newly acquired images against procedure steps Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136838 Application Pending The process involves designing thread placement in surgery, creating a learning model using images, utilizing image recognition technology for feature extraction, and employing the model to analyze the adherence to proper procedures. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136839 Application Pending A method for monitoring medical procedures using machine learning analysis of image data Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136840 Application Pending A method of using a machine learning model to monitor the removal and suturing of nasal wing skin in a cosmetic procedure, notifying stakeholders if the process is being improperly performed. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136841 Application Pending Machine learning method for error detection and quality improvement in alar reduction surgeries Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136842 Application Pending Invention involves a procedure including creating a design, administering anesthesia, inserting a thread into the puncture site, carrying out hemostasis, auditing number of needles used, erasing the design and protecting the puncture site, all informing the creation of a learning model from hospital images for procedural compliance audit. 53 Table of Contents Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136843 Application Pending Invention for a machine-learning algorithm to record, analyze and provide feedback on the correctness of nasal septum extension procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136844 Application Pending Invention involves creating learning model from hospital procedure images for auditing accuracy of procedures using machine learning Safety Management Method for Equipment Patent Japan 8/25/2023 JP2023-136845 Application Pending Method for Efficient Management and Utilization of PDS Sheets in Medical Procedures Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136846 Application Pending Development of a learning model from image analysis of cosmetic surgery procedure for chin repositioning using prosthetic cartilage Cheek Sag Prevention Method Patent Japan 8/25/2023 JP2023-136847 Application Pending Medical audit system uses machine learning to record procedures, generate learning models, and evaluate new procedures’ appropriateness. Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136848 Application Pending Invention of a Monitoring System utilizing Machine Learning to Audit Procedures based on Captured Images Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136849 Application Pending Invention related to an auditing system for ensuring adherence to prescribed steps in liposuction surgery to improve healthcare quality Safety Management Method for Procedures Patent Japan 8/25/2023 JP2023-136850 Application Pending This patent describes a minimally invasive surgery procedure for obesity and body contouring, using an 18G perforator and fat suction injections, with the operation filmed and continuously improved through the advancement of machine learning models. 54 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the white face bandage (balance cargo) method. Patent Japan 8/25/2023 JP2023-136851 Application Pending A patent system involving White Faceband (Balance Cargo) method with manual compliance monitoring and recording systems, display guide system, and a robotics application system. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the chin-neck bandage (Lumbic) method. Patent Japan 8/25/2023 JP2023-136852 Application Pending A system for monitoring, guiding, recording compliance, and utilizing robotics for the Ranbick method for Chin Neck Bandages. Manual compliance monitoring system, manual display guide system, manual compliance recording system, and robotics application system for the upper arm S compression method. Patent Japan 8/25/2023 JP2023-136853 Application Pending This is regarding various systems for implementing upper arm S compression, such as manual compliance monitoring, display guidance, recording systems, and robotic application. Abdomen, waist, and hip S Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for compression methods. Patent Japan 8/25/2023 JP2023-136854 Application Pending System for manual monitoring, guidance, and recording of abdomen, waist, and lower back compression with robotics application 55 Table of Contents Waist and waist S Compression method of liposuction — Amulet — Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the method. Patent Japan 8/25/2023 JP2023-136855 Application Pending A system for waist and abdominal fat liposuction using the ‘Amulet’ compression method with compliance monitoring, guidance display, record keeping, and robotic applications. Waist and waist liposuction compression method — abdominal band — manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the method. Patent Japan 8/25/2023 JP2023-136856 Application Pending A system for monitoring compliance with manual guidelines in the compression method for waist fat suction using an abdominal band, including a guide display, record system, and application of robotics. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the gluteal knee S compression method. Patent Japan 8/25/2023 JP2023-136857 Application Pending Patent regarding systems for applying major gluteal knee S compression methods including monitoring, guiding, recording compliance, and robotic application. Manual compliance monitoring system, manual display guide system, manual compliance recording system, and robotics application system for the lower leg S compression method. Patent Japan 8/25/2023 JP2023-136858 Application Pending Systems for monitoring and recording compliance with a manual for lower leg S compression method, manual guidance display, and application system for robotics 56 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the lower body S compression method. Patent Japan 8/25/2023 JP2023-136859 Application Pending Systems related to lower body comfort involving pressure techniques, including systems for manual adherence, guidance, recording compliance, and robotics applications. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems for thigh fixation methods. Patent Japan 8/25/2023 JP2023-136860 Application Pending A femur fixation method with manual adherence monitoring, guidance display, compliance recording, and robotic application system. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to the two arm fixation method. Patent Japan 8/25/2023 JP2023-136861 Application Pending System for Monitoring and Recording Compliance with Upper Arm Securing Manual using a Guide Display and Robotics Induction Method for Hair Removal Device Patent Japan 7/25/2023 JP2023-120738 Application Pending Patent for Surgery Audit System Using Machine Learning for Quality and Safety Assessment Induction Method for Hair Removal Device Patent Japan 7/25/2023 JP2023-120739 Application Pending Using a machine learning model to evaluate the accuracy of laser hair removal treatment based on observed laser movements Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120740 Application Pending Invention uses machine learning to audit hospital procedures and compliance, checking actions against generated models and ensuring record keeping. 57 Table of Contents Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120741 Application Pending Use of Multiscale Health Assessment Procedure with Machine Learning for Risk Evaluation and Compliance Check in Treatment Procedures Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120742 Application Pending Invention involves utilizing captured images of hospital procedures to develop a learning model for operations, specifically for evaluating correct use of a spacer and guide light in irradiation range. Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120743 Application Pending Improve Laser Surgery Techniques and Cleanliness in Beauty Clinics using Machine Learning Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120744 Application Pending Invention embodies a process of evaluating and reducing levels of pain, redness, swelling and hypersensitivity post exposure, and generates a learning model using machine learning algorithms to monitor new operations. Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120745 Application Pending Invention for auditing medical procedures using a learning model generated from filmed actions, focusing on irradiation speed and overlap degree. Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120746 Application Pending Invention for auditing health procedures using a learning model generated from recorded data Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120747 Application Pending A patent detailing a machine learning model that generates and uses a database of images captured within a hospital to analyze and determine proper actions Safety Management Method for Hair Removal Treatment Patent Japan 7/25/2023 JP2023-120748 Application Pending An auditing system for procedures in aesthetic clinics utilizing hair removal lasers, providing monitoring, learning models, analysis and feedback on procedure accuracy. 58 Table of Contents Checklist Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for implantation double prosthesis method. Patent Japan 7/25/2023 JP2023-120749 Application Pending System for monitoring, guiding, recording checklist compliance and applying robotics for buried double-treatment methods Checklist Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the chin prosthesis method. Patent Japan 7/25/2023 JP2023-120750 Application Pending The document discusses systems related to the Agoprosthesis method, including monitoring, guiding, record tracking, and robotics application. Checklist Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the bacar fat and molluscum contagiosum method. Patent Japan 7/25/2023 JP2023-120751 Application Pending Invention related to a system for monitoring adherence to the Checklist Buckelfat-Meelerfat method, displaying guidelines, logging compliance, and application in robotics. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the fat injection breast augmentation method. Patent Japan 7/25/2023 JP2023-120752 Application Pending Manual and robotics systems for compliance monitoring, display guide, recording, related to fat injection for breast augmentation. 59 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the pure graft 1UP method. Patent Japan 7/25/2023 JP2023-120753 Application Pending The patent pertains to the PureGraft 1UP method incorporating a manual compliance monitoring system, display guide system, recording system, and a robotics application system. A manual compliance monitoring system, a manual display guide system, a manual compliance record system, and a robotics application system related to the condensed rich liposuction method. Patent Japan 7/25/2023 JP2023-120754 Application Pending A system pertaining to condensed rich fat injection featuring a monitoring system for manual compliance, a descriptive manual guide system, a record system, and a robotics application system. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the serration method. Patent Japan 7/25/2023 JP2023-120755 Application Pending Invention about cell fusion techniques systems including supervision, display and recording of manual guidelines, and a robotics application system. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the method of fat augmentation injection (petit breast augmentation) with anesthesia for peace of mind. Patent Japan 7/25/2023 JP2023-120756 Application Pending System for Monitoring and Automating Fat Grafting Breast Enhancement Injection Procedures 60 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the submammary method of breast augmentation by inserting artificial breast implants. Patent Japan 7/25/2023 JP2023-120757 Application Pending System for monitoring and recording the compliance of implantation procedures for artificial breast augmentation with sub-mammary techniques Breast augmentation by insertion of artificial breast implants: Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the submammary method. Patent Japan 7/25/2023 JP2023-120758 Application Pending A system for breast augmentation with artificial implants using subpectoral method featuring manual adherence monitoring, display guide, recording compliance, and application of robotics. Breast augmentation with artificial breast implants: Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the subpectoral fascia method. Patent Japan 7/25/2023 JP2023-120759 Application Pending A system related to breast augmentation surgery using the Subpectoral method, comprising a manual adherence monitoring system, display guide system, compliance record system, and robotics application. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the ENT method. Patent Japan 7/25/2023 JP2023-120760 Application Pending The manual paper discusses the ENT method including systems for manual compliance monitoring, display guides, recording adherence and the use of robotics. 61 Table of Contents Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to MMBAG compression methods. Patent Japan 7/25/2023 JP2023-120761 Application Pending Document on MMBAG compression method featuring monitoring, display guide, compliance recording, and robotics application systems Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for MMBAG breath band fixation method. Patent Japan 7/25/2023 JP2023-120762 Application Pending Patent on MMBAG wristband fixation method in compliance monitoring, manual display guide, compliance recording and robotics application systems Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for SNP breast duct preservation method. Patent Japan 7/25/2023 JP2023-120763 Application Pending System related to SNP ductal preservation method including manual adherence monitoring, display guide, record system and robotics application Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for SNP conventional method. Patent Japan 7/25/2023 JP2023-120764 Application Pending SNP method involves systems for monitoring, displaying, recording manual adherence, and applying robotics. 62 Table of Contents LA Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the nipple base excision method. Patent Japan 7/25/2023 JP2023-120765 Application Pending Document on LA mammary papillary base resection method, discussing compliance monitoring, guide and recording systems, and robotic application Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for LA nipple circumference excision method. Patent Japan 7/25/2023 JP2023-120766 Application Pending A system related to the LA nipple periphery excision method, featuring a manual compliance monitoring, display guide, recording system, and applications in robotics. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the method of sunken nipple removal. Patent Japan 7/25/2023 JP2023-120767 Application Pending A system related to the innie nipple method, including monitoring, display guide, compliance recording, and robotics application systems. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for Montgomery gland removal method. Patent Japan 7/25/2023 JP2023-120768 Application Pending A method for removing Montgomery glands using a manual adherence monitoring, display guide, recording system, and robotics application system. 63 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for breast reduction round method. Patent Japan 7/25/2023 JP2023-120769 Application Pending Patent for a manual and robotic system for monitoring, guiding and recording compliance in breast reduction surgeries using the ‘Round method’ Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the inverted T-shape breast reduction method. Patent Japan 7/25/2023 JP2023-120770 Application Pending An oversight and guidance system for ‘Reverse T’ breast reduction surgery ensuring procedural adherence and record compliance Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for rich face, CRF, and nano rich methods. Patent Japan 7/25/2023 JP2023-120771 Application Pending A system involving RichFace, CRF, and NanoRich methods with manual compliance monitoring, display guide, recording systems and a robotics application. Manual compliance monitoring systems, manual display guide systems, manual compliance record systems, and robotics application systems related to flagellar methods. Patent Japan 7/25/2023 JP2023-120772 Application Pending The excerpt discusses a system connected to the Flagellar method that incorporates manual compliance monitoring, display guide systems, compliance recording, and robotics application. 64 Table of Contents Manual compliance monitoring systems, manual display guide systems, manual compliance record systems, and robotics application systems related to balancer handling methods. Patent Japan 7/25/2023 JP2023-120773 Application Pending Systems pertaining to balancer handling including monitoring adherence to manual, manual display guidance, compliance recording, and robotics applications. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems for muftogun methods. Patent Japan 7/25/2023 JP2023-120774 Application Pending The Maftogan method encompasses systems for manual compliance monitoring, display guide, compliance recording, and robotics application, providing an efficient framework for procedural tasks execution and oversight. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems for the thread lift floating method in which the piercing part is not a hairy part. Patent Japan 7/25/2023 JP2023-120775 Application Pending A system including a thread lift floating method, a compliance monitoring system, a display guide system, a compliance recording system, and a robotics application system without hairy area insertion. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for methods in which the thread lift floating insertion site is a hairy part. Patent Japan 7/25/2023 JP2023-120776 Application Pending A method involving thread lift floating with hair insertion, alongside monitoring, display, recording systems for manual compliance, and an application for robotics. 