UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2025
			For the quarterly period ended September 30, 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 1-12725

Regis Corporation

(Exact name of registrant as specified in its charter)

Minnesota

41-0749934

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3701 Wayzata Boulevard,

Minneapolis

Minnesota

55416

(Address of principal executive offices)

(Zip Code)

(952) 947-7777

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of exchange on which registered

Common Stock, $0.05 par value

RGS

The Nasdaq Global Market

Rights to Purchase Series A Junior Participating Preferred Stock, $0.05 par value

RGS

The Nasdaq Global Market

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 be 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 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 is a shell company (as defined by Rule 12b-2 of the Act): Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of ~~May~~November 95, 2025: 2,~~435~~480,~~981~~493

REGIS CORPORATION

INDEX

Part I.	Financial Information
	Item 1.	Financial Statements (Unaudited):
		Condensed Consolidated Balance Sheets as of March 31, 2025, and June 30, 2024	3
		Condensed Consolidated Balance Sheets as of September 30, 2025, and June 30, 2025	3
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2025, and 2024	4
		Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2025, and 2024	4
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended March 31, 2025, and 2024	5
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended September 30, 2025, and 2024	5
		Condensed Consolidated Statements of Shareholders' Equity (Deficit) for the Three and Nine Months Ended March 31, 2025, and 2024	6
		Condensed Consolidated Statements of Shareholders' Equity for the Three Months Ended September 30, 2025, and 2024	6
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2025, and 2024	7
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2025, and 2024	7
		Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3736
	Item 4.	Controls and Procedures	3736
Part II.	Other Information		3837
	Item 1.	Legal Proceedings	3837
	Item 1A.	Risk Factors	3837
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4038
	Item 5.	Other Information	4038
	Item 6.	Exhibits	4139
	Signatures		4240

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

REGIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

As of ~~March~~September 3130, 2025, and June 30, ~~2024~~2025

(Dollars in thousands, except per share data)

	March 31,2025		June 30,2024
	September 30,2025		June 30,2025
ASSETS
Current assets:
Cash and cash equivalents (Note 7)	$	1316,~~287~~560	$	1016,~~066~~959
Receivables, net	89,~~979~~220		9,~~434~~473
Other current assets	25,136		22,550
Inventory	2,751		2,798
Total current assets	47,402		42,050
Other current assets	22,873		21,254
Property and equipment, net	10,696		3,664
Total current assets	51,404		50,484
Goodwill (Note 1)	184,317		173,146
Property and equipment, net	9,928		10,085
Other intangibles, net	5,906		2,427
Goodwill (Note 1)	183,082		183,436
Right of use asset (Note 8)	244,664		287,912
Other intangibles, net	5,692		5,830
Other assets	18,263		21,297
Right of use asset (Note 8)	224,405		229,861
Total assets	$	511,248	$	530,496
Deferred tax asset (Note 5)	101,961		102,504
LIABILITIES AND SHAREHOLDERS’ EQUITY
Other assets	15,643		16,757
Total assets	$	592,115	$	598,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1822,~~127~~194	$	1220,~~747~~837
Accrued expenses	2016,~~296~~536		2119,~~644~~066
Short-term lease liability (Note 8)	62,572		69,127
Long-term debt, current portion (Note 9)	1,650		1,100
Total current liabilities	100,995		103,518
Short-term lease liability (Note 8)	59,575		60,685
Long-term debt, net (Note 9)	112,010		99,545
Total current liabilities	99,955		101,688
Long-term lease liability (Note 8)	193,314		230,607
Long-term debt, net (Note 9)	109,605		109,693
Other noncurrent liabilities	36,285		40,039
Long-term lease liability (Note 8)	174,309		179,280
Total liabilities	442,604		473,709
Other non-current liabilities	20,695		22,680
Shareholders’ equity:
Total liabilities	404,564		413,341
Common stock, $0.05 par value; issued and outstanding 2,435,981 and 2,279,948 common shares at March 31, 2025, and June 30, 2024, respectively	122		114
Shareholders' equity:
Additional paid-in capital	74,878		69,660
Common stock, $0.05 par value; issued and outstanding, 2,461,270 and 2,435,981 common shares at September 30, 2025, and June 30, 2025, respectively	123		122
Accumulated other comprehensive income	8,173		8,584
Additional paid-in capital	76,110		75,243
Accumulated deficit	(14,529)		(21,571)
Accumulated other comprehensive income	7,997		8,286
Total shareholders’ equity	68,644		56,787
Retained earnings	103,321		101,965
Total liabilities and shareholders’ equity	$	511,248	$	530,496
Total shareholders' equity	187,551		185,616
Total liabilities and shareholders' equity	$	592,115	$	598,957

_______________________________________________________________________________

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

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2025, and 2024

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

	Three Months Ended March 31,				Nine Months Ended March 31,
	Three Months Ended September 30,
	2025		2024		~~2025~~		~~2024~~
Revenues:
Royalties	$	1314,~~533~~036	$	15,~~687~~646	$	~~44,019~~	$	~~48,035~~
Fees	21,~~402~~784		2,~~617~~352		~~7,671~~		~~7,740~~
Product sales to franchisees	—		—		—		451
Advertising fund contributions	5,573		5,641
Advertising fund contributions	5,203		5,773		16,334		19,807
Franchise rental income (Note 8)	17,354		21,636
Franchise rental income (Note 8)	16,866		23,780		58,524		72,534
Company-owned salon revenue	20,211		785
Company-owned salon revenue	18,953		1,324		23,188		5,039
Total revenue	58,958		46,060
Total revenue	56,957		49,181		149,736		153,606
Operating expenses:
Cost of product sales to franchisees	—		19		—		436
General and administrative	11,351		14,034
General and administrative	11,235		11,247		36,424		33,748
Rent (Note 8)	3,223		1,064
Rent (Note 8)	4,058		1,766		7,271		4,257
Advertising fund expense	5,573		5,641
Advertising fund expense	5,203		5,773		16,334		19,807
Franchise rent expense	17,354		21,636
Franchise rent expense	16,866		23,780		58,524		72,534
Company-owned salon expense (1)	14,768		753
Company-owned salon expense (1)	13,835		1,503		16,534		4,301
Depreciation and amortization	768		446
Depreciation and amortization	739		1,009		1,645		2,056
Long-lived asset impairment	—		352
Long-lived asset impairment	—		—		352		170
Total operating expenses	53,037		43,926
Total operating expenses	51,936		45,097		137,084		137,309
Operating income	5,921		2,134
Operating income	5,021		4,084		12,652		16,297
Other (expense) income:
Interest expense	(5,~~087~~271)		(64,~~153~~846)		~~(14,781)~~		~~(18,529)~~
Other, net	315		(298)		685		(199)
Gain on earn-out liability	1,000		—
Income (loss) from operations before income taxes	249		(2,367)		(1,444)		(2,431)
Other, net	242		677
Income tax benefit (expense)	1		(54)		90		201
Income (loss) from operations before income taxes	1,892		(2,035)
Income (loss) from continuing operations	250		(2,421)		(1,354)		(2,230)
Income tax (expense) benefit	(536)		225
Income from discontinued operations (Note 3)	—		89		8,396		2,089
Income (loss) from continuing operations	1,356		(1,810)
Net income (loss)	$	250	$	(2,332)	$	7,042	$	(141)
Income from discontinued operations (Note 3)	—		957
Net income (loss)	$	1,356	$	(853)
Net income (loss) per share:
Basic:
Income (loss) from continuing operations	$	0.1056	$	(10.0377)	$	~~(0.58)~~	$	~~(0.95)~~
Income from discontinued operations	~~0.00~~—		0.0441		~~3.57~~		~~0.89~~
Net income (loss) per share, basic (2)	$	0.10	$	(1.00)	$	3.00	$	(0.06)
Net income (loss) per share (2)	$	0.56	$	(0.36)
Diluted:
Income (loss) from continuing operations	$	0.0849	$	(10.0377)	$	~~(0.58)~~	$	~~(0.95)~~
Income from discontinued operations	~~0.00~~—		0.0441		~~3.57~~		~~0.89~~
Net income (loss) per share, diluted (2)	$	0.0849	$	(10.0036)	$	~~3.00~~	$	~~(0.06)~~
Weighted average common and common equivalent shares outstanding:
Basic	2,~~499~~440		2,~~342~~343		~~2,350~~		~~2,338~~
Diluted	32,~~002~~781		2,~~342~~343		~~2,350~~		~~2,338~~

_______________________________________________________________________________

(1)Includes cost of services and products sold to guests in our company-owned salons. Excludes general and administrative expense, rent, and depreciation and amortization related to company-owned salons.

(2)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

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

REGIS CORPORATION

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

For the Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2025, and 2024

(Dollars in thousands)

Three Months Ended March 31,

Nine Months Ended March 31,

Three Months Ended September 30,

2025

2024

~~2025~~

~~2024~~

Net income (loss)

~~250~~1,356

(~~2,332~~853)

~~7,042~~

~~(141)~~

Foreign currency translation adjustments

41(289)

~~(230)~~152

~~(411)~~

~~(227)~~

Comprehensive income (loss)

~~291~~1,067

(~~2,562~~701)

~~6,631~~

~~(368)~~

_______________________________________________________________________________

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

REGIS CORPORATION

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

For the Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2025, and 2024

	Three Months Ended March 31, 2025
	Common Stock			AdditionalPaid-InCapital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance, December 31, 2024	2,435,981	$	122	$	73,243	$	8,132	$	(14,779)	$	66,718
Net income	—	—		—		—		250		250
Foreign currency translation	—	—		—		41		—		41
Stock-based compensation	—	—		383		—		—		383
Stock warrants issued in connection with debt	—	—		1,252		—		—		1,252
Balance, March 31, 2025	2,435,981	$	122	$	74,878	$	8,173	$	(14,529)	$	68,644
	Three Months Ended March 31, 2024
	Common Stock			AdditionalPaid-InCapital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance, December 31, 2023	2,279,450	$	114	$	67,710	$	9,026	$	(110,440)	$	(33,590)
Net loss	—	—		—		—		(2,332)		(2,332)
Foreign currency translation	—	—		—		(230)		—		(230)
Stock-based compensation	—	—		333		—		—		333
Net restricted stock activity	498	—		(3)		—		—		(3)
Balance, March 31, 2024	2,279,948	$	114	$	68,040	$	8,796	$	(112,772)	$	(35,822)
	Nine Months Ended March 31, 2025
	Common Stock			AdditionalPaid-InCapital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance, June 30, 2024	2,279,948	$	114	$	69,660	$	8,584	$	(21,571)	$	56,787
Net income	—	—		—		—		7,042		7,042
Foreign currency translation	—	—		—		(411)		—		(411)
Stock-based compensation	—	—		1,048		—		—		1,048
Net restricted stock activity	15,481	1		(75)		—		—		(74)
Common stock issued in connection with Alline Acquisition (1)	140,552	7		2,993		—		—		3,000
Stock warrants issued in connection with debt	—	—		1,252		—		—		1,252
Balance, March 31, 2025	2,435,981	$	122	$	74,878	$	8,173	$	(14,529)	$	68,644
	Nine Months Ended March 31, 2024
	Common Stock			AdditionalPaid-InCapital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance, June 30, 2023	2,277,828	$	114	$	66,764	$	9,023	$	(112,631)	$	(36,730)
Net loss	—	—		—		—		(141)		(141)
Foreign currency translation	—	—		—		(227)		—		(227)
Stock-based compensation	—	—		1,292		—		—		1,292
Net restricted stock activity	2,120	—		(16)		—		—		(16)
Balance, March 31, 2024	2,279,948	$	114	$	68,040	$	8,796	$	(112,772)	$	(35,822)

(Dollars in thousands)

(1)This activity represents the common stock issued in connection with the Alline Acquisition on December 19, 2024. See Note 13 for additional details.






