65 Table of Contents (Limited) A manual compliance monitoring system, a manual display guide system, a manual compliance recording system, and a robotics application system relating to a small face rejuvenation lift method. Patent Japan 7/25/2023 JP2023-120777 Application Pending A facial rejuvenation lift system featuring compliance monitoring, display guide, compliance recording and a robotic application to ensure correct and efficient procedures. A manual compliance monitoring system, a manual display guide system, a manual compliance recording system, and a robotics application system relating to an incisional forehead lift method. Patent Japan 7/25/2023 JP2023-120778 Application Pending A system related to the Incision Forehead Lift method including a manual compliance monitoring system, display guide, recording system, and a robotics application. A manual compliance monitoring system, a manual display guide system, a manual compliance record system, and a robotics application system related to the submental muscle binding method. Patent Japan 7/25/2023 JP2023-120779 Application Pending Patent about systems related to restraining submandibular muscles, including adherence monitoring, manual guide display, compliance record keeping, and robotics application. A manual compliance monitoring system, a manual display guide system, a manual compliance record system, and a robotics application system related to a baser shaving method. Patent Japan 7/25/2023 JP2023-120780 Application Pending Patent for systems that supervise, guide, and record manual compliance with ‘Beyzer Shaving Methods’ and apply robotics. 66 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for shaving method. Patent Japan 7/25/2023 JP2023-120781 Application Pending System for monitoring adherence to a shaving manual, providing display guides, recording compliance, and applying robotics. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the complete extraction method. Patent Japan 7/25/2023 JP2023-120782 Application Pending Detailed extraction method system featuring manual compliance monitoring, display guide, record system, and robotics application. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to the Sooso OS method. Patent Japan 7/25/2023 JP2023-120783 Application Pending SksoOS method concerning a monitoring system for manual compliance, a display guide system, documentation system for manual compliance and an application system for robotics Manual Compliance Monitoring System, Manual Display Guide System, Manual Compliance Recording System, and Robotics Application System for Tattoo Removal Method by Excision. Patent Japan 7/25/2023 JP2023-120784 Application Pending The system for tattoo removal by ablation includes compliance monitoring, instruction guide display, manual compliance record, and robotics application. 67 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for tattoo removal by skin grafting. Patent Japan 7/25/2023 JP2023-120785 Application Pending A patent about a tattoo removal system utilizing skin grafts, which includes features for operation manual compliance monitoring, display guidance, record keeping, and robotics application. Tattoo removal by skin grafting Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for skin grafting method. Patent Japan 7/25/2023 JP2023-120786 Application Pending A tattoo removal method using skin grafting with system to track and ensure adherence to the manual procedures, including a guide display and robotics application. Tattoo removal by skin grafting Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for full-layer skin grafting methods. Patent Japan 7/25/2023 JP2023-120787 Application Pending System for tattoo removal via skin transplantation with compliance monitoring, display guide, recording system, and robotics application Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the “Cachi” and “Folded ear” methods. Patent Japan 7/25/2023 JP2023-120788 Application Pending System incorporating manual compliance monitoring, display guide, recording systems, and applied robotics for manipulating ears 68 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for the split-ear straight line method. Patent Japan 7/25/2023 JP2023-120789 Application Pending A system for monitoring, displaying, recording adherence to manuals, and a robotics implementation using the straight-line method of split ear. The manual compliance monitoring system, the manual display guide system, the manual compliance record system, and the robotics application system related to the cleft ear W-type method. Patent Japan 7/25/2023 JP2023-120790 Application Pending A system related to the ‘W-type’ method for monitoring manual compliance, display guidance, record adherence, and robotics application. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system related to the split-ear Z-type method. Patent Japan 7/25/2023 JP2023-120791 Application Pending Systems for the ‘Split-ear Z-type’ method involving manual compliance monitoring, display guide, compliance recording, and robotics application Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for NVL method. Patent Japan 7/25/2023 JP2023-120792 Application Pending The text discusses NVL method-based systems for monitoring, displaying, recording compliance with manuals and applications for robotics 69 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for lip enlargement method. Patent Japan 7/25/2023 JP2023-120793 Application Pending Lip enlargement method incorporating systems of compliance monitoring, guide display, adherence recording, and robotics utilization Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for lip reduction method. Patent Japan 7/25/2023 JP2023-120794 Application Pending A system for monitoring, guiding, recording compliance, and applying robotics to a lip reduction method Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for gummiesmile and mucous membrane resection methods. Patent Japan 7/25/2023 JP2023-120795 Application Pending A system for monitoring and recording adherence to a manual, guidance display, and application of robotics in the method of mucosal excision for gummy smile treatment Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for gum resection method. Patent Japan 7/25/2023 JP2023-120796 Application Pending A system for gummy smile gingival resection including manual compliance monitoring, display guide, recording, and robotics application. 70 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance recording system, and robotics application system for the gummintomy method. Patent Japan 7/25/2023 JP2023-120797 Application Pending A system for monitoring compliance, displaying manual guides, recording compliance, and applying robotics in muscle resection for gummy smile correction. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to lip lift methods. Patent Japan 7/25/2023 JP2023-120798 Application Pending A lip lift procedure that employs a system for monitoring, guiding, documenting compliance with manual, and robot application. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems for osteotomy and mandibular angioplasty (gill osteotomy and osteotomy) methods. Patent Japan 7/25/2023 JP2023-120799 Application Pending A system concerning bone cutting and mandibular angle formation procedural methods, incorporating manual adherence monitoring, display guide, compliance recording systems and a component for robotics application. Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for osteotomy and mastoid (jaw) plasty methods. Patent Japan 7/25/2023 JP2023-120800 Application Pending A system for bone cutting and jaw reshaping procedures with compliance monitoring, display guide, adherence recording features, and the application of robotic technology. 71 Table of Contents Manual compliance monitoring system, manual display guide system, manual compliance record system, and robotics application system for osteotomy (upper and lower setback) method. Patent Japan 7/25/2023 JP2023-120801 Application Pending A system encompassing osteotomy method, manual compliance monitoring, manual display guide, records keeping, and robotics applications. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to forehead shaping methods. Patent Japan 7/25/2023 JP2023-120802 Application Pending Methodology for designing a frontal area featuring a monitoring and guiding system for manual adherence, record-keeping for compliance, and application of robotics A manual compliance monitoring system, a manual display guide system, a manual compliance recording system, and a robotics application system related to the pre-procedure photography procedure and the points to keep in mind when taking photographs. Patent Japan 7/25/2023 JP2023-120803 Application Pending The patent relates to various systems for manual adherence monitoring, manual display, recording adherence to manuals, and a robotic application, specifically regarding surgical imaging procedures. 72 Table of Contents Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to pre-procedure photography procedures and methods to keep in mind when taking photographs. Patent Japan 7/25/2023 JP2023-120804 Application Pending A technology system for monitoring adherence to pre-treatment photography manual procedures, including a displaying guide, compliance recording, and a robotics application system. Manual compliance monitoring systems, manual display guide systems, manual compliance recording systems, and robotics application systems related to cleaning methods. Patent Japan 7/25/2023 JP2023-120805 Application Pending Methods of cleansing involving manual compliance monitoring, display guide, compliance recording systems, and robotics application system Manual compliance monitoring systems, manual display guide systems, manual compliance record systems, and robotics application systems for equipment assembly and sterilization process methods. Patent Japan 7/25/2023 JP2023-120806 Application Pending Invention relating to systems for the assembly and sterilization process of equipment with monitoring, guidance, recording compliance, and robotic application features. We recognize the importance of protecting and enforcing our intellectual property rights. We believe that we have registered all the principal trademarks and internet domain names in Japan that are necessary for us to carry out our business operations. We believe that we have filed all patent applications in Japan that are necessary for us to carry out our business operations. We have no patents or patent applications in Vietnam, Singapore or the United States. We will take the necessary legal action to protect our intellectual property rights if we discover any infringement of those rights. We license certain intellectual property relating to our business to our franchisee clinics. In addition, we rely on trade secrets, proprietary know-how, and concepts that are critical to our business, which we also license to our franchisee clinics. Any termination or limitation of, or loss of intellectual property rights would have a material adverse effect on us and could adversely affect our business, financial condition or results of operations. We are not currently aware of any material infringement of our intellectual property rights and we believe that we have taken reasonable measures to prevent infringement of our own intellectual property rights. We do not currently have any pending or, to our knowledge, threatened claims against us or any of our subsidiaries relating to the infringement of any intellectual property rights owned by third parties. 73 Table of Contents It is possible that our current patent applications, or patents which we may later acquire or develop, may be successfully challenged or invalidated in whole or in part. It is also possible that we may not obtain issued patents from our pending patent applications or for other inventions we seek to protect. Due to uncertainties inherent in prosecuting patent applications, sometimes patent applications are rejected and we subsequently abandon them. It is also possible that we may develop proprietary products or technologies in the future that are not patentable or that the patents of others will limit or altogether preclude our ability to do business. In addition, any patent issued to us in the future, or any of our pending patent applications, may provide us with little or no competitive advantage, in which case we may abandon such patent, or patent applications, or license them to another entity. Please refer to “Part I, Item 1A. Risk Factors — Risks Related to our Intellectual Property” for more information. Insurance We do not maintain product liability insurance for the medical devices, products, and equipment that we sell to the MCs as part of our provision of purchasing services, since we are not the manufacturer of those products. We have fire insurance, leaseholder liability insurance, and facility liability insurance for our leased spaces (consisting primarily of office space) in case of damages which may be caused by any incidents or disasters. Further, we maintain cyber insurance in order to combat the increasing risks of cyber-attacks and theft of patient information, which may lead to litigation, damage to our brand, loss of existing customers and potential customers, regulatory violations, suspension of operations, and ultimately deterioration of business performance and financial position. We do not maintain business interruption insurance or key employee insurance for our executive officers. The MCs are responsible for maintaining fire insurance, leaseholder liability insurance, and facility liability insurance for the franchisee clinic properties. Accordingly, we might be subject to liabilities that exceed our insurance coverage. See “Part I, Item 1A. Risk Factors — Risk relating to our business and our industry — Our business is subject to liabilities for which we may not be insured.” Available Information We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports electronically with the U.S. Securities and Exchange Commission (“SEC”) and such reports can be accessed on our website at sbc-holdings.com/en, including the Investor Relations section of our website. Alternatively, you may access these reports at the SEC’s website at www.sec.gov. We make available, free of charge, copies of these reports as soon as reasonably practicable after filing these reports with the SEC or otherwise furnishing it to the SEC. SBC Medical Group Holdings Incorporated uses its website (https://sbc-holdings.com/en) to distribute company information and makes available free of charge a variety of information for investors, including our filings with the Securities and Exchange Commission (“SEC”), as soon as reasonably practicable after electronically filing that material with, or furnishing it, to the SEC. The information that we post on our website may be deemed material. Accordingly, investors should monitor our website, in addition to following our press releases, filings with the SEC, and public conference calls and webcasts. In addition, investors may opt in to automatically receive email alerts and other information about us when enrolling their email address by visiting the “Email Alerts” section under the “Resources” tab on our website. We do not incorporate the information contained on, or accessible through, our website or related social media channels into this Annual Report on Form 10-K (“Annual Report”) or in any other report or document we file with the SEC, and any references to our website or related social media channels are intended to be inactive textual references only. I tem 1A. Risk Factors An investment in our securities carries a significant degree of risk. You should carefully consider the following risks, as well as the other information contained in this Annual Report, including our historical financial statements and related notes included elsewhere in this Annual Report, before you decide to purchase our securities. Any one of these risks and uncertainties has the potential to cause material adverse effects on our business, prospects, financial condition and operating results which could cause actual results to differ materially from any forward-looking statements expressed by us and a significant decrease in the value of our common shares and warrants. Refer to “Cautionary Note Regarding Forward-Looking Statements.” We may not be successful in preventing the material adverse effects that any of the following risks and uncertainties may cause. These potential risks and uncertainties may not be a complete list of the risks and uncertainties facing us. There may be additional risks and uncertainties that we are presently unaware of, or presently consider immaterial, that may become material in the future and have a material adverse effect on us. You could lose all or a significant portion of your investment due to any of these risks and uncertainties. Risks Relating to Our Business and Industry We are a holding company and depend upon our operating subsidiaries for our cash flows. We are a holding company. Almost all of our operations are conducted, and almost all of our assets are owned, by our operating subsidiaries. Consequently, our cash flows and our ability to meet our obligations depend upon the cash flows of our operating subsidiaries and the payment of funds by these operating subsidiaries to us in the form of dividends, distributions or otherwise. The ability of our operating subsidiaries to make any payments to us depends on their earnings, the terms of their indebtedness, including the terms of any credit facilities and legal restrictions. Any failure to receive dividends or distributions from our operating subsidiaries when needed could have a material adverse effect on our business, results of operations or financial condition. 