	Three Months Ended September 30, 2025
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
	Shares	Amount

Balance, June 30, 2025	2,435,981	$	122	$	75,243	$	8,286	$	101,965	$	185,616
Net income	—	—		—		—		1,356		1,356
Foreign currency translation	—	—		—		(289)		—		(289)
Exercise of stock options	11,000	—		291		—		—		291
Stock-based compensation	—	—		297		—		—		297
Net restricted stock activity	1,722	—		(19)		—		—		(19)
Common stock issued in connection with warrant exercise	12,567	1		298		—		—		299
Balance, September 30, 2025	2,461,270	$	123	$	76,110	$	7,997	$	103,321	$	187,551

	Three Months Ended September 30, 2024
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount

Balance, June 30, 2024	2,279,948	$	114	$	69,660	$	8,584	$	(21,571)	$	56,787
Net loss	—	—		—		—		(853)		(853)
Foreign currency translation	—	—		—		152		—		152


Stock-based compensation	—	—		335		—		—		335
Net restricted stock activity	2,447	—		(23)		—		—		(23)

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

_______________________________________________________________________________

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

REGIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the ~~Nine~~Three Months Ended ~~March~~September 3130, 2025, and 2024

(Dollars in thousands)

	Nine Months Ended March 31,
	Three Months Ended September 30,
	2025		2024
Cash flows provided by (used in) operating activities:
Net income (loss)	$	71,~~042~~356	$	(~~141~~853)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Gain from sale of OSP	(8,396)		(2,000)
Gain from sale of OSP (Note 3)	—		(957)
Depreciation and amortization	~~1,596~~758		~~1,576~~425
Long-lived asset impairment	352		170
Deferred income taxes	462		(221)
Deferred income taxes	(197)		(50)
Non-cash interest	1,404		1,264
Non-cash interest	3,846		1,956
Gain on earn-out liability	(1,000)		—
Stock-based compensation	2,043		1,201
Long lived asset impairment	—		352
Amortization of debt discount and financing costs	2,437		2,240
Stock-based compensation	629		1,430
Other non-cash items affecting earnings	579		216
Amortization of debt discount and financing costs	906		719
Changes in operating assets and liabilities, excluding the effects of asset sales and business acquisitions	(2,316)		(12,298)
Other non-cash items affecting earnings	198		(80)
Net cash provided by (used in) operating activities	6,986		(7,130)
Ad fund	1,069		2,840
Changes in operating assets and liabilities (1)	(3,499)		(6,263)
Net cash provided by (used in) operating activities	2,283		(1,344)
Cash flows (used in) provided by investing activities:
Capital expenditures	(~~769~~395)		(~~372~~16)
Proceeds from sale of OSP	8,463		2,000
Proceeds from sale of OSP, net of fees	—		957
Business acquisitions, net of cash acquired and certain obligations assumed	(18,631)		—
Net cash (used in) provided by investing activities	(395)		941
Net cash (used in) provided by investing activities	(10,937)		1,628
Cash flows (used in) provided by financing activities:
Cash flows provided by (used in) financing activities:
Borrowings on revolving credit facility	—		4,326
Proceeds from issuance of long-term debt	15,000		—
Repayments of revolving credit facility	—		(10,237)
Repayments of long-term debt	(~~825~~1,840)		(~~2,499~~263)
Borrowings on revolving credit facility	4,326		4,000
Debt refinancing fees	(8)		(298)
Repayments of revolving credit facility	(10,238)		—
Proceeds from issuance of common stock, net of offering costs	589		—
Debt refinancing fees	(949)		(2,552)
Taxes paid for shares withheld	(19)		(23)
Taxes paid for shares withheld	(75)		(16)
Net cash used in financing activities	(1,278)		(6,495)
Net cash provided by (used in) financing activities	7,239		(1,067)
Effect of exchange rate changes on cash and cash equivalents	(48)		27
Effect of exchange rate changes on cash and cash equivalents	(92)		(11)
Increase (decrease) in cash, cash equivalents, and restricted cash	562		(6,871)
Increase (decrease) in cash and cash equivalents, restricted cash and restricted cash equivalents	3,196		(6,580)
Cash, cash equivalents and restricted cash:
Cash, cash equivalents and restricted cash and restricted cash equivalents:
Beginning of period	35,205		29,312
Beginning of period	29,312		21,396
End of period	$	35,767	$	22,441
End of period	$	32,508	$	14,816
Supplemental non-cash disclosure
Stock issued in connection with Alline Acquisition	$	3,000	$	—

_______________________________________________________________________________

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

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

REGIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

The unaudited ~~interim~~ Condensed Consolidated Financial Statements of Regis Corporation (the Company) as of ~~March~~September 3130, 2025, and for the three ~~and nine~~ months ended ~~March~~September 3130, 2025, and 2024, reflect, in the opinion of management, all adjustments necessary to fairly state the consolidated financial position of the Company as of ~~March~~September 3130, 2025, and its consolidated results of operations, comprehensive income (loss), shareholders' equity ~~(deficit)~~ and cash flows for the interim periods. Adjustments consist only of normal recurring items, except for any discussed in the notes below. The results of operations and cash flows for any interim period are not necessarily indicative of results of operations and cash flows for the full year.

The accompanying unaudited ~~interim~~ Condensed Consolidated Financial Statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). The unaudited ~~interim~~ Condensed Consolidated Financial Statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended June 30, ~~2024~~2025, and other documents filed or furnished to the SEC during the current fiscal year.

Alline Salon Group Acquisition:

On December 19, 2024, the Company completed the ~~previously announced~~ transaction to acquire 100 percent ownership of Super C Group, LLC, doing business as Alline Salon Group (Alline). Under the terms of the agreement, the Company paid cash consideration of approximately $19 million, stock consideration valued at $3.0 million, and additional amounts for working capital adjustments and transaction-related fees. Refer to Note 13 to ~~these~~the unaudited Condensed Consolidated Financial Statements for additional information regarding the acquisition. The Company’s financial results for the three ~~and nine~~ months ended ~~March~~September 3130, 2025, include the results of Alline ~~subsequent to the December 19, 2024, acquisition date~~.

Goodwill:

As further described in Note 13 of these unaudited Condensed Consolidated Financial Statements, the acquisition of Alline resulted in ~~a preliminary~~ recognition of approximately $1210.13 million in goodwill, which was assigned to the company-owned operating segment.

As of ~~March~~September 3130, 2025, and June 30, ~~2024~~2025, the franchise reporting unit had goodwill of $172.28 million and $173.12 million, respectively, and the company-owned reporting unit had ~~$12.1~~goodwill ~~million~~ of ~~goodwill~~$10.3 ~~at March 31, 2025~~million.

Acquisition-Related Costs:

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

Inventory:

Other current assets includes an inventory balance of $2.9 million and $0.8 million as of March 31, 2025, and June 30, 2024, respectively, in the unaudited Condensed Consolidated Balance Sheets. Inventory primarily consists of beauty products sold and used in serving our customers in our company-owned salons. The preliminary inventory balance acquired in connection with the Alline Acquisition consists of shampoo, conditioner, hair care tools, and various other hair care and beauty products available for sale to salon customers and used in the servicing of our customers. The inventory is valued at the lower of cost or net realizable value, with cost determined using a weighted average.

Tax Benefits Preservation Plan:

On January 28, 2024, the Board authorized and declared a dividend of one preferred stock purchase right (a Right) for each outstanding share of common stock. The dividend was payable on February 9, 2024, (the Record Date), to the holders of record of shares of common stock as of the close of business on the Record Date. The description and terms of the Rights are set forth in a Tax Benefits Preservation Plan (the Plan), dated as of January 29, 2024, as the same may be amended from time to time between the Company and Equiniti Trust Company, LLC, as Rights Agent. On January 27, 2025, the Company entered into Amendment No. 1 to the Plan, extending the expiration date of the Plan from January 29, 2025, to January 29, 2028 (the Extension). Pursuant to the terms of the Plan, the Company ~~will~~submitted ~~submit~~ the Extension to its shareholders for ratification at the ~~next~~October ~~annual~~28, or2025 ~~special~~annual shareholders meeting, ofand ~~its~~the shareholders ratified the Plan. The Rights and the Plan will now expire on the earliest of (i) the close of business on January 29, 2028 (or such later date as may be established by the Board of Directors prior to the expiration date as long as the Extension is submitted to the shareholders of the Company for ratification at the next annual or special meeting of shareholders succeeding such extension), (ii) the time at which the Rights are redeemed or exchanged pursuant to the Plan, (iii) the time at which the Rights (other than Rights owned by an Acquiring Person, as defined by the Plan) are exchanged pursuant to the Plan, (iv) the repeal of Section 382 of the U.S. Internal Revenue Code of 1982, as amended (the Code), or any successor statute if the Board determines that the Plan is no longer necessary or desirable for the preservation of certain unrecognized tax benefits, or (v) the beginning of a taxable year to which the Board determines that no tax benefits may be carried forward.

Recently Issued Accounting Standards Not Yet Adopted:

In ~~November~~December 2023, the Financial Accounting Standards Board (FASB) issued ASU ~~No.~~ 2023-0709, ~~"Segment~~“Income ~~Reporting~~Taxes (Topic ~~280~~740): Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures,".” ~~which~~The ~~requires~~ASU ~~disclosure~~includes ofamendments ~~significant~~requiring ~~segment~~enhanced ~~expenses~~income ~~that~~tax ~~are~~disclosures, ~~regularly~~primarily ~~provided~~related to ~~the~~standardization ~~chief operating decision maker (CODM)~~ and adisaggregation ~~description~~ of ~~other~~rate ~~segment~~reconciliation ~~items~~categories ~~(the difference between segment revenue less the segment expenses disclosed under the significant expense principle~~ and ~~each~~income ~~reported~~taxes ~~measure~~paid ~~of segment profit or loss)~~ by reportable segment, as well as disclosure of the title and position of the entity’s CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resourcesjurisdiction. The ~~pronouncement~~ASU is effective for annual reporting periods ~~in fiscal years~~ beginning after December 15, ~~2023~~2024, and ~~for~~shall ~~interim~~be ~~periods~~applied ~~in fiscal years beginning after December 15, 2024~~prospectively. WeThe doCompany ~~not~~is ~~expect~~currently evaluating the ~~adoption~~impact of this ~~pronouncement~~new toguidance ~~impact~~will ~~our~~have ~~consolidated~~on ~~financial~~its ~~statements~~annual ~~beyond~~disclosures for the ~~expansion~~current offiscal ~~our reportable segment disclosures~~year.

In ~~December~~November ~~2023~~2024, the FASB issued ~~ASU~~the ~~2023~~ASC 2024-~~09,~~03 “"Income ~~Taxes~~Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (~~Topic~~Subtopic ~~740~~220-04): ~~Improvements~~Disaggregation toof Income ~~Tax~~Statement ~~Disclosures.”~~of ~~The~~Expenses" ~~ASU~~which ~~includes~~requires ~~amendments~~additional ~~requiring~~disclosure ~~enhanced~~of ~~income~~the ~~tax~~nature ~~disclosures,~~of ~~primarily~~expenses ~~related~~included in the income statement in response to ~~standardization~~requests ~~and~~from ~~disaggregation~~investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of ~~rate~~expenses ~~reconciliation~~included ~~categories~~in ~~and~~the expense captions presented on the face of the income ~~taxes~~statement ~~paid~~as bydisclosures ~~jurisdiction~~about selling expenses. The ~~ASU~~guidance is effective for ~~fiscal~~annual ~~years~~reporting periods beginning after December 15, ~~2024~~2026, and ~~shall~~interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the ~~standard~~impact ~~and~~this ~~determining~~new ~~the~~guidance ~~extent~~will ofhave ~~additional~~on ~~disclosures~~its ~~that~~financial ~~will~~statements beand ~~required~~disclosures.

In ~~November~~July ~~2024~~2025, the ~~Financial Accounting Standards Board (“~~FASB”) issued the ASC ~~2024~~2025-0305 "~~Income~~Financial ~~Statement~~Instruments—Credit -Losses ~~Reporting Comprehensive Income - Expense Disaggregation Disclosures~~ (~~Subtopic~~Topic ~~220-04~~326): ~~Disaggregation~~Measurement of ~~Income~~Credit ~~Statement~~Losses offor ~~Expenses"~~Accounts ~~which~~Receivable ~~requires~~and ~~additional~~Contract ~~disclosure~~Assets." ofThe ~~the~~ASU ~~nature~~includes ofamendments ~~expenses~~which ~~included~~provide inentities ~~the~~with ~~income~~a ~~statement~~practical inexpedient ~~response~~ to ~~requests~~assume ~~from~~that ~~investors~~current ~~for~~conditions ~~more~~as ~~information~~of ~~about~~the anbalance ~~entity’s~~sheet ~~expenses.~~date ~~The~~will ~~new~~remain ~~standard~~unchanged ~~requires~~for ~~disclosures~~the ~~about~~remaining ~~specific~~life ~~types~~ of ~~expenses included in~~ the ~~expense~~assets, ~~captions~~effectively ~~presented~~simplifying oncredit ~~the~~loss ~~face~~estimations offor ~~the~~certain ~~income statement as disclosures about selling expenses~~situations. The guidance is effective for annual reporting periods beginning after December 15, ~~2026~~2025, and interim reporting periods within ~~annual~~fiscal ~~reporting~~years ~~periods~~ beginning after ~~December~~that ~~15, 2027~~date. The ~~requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The~~ Company isdoes ~~currently~~not ~~evaluating~~believe the ~~impact this new~~ guidance will have a material impact on its financial statements and disclosures.

2. REVENUE RECOGNITION:

Revenue Recognition and Deferred Revenue:

Revenue recognized over time

Royalty and advertising fund revenues represent sales-based royalties that are recognized in the period in which the sales occur. Generally, royalty and advertising fund revenues are billed and collected monthly in arrears. Advertising fund revenues and expenditures, which must be spent on marketing and related activities per the franchise agreements, are recorded on a gross basis within the ~~unaudited~~ Condensed Consolidated Statements of Operations. The treatment increases both the gross amount of reported revenue and expense and generally has no impact on operating income and net income. Franchise fees are billed and received upon the signing of the franchise agreement. Recognition of these fees is deferred until the salon opens and istypically ~~then~~ recognized over ~~the term of the franchise agreement, which is typically~~ 10 years. Franchise rental income is a result of the Company signing leases on behalf of franchisees and entering into sublease arrangements with the franchisees. The Company recognizes franchise rental income and expense when it is due to the landlord.

Revenue recognized at point of sale

Company-owned salon revenues are recognized at the time when the services are provided, or the guest receives and pays for the merchandise. Revenues from purchases made with gift cards are also recorded when the guest takes possession of the merchandise or services are provided. Gift cards issued by the Company are recorded as a liability (deferred revenue) upon sale and recognized as revenue upon redemption by the guest. Gift card breakage, the amount of gift cards which will not be redeemed, is recognized based on gift card balances with no activity over a 36-month basis. Product sales to franchisees are recorded at the time product is delivered to the franchisee.

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

March 31,2025

June 30,2024

Balance Sheet Classification

September 30,2025

June 30,2025

Balance Sheet Classification

(Dollars in thousands)

Receivables from contracts with customers, net

7,~~446~~497

67,~~887~~378

Receivables, net

Broker fees

65,~~399~~505

95,~~369~~997

Other assets

Deferred revenue:

Current

Gift card liability

~~571~~402

~~366~~476

Accrued expenses

Deferred franchise fees open salons

3,~~996~~690

43,~~738~~832

Accrued expenses

Total current deferred revenue

4,~~567~~092

54,~~104~~308

Non-current

Deferred franchise fees unopened salons

1,~~530~~396

1,~~783~~475

Other ~~noncurrent~~non-current liabilities

Deferred franchise fees open salons

108,~~532~~466

149,~~972~~394

Other ~~noncurrent~~non-current liabilities

Total non-current deferred revenue

129,~~062~~862

1610,~~755~~869

Receivables relate primarily to payments due for royalties, advertising fees, rent, and ~~rent~~sales of salon services and product paid by credit card. The receivables balance is presented net of an allowance for expected credit losses (i.e., doubtful accounts)., ~~The~~related ~~Company~~to ~~monitors the financial condition of its franchisees and records provisions for estimated losses on~~ receivables ~~when~~from ~~it believes~~ franchisees. ~~are~~Management ~~unable~~estimates tothe ~~make~~allowance ~~their required payments~~ based on ~~factors such as delinquencies and aging trends. The allowance for credit losses is~~ the ~~Company's~~age ~~best estimate~~ of the ~~amount~~receivable ~~of probable credit losses related to existing accounts~~ and ~~notes~~creditworthiness ~~receivable. The Company offers financing to SmartStyle® franchisees when they remodel their salons. Included in other assets is a receivable~~ of ~~$0.8 million,~~the ~~partially offset by a credit loss reserve of $0~~franchisee.~~2 million,~~ ~~related to this financing program.~~ The following table is a rollforward of the allowance for credit losses for the periods indicated:

	Nine Months Ended March 31,
	Three Months Ended September 30,
	2025		2024
	(Dollars in thousands)
Balance at beginning of period	$	65,~~227~~015	$	76,~~297~~227
Provision for doubtful accounts	2,234		289
Provision for doubtful accounts (1)	453		689
Provision for franchisee rent	784		1,006
Provision for franchisee rent (2)	267		127
Recoveries	(~~1,495~~714)		(~~182~~237)
Write-offs	(2,755)		(1,399)
Other	5		243
Other (1)	(68)		(77)
Write-offs	(398)		(142)
Balance at end of period	$	4,~~927~~628	$	6,~~934~~907

______________________________________________________________________________________

(1)Includes currency fluctuation.

Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as general and administrative expense over the term of the franchise agreement. The following table is a rollforward of the broker fee balance for the periods indicated:

	Nine Months Ended March 31,
	2025		2024
	(Dollars in thousands)
Balance at beginning of period	$	9,369	$	12,471
Amortization	(1,820)		(2,099)
Write-offs (1)	(1,150)		(318)
Balance at end of period	$	6,399	$	10,054

________________________________________________________________________________________

(1)InThe ~~the~~provision ~~nine~~for ~~months~~doubtful ~~ended~~accounts ~~March 31,~~is ~~2025,~~recognized ~~broker~~as ~~fees~~general ofand ~~$0.9 million~~administrative ~~were~~expense ~~written off~~ in ~~connection~~the ~~with~~Condensed ~~the~~Consolidated ~~Alline~~Statements ~~Acquisition~~of Operations.

~~Deferred~~(2)The ~~franchise~~provision ~~fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue~~ for ~~the~~franchisee ~~three~~rent ~~months~~is ended March 31, 2025, and 2024, was $1.8 million and $1.7 million, respectively, and for the nine months ended March 31, 2025, and 2024, was $5.5 million and $5.0 million, respectively. Deferred franchise fees of $0.7 million were recognized inas ~~connection~~rent ~~with the acquisition of Alline~~ in the ~~nine~~Condensed ~~months~~Consolidated ~~ended~~Statements ~~March 31, 2025. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as~~ of ~~March 31, 2025, is as follows (dollars in thousands):~~Operations.

Broker fees are the costs associated with using external brokers to identify new franchisees. These fees are paid upon the signing of the franchise agreement and recognized as general and administrative expense over the term of the franchise agreement in the Condensed Consolidated Statements of Operations. The following table is a rollforward of the broker fee balance for the periods indicated:


	Three Months Ended September 30,
	2025		2024

	(Dollars in thousands)

Balance at beginning of period	$	5,997	$	9,369

Amortization	(492)		(617)
Write-offs	—		(192)
Balance at end of period	$	5,505	$	8,560

Deferred revenue includes the gift card liability and deferred franchise fees for unopened salons and open salons. Deferred franchise fees related to open salons are generally recognized on a straight-line basis over the term of the franchise agreement. Franchise fee revenue for the three months ended September 30, 2025, and 2024, was $1.0 million and $1.6 million, respectively. Estimated revenue expected to be recognized in the future related to deferred franchise fees for open salons as of September 30, 2025, is as follows (dollars in thousands):


Remainder of 2026	$	2,766
2027	3,303
2028	2,624
2029	1,702
2030	692
Thereafter	1,069
Total	$	12,156

Remainder of 2025	$	998
2026	3,965
2027	3,507
2028	2,785
2029	1,597
Thereafter	1,674
Total	$	14,526

3. DISCONTINUED OPERATIONS:

On June 30, 2022, the Company sold its Opensalon® Pro (OSP) software-as-a-service solution to Soham, Inc. As a result of the sale, the Company classified the OSP business as discontinued operations in the financial statements for all periods presented. ~~During~~The ~~the three and nine months ended March 31, 2025, the~~ Company received ~~$0.0 million~~no ~~and $8.5 million, respectively, of~~ proceeds ~~related~~from to the ~~number~~sale ofin ~~salons~~the ~~migrating~~three tomonths ~~Soham's~~ended ~~Zenoti~~September 30, ~~product~~2025. ~~During~~In the ~~nine~~three months ended ~~March~~September 3130, 2024, the Company received $21.0 million of proceeds ~~that~~related ~~had~~to ~~been~~the ~~previously~~number ~~held~~of ~~back~~salons ~~for~~migrating ~~general~~to ~~indemnity~~Soham's ~~provisions~~Zenoti product. NoIncome ~~income~~ taxes have been allocated to continuing and discontinued operations based on the methodology required by accounting for income taxes guidance. ~~Cash~~There ~~(used~~was ~~in)~~no ~~provided~~tax byimpact ~~investing~~in ~~activities for~~ the ~~nine~~prior ~~months~~year ~~ended March 31~~quarter, ~~2025,~~due ~~and~~to ~~2024,~~a ~~includes~~valuation $8allowance.5 ~~million~~Cash ~~and~~provided by operations includes $21.0 million, ~~respectively,~~ of cash from discontinued operations in the prior year period.

1312

4. SHAREHOLDERS' EQUITY ~~(DEFICIT)~~:

Stock-Based Employee Compensation:

During the three ~~and nine~~ months ended ~~March~~September 3130, 2025, and 2024, the Company granted restricted stock units as follows:

	Three Months Ended March 31, 2025	Nine Months Ended March 31, 2025
	Three Months Ended September 30,
Restricted stock units (RSUs)	3,002	81,802
	2025	2024
Restricted stock units (RSUs)	24,100	—

The RSUs granted during the three ~~and nine~~ months ended ~~March~~September 3130, 2025, vest in equal amounts over a ~~one or~~ three-year period subsequent to the grant date.

Total compensation cost for stock-based payment arrangements totaling $0.46 million and $~~0.3 million, and $2.0 million and $~~1.24 million for the three ~~and nine~~ months ended ~~March~~September 3130, 2025, and 2024, respectively, ~~were~~was recorded within general and administrative ~~expense~~ on the ~~unaudited~~ Condensed Consolidated Statements of Operations.

Alline Acquisition:

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

Stock Warrants Issued in Connection with Long-Term Debt:

In connection with the 2024 Credit Agreement (as defined in Note 9 to the unaudited Condensed Consolidated Financial Statements), the Company issued detachable warrants to affiliates of TCW Asset Management Company, LLC, and Asilia Investments. Pursuant to the warrants, the holders can purchase up to an aggregate 407,542 shares of ~~the Company’s~~ common stock of the Company, par value $0.05 per share (Common Stock), at an exercise price equal to $7.00 per share. The warrants are exercisable for a seven-year period beginning June 24, 2024. The warrants may also be exercised on a cashless basis under certain circumstances under the agreement.

In ~~addition~~December 2024, inthe ~~connection~~Company ~~with~~amended the ~~issuance~~2024 ofCredit ~~the~~Agreement. ~~warrants,~~The ~~the~~ Company ~~granted~~issued anadditional ~~exemption~~warrants into ~~favor~~affiliates of ~~each~~TCW ~~holder~~Asset ~~pursuant~~Management toCompany, ~~Section~~LLC, 36and ofAsilia ~~the~~Investments. ~~Plan,~~In ~~dated~~connection ~~January~~with ~~29,~~this ~~2024~~amendment, ~~among~~ the ~~Company~~warrant ~~and~~holders ~~Equiniti~~can ~~Trust~~purchase ~~Company,~~up ~~LLC~~to an aggregate 64,372 ~~such~~shares ~~that~~of ~~neither~~Common ~~holder~~Stock, ~~was~~at ~~deemed~~an exercise price equal to be$23.86 anper ~~Acquiring~~share. ~~Person~~The ~~solely~~warrants inare ~~connection~~exercisable ~~with~~for ~~(i)~~a ~~the~~seven-year ~~issuance~~period ofbeginning ~~the~~December 19, 2024. The warrants ~~nor~~may ~~(ii)~~also be exercised on a cashless basis if, at the ~~acquisition~~time of ~~beneficial~~exercise, ~~ownership~~there ofis ~~securities~~no ofeffective registration statement registering, or the ~~Company~~prospectus ~~pursuant~~therein tois not available for, the ~~exercise~~issuance of the shares of Common Stock underlying the warrants.

In ~~December 2024~~addition, ~~the~~in ~~Company~~connection ~~amended~~with the ~~2024~~issuance ~~Credit~~of ~~Agreement.~~the ~~The~~warrants, the Company ~~issued~~granted ~~additional~~an ~~warrants~~exemption toin ~~affiliates~~favor of ~~TCW~~each ~~Asset~~holder ~~Management~~pursuant ~~Company~~to ~~LLC~~Section ~~and~~36 ~~Asilia~~of ~~Investments.~~the InTax ~~connection~~Benefits ~~with~~Preservation ~~this amendment~~Plan, ~~the~~dated ~~warrant~~January ~~holders~~29, ~~can purchase up to an aggregate 64~~2024,~~372~~ ~~shares~~as ofthe ~~Common~~same ~~Stock,~~may atbe anamended ~~exercise~~from ~~price~~time ~~equal~~ to ~~$23.86~~time, ~~per~~among ~~share.~~the ~~The~~Company ~~warrants~~and ~~are~~Equiniti ~~exercisable~~Trust ~~for a seven-year period beginning December 19~~Company, ~~2024~~LLC (the ~~"Issue Date”~~Plan)~~. The warrants may also be exercised on a cashless basis if~~, atsuch ~~the~~that ~~time~~neither ofholder ~~exercise,~~was ~~there~~deemed isto nobe ~~effective~~an ~~registration~~“Acquiring ~~statement~~Person” ~~registering,~~(as ordefined in the ~~prospectus~~Plan) ~~therein~~solely isin ~~not~~connection ~~available~~with ~~for,~~(i) the issuance of the ~~shares~~warrants ofnor ~~common~~(ii) ~~stock underlying~~ the ~~warrants.~~acquisition ~~Prior~~of tobeneficial ~~the~~ownership ~~second~~of ~~anniversary~~securities of the ~~Issue Date, the~~ Company ~~may~~pursuant ~~call for cancellation up~~ to anthe ~~aggregate~~exercise ~~32,186 shares~~ of ~~common stock underlying~~ the warrants ~~for consideration equal to $51~~.~~13 per share; provided necessary requirements are met. These warrants were valued at $1.3 million at March 31, 2025.~~

The warrants and the shares of ~~common~~Common ~~stock~~Stock issuable upon the exercise of such warrants have not been registered under the Securities Act of 1933, as amended (~~the~~ Securities Act), and may not be sold absent registration or an applicable exemption from the registration requirements of the Securities Act. Based in part upon the representations of each holder in each warrant, the offering and sale of each warrant is exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.

The combined value of these warrants was valued at $2.8 million using a relative fair value method and accounted for through additional paid-in capital. Further, the related financing fees incurred as a result of warrant issuance isare recorded through a contra-equity account and ~~amounts~~amounted to $0.2 million.

~~Prior~~For the warrants originally issued in June 2024, prior to the second anniversary of the issue date, the Company may call for cancellation up to an aggregate 203,771 shares of ~~common~~Common ~~stock~~Stock underlying the warrants for consideration equal to $15.00 per share; provided, that the volume weighted average price on the trading day immediately preceding the date the Company delivers a written call notice to a holder exceeds $20.00. For the warrants issued in December 2024, prior to the second anniversary of the issue date, the Company may call for cancellation up to an aggregate 32,186 shares of Common Stock underlying the warrants for consideration equal to $51.13 per share; provided, that the volume weighted average price on the trading day immediately preceding the date the Company delivers a written call notice to a holder exceeds $68.17. As of ~~March~~September 3130, 2025, the Company has no intention of exercising ~~this~~either call provision. The Company will reassess this ~~provision~~intention on a quarterly basis.