74 Table of Contents We may need additional capital, and we cannot be sure that additional financing will be available. Although we currently anticipate that our available funds and cash flow from operations will be sufficient to meet our cash needs for the foreseeable future, we may require additional financing to meet our long-term liquidity needs as we continue to execute our business strategy. Our ability to obtain financing will depend, among other things, on our development efforts, business plans, operating performance and condition of the capital markets at the time we seek financing. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our common stock, and the existing stockholders may experience dilution. We may not grow our franchise system or we may lose business by failing to compete effectively or by failing to manage the reputation of our brand. Our success and growth prospects depend on the strength and desirability of our brand. We believe that potential franchisees choose clinics based primarily on the value and quality of the brand and services, the extent to which affiliation with that franchisor may increase the franchisee’s revenue, and the franchise management service fees charged. Demographic, economic or other changes in markets may adversely affect the desirability of our brand and, correspondingly, the number of clinics franchised. The terms of new franchise management service agreements may not be as favorable as our current franchise management service agreements. For example, we may be required to reduce or change fee structures due to regulatory changes, make greater use of financial incentives such as loans and guaranties to induce the MCs to open new clinics and/or reduce the level of property improvements required before operating under our brand names. This could potentially impact our margins negatively. In addition, unfavorable borrowing conditions may discourage potential franchisees from expanding or constructing new clinics, thereby limiting a source of growth of the franchise management service fees received by us. Also, each of our franchisee clinics competes with major clinic chains in national and international markets and with independent companies in regional markets. Our ability to remain competitive and to attract and retain franchisee clinic customers depends on our success in distinguishing our management service, including but not limited to resale of cosmetic products, and services from those offered by competitors to our franchisee clinics. If we are unable to compete successfully in these areas, this could adversely affect our market share and our results of operations. The financial performance of our franchisees and other alliance partners can negatively impact our business. As of December 31, 2025, our subsidiaries provide management services to clinics operated by the MCs under a combination of franchisor-franchisee contracts with seven medical corporations and service contracts with Medical Corporation Association Furinkai, Medical Corporation Association Junikai, Medical Corporation Misakikai and General Incorporated Association Miotokai. Accordingly, our financial results are dependent in significant part upon the operational and financial success of our franchisees and other MCs with whom we have service contracts. To the extent we are unable to increase the number of franchise clinic locations in certain locations, are prevented from increasing franchise clinic locations due to historical performance, government regulations, licensing, registrations, or other factors, we will have a material negative impact on future revenues. Our revenue model and cash flows rely heavily on franchise management service fees as well as the expiration of clinic customer reward points. A significant reduction in the total number of new franchisee clinics opened would have a material adverse effect on future revenues. We have established operational standards and guidelines for our franchisees; however, we have limited control over how our franchisees’ businesses are run. While we are responsible for the anticipated success of our entire system of clinics and for taking a longer-term view with respect to system improvements, our franchisees have individual business strategies and objectives, which might conflict with our interests. Our franchisees may not be able to secure adequate financing to open or continue operating their clinics. If they incur too much debt or if economic or sales trends deteriorate such that they are unable to repay existing debt, our franchisees could experience financial distress or even bankruptcy. If a significant number of franchisees become financially distressed, it could harm our operating results through reduced management services revenues and the impact on our profitability could be greater than the percentage decrease in the management services revenues. Closure of franchised clinics would reduce our management services revenues and other sources of income and could negatively impact margins, since we may not be able to reduce fixed costs which we continue to incur. The interests of our franchisees and other alliance partners may conflict with ours or yours in the future and we could face liability from our franchisees and other alliance partners or related to our relationship with our franchisees and other alliance partners. The MCs, even though considered related parties, may from time to time disagree with us and our strategies regarding the business or our interpretation of our respective rights and obligations under the franchise and management services agreements and the terms and conditions of the franchisee/franchisor relationship. This may lead to disputes with our franchisees, and we expect such disputes to occur from time to time in the future as we continue to offer franchises. Such disputes may result in legal action against us. To the extent we have such disputes, the attention, time and financial resources of our management and our franchisees will be diverted from the clinics, which could have a material adverse effect on our business, financial condition, results of operations and cash flows even if we have a successful outcome in the dispute. 75 Table of Contents In addition, various laws and regulations govern our relationship with our franchisees and our potential addition of a franchise clinic location. A franchisee and/or a government agency may bring legal action against us based on the franchisee/franchisor relationships that could result in the award of damages to franchisees and/or the imposition of fines or other penalties against us. We could face liability from or as a result of our franchisees and other alliance partners. Various laws will govern the relationship between us and our franchisees and the potential addition of a franchise clinic location. If we fail to comply with these laws, we could be liable for damages to franchisees and fines or other penalties. A franchisee or government agency may bring legal action against us based on the franchisee/franchisor relationship. Also, under the franchise and management services business model, we may face claims and liabilities based on vicarious liability, joint-employer liability, or other theories or liabilities. Such legal actions could result in expensive litigation with our franchisees or government agencies that could adversely affect both our profit and our important relations with our franchisees. In addition, regulatory or legal developments could result in changes to laws or the franchisor/franchisee relationship that could negatively impact the franchise business model and, accordingly, our profit. We have limited control with respect to the operations of our medical corporation customers, which could have a negative impact on our business. The MCs, even though considered related parties, are independent business operators and are not our employees. Generally speaking, the Company does not exercise control over the day-to-day operations of their clinics (except to the extent governed by our management services contracts). In addition, the CEO of the Company is not able to exert influence over the MC. This is because he neither has any equity interest of the MC nor is a member (or shain ) or a director of the MC. In particular, however, relatives of our CEO are able to exert influence over the MC to the extent of the voting rights, since they are shain of the MC. The relatives of our CEO are members of the following MCs for which we provide services: • Medical Corporation Shobikai • Medical Corporation Kowakai • Medical Corporation Nasukai • Medical Corporation Aikeikai • Medical Corporation Jukeikai • Medical Corporation Ritz Cosmetic Surgery • Medical Corporation Association Furinkai • Medical Corporation Association Junikai • Medical Corporation Misakikai • General Incorporated Association Miotokai The relatives of our CEO account for two-thirds of the general meeting of members (or shain ), which is the highest decision-making body in these MCs. We provide training and support to franchisees, and set and monitor operational standards, but the quality of franchised clinics may be diminished by any number of factors beyond our control. Consequently, franchisees may not successfully operate clinics in a manner consistent with our standards and requirements or may not hire and train qualified personnel. If franchisees do not operate to our expectations, our image and reputation, and the image and reputation of other franchisees, may suffer materially and system-wide sales could decline significantly, which would reduce our management services fees and other revenues, and the impact on profitability could be greater than the percentage decrease in management services fees. The challenging economic environment may affect our franchisees, with adverse consequences to us. We rely substantially on our franchisees and the manner in which they operate their locations to develop and promote our brand and business. Due to the continuing challenging economic environment, it is possible that some franchisees could file for bankruptcy or become delinquent in their payments to us, which could have a significant adverse impact on our business due to loss or delay in payments of management services fees and other fees. Bankruptcies by our franchisees could prevent us from terminating their franchise and management services agreements so that we can offer their territories to other franchisees, negatively impact our market share and operating results as we may have fewer well-performing franchisee clinics, and adversely impact our ability to open new franchisee clinics. 76 Table of Contents We cannot be certain that the MCs and other franchisees we select in the future will have the business acumen or financial resources necessary to open and operate successful franchises in their franchise areas, and applicable franchise laws may limit our ability to terminate or modify these franchise arrangements and management services agreements. Moreover, franchisees may not successfully operate clinics in a manner consistent with our standards and requirements or may not hire and train qualified personnel. The failure of MCs and other franchisees to open and operate franchises successfully could have a material adverse effect on us, our reputation, our brand and our ability to open new franchisee clinics and could materially adversely affect our business, financial condition, results of operations and cash flows. Franchisees may not have access to the financial or management resources that they need to open the clinics contemplated by their agreements with us or be able to find suitable sites on which to develop them. Franchisees may not be able to negotiate an acceptable lease or purchase terms for clinic sites, obtain the necessary permits and government approvals or meet renovation schedules. Any of these problems could slow our growth and reduce our franchise revenues. Additionally, our franchisees typically depend on financing from banks and other financial institutions, which may not always be available to them, in order to construct and open new clinics. For these reasons, franchisees may not be able to meet the new clinic opening dates required under the franchise agreements. If we are unable to obtain, maintain or protect intellectual property rights, in Japan, in Vietnam, in Singapore, in the U.S., in Thailand and throughout the world, we may not be able to compete effectively in our market or globally. Our success depends in significant part on our and our licensees’ ability to establish, maintain and protect patents and other intellectual property rights and operate without infringing the intellectual property rights of others. The patent prosecution process is expensive and time-consuming, and we may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process and certain periodic maintenance and annuity fees following patent issuance. It is also possible that we will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. The lack of such patent protection may have a materially adverse effect on our business and financial condition. Finally, our patent portfolio encompasses all pending patent applications and unpatented intellectual property in various jurisdictions, and the pending patent applications encompassing each of the different technology areas may be assigned different relative and future values, either based on commercial relevance, patent position strength, patent coverage, claim scope, or any other variables associated with intellectual property. That is, some aspects of our patent portfolio may be more valuable than other aspects of our patent portfolio. Inability to obtain patents encompassing critical technologies could more adversely impact our business than inability to obtain patents encompassing other aspects of our business. Thus, adverse events experienced within specific patent portfolios could critically hamper our ability to commercialize and conduct business in these key technology areas. Globally, filing, prosecuting, enforcing and defending patents in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in certain countries can be less extensive than those in other jurisdictions. In addition, as noted above, the laws of some foreign countries do not protect intellectual property rights to the same extent as laws in Japan. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries. Since we have not obtained patent protection, competitors may use our technologies and our intellectual property rights may not be effective or sufficient to prevent them from competing. We have substantial franchisee concentration. The number of our franchisees is severely limited since our franchisees primarily consist of the MCs. There are inherent risks whenever a large percentage of revenues are concentrated with a limited number of franchisees that mainly operate the franchise locations in Japan, rather than in broad, mainstream commercial operations. We are unable to predict the future level of demand for our services that will be generated by these franchisees. 77 Table of Contents Our reputation and the trading price of our common stock may be negatively affected by adverse publicity or detrimental conduct against us. Adverse publicity concerning our failure or perceived failure to comply with legal and regulatory requirements, alleged accounting or financial reporting irregularities, regulatory scrutiny and further regulatory action or litigation could harm our reputation and cause the trading price of our common stock to decline and fluctuate significantly. The negative publicity and the resulting decline of the trading price of our common stock may lead to the filing of stockholder class action lawsuits against us and some of our senior executive officers, and may potentially have further severe impact on the market price of our common stock and divert management’s attention from the day-to-day operations of our company. Our management team plans to conduct additional procedures and actions to mitigate risks of the short seller allegations that the Company may be subject to. Legacy SBC is not a publicly listed entity and has not been the subject of short seller allegations, and this risk factor is discussing allegations that may potentially occur in the future with regard to the Company. As it is in short sellers’ interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks on public entities have, in the past, led to selling of shares in the market. Much of the scrutiny and negative publicity in such circumstances has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to stockholder lawsuits and/or SEC enforcement actions. Such a situation could be costly and time-consuming, and could divert management’s attention from the day-to-day operations of our company. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact the market price of our securities and our business operations. However, we may be constrained in the manner in which we can proceed against the relevant short sellers by principles of freedom of speech, applicable state law or issues of commercial confidentiality. We may continue to be the target of adverse publicity and detrimental conduct against us, including complaints, anonymous or otherwise, to regulatory agencies regarding our operations, accounting, revenues and regulatory compliance. Additionally, allegations against us may be posted on the internet by any person or entity which identifies itself or on an anonymous basis. We and our subsidiaries may be subject to government or regulatory investigation or inquiries, or stockholder lawsuits, as a result of such third-party conduct and may be required to incur significant time and substantial costs to defend ourselves, and there is no assurance that we and our subsidiaries will be able to conclusively refute each of the allegations within a reasonable period of time or at all. Our reputation may also be negatively affected as a result of the public dissemination of allegations or malicious statements about us, which in turn may materially and adversely affect the trading price of our common stock. We are a relatively young company with a short operating history, and we may not be able to sustain our rapid growth, effectively manage it or implement our business strategies. We and our subsidiaries have been providing our management services since 2003. Although we have experienced growth, our historical performance may not be indicative of our future performance due to our limited operating history. We are currently evaluating a continued expansion of franchisee locations to countries other than Japan, and have a short history of franchise locations outside of Japan. There is only a limited historical basis for making judgments on the demand for our franchisee clinic services in new locations in the future. You should consider our business and future prospects in light of the risks and challenges associated with our ability to: • ensure that our franchisee clinics are providing safe, convenient and effective cosmetic services; • maintain reliable, secure, high-performance and scalable infrastructure; • identify suitable facilities to expand franchisee clinic capacity and customer base; • navigate the evolving and complex regulatory environment across all the markets in which we and the managed clinics operate; • anticipate and adapt to changing market conditions, including technological developments and changes in the competitive landscape, and adjust, manage and execute our marketing and sales activities to cater to local economic and demographic conditions, cultural differences and customer preferences across all our current and future markets; • successfully market our brand; • improve and maintain our operational efficiency; and • attract, retain and motivate talented employees. If we fail to address any or all of these risks and challenges, our business may be materially and adversely affected. 