Stock Warrants Issued in Connection with Consulting Services Agreement:

On August 1, 2025, as part of a consulting services agreement, the Company issued two warrants to purchase Common Stock of the Company to Forum3 Inc., consisting of: (i) a warrant, exercisable through October 31, 2025, to purchase up to $490,000 in aggregate value of shares of Common Stock at an exercise price of the greater of $22 per share and the 10-day average closing price immediately prior to any exercise (the Initial Warrant); and (ii) a warrant to purchase up to an additional 35,000 shares of Common Stock, at an exercise price of $24.20 per share (the Coverage Warrant). At issuance, the fair value of these warrants was determined to be $0.5 million using the Black-Scholes model as described below. The warrant is not remeasured in future periods as it meets the conditions for equity classification. The Coverage Warrant is eligible to vest proportionally to the extent the Initial Warrant is exercised, and, to the extent vested, will remain exercisable until August 1, 2028.

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

On September 11, 2025, Forum3 Inc. exercised $300,000 of the Initial Warrant at the 10-day average closing price of $23.87 per share for a total of 12,567 shares.

5. INCOME TAXES:

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

	Three Months Ended March 31,						Nine Months Ended March 31,
	Three Months Ended September 30,
	2025			2024			~~2025~~			~~2024~~
	(Dollars in thousands)
Income tax benefit (expense)	$	1		$	(54)		$	90		$	201
Income tax (expense) benefit	$	(536)		$	225
Effective tax rate	(028.4)3		%	(211.3)1		%	~~6.2~~		%	~~8.3~~		%

The ~~recorded~~Company’s effective tax ~~provision~~rate ~~and~~differed ~~effective~~from the U.S. federal statutory tax rate ~~for~~primarily due to the ~~three~~impact of non-deductible items, certain nonrecurring discrete tax items, and ~~nine~~the ~~months~~impact of tax credits. The income tax provision for the quarter ended ~~March~~September 3130, 2025, ~~and~~is ~~2024~~primarily a non-cash deferred tax expense, ~~were~~which ~~different~~is ~~than~~no ~~what~~longer ~~would~~offset ~~normally~~by bea ~~expected,~~valuation ~~primarily~~allowance ~~due~~as toa result of the ~~impact~~valuation ofallowance release that occurred for the ~~deferred~~year ~~tax~~ended ~~valuation~~June ~~allowance.~~30, 2025.

On July 4, 2025, legislation known as the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA makes changes to the United States corporate income tax system, including, among other provisions, the modification of the limitation on business interest deductions under Section 163(j) of the Code, 100 percent bonus depreciation on qualified property and expansion of the 45B FICA Tip Tax Credit provisions applicable to the beauty salon industry. The impacts of the OBBBA are reflected in our results for the quarter ended September 30, 2025.

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

6. COMMITMENTS AND CONTINGENCIES:

The Company is a plaintiff or defendant in various lawsuits and claims arising out of the normal course of business. Like certain other franchisors, the Company has faced allegations of franchise regulation and agreement violations. Additionally, because the Company may be the tenant under a master lease for a location subleased to a franchisee, the Company has faced allegations of nonpayment of rent and associated charges. Further, similar to other retail employers, the Company has faced, and may continue to face, allegations of purported class-wide consumer and wage and hour violations.

Litigation is inherently unpredictable, and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could incur judgments in the future or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

7. CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

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

March 31,2025

June 30,2024

September 30,2025

June 30,2025

(Dollars in thousands)

Cash and cash equivalents

1316,~~287~~560

1016,~~066~~959

Restricted cash, included in other current assets (1)

19,~~221~~207

1918,246

Total cash, cash equivalents and restricted cash

3235,~~508~~767

2935,~~312~~205

_______________________________________________________________________________

(1)Restricted cash within other current assets primarily relates to consolidated advertising cooperatives funds, which can only be used to settle obligations of the respective cooperatives, and contractual obligations to collateralize the Company's self-insurance programs.

8. LEASES:

At contract inception, the Company determines whether a contract is, or contains, a lease by determining whether it conveys the right to control the use of the identified asset for a period of time. If the contract provides the Company the right to substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset, the Company considers it to be, or contain, a lease. The Company leases its company-owned salons and its corporate facilities under operating leases. The original terms range from one to 11 years with many leases renewable for an additional five to 10-year term at the option of the Company. In addition to the obligation to make fixed rental payments for the use of the salons, the Company also has variable lease payments that are based on sales levels. For most leases, the Company is required to pay real estate taxes and other occupancy expenses. Total rent includes the following:

	Three Months Ended March 31,				Nine Months Ended March 31,
	Three Months Ended September 30,
	2025		2024		~~2025~~		~~2024~~
	(Dollars in thousands)
Office rent (1)	$	~~737~~754	$	~~756~~726	$	~~2,164~~	$	~~2,330~~
Lease termination expense (benefit)	70		(39)		149		122
Lease termination expense (2)	123		52
Lease liability benefit (2)	(81)		(59)		(209)		(281)
Lease liability benefit (3)	(56)		(62)
Franchise salon rent (3)	313		627		1,264		193
Franchise salon rent	(242)		71
Company-owned salon rent (4)	32,~~019~~644		~~481~~277		~~3,903~~		~~1,893~~
Total	$	43,~~058~~223	$	1,~~766~~064	$	~~7,271~~	$	~~4,257~~

_______________________________________________________________________________

(1)Rental income associated with the sublease of the corporate office space is recorded in other income and was $0.3 million and $0.92 million for the three ~~and nine~~ months ended ~~March~~September 3130, 2025, and 2024, respectively.

(2)~~Upon~~Costs ~~termination~~incurred ofto ~~previously~~exit ~~impaired~~salons ~~leases,~~before the ~~Company derecognizes the corresponding right of use (ROU) assets and~~ lease ~~liabilities,~~end ~~which~~date ~~results~~ in aorder ~~net~~to ~~gain.~~relieve ~~In addition,~~ the ~~Company~~company ~~recognizes~~of afuture ~~benefit from~~ lease ~~liabilities decreasing in excess of previously impaired ROU assets for ongoing leases that were previously impaired~~obligations.

(3)~~Franchise~~Upon ~~salon~~termination ~~rent~~of ispreviously ~~lower~~impaired inleases, the ~~nine~~Company ~~months~~derecognizes ~~ended~~the ~~March~~corresponding ~~31,~~ROU ~~2024~~assets and lease liabilities which results in a net gain. In addition, ~~due~~the toCompany ~~settlements~~recognizes ~~with~~a ~~landlords~~benefit from lease liabilities decreasing in excess of previously impaired ROU assets for ~~less~~ongoing ~~than~~leases that were previously ~~accrued~~impaired.

(4)Includes rent related to the Alline salons acquired in December 2024. See Note 13.

The Company leases salon premises in which the majority of its franchisees operate and has entered into corresponding sublease arrangements with franchisees. All lease-related costs are passed through to the franchisees. The Company records the rental payments due from franchisees as franchise rental income and the corresponding amounts owed to landlords as franchise rent expense on the ~~unaudited~~ Condensed Consolidated Statements of Operations. For the three ~~and nine~~ months ended ~~March~~September 3130, 2025, and 2024, franchise rental income and franchise rent expense were $1617.94 million and $2321.~~8 million,~~6 ~~and $58.5~~ million ~~and $72.5 million~~, respectively. These leases generally have lease terms of approximately five years. The Company expects to renew the SmartStyle master lease and ~~some~~certain leases for locations subleased to our franchisees upon expiration of those leases. Other leases are expected to be renewed by the franchisee upon expiration.

All the Company's leases are operating leases. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date, including one lease term option when the lease is expected to be renewed. The ROU asset is initially and subsequently measured throughout the expected lease term at the carrying amount of the lease liability, plus initial direct costs, less accrued lease payments and unamortized lease incentives received, if any. Expense for lease payments is recognized on a straight-line basis over the lease term, including the lease renewal option when the lease is expected to be renewed. Generally, the non-lease components, such as real estate taxes and other occupancy expenses, are separate from rent expense within the lease and are not included in the measurement of the lease liability because these charges are variable.

The discount rate used to determine the present value of the lease payments is the Company's estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, as the interest rate implicit in the lease cannot generally be determined. The Company uses the portfolio approach in applying the discount rate based on the original expected lease term. The weighted average remaining lease term was 4.8273 ~~years~~ and 54.0568 years, and the weighted average discount rate was 56.9361% and 56.1345% for all salon operating leases as of ~~March~~September 3130, 2025, and June 30, ~~2024~~2025, respectively.

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

Fiscal Year	Leases For Franchise Salons		Leases For Company-Owned Salons		Corporate Leases		Total Operating Lease Payments		Sublease Income to be Received From Franchisees		Net Rent Commitments
Remainder of 2025	$	17,725	$	2,131	$	339	$	20,195	$	(17,725)	$	2,470
2026	64,424		7,270		1,367		73,061		(64,424)		8,637
2027	54,947		5,285		1,401		61,633		(54,947)		6,686
2028	45,729		3,688		1,436		50,853		(45,729)		5,124
2029	34,623		2,435		1,472		38,530		(34,623)		3,907
Thereafter	46,938		2,346		1,509		50,793		(46,938)		3,855
Total future obligations	$	264,386	$	23,155	$	7,524	$	295,065	$	(264,386)	$	30,679
Less amounts representing interest	35,713		2,700		766		39,179
Present value of lease liability	$	228,673	$	20,455	$	6,758	$	255,886
Less short-term lease liability	54,774		6,695		1,103		62,572
Long-term lease liability	$	173,899	$	13,760	$	5,655	$	193,314

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


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

Remainder of 2026	$	48,879	$	5,560	$	1,028	$	55,467	$	(48,879)	$	6,588
2027	57,725		5,679		1,401		64,805		(57,725)		7,080
2028	48,508		3,886		1,436		53,830		(48,508)		5,322
2029	38,279		2,237		1,472		41,988		(38,279)		3,709
2030	25,301		1,099		1,509		27,909		(25,301)		2,608
Thereafter	27,897		218		—		28,115		(27,897)		218
Total future obligations	$	246,589	$	18,679	$	6,846	$	272,114	$	(246,589)	$	25,525
Less amounts representing interest	35,737		1,860		633		38,230
Present value of lease liability	$	210,852	$	16,819	$	6,213	$	233,884
Less short-term lease liability	52,152		6,279		1,144		59,575
Long-term lease liability	$	158,700	$	10,540	$	5,069	$	174,309

9. FINANCING ARRANGEMENTS:

The Company's debt consists of the following:

	Three Months Ended March 31, 2025	Fiscal Year	Balance at March 31, 2025		Balance at June 30, 2024
	Three Months Ended September 30, 2025	Fiscal Year	Balance at September 30, 2025		Balance at June 30, 2025
		2024
		2025
	(Average cash interest rate %)		(Dollars in thousands)
Term loan	8.83%	9.68%	$	119,175	$	105,000
Term loan (1)	8.80%	9.14%	$	117,035	$	118,875
Paid-in-kind interest			36,~~923~~780		535,376
Deferred financing fees			(1211,~~886~~420)		(1412,~~244~~174)
Term loan, net			~~110~~112,~~212~~395		90112,~~809~~077
Revolving credit facility	8.83%	9.68%	4,326		10,237
Revolving credit facility (1)	8.80%	9.14%	1,030		1,030
Fair value of warrants issued to lenders			(2,~~528~~170)		(12,~~501~~314)
Total long-term debt, net			$	112,010	$	99,545
Total debt, net			111,255		110,793
Less: long-term debt, current portion			(1,650)		(1,100)
Total long-term debt, net			$	109,605	$	109,693

In June 2024, the Company entered into a new credit agreement (the 2024 Credit Agreement). The 2024 Credit Agreement includes a $105.0 million term loan and a $25.0 million revolving credit facility, with a $10.0 million minimum liquidity covenant and matures June 24, 2029. The Company incurred $14.2 million of refinancing fees (including $3.9 million of Original Issue Discount fee) that will be amortized on a straight-line basis over the term of the agreement. As of March 31, 2025, the Company had outstanding standby letters of credit under the revolving credit facility of $9.3 million, primarily related to the Company's self-insurance program. As of March 31, 2025, total available liquidity and available credit under the $25.0 million revolving credit facility, as defined by the 2024 Credit Agreement Amendment, were $19.0 million and $15.7 million, respectively. _______________________________________________________________________________

~~The interest rate on the 2024 Credit Agreement is based on the secured overnight financing rate~~ (~~SOFR~~1) ~~plus margin.~~ The margin applicable to the 2024 Credit Agreement is subject to change based on the Company's total leverage ratio, remeasured annually on a predetermined date set by the lender. When the Company's total leverage ratio is greater than or equal to 3.75 to 1.00, the margin applicable to the term loan and revolving credit facility ismature ~~9.00%.~~on IfJune ~~the Company's leverage ratio is less than 3.75 to 1.00~~24, ~~the margin rate is 8~~2029.~~50%.~~ InThe ~~either scenario, 4.50% of the margin is paid-in-kind (PIK)~~ interest ~~(added to the principal balance and thereafter accruing interest), and the remainder is paid in cash. The SOFR base~~ rate applicable to ~~the debt has a floor of 2.50% per annum. The margin applicable to~~ any letter of credit is 5.25% and paid currently in cash.

The agreement contains typical provisions and financial covenants regarding maximum leverage and minimum fixed-charge coverage and a minimum liquidity threshold of $10.0 million. In connection with the 2024 Credit Agreement, the Company issued detachable stock warrants to the debt lenders. The Company was in compliance with its covenants and other requirements of the financing arrangements as of March 31, 2025. The Company's assets serve as collateral to the credit facility.17

~~The~~In June 2024, the Company entered into a new credit agreement (the 2024 Credit Agreement). The 2024 Credit Agreement includes ~~scheduled~~a ~~payments~~$105.0 million ~~totaling~~term loan and a $125.10 million inrevolving ~~fiscal~~credit ~~years~~facility, ~~2025~~with a $10.0 million minimum liquidity covenant and ~~2026~~is set to expire June 24, ~~payable~~2029. ~~quarterly~~The Company incurred $14.2 million of refinancing fees (including $3.9 million of Original Issue Discount fee) that will be amortized on a straight-line basis over the term of the agreement. The 2024 Credit Agreement is considered a troubled debt restructuring, which resulted in a $94.6 million ($39.83 per weighted average diluted share) gain on the extinguishment of the prior agreement. Any unamortized financing fees that existed at the date of the new agreement were written off upon the signing date of the 2024 Credit Agreement. On December 19, 2024, the Company amended the 2024 Credit Agreement for an additional $15.0 million in long-term debt in the form of a term loan (the 2024 Credit Agreement Amendment). In ~~fiscal~~connection ~~years~~with ~~2027~~the 2024 Credit Agreement, ~~2028~~the Company issued detachable stock warrants to the debt lenders. The Company issued additional warrants to affiliates of TCW Asset Management Company, LLC, and ~~2029~~Asilia Investments in connection with the 2024 Credit Agreement Amendment. See Note 4 for additional details. The term loan was provided on the same terms as the original term loan, ~~scheduled~~with ~~payments~~respect ~~total~~to maturity and interest rate margins. The $215.60 million in proceeds were used as consideration for the Alline Acquisition. ~~Additionally~~The Company incurred $0.4 million of Original Issue Discount fee that will be amortized on a straight-line basis over the term of the agreement. As of September 30, ~~excess~~2025, ~~cash~~the isCompany ~~swept~~had ~~annually~~outstanding ~~per~~standby ~~terms~~letters of credit under the revolving credit facility of $6.0 million, primarily related to the Company's self-insurance program. As of September 30, 2025, total available liquidity, net of the $10.0 million minimum liquidity covenant, and available credit under the $25.0 million revolving credit facility, as defined by the amended agreement, were $25.5 million and $19.0 million, respectively. The Company was in compliance with its covenants and other requirements of the financing arrangements as of September 30, 2025. The Company's assets serve as collateral to the 2024 Credit Agreement.

OnThe ~~December~~interest ~~19,~~rate ~~2024,~~on the ~~Company~~2024 ~~amended~~Credit Agreement is based on the ~~2024~~secured ~~Credit~~overnight ~~Agreement~~financing rate (SOFR) plus margin. The margin applicable to the 2024 Credit Agreement ~~Amendment)~~is ~~for~~subject anto ~~additional~~change ~~$15.0 million~~based inon ~~long-term~~the ~~debt~~Company's intotal ~~the~~leverage ~~form~~ratio, ofremeasured aannually ~~term~~on ~~loan.~~a Inpredetermined ~~connection~~date ~~with~~set ~~this~~by ~~2024~~the ~~Credit~~lender. ~~Agreement~~When ~~Amendment,~~ the Company's ~~issued~~total ~~warrants~~leverage asratio ~~discussed~~is ingreater ~~Note~~than 4.or ~~The~~equal ~~term~~to ~~loan~~3.75 ~~was~~to ~~provided~~1.00, on the ~~same~~margin ~~terms~~applicable asto the ~~original~~new term loan, ~~with~~and ~~respect~~revolving tocredit ~~maturity~~facility ~~and~~is ~~interest~~9.00%. ~~rate~~If ~~margins.~~the ~~The~~Company's ~~$15.0 million~~leverage inratio ~~proceeds~~is ~~were~~less ~~used~~than as3.75 ~~consideration~~to ~~for~~1.00, the ~~Alline~~margin ~~Acquisition~~rate is 8.50%. ~~The~~In ~~Company~~either ~~incurred~~scenario, ~~$0.~~4 ~~million~~.50% of ~~Original~~the ~~Issue~~margin ~~Discount~~is ~~fee~~paid-in-kind ~~that~~(PIK) ~~will~~interest be(added ~~amortized~~to onthe aprincipal ~~straight-line~~balance ~~basis~~and ~~over~~thereafter ~~the~~accruing ~~term~~interest), ofand the ~~agreement~~remainder is paid currently in cash. As ofThe ~~March 31,~~SOFR ~~2025,~~base ~~the~~rate ~~Company~~applicable ~~had~~to ~~cash~~the ~~and~~debt ~~cash~~has ~~equivalents~~a floor of ~~$13~~2.350% ~~million~~per ~~and~~annum. ~~current~~The ~~liabilities~~interest rate applicable to any letter of ~~$101.0~~credit ~~million~~is 5.25% and paid currently in cash.

The 2024 Credit Agreement includes scheduled payments totaling $1.1 million in fiscal year 2026, payable quarterly. In fiscal years 2027, 2028 and 2029, scheduled payments total $3.0 million. Additionally, excess cash is swept annually per the terms of the agreement and there is a balloon payment required upon maturity of the agreement in 2029. In the three months ended September 30, 2025, the Company paid $1.5 million to satisfy the annual mandatory prepayment of 75% of excess cash flow as defined in the 2024 Credit Agreement. This amount was applied as a prepayment of the term loan and reduced the Company's unrestricted cash balance accordingly.

10. FAIR VALUE MEASUREMENTS:

Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

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

	(Dollars in thousands)
Earn-out liability at June 30, 2024	$	—
Addition for acquisition	3,000
Earn-out liability at March 31, 2025	$	3,000

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of ~~March~~September 3130, 2025, and June 30, ~~2024~~2025, the estimated fair value of the Company's cash, cash equivalents, restricted cash, receivables, inventory, deferred compensation assets, accounts payable and debt approximated their carrying values.

The Company recorded the estimated fair value of the contingent consideration liability assumed with the acquisition of Alline ~~on a preliminary basis~~. The estimated fair value of the contingent consideration liability is included in the ~~unaudited~~ Condensed Consolidated Balance Sheets within ~~accrued expenses and~~ other noncurrent liabilities~~, totaling $3~~.~~0 million~~ ~~at March 31, 2025.~~ The earn-out liability is adjusted at fair value quarterly until settled utilizing the Monte Carlo simulation, and changes in fair value ~~will~~are be reported in our ~~unaudited~~ Condensed Consolidated Statements of Operations. As of September 30, 2025, management's revised estimates indicated a fair value of zero dollars.

The ~~following~~change ~~provides~~in ~~information~~the ~~regarding fair value measurements for our remaining contingent~~ earn-out liability asmeasured ofat ~~March 31,~~fair ~~2025,~~value ~~according~~using tosignificant ~~the~~unobservable ~~three-level~~inputs ~~fair~~(Level ~~value~~3) ~~hierarchy~~is as follows:

~~(Dollars in thousands)~~	~~Quoted~~(Dollars ~~Prices~~ in ~~Active Markets for Identical Assets (Level 1~~thousands)		~~Significant Other Observable Inputs(Level 2)~~		~~Significant Unobservable Inputs(Level 3)~~		~~Total~~
Recurring Fair Value Measurements:
Earn-out liability at June 30, 2025	$	1,000
Earn-out liability	$	—	$	—	$	3,000	$	3,000
Less: gain on earn-out liability	1,000
Total	$	—	$	—	$	3,000	$	3,000
Earn-out liability at September 30, 2025	$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain assets, including the Company's tangible fixed and other assets, and goodwill, at fair value on a nonrecurring basis when they are deemed to be other than temporarily impaired. The fair values of these assets are determined, when applicable, based on valuation techniques using the best information available, and may include quoted market prices, market comparables and discounted cash flow projections.

11. EARNINGS PER SHARE:

The Company's basic earnings per share is calculated as net income (loss) divided by weighted average common shares outstanding, excluding unvested outstanding stock options (SOs), stock appreciation rights (SARs), ~~and~~restricted stock units (RSUs), and stock-settled performance units (PSUs). The Company's diluted earnings per share is calculated as net income (loss) divided by weighted average common shares and common share equivalents outstanding, which ~~include~~includes shares issued under the Company's stock-based compensation plans and warrants issued in connection with the Company's credit ~~agreement~~and consulting services agreements. Stock-based awards with exercise prices greater than the average market price of the Company's common stock are excluded from the computation of diluted earnings per share. The computation of weighted average shares outstanding, assuming dilution, excluded stock-based awards as detailed below, as they were not dilutive under the treasury stock method.

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

Three Months Ended March 31,

Nine Months Ended March 31,

Three Months Ended September 30,

2025

2024

~~2025~~

~~2024~~

(Shares in thousands)

Denominator for basic EPS - weighted average common shares

2,~~499~~440

2,~~342~~343

~~2,350~~

~~2,338~~

Dilutive shares associated with option plans

~~503~~341

—

Denominator for diluted EPS - weighted average common shares and dilutive potential common shares

32,~~002~~781

2,~~342~~343

~~2,350~~

~~2,338~~

Stock-based awards excluded from EPS calculation - anti-dilutive

188

219

191

217

Options excluded from EPS calculation - anti-dilutive

180

195

2019

12. SEGMENT INFORMATION:

Segment information is ~~prepared~~presented on the same basis that the ~~CODM~~Company ~~reviews~~internally ~~financial~~organizes ~~information~~the business for ~~operational~~assessing ~~decision-~~performance and making ~~purposes~~decisions regarding allocation of resources. The Company's Chief Operating Decision Maker's (CODM) primary measures of segment performance are revenue and segment adjusted EBITDA. The Company’s Chief Executive Officer is the CODM. Revenue and segment adjusted EBITDA are regularly reviewed by the CODM to make decisions about resources to be allocated to the segments, assess current performance, and forecast future performance. The Company's CODM does not evaluate reportable segments using assets and capital expenditure information. Segment adjusted EBITDA is defined as income (loss) from continuing operations before interest, income taxes, depreciation, amortization, and impairment. Consistent with our internal management reporting, unallocated expenses include certain items impacting comparability. These unallocated items are not defined terms within GAAP. They are based on how management views the business, makes financial, operating ~~segments~~and ~~consisted~~planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment. Unallocated fees include one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired ROU assets, lease termination fees, asset retirement obligation costs, goodwill and long-lived asset impairment charges, and the ~~following~~benefit ~~salons:~~from the Company's debt refinancing.

	March 31,2025		June 30,2024
FRANCHISE SALONS:
Supercuts	1,746		1,946
SmartStyle/Cost Cutters in Walmart stores	1,099		1,232
Portfolio Brands	836		1,117
Total North American salons	3,681		4,295
Total International salons (1)	95		96
Total franchise salons	3,776		4,391
as a percent of total franchise and company-owned salons	92.4	%	99.6	%
COMPANY-OWNED SALONS (2):
Supercuts	104		3
SmartStyle/Cost Cutters in Walmart stores	—		8
Portfolio Brands	207		6
Total company-owned salons	311		17
as a percent of total franchise and company-owned salons	7.6	%	0.4	%
Total franchise and company-owned salons	4,087		4,408

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

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


	Three Months Ended September 30, 2025

	(Dollars in thousands)

	Franchise		Company-owned		Consolidated

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

Expenses
General and administrative	$	10,209	$	1,142	$	11,351
Rent	430		2,793		3,223
Non-margin expenses (1)	22,927		—		22,927
Company-owned salon expense	—		14,768		14,768
Depreciation and amortization	210		558		768



Operating income	$	4,971	$	950	$	5,921
Unallocated expense, net					(4,565)
Total net income					$	1,356

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

_______________________________________________________________________________

(21)~~Salon~~Non-margin ~~counts~~expenses asinclude ofadvertising ~~March 31,~~fund ~~2025,~~and ~~include~~franchise ~~salons~~rent ~~acquired~~expenses aswhich ~~part~~are ofoffset ~~the~~in ~~Alline~~total ~~Acquisition.~~revenue ~~See~~and, ~~Note~~as 13such, tonot ~~these~~used ~~unaudited~~as ~~Condensed~~a ~~Consolidated~~primary ~~Financial~~measure ~~Statements~~of ~~for~~performance ~~further~~by ~~details~~our ~~on the transaction~~CODM.

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


	Three Months Ended September 30, 2025

	(Dollars in thousands)

	Franchise		Company-owned		Consolidated

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

Depreciation and amortization	210		558		768
Other, net	242		—		242
Gain on earn-out liability	1,000		—		1,000
Stock-based compensation expense	629		—		629
Discrete items (1)	(668)		73		(595)
Segment adjusted EBITDA	$	6,384	$	1,581	$	7,965

_______________________________________________________________________________

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


	Three Months Ended September 30, 2024

	(Dollars in thousands)

	Franchise		Company-owned		Consolidated

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

Expenses
General and administrative	$	13,982	$	52	$	14,034
Rent	723		341		1,064
Non-margin expenses (1)	27,277		—		27,277
Company-owned salon expense	—		753		753
Depreciation and amortization	361		85		446
Long-lived asset impairment	352		—		352


Operating income (loss)	$	2,580	$	(446)	$	2,134
Unallocated expenses, net					(2,987)
Total net loss					$	(853)

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

_______________________________________________________________________________

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

Financial information ~~concerning~~reconciling the Company's reportable operating segments isOperating ~~shown~~income in(loss) the table below. Segment information is presented in the same way that the Company internally organizes the business for assessing performance and making decisions regarding allocation of resources. The CODM’s primary measures of segment performance are revenue and segment adjusted EBITDA. Revenue and segment adjusted EBITDA are regularly reviewed by the CODM to ~~make~~Adjusted ~~decisions about resources to be allocated to the segments, assess current performance, and forecast future performance. Asset information by segment is not provided to the CODM. Segment adjusted~~ EBITDA is ~~defined~~shown ~~as income from continuing operations before interest, income taxes, depreciation, amortization, and impairment. Beginning~~ in fiscal year 2025, management determined that stock-based compensation expenses will be excluded from adjusted EBITDA. This change has been retrospectively applied to all prior periods presented in this report. Consistent with our internal management reporting, unallocated expenses include certain items impacting comparability. These unallocated items are not defined terms within U.S. GAAP. They are based on how management views the ~~business,~~table ~~makes financial, operating and planning decisions and evaluates the Company's ongoing performance and are not attributable to either segment~~below. Unallocated fees include one-time professional fees and settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired ROU assets, and lease termination fees.