78 Table of Contents As our business grows, we or our subsidiaries may adjust our management services offerings. These adjustments may not bring about expected results and may instead have a material and adverse impact on our financial condition and results of operations. Our revenue structure may continue to evolve in response to market demand in locations where the franchisee clinics are located. Our growth is dependent on the opening of such new franchisee clinic locations. We may not accurately identify market needs before we invest in the development of a new clinic service. In addition, we might face difficulties or delays in the development process, which may result in losses in our market share and competitive advantages. In pursuit of our growth strategy, we or our subsidiaries may enter into new strategic relationships to further penetrate our targeted markets. Should these relationships fail to materialize and develop into demand for our services, or should we fail to work effectively with these companies, we may lose opportunities to generate clinic growth and our business, results of operations and financial condition could be adversely affected. Our franchisee and other alliance clinics may not be successful in competing in the cosmetic clinic industry. We operate in the cosmetic clinic industry by providing management services to our franchisee and other alliance clinics. Companies engaged in businesses similar to those of our franchisee and other alliance clinics are entering the market one after another, and competition is fierce, with a wide range of cosmetic products and service formats. Our policy is to continue to respond to customer needs and enhance its services. However, if these efforts do not produce the anticipated results, or if the emergence of competitor clinics offering cosmetic services leads to customers leaving our franchisee and other alliance clinics, leading to a decrease in revenues generated by our franchisee and other alliance clinics, then our business and performance may be affected since we receive substantial revenue from the MCs as part of our compensation for management services. Many of our franchisee and other alliance clinics’ current and potential competitors, particularly international competitors, have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, promotion, and support of their clinics. We expect competition in our industry to intensify in the future in light of increased demand for cosmetic services. Factors affecting competition include, among others, ability to innovate, service quality, reliability, safety, pricing, and customer service. Increased competition may lead to lower revenues generated by our franchisee and other alliance clinics, which may result in downward price pressure and adversely affect our business, financial condition, operating results and prospects, since we receive substantial revenue from the MCs as part of our compensation for management services. The Company may face competition from senior management who cease working for it, and the Non-Competition Agreements (as defined below) may be unenforceable and expire two years following the Closing. Following execution of the Merger Agreement, certain current and former key personnel of Legacy SBC, including Dr. Aikawa, Ryoji Murata, Yuya Yoshida and Akira Komatsu, entered into non-competition and non-solicitation agreements (the “Non-Competition Agreements”), pursuant to which they agreed not to compete with the Company and its subsidiaries during the two-year period following the Closing and, during such two-year restricted period, not to solicit employees or customers or clients of such entities. We cannot be sure that one or more of these parties to the Non-Competition Agreements will not compete with the Company or solicit its employees or clients in the future. Even if ultimately resolved in its favor, any litigation associated with the Non-Competition Agreements could be time consuming, costly and distract management’s focus from operating the Company’s business. Moreover, states and foreign jurisdictions may interpret restrictions on competition narrowly and in favor of employees. Therefore, certain restrictions on competition or solicitation may be unenforceable. In addition, the Company may not pursue legal remedies if it determines that preserving cooperation and a professional relationship with the former employee, or other concerns, outweigh the benefits of any possible legal recourse or the likelihood of success does not justify the costs of pursuing a legal remedy. Furthermore, the term of the Non-Competition Agreements expires two years following the Closing. Upon expiration of the term, Dr. Aikawa, Ryoji Murata, Yuya Yoshida and Akira Komatsu, each of whom is current or former key personnel of Legacy SBC, and continue to be key personnel of the Company, may solicit employees or customers or clients of the Company. Such persons, because they have worked for Legacy SBC and the Company, may be able to compete more effectively with the Company, or be more successful in soliciting its employees and clients, than unaffiliated third parties. 79 Table of Contents Any significant change in the customer reward program at our franchisee and other alliance clinics could have a negative impact on our business. We depend on the customer reward program at our franchisee and other alliance clinics. Effective June 1, 2025, the Company revised the customer rewards program. The customer’s points expire if the customer does not make any additional eligible payment at a participating clinic within one year from the customer’s last eligible payment (subject to certain exclusions and the existence of certain clinics that do not participate in the program). Accordingly, at the time that a customer’s points expire, the Company earns 1 yen (approximately $0.0064) for each customer point that expires. Any material disruption to or changes to the customer reward program at our franchisee and other alliance clinics could harm our brand and adversely affect our operating results. Further, if customers’ practices at our franchisee and other alliance clinics change and the number of reward points that remain unused and expire decreases, then our business and operating results could be adversely affected. Any significant cybersecurity incident or disruption to our operating systems could subject us to significant reputational, financial, legal and operational consequences. We depend on our and our franchisees’ and other alliance partners’ operating systems to operate. Any material disruption to or slowdown of our operating systems could cause delays in our management services, which could harm our brand and adversely affect our operating results. Problems with our telecommunications network providers could adversely affect our services. Our telecommunications network providers could decide to cease providing services to us without adequate notice. Any change in service levels of our telecommunications network or any errors, defects, disruptions or other performance problems with our operating systems or infrastructure could harm our brand and potentially affect our franchisee and other alliance clinics’ access to our management services. If changes in technology cause our operating systems or infrastructure to become obsolete, or if our operating systems are inadequate to support our growth, we could lose customers, and our business and operating results could be adversely affected. The Company, its subsidiaries, and the MCs could be subject to breaches of security by hackers. Although we proactively employ multiple measures to defend our systems against intrusions and attacks, our measures may not prevent unauthorized access or use of sensitive data. A cybersecurity breach could harm our reputation, deter customers and potential customers from buying products or services from our franchisee and other alliance clinics, and result in regulatory penalties due to the sensitive nature of our franchisee and other alliance clinics’ customers’ medical information. In addition, any such breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liability, increase our risk of regulatory scrutiny, subject us to lawsuits and result in the imposition of material penalties and fines. Uncertainties with respect to the development, and use of artificial intelligence in our business and products may result in harm to our business and reputation. We have begun incorporating AI into our business activities. As with many innovations, AI presents risks and challenges that could adversely impact our business. The development, adoption and use of AI technologies are still in their early stages, and ineffective or inadequate AI development, deployment or governance practices could result in unintended consequences. For example, AI algorithms may be flawed or may be based on biased or insufficient datasets, and any disruption or failure in the AI functionality we incorporate into our business activities could adversely impact our business or result in delays or errors in our offerings. In addition, the successful development and deployment of AI in our business depends on our ability to timely and effectively upskill our existing workforce and attract and retain personnel with AI‑related skills and experience. Competition for AI‑native talent is intense, and if we are unable to develop or recruit the necessary capabilities, we may be unable to fully realize potential efficiency gains, innovation opportunities or competitive advantages from AI, or to respond effectively to AI‑enabled competitive, technological or regulatory developments. Conversely, any failure to successfully develop and deploy AI in our business activities could adversely affect our competitiveness, particularly if our competitors successfully deploy AI, and the development and deployment of AI will require additional investment and increase our costs. There also may be real or perceived social harm, unfairness or other outcomes that undermine public confidence in the use and deployment of AI. Any of the foregoing may result in harm to our business, financial condition or reputation. Furthermore, the legal and regulatory landscape surrounding AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, cybersecurity and privacy and data protection. Compliance with new or changing laws, regulations or industry standards relating to AI or failure to implement robust governance frameworks to address ethical considerations, such as fairness, transparency, and bias, may impose significant costs and may limit our ability to develop, deploy or use AI technologies. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm. 80 Table of Contents We may be compelled to undertake product recalls or take other actions, which could adversely affect our brand image and results of operations. The cosmetic products, medical equipment, and medical supplies that we sell may not perform in line with customers’ expectations. Any product defects, accidents or any other failure of the cosmetic products, medical equipment, or medical supplies that we sell to perform as expected could harm our reputation and result in adverse publicity, revenue loss, delivery delays and product recalls, which could harm our brand and reputation. Any product recall or lawsuit seeking significant monetary damages may have a material adverse effect on our business and financial condition. In the future, our suppliers may, voluntarily or involuntarily, initiate a recall if any of the cosmetic products, medical equipment, or medical supplies that we sell, prove to be defective or noncompliant with applicable laws and regulations. Such recalls, whether voluntary or involuntary, could cause us to incur significant expenses and adversely affect our brand image in our target markets. We may become subject to product liability claims or warranty claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims. We may be exposed to significant product liability claims if the cosmetic products, medical equipment, and medical supplies that we sell do not perform as expected. Any defects in the cosmetic products, medical equipment, and medical supplies that we sell or the misuse of the cosmetic products, medical equipment, and medical supplies that we sell could also result in injury, death or property damage. Our risks in this area are reduced due to the fact that we only act as a seller of the cosmetic products and not as the developer or manufacturer. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about the cosmetic products, medical equipment, and medical supplies that we sell and our business and inhibit or prevent the sale of current and future cosmetic products, medical equipment, and medical supplies by us. Since we are not the developer or manufacturer of the cosmetic products, medical equipment, and medical supplies that we sell, we do not have insurance coverage to cover potential product liability claims. Even if a claim is without merit or subsequently disproven, the claim could nevertheless diminish our brand and divert management’s attention and resources, which could have a negative impact on our business, financial condition and result of operations. 81 Table of Contents We have limited experience in providing management services to franchisee clinics located outside of Japan and we are subject to a variety of costs and risks due to our continued international expansion. One of our core strategies is international expansion. We generally have less experience in marketing and providing management services to franchisee clinics in markets outside Japan. International expansion will require us to invest significant capital and other resources, and our efforts may not be successful. International franchisee clinic operations are subject to risks such as: • limited brand recognition; • costs associated with establishing new supplier networks; • difficulty in finding qualified franchise partners; • inability to anticipate changes in local market conditions, economic landscapes, and consumers’ preferences and customs; • difficulties in staffing and managing foreign operations; • lack of familiarity with and understanding of the local legal, regulatory and policy frameworks, as well as burdens of complying with a wide variety of local laws and regulations, including those governing personal and customer data protection and safety control; • political and economic instability; • trade restrictions; • differing employment laws and practices, as well as potential labor disruptions; • the imposition of government controls; • lesser degrees of intellectual property protection; • tariffs and customs duties and the classifications of the cosmetic products, medical equipment, and medical supplies that we sell by applicable governmental bodies; and • a legal system subject to undue influence or corruption. The failure to manage any of these risks could negatively affect our international business and consequently our overall business and operating results. In addition, the concern over these risks may also prevent us from entering into or marketing our franchisee clinics in certain markets. Our operations may be interrupted by utility shortages or stoppages, fire, natural disaster or other calamities at or near our facilities. Our franchisee and other alliance clinics, and our clinics in Vietnam and Singapore depend on a continuous supply of utilities, such as electricity and water, to operate. Any disruption to the supply of electricity or other utilities may disrupt the services that are provided at our franchisee and other alliance clinics and our clinics in Vietnam and Singapore. This could adversely affect our ability to provide cosmetic services to the customers of our franchisee and other alliance clinics and our clinics in Vietnam and Singapore, and consequently may have an adverse effect on our business and results of operations since we receive substantial revenue from the MCs as part of our compensation for management services. In addition, fire, natural disasters, pandemics or extreme weather, including droughts, floods, typhoons or other storms, or excessive cold or heat, could cause power outages, fuel shortages, water shortages, damage to our franchisee and other alliance clinics and our clinics in Vietnam and Singapore, or disruption of transportation channels, any of which could impair or interfere with the operations of our franchisee and other alliance clinics and our clinics in Vietnam and Singapore. We cannot assure you that such events will not happen in the future or that we will be able to take adequate measures to mitigate the likelihood or potential impact of such events, or to effectively respond to such events if they occur. 