	Three Months Ended March 31,				Nine Months Ended March 31,
	For the Three Months Ended September 30, 2024
	2025		2024		2025		2024
	(Dollars in thousands)
	(Dollars in thousands)
	Franchise		Company-owned		Consolidated
Revenues:
Operating income (loss)	$	2,580	$	(446)	$	2,134
Franchise	$	38,004	$	47,857	$	126,548	$	148,567
Depreciation and amortization	361		85		446
Company-owned	18,953		1,324		23,188		5,039
Long lived asset impairment	352		—		352
Total revenue	56,957		49,181		149,736		153,606
Other, net	677		—		677
Segment adjusted EBITDA:
Stock-based compensation expense	1,430		—		1,430
Franchise	6,282		6,125		20,683		21,346
Discrete items (1)	2,586		12		2,598
Company-owned	843		(773)		1,219		(1,606)
Segment adjusted EBITDA	$	7,986	$	(349)	$	7,637
Total	7,125		5,352		21,902		19,740
Unallocated expenses (1)	(611)		(247)		(4,525)		(215)
Depreciation and amortization	(739)		(1,009)		(1,645)		(2,056)
Long-lived asset impairment	—		—		(352)		(170)
Stock-based compensation	(439)		(310)		(2,043)		(1,201)
Interest expense	(5,087)		(6,153)		(14,781)		(18,529)
Income tax benefit (expense)	1		(54)		90		201
Income from discontinued operations	—		89		8,396		2,089
Total net income (loss) (2)	$	250	$	(2,332)	$	7,042	$	(141)

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

(21)~~Total~~Discrete isitems ainclude ~~recalculation;~~one-time ~~line~~professional ~~items~~fees ~~calculated~~and ~~individually~~legal ~~may~~settlements, ~~not~~severance ~~sum~~expense, tothe ~~total~~benefit ~~due~~from tolease ~~rounding~~liability decreases in excess of previously impaired right of use asset, lease termination fees and asset retirement obligation costs.

The Franchise reportable operating segment is comprised of franchise salons located mainly in strip center locations and Walmart stores. Franchise salons offer high quality, convenient and value-priced hair care and beauty services and retail products. This segment operates primarily in the U.S., Puerto Rico, and Canada and primarily includes the Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters, Roosters, and Magicuts concepts.

The company-owned salons reportable operating segment is comprised of company-owned salons located mainly in strip center locations. Company-owned salons offer high quality, convenient and value priced hair care and beauty services and retail products. Supercuts, Cost Cutters and other regional trade names operating in the U.S. are generally within the company-owned salons segment.

Segment information is prepared on the same basis that the CODM reviews financial information for operational decision-making purposes. The Company's reportable operating segments consisted of the following salons:


	September 30, 2025		June 30, 2025

FRANCHISE SALONS:
Supercuts	1,688		1,711
SmartStyle/Cost Cutters in Walmart stores	1,032		1,049
Portfolio Brands	802		816
Total North American salons	3,522		3,576
Total International salons (1)	71		71
Total franchise salons	3,593		3,647
as a percent of total franchise and company-owned salons	92.6	%	92.5	%

COMPANY-OWNED SALONS:
Supercuts	99		100

Portfolio Brands	187		194
Total company-owned salons	286		294
as a percent of total franchise and company-owned salons	7.4	%	7.5	%




Total franchise and company-owned salons	3,879		3,941

_______________________________________________________________________________

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

13. ACQUISITIONS:

On December 19, 2024, the Company transferred consideration to acquire 100 percent of the equity interests of Alline (the Alline Acquisition), its largest franchisee, consisting of 314 salons. The transaction provides Regis with a turn-key operating infrastructure and gets the Company closer to salon operations alongside franchisees and the salon portfolio provides a testing ground for brand and operational initiatives. The transaction terminated the existing franchise arrangements between Regis and Alline, which resulted in the Company recognizing a loss of $0.2 million upon settlement, which is included in the unaudited Condensed Consolidated Financial Statements as a component of operating income for the nine months ended March 31, 2025.

The acquisition was accounted for as a business combination with the purchase price allocated ~~on a preliminary basis~~ using information available as of December 31, 2024. Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information, and supportable assumptions that management considered reasonable.

As of ~~March~~June 3130, 2025, the purchase price and related allocation ~~have~~were ~~been~~ revised as a result of additional information obtained and revisions to the provisional estimates of fair value, including, but not limited to, the completion of independent appraisals and valuations related to property and equipment, intangible assets, right of use assets and corresponding lease obligations. ~~Management~~There iswere ~~continuing~~no toadjustments ~~analyze~~made ~~the~~to ~~data~~these ~~and~~allocations asin ~~such,~~ the ~~final~~three ~~valuations~~months ofended ~~assets~~September 30, ~~acquired and liabilities assumed may be materially different from the estimated values shown below~~2025.

The ~~preliminary~~ fair value of total consideration transferred by the Company upon acquisition is $2422.6 million, as detailed below.

Consideration	(Dollars in thousands)
Cash, net of cash acquired (1)	$	18,~~631~~621
Equity instruments (140,552 of Regis common shares) (2)	3,000
Contingent consideration arrangement (preliminary estimate) (3)	3,000
Contingent consideration arrangement (3)	1,000
Fair value of total consideration	$	2422,~~631~~621

_______________________________________________________________________________

(1)Includes cash transferred of $20.0 million, net of cash acquired of $1.4 million.

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

(3)The contingent consideration arrangement requires Regis to pay the former owners of Alline additional cash consideration if certain 4-Wall EBITDA or Adjusted EBITDA thresholds are met for each of the three subsequent annual ~~earnout~~earn-out periods as well as a cumulative 4-Wall EBITDA or Adjusted EBITDA threshold for the cumulative three subsequent annual ~~earnout~~earn-out periods. The potential undiscounted amount of all future payments that Regis could be required to make under the contingent consideration arrangement is between $0 and $3.0 million. Regis recognized a ~~provisional~~ fair value of $31.0 million ~~on the acquisition date and~~ as of ~~March 31~~June 30, 2025, which is included in ~~accrued~~other ~~expenses~~noncurrent ~~($1.0 million)~~liabilities ~~and~~in ~~other~~the ~~noncurrent~~Consolidated ~~liabilities~~Balance ~~($2.0 million)~~Sheets in the ~~unaudited~~Company's ~~Condensed~~Annual ~~Consolidated~~Report ~~Balance~~on ~~Sheets~~Form 10-K for the year ended June 30, 2025. ~~The~~As ~~fair~~of September 30, 2025, the Company determined the value of the contingent consideration arrangement is ~~provisional~~$0, ~~while~~and ~~the~~recognized ~~Company~~a ~~completes~~gain ~~its~~on ~~fair~~earn-out ~~value~~liability ~~assessment~~of $1.0 million in our Condensed Consolidated Statements of Operations for the three months ended September 30, 2025. 4-Wall EBITDA is defined as earnings before interest, tax, depreciation and amortization and excluding corporate general and administrative expenses for acquired salons. The earn-out liability is adjusted at fair value quarterly until settled utilizing the Monte Carlo simulation, and changes in fair value will be reported in our Condensed Consolidated Statements of Operations. Refer to Note 10 to the Condensed Consolidated Financial Statements for additional information regarding the valuation.

2324

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

	(Dollars in thousands)
Current assets	$	3,~~640~~630
Property and equipment	7,~~654~~976
Goodwill (1)	1210,~~574~~252
Intangible assets (2)	3,780
Right of use assets	7,292
Other assets	56
Assumed current liabilities	(2,352)
Assumed lease liabilities	(8,013)
Fair value of total consideration	$	2422,~~631~~621

_______________________________________________________________________________

(1)Preliminary Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill that will be recorded as part of the acquisition of Alline includes the following:

a.the expected synergies and other benefits that we believe will result from combining the operations of Alline with the operations of Regis; and

b.any intangible assets that do not qualify for separate recognition.

Goodwill is not amortized and is deductible for tax purposes. All the goodwill related to the acquisition of Alline is related to our company-owned operating segment. The Company has ~~not yet~~ obtained all the information required to finalize the ~~valuations~~valuation of the assets acquired and liabilities assumed, except for information related to certain assumed liabilities. As such, we expect that goodwill could change from the amount noted above.

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

a.The reacquired rights were ~~preliminarily~~ valued using a form of the income approach where the asset's value is determined by its ability to generate future cash flows by isolating and discounting the cash flows attributable to the asset. The Company assumed a four-year life based on the weighted average remaining contract term, assuming no renewals.

b.Upon acquisition, the Company assumed lease agreements with lease payments fixed at a rate below the current market rate. As a result, a ~~preliminary~~ favorable lease asset of $1.4 million ~~has~~was ~~been~~ recorded on the balance sheet. This asset represents the benefit the Company receives from having lease payments below market and will be amortized to rent expense on a straight-line basis over the remaining terms of the respective leases.

The ~~Company~~following ~~incurred~~table ~~$0.2 million~~provides revenues and ~~$1.4 million~~operating ofincome ~~acquisition~~from ~~related~~Alline ~~costs~~that ~~which~~ are included in ~~general~~our ~~and administrative expense in Regis’s unaudited~~ Condensed Consolidated ~~Statements~~Financial ~~of Operations for the three and nine months ended March 31, 2025, respectively.~~Statements:

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


	Three Months Ended September 30, 2025

	(Dollars in thousands)

Total revenues	$	19,529
Operating income	1,185

	Three Months Ended March 31, 2025		Nine Months Ended March 31, 2025
Total revenues	$	18,290	$	20,993
Operating income	786		1,266

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


	Three months ended September 30,
	2025		2024

	(Dollars in thousands)

Total revenues	$	58,958	$	64,208
Operating income	5,921		3,161

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

	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025		2024
Total revenues	$	56,957	$	66,655	$	182,676	$	209,039
Operating income	5,021		4,106		15,703		16,787

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our consolidated financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. This MD&A should be read in conjunction with the MD&A included in our June 30, ~~2024~~2025, Annual Report on Form 10-K and other documents filed or furnished with the SEC during the current fiscal year.

MD&A includes certain non-GAAP measures. The following items have been excluded from our non-GAAP adjusted EBITDA results: stock-based compensation expense, discontinued operations, one-time professional fees and legal settlements, severance expense, the benefit from lease liability decreases in excess of previously impaired right of use asset, lease termination fees and asset retirement obligation costs.

MANAGEMENT'S OVERVIEW

Regis Corporation (NasdaqGM:RGS) is a leader in the beauty salon industry. As of ~~March~~September 3130, 2025, the Company franchised or owned 43,~~087~~879 locations, primarily in North America. Our locations consisted of 3,~~776~~593 franchised salons and ~~311~~286 company-owned salons. Regis’s franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters®, and First Choice Haircutters®. As of ~~March~~September 3130, 2025, the Company had 1,~~860~~745 employees, of which 1,~~666~~577 were acquired as part of the Alline Acquisition.

CRITICAL ACCOUNTING ESTIMATES

The interim unaudited Condensed Consolidated Financial Statements are prepared in conformity with U.S. GAAP. In preparing the interim unaudited Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the interim unaudited Condensed Consolidated Financial Statements. We base these estimates on historical experience and other assumptions believed to be reasonable under the circumstances. Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions about material matters that are uncertain at the time the accounting estimates are made and (2) other materially different estimates could have been reasonably made or material changes in the estimates are reasonably likely to occur from period to period. Changes in these estimates could have a material effect on our interim unaudited Condensed Consolidated Financial Statements.

Business Combinations

We account for our business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, we make significant estimates and assumptions, especially with respect to intangible assets. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Once the purchase accounting is finalized, any subsequent adjustments are reflected in the consolidated statements of operations. Acquisition costs, such as legal and consulting fees, are expensed as incurred.

Goodwill

The Company assesses goodwill impairment on an annual basis, during the Company's fourth fiscal quarter, and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. An interim impairment analysis was not required in the three months ended ~~March~~September 3130, 2025. As of ~~March~~September 3130, 2025, and June 30, ~~2024~~2025, the franchise reporting unit had goodwill of $172.28 million and $173.12 million, respectively, and the company-owned reporting unit had goodwill of $1210.13 million ~~and $0.0 million~~ as of ~~March~~both September 3130, 2025, and June 30, ~~2024, respectively~~2025.

Our significant accounting policies can be found in Note 1 to the Consolidated Financial Statements contained in Part II, Item 8 of the June 30, ~~2024~~2025, Annual Report on Form 10-K. There have been no changes to our critical accounting policies from those disclosed on our Form 10-K for the year ended June 30, ~~2024, except as noted above~~2025.

RESULTS OF OPERATIONS

System-wide results

Our results are impacted by our system-wide sales, which include sales by all points of distribution, whether owned by our franchisees or the Company. While we do not record sales by franchisees as revenue, and such sales are not included in our unaudited Condensed Consolidated Financial Statements, we believe that this operating measure is important in obtaining an understanding of our financial performance. We believe system-wide sales information aids in understanding how we derive royalty revenue and in evaluating performance. In the ~~nine~~three months ended ~~March~~September 3130, 2025, a net ~~301~~54 franchise salons, ~~excluding~~and ~~any~~eight impact from the Alline Acquisition, have closed. An additional 314 salons were acquired as part of the Alline Acquisition, which will reduce future royalty income. The Alline Acquisition will increase future company-owned ~~salon~~salons ~~revenue~~have ~~and expenses~~closed.

The following table summarizes system-wide revenue and system-wide same-store sales by concept:

	Three Months Ended March 31,						Nine Months Ended March 31,
	Three Months Ended September 30,
	2025			2024			~~2025~~			~~2024~~
	(Dollars in millions)
System-wide revenue	$	~~266~~273.97		$	~~286~~285.86		$	~~826.4~~		$	~~885.4~~
Supercuts	12.15		%	10.68		%	~~0.8~~		%	~~2.2~~		%
SmartStyle	(7.4.2)			(46.26)			~~(6.8)~~			~~(2.9)~~
Portfolio Brands	(01.9)1			(1.91)			~~(1.5)~~			~~3.0~~
Total system-wide same-store sales (1)	(10.1)9		%	0(1.51)		%	~~(1.3)~~		%	~~1.4~~		%

_______________________________________________________________________________

(1)System-wide same-store sales are calculated as the total change in sales for system-wide franchise and company-owned locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly system-wide same-store sales are the sum of the system-wide same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. System-wide same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

Condensed Consolidated Results of Operations (Unaudited)

The following table sets forth, for the periods indicated, certain information derived from our unaudited Condensed Consolidated Statements of Operations. The percentages are computed as a percent of total consolidated revenues, except as otherwise indicated, and the increase (decrease) is measured in basis points. Variances calculated on amounts shown in millions may result in rounding differences.

	Three Months Ended March 31,									Nine Months Ended March 31,
	Three Months Ended September 30,
	2025		2024		2025		2024			~~2025~~		~~2024~~		~~2025~~		~~2024~~
	(Dollars in millions)				% of TotalRevenue ~~(5)~~				(Decrease) Increase	~~(Dollars in millions)~~				~~% of TotalRevenue (5)~~				~~(Decrease) Increase~~
Royalties	$	1314.50	$	15.76	23.7	%	3133.9	%	(~~820~~1,020)	$	~~44.0~~	$	~~48.0~~	~~29.4~~	%	~~31.3~~	%	~~(190)~~
Fees	21.48		2.64		43.21		5.32		(~~110~~210)	~~7.7~~		~~7.7~~		~~5.1~~		~~5.0~~		10
Product sales to franchisees	—		—		—		—		—	—		0.5		—		0.3		(30)
Advertising fund contributions	5.6		5.6		9.5		12.2		(270)
Advertising fund contributions	5.2		5.8		9.1		11.8		(270)	16.3		19.8		10.9		12.9		(200)
Franchise rental income	17.4		21.6		29.5		47.0		(1,750)
Franchise rental income	16.9		23.8		29.6		48.4		(1,880)	58.5		72.5		39.1		47.2		(810)
Company-owned salon revenue	20.2		0.8		34.2		1.7		3,250
Company-owned salon revenue	19.0		1.3		33.3		2.6		3,070	23.2		5.0		15.5		3.3		1,220
General and administrative	11.4		14.0		19.3		30.4		(1,110)
Cost of product sales to franchisees (1)	—		—		—		—		N/M	—		0.4		—		80.0		N/M
Rent	3.2		1.1		5.4		2.4		300
General and administrative	11.2		11.2		19.6		22.8		(320)	36.4		33.7		24.3		22.0		230
Advertising fund expense	5.6		5.6		9.5		12.2		(270)
Rent	4.1		1.8		7.2		3.7		350	7.3		4.3		4.9		2.8		210
Franchise rent expense	17.4		21.6		29.5		47.0		(1,750)
Advertising fund expense	5.2		5.8		9.1		11.8		(270)	16.3		19.8		10.9		12.9		(200)
Company-owned salon expense (1)	14.8		0.8		25.1		1.7		2,340
Franchise rent expense	16.9		23.8		29.6		48.4		(1,880)	58.5		72.5		39.1		47.2		(810)
Depreciation and amortization	0.8		0.4		1.4		0.9		50
Company-owned salon expense (2)	13.8		1.5		24.2		3.0		2,120	16.5		4.3		11.0		2.8		820
Long-lived asset impairment	—		0.4		—		0.9		(90)
Depreciation and amortization	0.7		1.0		1.2		2.0		(80)	1.6		2.1		1.1		1.4		(30)
Operating income (2)	5.9		2.1		10.0		4.6		540
Long-lived asset impairment	—		—		—		—		—	0.4		0.2		0.3		0.1		20
Interest expense	(5.3)		(4.8)		(9.0)		(10.4)		(140)
Operating income (3)	5.0		4.1		8.8		8.3		50	12.7		16.3		8.5		10.6		(210)
Gain on earn-out liability	1.0		—		1.7		—		170
Interest expense	(5.1)		(6.2)		(8.9)		(12.6)		(370)	(14.8)		(18.5)		(9.9)		(12.1)		(220)
Other, net	0.2		0.7		0.3		1.5		(120)
Other, net	0.3		(0.3)		0.5		(0.6)		110	0.7		(0.2)		0.5		(0.1)		60
Income tax (expense) benefit (3)	(0.5)		0.2		28.3		11.1		N/A
Income tax (expense) benefit (4)	—		(0.1)		(0.4)		(2.3)		N/A	0.1		0.2		6.2		8.3		N/A
Income (loss) from continuing operations (2)	1.4		(1.8)		2.4		(3.9)		630
Income (loss) from continuing operations (3)	0.3		(2.4)		0.5		(4.9)		540	(1.4)		(2.2)		(0.9)		(1.3)		40
Income from discontinued operations	—		1.0		—		2.2		(220)
Income from discontinued operations	—		0.1		—		0.2		(20)	8.4		2.1		5.6		1.4		420
Net income (loss) (2)	1.4		(0.9)		2.4		(2.0)		440
Net income (loss) (3)	0.3		(2.3)		0.5		(4.7)		520	7.0		(0.1)		4.7		(0.1)		480

_______________________________________________________________________________

(1)~~Cost~~Includes cost of ~~product~~services ~~sales~~and products sold to ~~franchisees~~guests isin ~~computed~~our ascompany-owned asalons. ~~percent~~Excludes ofgeneral ~~product~~and ~~sales~~administrative toexpense, ~~franchisees.~~rent ~~The~~and ~~basis~~depreciation ~~point~~and ~~change~~amortization isrelated ~~not~~to ~~meaningful~~company-owned ~~(N/M)~~salons.

(2)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

(3)Computed as a percent of income (loss) from continuing operations before income taxes. The income tax basis point change is noted as not applicable (N/A) because the discussion within the MD&A is related to the effective income tax rate.

~~(2)Includes~~Three ~~cost~~Months ofEnded ~~services and products sold to guests in our company-owned salons. Excludes general and administrative expense~~September 30, ~~rent~~2025, ~~and~~Compared ~~depreciation~~with ~~and~~Three ~~amortization~~Months ~~related~~Ended toSeptember 30, ~~company-owned salons.~~2024

(3)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

(4)Computed as a percent of income (loss) from continuing operations before income taxes. The income tax basis point change is noted as not applicable (N/A) because the discussion within the MD&A is related to the effective income tax rate.

(5)Amounts from prior periods may not equal those per the prior period financials due to rounding from updating formulas for consistency purposes.

Three and Nine Months Ended March 31, 2025, Compared with Three and Nine Months Ended March 31, 2024

Royalties

During the three ~~and nine~~ months ended ~~March~~September 3130, 2025, royalties decreased $21.26 million ~~and $4.0 million~~, or 1410.~~0% and 8.~~3%, ~~respectively,~~ primarily due to a decrease in franchise salon count caused by franchise salon closures and ~~negative~~the ~~same-store~~Alline ~~sales~~Acquisition.

Fees

During the three ~~and nine~~ months ended ~~March~~September 3130, 2025, fees ~~remained~~decreased ~~relatively~~$0.6 ~~flat~~million, ~~year~~or ~~over year~~25.0%, primarily due to ~~terminated~~salon ~~franchise~~closures ~~fees~~and ~~related to the acquisition of Alline salons, offset by~~ lower rebate fees from our franchise product ~~vendors~~vendor.

Advertising Fund Contributions

Advertising fund contributions ~~decreased~~remained ~~$0.6~~relatively ~~million~~flat ~~and~~year ~~$3.5~~over ~~million, or 10~~year.3% ~~and 17.7%, during the three and nine months ended March 31, 2025, respectively, primarily due to the decrease in franchise salon count and lower contribution rates.~~

Franchise Rental Income

During the three ~~and nine~~ months ended ~~March~~September 3130, 2025, franchise rental income decreased $64.92 million ~~and $14.0 million~~, or ~~29.0% and~~ 19.34%, ~~respectively,~~ primarily due to the decrease in franchise salon count ~~and franchisees signing their own leases~~.

Company-Owned Salon Revenue

During the three ~~and nine~~ months ended ~~March~~September 3130, 2025, company-owned salon revenue increased $1719.74 million ~~and~~from $180.8 million to $20.2 million, ordue ~~1,361.5%~~to ~~and~~the ~~364.0%,~~increase ~~respectively,~~in ~~primarily~~company-owned ~~due~~salon tocount as a result of the Alline Acquisition.

General and Administrative

~~For~~General ~~the~~and ~~three~~administrative ~~and~~expense ~~nine~~for the three months ended ~~March~~September 3130, 2025, ~~general~~decreased ~~and administrative expense increased~~ $~~0.0 million and $~~2.76 million, or 018.06% ~~and 8.0%~~, ~~respectively,~~ primarily due to lower severance ~~costs of $0.4 million~~ and ~~$2.7~~stock-based ~~million,~~compensation ~~respectively.~~expense ~~Additionally,~~in the ~~nine~~current ~~month~~year period ~~includes $1~~.~~4 million of acquisition costs associated with the Alline Acquisition.~~

Rent

Rent expense increased $2.31 million ~~and $3.0 million~~, or ~~127~~190.89% ~~and 69.8%~~, during the three ~~and nine~~ months ended ~~March~~September 3130, 2025, ~~respectively.~~as ~~The~~a ~~increase~~result isof ~~primarily~~rent ~~due~~expense toassociated ~~Alline~~with ~~Acquisition~~the ~~salon~~acquired ~~rent~~Alline ~~expense~~salons.

Advertising Fund Expense

Advertising fund expense ~~decreased~~remained ~~$0.6~~relatively ~~million~~flat ~~and~~year ~~$3.5~~over ~~million, or 10~~year.3% ~~and 17.7%, during the three and nine months ended March 31, 2025, respectively, primarily due to the decrease in franchise salon count and lower contribution rates.~~

3029

Franchise Rent Expense

During the three ~~and nine~~ months ended ~~March~~September 3130, 2025, franchise rent expense decreased $64.92 million ~~and $14.0 million~~, or ~~29.0% and~~ 19.34%, ~~respectively,~~ primarily due to the decrease in franchise salon count ~~and franchisees signing their own leases~~.

Company-Owned Salon Expense

Company-owned salon expense, ~~increased~~for ~~$12.3~~the ~~million~~three ~~and~~months ~~$12.2~~ended ~~million~~September 30, or2025, ~~820~~increased $14.0% ~~and~~million ~~283~~from $0.7%8 ~~for~~million ~~the~~to ~~three~~$14.8 ~~and nine months ended March 31~~million, ~~2025, respectively,~~ primarily due to the strategic Alline Acquisition.

Depreciation and Amortization

Depreciation and amortization ~~decreased $0.3 million and $0.5 million, or 30.0% and 23.8%,~~ for the three ~~and nine~~ months ended ~~March~~September 3130, 2025, ~~respectively~~increased $0.4 million, or 100.0%, primarily due to ~~company-owned~~depreciation ~~salon~~expense ~~closures,~~associated ~~partially~~with ~~offset~~the byassets acquired in the Alline Acquisition.

Long-Lived Asset Impairment

~~During~~In the three ~~and~~months ~~nine~~ended September 30, 2025, the Company did not record any long-lived asset impairments. In the three months ended ~~March~~September 3130, ~~2025~~2024, the Company recorded a long-lived asset impairment ~~charges~~charge of $0.~~0 million and $0.~~4 million, ~~respectively,~~ related to the right-of-use asset associated with the corporate office lease. ~~Long-lived asset impairment charges for the three and nine months ended March 31, 2024, were $0.0 million and $0.2 million, respectively.~~

Interest Expense

~~Interest~~The ~~expense was~~ $50.15 million ~~and~~increase ~~$14.8~~in ~~million, which included non-cash~~ interest ofexpense ~~$1.3~~for ~~million and $3.8 million in~~ the three ~~and nine~~ months ended ~~March~~September 3130, 2025, ~~respectively.~~was ~~The~~primarily ~~$1.1~~due ~~million~~to ~~and~~higher ~~$3.7~~debt ~~million~~outstanding ~~decreases~~compared into ~~interest expense for~~ the three ~~and nine~~ months ended ~~March~~September 3130, ~~2025,~~2024. ~~respectively,~~Cash ~~were~~interest ~~primarily~~remained ~~due~~relatively toflat ~~less~~at ~~debt~~$3.0 ~~outstanding~~million ~~compared~~for to the three ~~and nine~~ months ended ~~March~~September 3130, 2025, and 2024.