82 Table of Contents Our business and prospects depend significantly on our ability to build our Shonan Beauty Clinic brand. Our business and prospects are heavily dependent on our ability to build, maintain and strengthen the Shonan Beauty Clinic brand. If we do not continue to establish, maintain and strengthen our brand, we may lose the opportunity to build a larger mass of customers for our franchisee and other alliance clinics. Promoting and positioning our brand will likely depend significantly on our franchisee and other alliance clinics’ ability to provide high-quality cosmetic treatments and engage with the customers as intended. In addition, we expect that our ability to develop, maintain and strengthen the Shonan Beauty Clinic brand will also depend heavily on the success of our branding efforts. Such efforts mainly include advertising for the franchisee and other alliance clinics as part of the management services that we provide to the MCs. To promote our brand, we may be required to change our branding practices, which could result in substantially increased expenses. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted. Our Shonan Beauty Clinic brand could be subject to adverse publicity if incidents related to the services provided at our franchisee and other alliance clinics or our clinics in Vietnam or Singapore have occurred, whether or not we are at fault. In particular, given the popularity of social media, including Facebook, X (formerly Twitter), TikTok, LinkedIn and Instagram in Japan, any negative publicity, regardless of its truthfulness, could quickly proliferate and harm consumer perceptions of and confidence in our brand. Furthermore, we may be affected by adverse publicity related to our franchisees or other partners, whether or not such publicity is related to their collaboration with us. Our ability to successfully position our brand could also be adversely affected by perceptions of the quality of the services at our franchisee and other alliance clinics and our clinics in Vietnam and Singapore. In addition, from time to time, the services at our franchisee and other alliance clinics and our clinics in Vietnam and Singapore are evaluated and reviewed by third party customers. Any unfavorable reviews could adversely affect consumer perceptions of our brand and the quality of services provided at our franchisee and other alliance clinics and our clinics in Vietnam and Singapore. Our employees, agents, business partners or subcontractors may engage in misconduct or other improper activities, which could cause us to lose contracts, expose us to damages, harm our reputation and diminish investor confidence in our company. We are exposed to the risk that an employee or subcontractor could commit fraud or other misconduct, including noncompliance with laws (including anti-bribery laws) or insider trading, which could subject us to civil or criminal investigations in the U.S. and in other jurisdictions, lead to civil and criminal penalties and related stockholder lawsuits, cause us to incur significant legal fees, and damage our reputation. As initially disclosed in our Annual Report on Form 10-K filed with the SEC on March 28, 2025, we previously identified a significant incident involving employee misconduct and misappropriation of funds at a subsidiary, which required investigative efforts and resulted in the restatement of certain prior-period financial statements. Although management has implemented remedial measures, similar misconduct could occur in the future and could result in investigative costs, management distraction, reputational harm and financial impacts. Employee or subcontractor misconduct could involve the improper use of our customers’ sensitive or classified information, which could result in regulatory sanctions against us, liability to third parties, and serious harm to our reputation and could result in a loss of customers and a reduction in revenue or profitability. We maintain a system of internal controls to prevent such occurrences, but it is not always possible to deter employee or subcontractor misconduct, and the precautions we take to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses. Any instances of employee or subcontractor fraud or misconduct could cause us to lose customers, cause a reduction in our revenue, expose us to damages, harm our reputation and diminish investor confidence in our company. Any decline in the business of our business partners or the deterioration of our relationship with them could have a material adverse effect on our operating results. We collaborate with various business partners to promote our Shonan Beauty Clinic brand. There can be no guarantee that those business partners will continue to collaborate with us in the future. If we are unable to maintain good relationships with our business partners, or the business of our business partners declines, the reach of our products and services may be adversely affected and our ability to maintain and expand our user base may decrease. Most of the agreements with our business partners do not prohibit them from working with our competitors or from offering competing services. If our partners change their standard terms and conditions in a manner that is detrimental to our business, or if our business partners decide not to continue working with us, or choose to devote more resources to supporting our competitors or their own competing products, we may not be able to find a substitute on commercially favorable terms, or at all, and our competitive advantages may diminish. 83 Table of Contents Safety issues or public perceptions of safety issues concerning cosmetic services could have a material adverse impact on our business. We believe that the cosmetic services provided at our franchisee and other alliance clinics and our clinics in Vietnam and Singapore are generally safe, however, there is a possibility of risk when undergoing any cosmetic procedure. On rare occasions, a cosmetic procedure may not go as planned, which may result in an adverse reaction, injury, accidents, casualty, or damages, and subject us to lawsuits. Also, negative public perceptions regarding the safety of cosmetic procedures, even if such incident does not involve our franchisee and other alliance clinics or our clinics in Vietnam and Singapore, could seriously harm our business. While we have implemented safety procedures related to the provision of cosmetic services at our franchisee and other alliance clinics and our clinic, a safety issue related to the cosmetic services provided could disrupt our operations, which could have a negative impact on our business, financial condition and result of operations or could lead to adverse publicity. If our franchisee and other alliance clinics or our clinics in Vietnam or Singapore fail to comply with environmental and work safety laws and regulations, the Company and the franchisee and other alliance clinics could become subject to fines or penalties or incur costs that could harm our business. The Company, its subsidiaries, and the MCs are subject to numerous environmental and work safety laws and regulations. For more details, see “Part I, Item 1. Business — Government Regulation and Environmental Matters” in this Annual Report. The Company, its subsidiaries, and the MCs also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations. Environmental and social laws and regulations have tended to become increasingly stringent. There has been increased global focus on environmental and social issues and it is possible that countries may potentially adopt more stringent standards or new regulations in these areas. To the extent regulatory changes occur in the future, they could result in, among other things, increased costs to the Company, its subsidiaries, and the MCs. In addition, the Company, its subsidiaries, and the MCs may incur substantial costs in order to comply with current or future environmental and work safety laws and regulations. These current or future laws and regulations may impair our franchisee and other alliance clinic growth efforts. The Company, its subsidiaries, and the MCs’ failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions, which could directly result in a material adverse effect with respect to the Company and/or its subsidiaries, since we receive substantial revenue from the MCs as part of our compensation for management services. If our business partners, independent contractors, suppliers, or franchisee and other alliance clinics fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity beyond our own control. Our reputation is sensitive to allegations of unethical business practices. We do not control the business practices of our business partners, independent contractors, suppliers, or franchisee and other alliance clinics (except to the extent of the guidelines that we provided to the franchisee and other alliance clinics). Accordingly, we cannot guarantee their compliance with ethical business practices, such as environmental responsibilities, fair wage practices, and compliance with child labor laws, among others. A lack of demonstrated compliance could lead us to seek alternative business partners, independent contractors, or suppliers, which could increase our costs and result in disruptions of our operations. Violation of labor or other laws by our business partners, independent contractors, suppliers, or franchisee and other alliance clinics or the divergence of their labor or other practices from those generally accepted as ethical in the markets in which we do business could also attract negative publicity, diminish our brand image and reduce demand for cosmetic services at our franchisee and other alliance clinics and our clinics in Vietnam and Singapore. Failure to safeguard personal information could subject us to penalties, damage our reputation and brand, and harm our business and results of operations. The regulatory framework for privacy and personal information security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. The U.S. federal and various state, local and foreign government bodies and agencies have adopted or are considering adopting laws and regulations limiting, or laws and regulations regarding, the collection, distribution, use, disclosure, storage, security and other processing of personal information. 84 Table of Contents Concerns or claims about our practices with regard to the processing of personal information or other privacy-related matters, even if unfounded, could damage our reputation and results of operations. In Japan, governmental authorities have enacted a series of laws and regulations to enhance the protection of privacy and data. We may need to adjust our business to comply with data security requirements and other laws and regulations from time to time. In Japan, the Act on the Protection of Personal Information (the “APPI”) and its related guidelines impose various requirements on businesses, including us, that use databases containing personal information. Under the APPI, the Company, its subsidiaries, and the MCs are required to lawfully use personal information we have obtained within the purpose of use we have specified and take appropriate measures to maintain the security of such personal information. The Company, its subsidiaries, and the MCs are also restricted from providing the personal information of a person (the “principal”) to third parties without the consent of the principal. In addition, in the event of a leak, loss, damage or other incident concerning the security of personal data that is likely to harm an individual’s rights and interests as provided in the relevant regulation, the relevant business operator is required to report the incident to the Personal Information Protection Commission and, in certain circumstances, notify the affected individuals (Article 26 of the APPI). The APPI also includes regulations relating to the handling of sensitive personal data and anonymized personal information and the transfer of personal information to foreign countries. A Personal Information Handling Business Operator (as defined below) shall not transfer a person’s personal data to third parties, including its affiliated entities without the prior consent of the principal unless an exception applies (Article 27, Paragraph 1 of the APPI). Except in certain cases prescribed under the APPI, transfers of personal data to a party outside Japan generally require the principal’s consent, and prescribed information regarding the foreign data protection regime and the recipient’s safeguards must be provided when obtaining such consent (Article 28 of the APPI). A failure by the MCs to comply with the APPI may harm our franchised brand and directly result in a reduction of the Company’s revenue, since we receive substantial revenue from the MCs as part of our compensation for management services. As laws and regulations in Japan on the protection of privacy and data are constantly evolving, complying with new laws and regulations could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security, it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by such laws, regulations or obligations. Any failure on our part to comply with applicable laws or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access, collection, transfer, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing customers of our franchisee and other alliance clinics and our clinics in Vietnam and Singapore from obtaining services or result in investigations, fines, suspension of our app, or other penalties by government authorities and private claims or litigation, any of which could materially adversely affect our business, financial condition and results of operations. In addition, the interpretation and application of the aforementioned laws and regulations are often uncertain and in flux. Our practice may become inconsistent with these laws and regulations. Our platform and internal systems depend on the ability of software and hardware developed and maintained internally and/or by third parties to store, retrieve, process and manage immense amounts of data, including personal information or other privacy-related matters. The software and hardware on which we rely may now or in the future contain, undetected programming errors, bugs, or vulnerabilities which may result in errors or compromise our ability to protect the data of our users and in turn adversely affect our business, financial condition and operating results. Any systems failure or compromise of security that results in the unauthorized access to or release of the data, photo or messaging history of our users could significantly limit the adoption of our services, as well as harm our reputation and brand, result in litigation against us, liquidation and other damages, regulatory investigations and penalties, and we could be subject to material liability. If customers of our franchisee and other alliance clinics or our clinics in Vietnam or Singapore allege that we have improperly used, released or disclosed their personal information, we could face legal claims and reputational damage. We may incur significant expenses to comply with privacy, consumer protection and security standards and protocols imposed by law, regulation, industry standards or contractual obligations. A major breach of our network security and systems could create serious negative consequences for our business and future prospects, including possible fines, penalties, reduced customer demand for services at our clinics in Vietnam and Singapore and our franchisee and other alliance clinics, and harm to our reputation and brand. See “Part I, Item 1. Business — Government Regulation and Environmental Matters — Japan Laws and Regulations” in this Annual Report for further details. 85 Table of Contents Failure by the MCs and other independently operated clinics and physicians to comply with the Medical Care Act in Japan could subject us to penalties, damage our reputation and brand, and harm our business and results of operations. The Medical Care Act defines rights and obligations regarding medical treatment, advertisement, authority, license, treatment of information, safety and security for patients, doctors and other individuals and organizations engaged in medical activities in Japan. A failure by the MCs or other independently operated clinics to comply with the Medical Care Act may harm our franchised brand and directly result in a reduction of the Company’s revenue, since we receive substantial revenue from the MCs as part of our compensation for management services. The execution of our business plans requires a significant amount of capital. In addition, our future capital needs may require us to sell additional equity or debt securities that may dilute the equity interests of our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends. We will need significant capital to, among other things, conduct research and development and expand our franchisee clinic locations. We may also need significant capital to maintain our existing property and equipment. Our expected sources of capital include both equity and debt financing. However, financing might not be available to us in a timely manner or on acceptable terms, or at all. Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market conditions and investor acceptance of our business plans. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities, substantially change our current corporate structure, or even curtail or discontinue our operations. In addition, our future capital needs and other business concerns could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute the equity interests of our stockholders. Additional indebtedness would increase our debt-service obligations and may be accompanied by covenants that would restrict our operations or our ability to pay dividends to our stockholders. We are subject to risks associated with strategic alliances or acquisitions. If we cannot manage the growth of our business or execute our strategies effectively, our business and prospects may be materially and adversely affected. We have entered into strategic alliances with various business partners, including but not limited to the MCs with respect to the franchisee clinics, and may in the future enter into other agreements with related parties and third parties to further our business purpose from time to time. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the related parties and third parties and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties. If any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party. Other than the acquisitions and investments described elsewhere in this Annual Report, we do not currently have any specific acquisition plans; however, if appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business. In addition to any required stockholders’ approval, we may also have to obtain approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable Japanese laws and regulations, which could result in delays and increased costs, and may derail our business strategy if we fail to do so. Furthermore, past and future acquisitions and the subsequent integration of new assets and businesses into our own require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant. In particular, our acquisition of a controlling interest in Waqoo involved the purchase of shares from the Company's CEO, a related party, presenting inherent conflicts of interest. Waqoo operates in the regenerative medicine and direct-to-consumer health and beauty products markets, which are subject to risks that differ from our core management services business, including evolving regulatory requirements applicable to regenerative medicine technologies in Japan, dependence on specialized manufacturing capabilities at its cell processing center, competition in the direct-to-consumer e-commerce market, and the inherent uncertainty of research and development activities. Additionally, Waqoo remains listed on the Tokyo Stock Exchange and has minority shareholders whose interests may differ from ours. We consolidate Waqoo on a three-month reporting lag, which may result in delays in identifying and responding to adverse developments at Waqoo. Our equity method investment in OrangeTwist (held through OT Midco) is subject to risks associated with the U.S. medical aesthetics market, including regulatory, competitive and macroeconomic conditions, and our minority ownership position limits our ability to control OrangeTwist's operations or strategy. There can be no assurance that these acquisitions and investments will achieve their intended strategic or financial objectives. 86 Table of Contents Our business could be adversely affected by trade tariffs or other trade barriers. The United States and other countries may in the future impose tariffs on the importation of consumer products related to our business, such as the resale of cosmetic products, medical equipment, and medical supplies. We plan to sell our cosmetic products, medical equipment, and medical supplies in the United States and other countries. Any new tariffs on cosmetic products, medical equipment, and medical supplies or other relevant products imposed by the United States or other countries may significantly increase our costs. It is not yet clear what impact these tariffs may have or what actions other governments, including the Japanese government, may take in retaliation. In addition, these developments could have a material adverse effect on global economic conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our business, financial condition and results of operations. We and our subsidiaries have limited insurance coverage, which could subject us to significant costs and business disruption. Our company, its subsidiaries, and the related parties such as MCs maintain equipment liability insurance, data security insurance and medical accident liability insurance for each clinic. Additionally, for medical devices, pharmaceuticals, etc., for which we serve as a sales agent, the manufacturer assumes primary product liability. However, our company, its subsidiaries, and related parties, such as MCs, bear responsibility for the medical devices and pharmaceuticals used in treatments on end customers. Given the potential for lawsuits or complaints related to medical errors, workmanship, or treatment results, we do not participate in the medical insurance of our company, subsidiaries, or related parties. Due to the difficulty in determining the customer’s subjectivity and the insurance company’s premium payment standards concerning treatment results, we abstain from such insurance coverage. The financial condition, operational results, and reputation of our company, subsidiaries, or MCs could be adversely affected if a claim is established against us, resulting from injuries or damages sustained by our franchisee and other alliance clinics, or our clinics in Vietnam and Singapore. Such claims, even if unsuccessful, may lead to negative publicity, significant defense costs, and a diversion of management’s time and attention. Furthermore, the absence of business interruption insurance exposes us to potential significant costs and resource diversion in case of disruptions. Additionally, operating jurisdictions like Japan, the United States, or others may impose requirements for maintaining specific minimum liability or other insurance for franchised clinics, potentially increasing service costs. The Company has never faced substantial compensation payouts or multiple compensations due to medical accidents in the past, with no material impact on business performance and a clean financial record. We have not incurred any significant liability in the past that was not covered by our existing insurance coverage. Each MC carries medical professional liability insurance for the physicians who belongs to each MC and we have not faced any significant claim beyond such insurance coverage. We believe that we maintain adequate levels of insurance relative to our business operations. We are involved in litigation from time to time and, as a result, we could incur substantial judgments, fines, legal fees or other costs. We may be the subject of complaints or litigation from franchisees and other alliance partners, customers, suppliers, employees or other third parties for various actions. The damages sought against us in some of these litigation proceedings could be substantial. We cannot assure you that we will always have meritorious defenses to the plaintiffs’ claims. While the ultimate effect of these legal actions cannot be predicted with certainty, our reputation and the result of operations could be negatively impacted. The proceedings we may be involved in from time to time, including the aforementioned bankruptcy proceedings, could incur substantial judgments, fines, legal fees or other costs and have a material adverse effect on our business, financial condition, results of operations and cash flows. Any financial or economic crisis or perceived threat of such a crisis may materially and adversely affect our business, financial condition and results of operations. We are subject to risks inherent in economic volatility and disruptions that may arise. COVID-19 had a severe and negative impact on the global economy from 2020 through 2022, and the global macroeconomic environment still faces numerous challenges. In response to inflation, divergent central bank monetary policy shifts (including interest rate increases in Japan, rate reductions followed by a pause in the United States, and heightened uncertainty across major economies amid ongoing geopolitical and energy price pressures), slowing of economic growth and other factors, stock markets across the world have experienced significant volatility and downward price pressure. The Russia-Ukraine conflict, the conflict in the Middle East and other geopolitical developments in various regions have heightened geopolitical tensions across the world. It is unclear whether these challenges will be contained and what global effects they each may have. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by the central banks and financial authorities of some of the world’s leading economies, including Japan’s. Economic conditions in Japan are sensitive to global economic conditions. Any prolonged slowdown in Japan’s economic development might lead to tighter credit markets, increased market volatility, sudden drops in business and customer confidence, and dramatic changes in business and customer behaviors. 87 Table of Contents We face risks related to natural disasters and health epidemics, which could significantly disrupt our operations. Our clinics in Vietnam and Singapore, and our franchisee and other alliance clinics, as well as our corporate offices, are vulnerable to natural disasters and other calamities such as typhoons, tornadoes, floods, earthquakes and other adverse weather and climate conditions, as well as the outbreak of health epidemics. Although we have servers that are hosted in an offsite location, our backup system does not capture data on a real-time basis, and we may be unable to recover certain data in the event of a server failure. We cannot assure you that any backup systems will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may also give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services to customers at our clinics in Vietnam and Singapore and the ability of the MCs and other operators to provide services at the franchisee and other alliance clinics. In addition, our business could also be adversely affected if our employees are affected by health epidemics and our business and operations may be disrupted. In addition, our results of operations could be adversely affected to the extent that any health epidemic harms the Japanese and global economy in general. If the landlords of our and our subsidiaries’ leased properties fail to properly maintain and renovate such premises, buildings or facilities in a timely manner or at all, the operation of our offices could be materially and adversely affected. We and our subsidiaries lease all the premises used in our operations from related parties and third parties. We and our subsidiaries require the landlords’ cooperation to effectively manage the condition of such premises, buildings and facilities. In the event that the condition of the office premises, buildings and facilities deteriorates, or if any or all of our and our subsidiaries’ landlords fail to properly maintain and renovate such premises, buildings or facilities in a timely manner or at all, the operation of our offices could be materially and adversely affected. The MCs may fail to pay us in accordance with the terms of their franchise and management services agreements, at times necessitating action by us to attempt to compel payment. If the MCs fail to pay us in accordance with the terms of our franchise and management services agreements, we may be adversely affected both from the inability to collect amounts due and the cost of enforcing the terms of our agreements, including litigation and arbitration costs. The risk of these issues increases with the term length of our franchise and management services arrangements. Furthermore, some of the MCs may seek bankruptcy protection or other similar relief and fail to pay amounts due to us, or pay those amounts more slowly, either of which could adversely affect our results of operations, financial condition and cash flow. We believe that this risk is reduced by the fact that the MCs are deemed to be related parties. We believe our success depends on continuing to invest in the growth of our worldwide operations by expanding franchisee and other alliance clinics to new geographic markets. If the clinic opportunities for our franchisee and other alliance clinics in these new markets are less than anticipated, or if the customer growth or sales in these markets do not meet our expectations, our results of operations and financial condition may be adversely affected. We believe our success depends on expanding our business into new geographic markets and attracting customers in countries other than primarily in Japan. We anticipate continuing to expand our operations worldwide and have made, and will continue to make, substantial investments and incur substantial costs as we permit franchisee and other alliance clinics to open in new geographic markets. This includes investments in offices, information technology investments, sales, marketing and administrative personnel and facilities. Often we must make these investments when it is still unclear whether a franchisee or other alliance clinic in the new market will justify the costs of these investments. In addition, these investments may be more expensive than we initially anticipate. If our investments are greater than we initially anticipate or if the customer growth or sales in these markets do not meet our expectations or justify the cost of the initial investments, our results of operations and financial condition may be adversely affected. The failure of new franchisee and other alliance clinics would directly impact our success since we receive substantial revenue from the franchisee and other alliance clinics as part of our compensation for management services. If we fail to maintain an effective system of internal controls over financial reporting, including remediating known material weaknesses in our internal control over financial reporting as of December 31, 2025, we may not be able to report our financial results timely and accurately or prevent fraud, which could adversely affect investor confidence in our company, and in turn, our results of operations and our stock price. Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 requires that companies evaluate and report on their systems of internal control over financial reporting. 88 Table of Contents As previously disclosed, we identified material weaknesses in our internal control over financial reporting as of December 31, 2024. Although our management achieved significant improvements during fiscal year 2025 through actions taken under the remediation plan previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, we concluded that those material weaknesses continued to exist as of December 31, 2025. In particular, our internal controls failed to ensure proper oversight and prior authorization of certain non-routine or exception-based related party transactions and executive compensation matters. For further discussion of the material weaknesses identified and our remedial efforts, see Part II, Item 9A, “Controls and Procedures.” In light of the material weaknesses described above, we performed additional procedures to ensure that the consolidated financial statements are prepared in accordance with generally accepted accounting principles. Accordingly, our management has concluded that the consolidated financial statements included in this Annual Report present fairly, in all material respects, the financial position, results of our operations and cash flows in accordance with U.S. generally accepted accounting principles (GAAP). If our remedial measures are insufficient to address the material weaknesses, or if we, or our independent registered public accounting firm, identify additional internal control deficiencies that could rise to the level of a material weakness or uncover errors in financial reporting, the disclosure of that fact, even if quickly remedied, could reduce the market’s confidence in our financial statements and harm our stock price. In addition, a failure to maintain effective internal controls could cause a delay in compliance with our reporting obligations, SEC rules and regulations or Section 404 of the Sarbanes-Oxley Act of 2002, which could subject us to a variety of administrative sanctions, including SEC enforcement action, ineligibility for short form resale registration, the suspension or delisting of our common stock from the stock exchange on which it is listed and the inability of registered broker-dealers to make a market in our common stock, which could adversely affect our business and the trading price of our common stock. Risks Related to Employee Matters If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success and our business may be harmed. We believe that a critical component to our success has been our company culture, which is based on transparency and personal autonomy. We have invested substantial time and resources in building our team within this company culture. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. As we grow and continue to develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our company culture. If we fail to maintain our company culture, our business may be adversely impacted. Our success depends on the continuing efforts of our key employees, including our senior management members and other key personnel. If we fail to hire, retain and motivate our key employees, we could lose the innovation, collaboration and focus that contribute to our business. We believe that our success depends substantially on the continued efforts of our key employees, including our senior management members and other qualified and key personnel. We rely on our executive officers, senior management and key employees to generate business and execute our initiatives successfully. Yoshiyuki Aikawa, our Chief Executive Officer, has a wealth of knowledge and business experience in the cosmetic clinic industry and the related management services, the core business of our group, as well as numerous personal and business relationships in this industry, and plays an extremely important role in the management of the Company. In addition, the relationships and reputation that members of our management and key employees have established and maintain with government personnel and other business partners contribute to our ability to maintain good relations and to identify new business opportunities. The loss of any key personnel or our failure to attract additional talent could reduce our employee retention, disrupt our research and development activities and operations, and impair our revenue growth and competitiveness. If one or more of our executive officers or key employees were unable or unwilling to continue their services with us, we might not be able to replace them easily, in a timely manner, or at all, and we might lose the innovation, collaboration and focus that contribute to our business. 89 Table of Contents The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy. To execute our business strategy, we must attract and retain highly qualified personnel. In particular, marketing, services, and content management domain experts are very important to our brand success and are difficult to replace. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and difficulty in retaining highly skilled employees with appropriate qualifications. In particular, we have experienced a competitive hiring environment in Japan, where we are headquartered and will continue to experience a competitive hiring environment as we recruit for remote talent worldwide. Many of the companies with which we compete for experienced personnel have greater resources than we do. In addition, in making employment decisions, job candidates often consider the value of the stock options or other equity incentives they are to receive in connection with their employment. If the price of our stock declines, or experiences significant volatility, our ability to attract or retain key employees will be adversely affected. If we fail to attract new personnel or fail to retain and motivate our current personnel, our growth prospects could be severely harmed. Risks Related to Intellectual Property We and our subsidiaries may need to defend ourselves against claims of intellectual property infringement, which may be time-consuming and costly. Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with the ability of our franchisee clinics and our clinics in Vietnam and Singapore to utilize our medical technologies, which could make it more difficult for our franchisee clinics and our clinics in Vietnam and Singapore to operate competitively. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights by us, our subsidiaries, and our franchisees, or otherwise assert their rights against us, our subsidiaries, and our franchisees. Moreover, our and our subsidiaries’ applications and uses of trademarks relating to our brand could be found to infringe upon existing trademark ownership and rights. We or our subsidiaries may also fail to apply for key trademarks in a timely manner. We, our subsidiaries, and our franchisees may continue to face intellectual property infringement claims in the future. If we, our subsidiaries, or our franchisees are determined to have infringed upon a third party’s intellectual property rights, we, our subsidiaries, or our franchisees may be required to do one or more of the following: • cease offering products or services that incorporate or use the challenged intellectual property; • pay substantial damages; • seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all; or • establish and maintain alternative branding for our brand and services. In the event of a successful claim of infringement against us, our subsidiaries, or our franchisees failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, even if frivolous, could result in substantial costs, negative publicity and diversion of resources and management attention. Our or our subsidiaries’ intellectual property rights may not protect us effectively. As of December 31, 2025, we and our subsidiaries together had filed a significant number of patent and trademark applications in Japan, and have registered numerous patents and trademarks in Japan. Additionally, a substantial number of trademark applications have been filed with the International Bureau of the World Intellectual Property Organization. Through the subsidiary acquired in November 2024, the Company also holds several trademarks in Singapore. However, the Company does not have any registered trademarks, domain names, or patents in Vietnam or the United States. We cannot assure you that our or our subsidiaries’ pending patent applications will be granted. Even if our or our subsidiaries’ applications are successful, patents may be contested, circumvented or invalidated in the future. In addition, the rights granted under any patents issued in the future may not provide us with proprietary protection or competitive advantages. The claims under any patents that issue from our or our subsidiaries’ patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to ours or our subsidiaries’ results. It is also possible that the intellectual property rights of others could bar us or our subsidiaries from licensing and exploiting any patents that are issued from our or our subsidiaries’ pending applications. Numerous patents and pending patent applications owned by others exist in the fields in which we and our subsidiaries have developed and are developing our technologies. These patents and patent applications might have priority over our or our subsidiaries’ patent applications and could subject our or our subsidiaries’ patent applications to invalidation. Finally, in addition to those who may claim priority, any of our or our subsidiaries’ existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable. 90 Table of Contents While Japan has established a comprehensive legal framework for the protection of intellectual property rights, the practical scope of protection and enforcement of such rights may vary depending on the nature of the intellectual property and the specific circumstances involved. Accordingly, protection of intellectual property rights in Japan may not be as effective as in the United States or other developed countries. Furthermore, policing unauthorized use of proprietary technologies is difficult and expensive. We and our subsidiaries rely on a combination of trademark and trade secret laws and restrictions on disclosure to protect our and our subsidiaries’ intellectual property rights. Despite our efforts to protect our and our subsidiaries’ proprietary rights, third parties may attempt to copy or otherwise obtain and use our or our subsidiaries’ intellectual property or seek court declarations that they do not infringe upon our or our subsidiaries’ intellectual property rights. Any unauthorized use of our or our subsidiaries’ intellectual property by third parties may adversely affect our current and future revenues and our reputation. Monitoring unauthorized use of our and our subsidiaries’ intellectual property is difficult and costly, and we cannot assure you that the steps we or our subsidiaries have taken or will take will prevent misappropriation of our and our subsidiaries’ intellectual property. From time to time, we or our subsidiaries may have to resort to litigation to enforce our and our subsidiaries’ intellectual property rights, which could result in substantial costs and diversion of our resources. The Company may not be able to protect its intellectual property rights throughout the world. Filing, prosecuting, and defending trademark and trade secret rights of the Company and its subsidiaries throughout the world would be prohibitively expensive. The Company has (i) filed patent applications in Japan, (ii) filed trademark applications in Japan and with the International Bureau of the World Intellectual Property Organization, and (iii) obtained trademarks in Japan. Competitors may use the Company’s technologies in jurisdictions where it has not obtained intellectual property protection. If we fail to protect, or incur significant costs in defending or enforcing our intellectual property and other proprietary rights, our business, financial condition and results of operations could be materially harmed. Our success depends, in large part, on our ability to protect our intellectual property and other proprietary rights. We rely primarily on trademarks, trade secrets, and unfair competition laws, as well as license agreements and other contractual provisions, to protect our intellectual property and other proprietary rights. However, existing Japanese legal standards relating to the validity, enforceability and scope of protection of intellectual property rights offer only limited protection, may not provide us with any competitive advantages, and our rights may be challenged by third parties. The laws of countries other than Japan may be even less protective of our intellectual property rights. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property or otherwise gaining access to our technology. Unauthorized third parties may try to copy or reverse engineer the medical technologies utilized at our clinics in Vietnam and Singapore and the franchisee clinics or otherwise obtain and use our intellectual property. Moreover, many of our employees and the MCs’ employees have access to our trade secrets and other intellectual property. If one or more of these employees leave our employment to work for one of our competitors, then they may disseminate this proprietary information, which may as a result damage our competitive position. If we fail to protect our intellectual property and other proprietary rights, then our business, results of operations or financial condition could be materially harmed. From time to time, we may have to initiate lawsuits to protect our intellectual property and other proprietary rights. Pursuing these claims is time consuming and expensive and could adversely impact our results of operations. In addition, affirmatively defending our intellectual property rights and investigating whether any of our medical technologies violate the rights of others may entail significant expense. Our intellectual property rights may be challenged by others or invalidated through administrative processes or litigation. If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity and scope of the intellectual property or other proprietary rights of others, then the proceedings could result in significant expense to us and divert the attention and efforts of our management and technical employees, even if we prevail. Risks Related to Government Regulation Failure to comply with laws and regulations could harm our business. Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than those in Japan. Although the Company, its subsidiaries, and the MCs strive to comply with these laws and regulations, including the APPI, Antimonopoly Act, the Medical Care Act, Dispatch Act, Poisonous and Deleterious Substances Control Act, the Labor Standards Act, Act on Land and Building Leases, Act on Special Provisions to the Civil Code Concerning Electronic Consumer Contracts and Electronic Acceptance Notice, and other laws and regulations related to our business, it is possible that regulations will be unexpectedly enacted, amended, or abolished in the future, or that planned deregulation will not proceed as planned. In such cases, if any of the Company, its subsidiaries, or the MCs receive some administrative sanction for violating such laws and regulations, etc., or if excessive legal restrictions are applied in the future, our activities may be restricted, which may affect our business and earnings. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. A failure by the MCs to comply with government regulations may harm our franchised brand and directly result in a reduction of the Company’s revenue, since we receive substantial revenue from the MCs as part of our compensation for management services. 91 Table of Contents We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and noncompliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation. We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which the Company, its subsidiaries, and the MCs conduct its business or operate franchisee clinics, including the Japanese anti-corruption laws and regulations, the U.S. Foreign Corrupt Practices Act, or the FCPA and other anti-corruption laws and regulations. The FCPA prohibits us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. The Japanese anti-corruption laws and regulations prohibit bribery to government agencies, state or government owned or controlled enterprises or entities, to government officials or officials that work for state or government owned enterprises or entities, as well as bribery to non-government entities or individuals. There is uncertainty in connection with the implementation of Japanese anti-corruption laws. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation. We have direct or indirect interactions with officials and employees of government agencies and state-owned affiliated entities in the ordinary course of business. We have also entered into joint ventures and/or other business partnerships with government agencies and state-owned or affiliated entities. These interactions subject us to an increased level of compliance-related concerns. We are in the process of implementing policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient, and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible. Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in our shares. General Risks Weakened global economic conditions may harm our industry, business and results of operations. Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated to us or the cosmetic clinic industry may harm us. Japan, the United States and other key international economies have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues. If economic conditions in Japan, the United States, Singapore, Vietnam, or any other future key markets for our franchisee clinics remain uncertain or deteriorate further, it could adversely affect clinic customers’ ability or willingness to purchase cosmetic products or services and delay prospective customers’ purchasing decisions, all of which could harm our operating results. A decrease in the revenue of the managed clinics (including the franchisee and other alliance clinics) as a result of such worldwide economic conditions would directly result in a reduction of the Company’s revenue since we receive substantial revenue from the MCs as part of our compensation for management services. We are exposed to fluctuations in currency exchange rates. Because we report our financial results in U.S. dollars but most of our revenues and incur most of our costs in Japanese yen, we face exposure to movements in currency exchange rates, which may cause our revenue and operating results to differ materially from expectations. Depreciation of the Japanese yen against the U.S. dollar would negatively impact our reported revenue and earnings. As exchange rates vary, revenue, cost of revenue, operating expenses and other operating results, when translated into U.S. Dollars, may differ materially from expectations. In addition, our operating results are subject to fluctuation if our mix of U.S. and foreign currency denominated transactions and expenses changes in the future. Furthermore, global political events and developments, fluctuating commodity prices and trade tariff developments, have caused global economic uncertainty, which could amplify the volatility of currency fluctuations. Such volatility, even when it increases our revenues or decreases our expenses, impacts our ability to predict our future results and earnings accurately. Although we may apply certain strategies to mitigate foreign currency risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and would involve costs and risks of their own, such as ongoing management time and expertise, external costs to implement the strategies and potential accounting implications. Additionally, as we anticipate growing our business further outside of Japan, the effects of movements in currency exchange rates will increase as our transaction volume outside of Japan increases. 92 Table of Contents Our actual operating results may differ significantly from our guidance and projections. From time to time, we may provide forward-looking estimates regarding our future performance that represent management’s estimates as of a point in time. These forward-looking statements are based on projections prepared by our management. These projections are not and were not prepared with a view toward compliance with published guidelines of the American Institute of Certified Public Accountants, and neither our independent registered public accountants nor any other independent expert or outside party compiles or examines the projections and, accordingly, no such person expresses any opinion or any other form of assurance on our projections. Projections are based upon a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions and conditions, some of which will change. The principal reason that we provide forward-looking information is to provide a basis for our management to discuss its business outlook with stakeholders. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions of its forward-looking statements will not materialize or will vary significantly from actual results. Accordingly, our forward-looking statements are only an estimate of what management believes is realizable as of the date of release. Actual results will vary from our forward-looking statements and the variations may be material. In light of the foregoing, investors are urged not to rely upon, or otherwise consider, our guidance or projections in making investment decisions. Risk Relating to Ownership of Our Securities An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities. Our common stock began trading on the Nasdaq Global Market under the symbol “SBC” and our public warrants began trading on the Nasdaq Capital Market under the symbol “SBCWW” on September 18, 2024. The price of our securities may vary significantly due to factors specific to the Company as well as to general market or economic conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained. Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject the Company to additional trading restrictions. Our common stock began trading on the Nasdaq Global Market under the symbol “SBC” and our public warrants began trading on the Nasdaq Capital Market under the symbol “SBCWW” on September 18, 2024. However, we cannot assure you that our securities will continue to be listed on Nasdaq in the future. In order to continue listing its securities on Nasdaq, the Company must maintain certain financial, distribution and stock price levels. Generally, the Company must maintain a minimum number of holders of its securities (including requirements relating to the minimum number of holders of its securities). If Nasdaq delists the Company’s securities from trading on its exchange and the Company is not able to list its securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, the Company could face significant material adverse consequences, including: • a limited availability of market quotations for its securities; • reduced liquidity for its securities; • a determination that our common stock is a “penny stock” which will require brokers trading in the common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future. The market price of our common stock may decline. The market price of our common stock and public warrants may decline for a number of reasons including if: • investors react negatively to our operating results or future prospects; • our actual financial and operating results are not consistent with the expectations of financial or industry analysts; or • we do not achieve the growth as rapidly or to the extent anticipated by financial or industry analysts. 93 Table of Contents The market price of our common stock may be volatile, and you could lose all or part of your investment. The trading price of our common stock is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares of common stock and/or public warrants at an attractive price due to a number of factors such as those listed in this Risk Factors section and the following: • results of operations that vary from the expectations of securities analysts and investors; • results of operations that vary from those of the Company’s competitors; • changes in expectations as to the Company’s future financial performance, including financial estimates and investment recommendations by securities analysts and investors; • declines in the market prices of stocks generally; • strategic actions by the Company or its competitors; • announcements by the Company or its competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; • announcements of estimates by third parties of actual or anticipated changes in the size of the Company’s customer base or the level of customer engagement; • any significant change in the Company’s management; • changes in general economic or market conditions or trends in the Company’s industry or markets; • changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to the Company’s business; • additional shares of the Company’s securities being sold or issued into the market by the Company or any of the existing stockholders or the anticipation of such sales, including if the Company issues shares to satisfy restricted stock unit related tax obligations or if existing stockholders sell shares into the market when applicable “lock-up” periods end; • investor perceptions of the investment opportunity associated with the Company’s common stock relative to other investment alternatives; • the public’s response to press releases or other public announcements by the Company or third parties, including the Company’s filings with the SEC; • litigation involving the Company, the Company’s industry, or both, or investigations by regulators into the Company’s operations or those of the Company’s competitors; • guidance, if any, that the Company provides to the public, any changes in this guidance or the Company’s failure to meet this guidance; • the development and sustainability of an active trading market for the Company’s common stock; • actions by institutional or activist stockholders; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; • changes in accounting standards, policies, guidelines, interpretations or principles; and • other events or factors, including those resulting from pandemics, natural disasters, war, acts of terrorism or responses to these events. These broad market and industry fluctuations may adversely affect the market price of the Company’s common stock and public warrants, regardless of the Company’s actual operating performance. In addition, price volatility may be greater if the public float and trading volume of the Company’s common stock and/or public warrants is low. 94 Table of Contents In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If the Company was involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation. Because there are no current plans to pay cash dividends on the Company’s common stock for the foreseeable future, you may not receive any return on investment unless you sell your shares of the Company’s common stock at a price greater than what you paid for it. The Company intends to retain future earnings, if any, for future operations, expansion and debt repayment, and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of the Company’s common stock will be at the sole discretion of the Company’s board of directors. The Company’s board of directors may take into account general and economic conditions, the Company’s financial condition and results of operations, the Company’s available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications of the payment of dividends by the Company to its stockholders or by its subsidiaries to it and such other factors as the Company’s board of directors may deem relevant. As a result, you may not receive any return on an investment in the Company’s common stock unless you sell your shares of the Company’s common stock for a price greater than that which you paid for it. The Company’s stockholders may experience dilution in the future. The percentage of shares of the Company’s common stock owned by current stockholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that the Company may grant to its directors, officers and employees, exercise of the Company’s warrants. Such issuances may have a dilutive effect on the Company’s earnings per share, which could adversely affect the market price of the Company’s common stock. If securities or industry analysts do not publish research or reports about the Company’s business, if they change their recommendations regarding the Company’s common stock or if the Company’s operating results do not meet their expectations, the Company’s common stock price and trading volume could decline. The trading market for the Company’s common stock and public warrants will depend in part on the research and reports that securities or industry analysts publish about the Company or its businesses. If no securities or industry analysts commence coverage of the Company, the trading price for the Company’s common stock and/or public warrants could be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover the Company downgrade its securities or publish unfavorable research about its businesses, or if the Company’s operating results do not meet analyst expectations, the trading price of the Company’s common stock and/or public warrants would likely decline. If one or more of these analysts cease coverage of the Company or fail to publish reports on the Company regularly, demand for the Company’s common stock and/or public warrants could decrease, which might cause the Company’s common stock and/or public warrants price and trading volume to decline. Future sales, or the perception of future sales, by the Company or its stockholders in the public market following the Business Combination could cause the market price for the Company’s common stock to decline. The sale of shares of the Company’s common stock and/or public warrants in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of the Company’s common stock and/or public warrants. These sales, or the possibility that these sales may occur, also might make it more difficult for the Company to sell equity securities in the future at a time and at a price that it deems appropriate. As an emerging growth company within the meaning of the Securities Act, the Company is permitted to rely on certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies. We qualify as an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. We plan to continue to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, the Company’s stockholders may not have access to certain information they may deem important. We cannot predict whether investors will find securities issued by the Company less attractive because the Company will rely on these exemptions. If some investors find those securities less attractive as a result of its reliance on these exemptions, the trading prices of the Company’s securities may be lower than they otherwise would be, there may be a less active trading market for the Company’s securities and the trading prices of the Company’s securities may be more volatile. 95 Table of Contents Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make a comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. The Company will remain an emerging growth company until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the closing of the IPO, (ii) the last day of the fiscal year in which the Company has total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which the Company is deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of the Company’s common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. The Company may redeem unexpired public warrants prior to their exercise at a time that is disadvantageous for the Company’s warrant holders. The Company will have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the Company’s common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders. If and when the public warrants become redeemable by the Company, the Company may exercise its redemption right if there is a current registration statement in effect with respect to the shares of the Company’s common stock underlying such warrants. Redemption of the outstanding public warrants could force you to: (i) exercise your warrants and pay the related exercise price at a time when it may be disadvantageous for you to do so; (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants; or (iii) accept the nominal redemption price which, at the time the outstanding public warrants are called for redemption, is likely to be substantially less than the market value of your warrants. Our securities holders may face limitations in connection with the issuance of shares upon the exercise of our warrants, and additional state securities law requirements could apply if our securities were to become no longer listed on a national securities exchange. Each state has its own securities laws, often called “blue sky” laws, which (i) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (ii) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker must be registered in that state. While our common stock is currently listed on Nasdaq, we cannot assure you that shares issuable upon the exercise of our warrants will be registered, qualified, or deemed exempt under applicable state securities laws for each holder, or that we will be able to effect such registration or qualification on a timely basis. In addition, if our securities were to be delisted from Nasdaq and not listed on another national securities exchange, additional state securities law requirements could apply and could limit the ability of investors to sell, and on purchasers to buy, our securities. Substantial future sales of shares of our common stock could cause the market price of our common stock to decline. The market price of shares of our common stock could decline as a result of substantial sales of our common stock, particularly sales by our directors, executive officers and significant stockholders, a large number of shares of our common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares. If we fail to maintain effective internal control over financial reporting, the price of our securities may be adversely affected. Our internal control over financial reporting may have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our common stock. We are required to establish and maintain appropriate internal control over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations. In addition, management’s assessment of internal control over financial reporting may identify weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal control over financial reporting may have an adverse impact on the price of our common stock. 96 Table of Contents As an emerging growth company, our auditor is not required to attest to the effectiveness of our internal controls. Our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting while we are an emerging growth company (and even after we cease to be an emerging growth company, so long as we remain a non-accelerated filer). This means that the effectiveness of our financial operations may differ from our peer companies in that they may be required to obtain independent registered public accounting firm attestations as to the effectiveness of their internal controls over financial reporting and we are not. While our management will be required to attest to internal control over financial reporting and we will be required to detail changes to our internal controls on a quarterly basis, we cannot provide assurance that the independent registered public accounting firm’s audit process in assessing the effectiveness of our internal controls over financial reporting, if obtained, would not find one or more material weaknesses or significant deficiencies. Further, once we cease to be an emerging growth company and cease to be a smaller reporting company (as described below), we will be subject to independent registered public accounting firm attestation regarding the effectiveness of our internal controls over financial reporting. Even if management finds such controls to be effective, our independent registered public accounting firm may decline to attest to the effectiveness of such internal controls and issue a qualified report. Our common stock and warrants may be subject to the “penny stock” rules in the future. It may be more difficult to resell securities classified as “penny stock.” Our common stock may be subject to “penny stock” rules (generally defined as non-exchange traded stock with a per-share price below $5.00) in the future. While our common stock and warrants are not currently considered “penny stock” since it is listed on Nasdaq, if we are unable to maintain that listing and our common stock and/or warrants are no longer listed on Nasdaq, unless we maintain a per-share price above $5.00, our common stock and/or warrants will become “penny stock.” These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction. Legal remedies available to an investor in “penny stocks” may include the following: • If a “penny stock” is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment. • If a “penny stock” is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock or our Private Placement Warrants and may affect your ability to resell our common stock and our Private Placement Warrants. Many brokerage firms will discourage or refrain from recommending investments in penny stocks. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not invest in penny stocks due, among other reasons, to the increased financial risk generally associated with these investments. For these reasons, penny stocks may have a limited market and, consequently, limited liquidity. We can give no assurance at what time, if ever, our common stock or our Private Placement Warrants will not be classified as a “penny stock” in the future. 97 Table of Contents We believe we will be considered a smaller reporting company and will be exempt from certain disclosure requirements, which could make our common stock less attractive to potential investors. Rule 12b-2 of the Exchange Act defines a “smaller reporting company” as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that: • had a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity; or • in the case of an initial registration statement under the Securities Act or the Exchange Act for shares of its common equity, had a public float of less than $250 million as of a date within 30 days of the date of the filing of the registration statement, computed by multiplying the aggregate worldwide number of such shares held by non-affiliates before the registration plus, in the case of a Securities Act registration statement, the number of such shares included in the registration statement by the estimated public offering price of the shares; or • in the case of an issuer whose public float as calculated under paragraph (1) or (2) of this definition was zero or whose public float was less than $700 million, had annual revenues of less than $100 million during the most recently completed fiscal year for which audited financial statements are available. As a smaller reporting company, we are not required to, and may not, include a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; and we need not provide the table of selected financial data. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our common stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares. We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives. As a public company, we incur significant legal, accounting and other expenses that we did not previously incur as a private company. In addition, the Sarbanes-Oxley Act has imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the timing of such costs. The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition, we will be required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting for the first annual report on Form 10-K following the date on which we are no longer an emerging growth company or a non-accelerated filer. Our compliance with Section 404 of the Sarbanes-Oxley Act will require that we incur substantial expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the value of our securities could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources. Our ability to successfully implement our business pl