Gain on Earn-out Liability

The $1.0 million gain on earn-out liability in the three months ended September 30, 2025, is due to a change in the estimated fair value expected to be paid in conjunction with the Alline Acquisition.

Other, Net

Other, net ~~increased~~decreased $0.65 million in the three months ended ~~March~~September 3130, 2025, primarily due to aan ~~favorable~~unfavorable currency adjustment and ~~corporate~~unclaimed ~~sublease~~property ~~income.~~revenue ~~Other, net increased $0.9 million~~ in the ~~nine~~prior ~~months~~year ~~ended March 31~~period, ~~2025,~~offset ~~primarily~~partially ~~due~~by ~~to unclaimed property and~~ corporate office sublease income~~, partially offset by an unfavorable currency adjustment~~.

Income Tax ~~Benefit~~ (Expense) Benefit

During the three months ended ~~March 31~~September 30, 2025, the Company recognized a tax ~~benefit~~expense of $0.05 million, with a corresponding effective tax rate of (028.~~4)%, as compared to recognizing a tax expense of $0.1 million during the three months ended March 31, 2024, for an effective tax rate of (2.~~3)%~~. During the nine months ended March 31~~, ~~2025, the Company recognized a tax benefit of $0.1 million, with a corresponding effective tax rate of 6.2%,~~ as compared to recognizing a tax benefit of $0.2 million, with a corresponding effective tax rate of 811.31% during the ~~nine~~three months ended ~~March 31~~September 30, 2024. See Note 5 to the unaudited Condensed Consolidated Financial Statements.

Income from Discontinued Operations

Income from discontinued operations ~~decreased $0.1 million~~ in the three months ended ~~March~~September 3130, ~~2025. Income from discontinued operations increased $6.3 million in the nine months ended March 31~~2024, ~~2025,~~relates ~~due primarily~~ to ~~receiving~~ proceeds received from the sale of OSP related to the number of salons migrating to the Zenoti platform. See Note 3 to the unaudited Condensed Consolidated Financial Statements.

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Results of Operations by Segment

Based on our internal management structure, we report two segments: franchise and company-owned salons. See Note 12 to the unaudited Condensed Consolidated Financial Statements. Significant results of continuing operations are discussed below with respect to each of these segments.

Franchise Salons

	Three Months Ended March 31,								Nine Months Ended March 31,
	Three Months Ended September 30,
	2025			2024			(Decrease) ~~Increase~~ (1)		~~2025~~			~~2024~~			~~(Decrease) Increase (1)~~
	(Dollars in millions)								~~(Dollars in millions)~~
Royalties	$	1314.50		$	15.76		$	(21.26)	$	~~44.0~~		$	~~48.0~~		$	~~(4.0)~~
Fees	21.48			2.64			(0.26)		~~7.7~~			~~7.7~~			—
Product sales to franchisees	—			—			—		—			0.5			(0.5)
Advertising fund contributions	5.6			5.6			—
Advertising fund contributions	5.2			5.8			(0.6)		16.3			19.8			(3.5)
Franchise rental income	17.4			21.6			(4.2)
Franchise rental income	16.9			23.8			(6.9)		58.5			72.5			(14.0)
Total franchise revenue (1)	$	38.7		$	45.3		$	(6.6)
Total franchise revenue (1)	$	38.0		$	47.9		$	(9.9)	$	126.5		$	148.5		$	(22.0)
Franchise same-store sales (2)	0.9		%	(1.2)		%
Franchise same-store sales (2)	(0.7)		%	0.5		%			(1.1)		%	1.3		%
Franchise adjusted EBITDA	$	6.4		$	8.0		$	(1.6)
Franchise adjusted EBITDA	$	6.3		$	6.1		$	0.2	$	20.7		$	21.3		$	(0.6)
Total franchise salons	3,593			4,350			(757)
Total franchise salons	3,776			4,537			(761)

_______________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

(2)Franchise same-store sales are calculated as the total change in sales for franchise locations that were open on a specific day of the week during the current period and the corresponding prior period. Quarterly franchise same-store sales are the sum of the franchise same-store sales computed on a daily basis. Franchise salons that do not report daily sales are excluded from same-store sales. Franchise same-store sales are calculated in local currencies to remove foreign currency fluctuations from the calculation.

Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2025, Compared with Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2024

Franchise Revenue

Franchise revenue decreased $96.96 million ~~and $22.1 million~~ during the three ~~and nine~~ months ended ~~March~~September 3130, 2025~~, respectively~~. The ~~decreases~~decrease in franchise revenue during the three ~~and nine~~ months ended ~~March~~September 3130, 2025, ~~were~~was primarily due to the decrease in franchise salon count ~~and negative same-store sales, as well as lower franchise rental income and lower advertising fund revenues, which provide no contribution margin~~.

Franchise Adjusted EBITDA

During the three months ended ~~March~~September 3130, 2025, ~~and 2024,~~ franchise adjusted EBITDA ~~increased~~totaled $~~0.2 million to $~~6.34 million~~. During the nine months ended March 31~~, ~~2025, franchise adjusted EBITDA totaled $20.7 million,~~ a decrease of $01.6 million compared to the ~~nine~~three months ended ~~March~~September 3130, 2024. The ~~decrease~~decline was primarily due to a decrease in royalties ~~partially~~and fees, offset partially by adecreased ~~lower~~ general and ~~administration~~administrative ~~expense structure~~expenses.

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Company-Owned Salons

	Three Months Ended March 31,						Nine Months Ended March 31,
	Three Months Ended September 30,
	2025		2024		Increase (1)		~~2025~~		~~2024~~		~~Increase (1)~~
	(Dollars in millions)						~~(Dollars in millions)~~
Company-owned salon revenue	$	1920.02	$	10.38	$	1719.74	$	~~23.2~~	$	~~5.0~~	$	~~18.2~~
Company-owned salon adjusted EBITDA	$	01.86	$	(0.83)	$	1.69	$	~~1.2~~	$	~~(1.6)~~	$	~~2.8~~
Total company-owned salons	~~311~~286		209		~~291~~277

_______________________________________________________________________________

(1)Total is a recalculation; line items calculated individually may not sum to total due to rounding.

Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2025, Compared with Three ~~and Nine~~ Months Ended ~~March~~September 3130, 2024

Company-Owned Salon Revenue

Company-owned salon revenue increased $1719.74 million ~~and $18.2 million~~ during the three ~~and nine~~ months ended ~~March~~September 3130, 2025, ~~respectively. The increases are~~ primarily ~~driven~~due byto the Alline Acquisition~~, partially offset by other company-owned store closures~~.

Company-Owned Salon Adjusted EBITDA

In the three ~~and nine~~ months ended ~~March~~September 3130, 2025, company-owned salon adjusted EBITDA improved $1.69 million ~~and $2.8 million~~, ~~respectively,~~ primarily due to ~~the~~increased ~~Alline~~revenues ~~Acquisition,~~generated ~~partially offset~~ by the ~~wind-down~~greater ofsalon ~~underperforming company-owned stores~~count.

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LIQUIDITY AND CAPITAL RESOURCES

~~The~~In June 2024, the Company ~~has~~entered into a new credit agreement with TCW Asset Management Company, LLC, and MidCap Financial Trust, which matures in June 2029. In addition to a $10.0 million minimum liquidity covenant, the agreement includes typical provisions and financial covenants, including leverage and fixed-charge coverage ratio covenants. The agreement was amended in December 2024 in connection with the Alline Acquisition.

Sources of Liquidity

Funds generated by operating activities, available cash and cash equivalents and our credit agreement are our most significant sources of liquidity. The Company believes it has sufficient liquidity, cash on hand and borrowing capacity to meet its obligations in the next twelve months and until maturity of the credit agreement in June 2029.

As of ~~March~~September 3130, 2025, cash and cash equivalents were $1316.36 million, with $1215.19 million and $10.27 million within the United States and Canada, respectively.

As of ~~March~~September 3130, 2025, the Company's borrowing arrangements include a $~~119~~117.20 million term loan, $36.98 million of paid-in-kind interest and a $25.0 million revolving credit facility that matures in June 2029. As of ~~March~~September 3130, 2025, the unused available credit under the revolving credit facility was $1519.70 million, ~~the~~and ~~credit~~total ~~agreement~~available ~~has a minimum~~ liquidity, ~~covenant~~net of the $10.0 million, ~~and~~minimum ~~total available~~ liquidity ~~per~~covenant, ~~the agreement~~ was $1925.05 million. See Note 9 to the unaudited Condensed Consolidated Financial Statements.

On June 30, 2022, the Company sold its OSP software-as-a-service solution to Soham, Inc., for a purchase price of $20.0 million in cash plus additional cash proceeds contingent upon the number of salons that migrate to Soham's Zenoti product as their salon technology platform. As of March 31, 2025, the Company has received $28.5 million in cash proceeds related to the sale of and completed migration to the Zenoti platform.

Uses of Cash

The Company closely manages its liquidity and capital resources. The Company's liquidity requirements depend on key variables, including the performance of the business, the level of investment needed to support its business strategies, credit facilities and borrowing arrangements, and working capital management.

Cash Requirements

The Company's most significant contractual cash requirements as of ~~March~~September 3130, 2025, were lease commitments and interest payments. See Notes 8 and 9 to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

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Cash Flows

Cash Flows from Operating Activities

During the ~~nine~~three months ended ~~March~~September 3130, 2025, cash provided by operating activities was $72.03 million compared to $1.3 million cash used in operating activities ofin ~~$7.1 million during~~ the ~~nine~~three months ended ~~March~~September 3130, 2024. Cash ~~flows~~provided ~~from~~by (used in) operating activities improved year over year due primarily to ~~our~~a ~~lower~~build ~~cost~~in ~~structure,~~restricted ~~less~~ad fund cash ~~used~~and ~~for~~net ~~working~~income ~~capital,~~in ~~and~~the ~~lower~~current ~~cash~~year ~~interest~~period compared to a net loss in the three months ended September 30, 2024.

Cash Flows from Investing Activities

During the ~~nine~~three months ended ~~March~~September 3130, 2025, cash used in investing activities of $100.94 million was primarily due to ~~cash~~capital ~~used in the acquisition of Alline of $18~~expenditures.6 ~~million, partially offset by the receipt of OSP sale proceeds of $8.5 million.~~ During the ~~nine~~three months ended ~~March~~September 3130, 2024, cash provided by investing activities of $10.69 million ~~was~~ primarily ~~due~~related to ~~$2.0 million of~~ OSP sale proceeds~~, partially offset by salon capital improvements~~.

Cash Flows from Financing Activities

During the ~~nine~~three months ended ~~March~~September 3130, 2025, cash ~~provided~~used byin financing activities was $71.23 million, primarily as a result of ~~$15.0~~the ~~million~~repayment ~~in proceeds from issuance~~ of long-term debt of $1.8 million, partially offset by ~~net~~$0.6 ~~payments~~million onof ~~the~~proceeds ~~revolving~~from ~~credit~~the ~~facility~~issuance of ~~$5.9~~common ~~million~~stock. During the ~~nine~~three months ended ~~March~~September 3130, 2024, cash used in financing activities was $16.15 million, primarily as a result of ~~fees~~repayments ~~associated~~of ~~with~~the ~~our~~revolving ~~strategic~~credit ~~review~~facility of $10.2 million, partially offset by ~~net~~$4.3 ~~borrowings~~million of ~~$1.5~~borrowings ~~million~~under the revolving credit facility.

Financing Arrangements

See Note 9 of the Notes to the unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for the quarter ended ~~March~~September 3130, 2025, and Note 8 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2024~~2025, for additional information regarding our financing arrangements.

Debt to Capitalization Ratio

Our debt to capitalization ratio, calculated as the principal amount of debt, including paid-in-kind interest accrued, as a percentage of the principal amount of debt and shareholders' equity at fiscal quarter end, was as follows:

	Debt toCapitalization (1)
March 31, 2025	64.8	%
September 30, 2025	40.3	%
June 30, 2024	67.0	%
June 30, 2025	40.3	%

_______________________________________________________________________________

(1)Excludes the long-term lease liability as that liability is offset by the ROU asset.

Share Repurchase Program

In May 2000, the Board approved a stock repurchase program with no stated expiration date. Since that time and through ~~March~~September 3130, 2025, the Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under this program. All repurchased shares become authorized but unissued shares of the Company. The ~~timing~~Company ~~and~~last ~~amounts~~purchased ofshares ~~any~~through ~~repurchases~~this ~~depend~~program onin ~~many~~fiscal ~~factors,~~year ~~including the market price of the common stock and overall market conditions~~2020. ~~During the nine months ended March 31, 2025, the Company did not repurchase any shares.~~ As of ~~March~~September 3130, 2025, ~~approximately~~a total accumulated 1.5 million shares have been cumulatively repurchased for $595.4 million. At September 30, ~~and~~2025, $54.6 million remain outstanding under the approved stock repurchase program. The Company does not ~~anticipate~~expect ~~repurchasing~~to repurchase shares ofin ~~common~~fiscal ~~stock~~year ~~for the foreseeable future~~2026.

3534

SAFE HARBOR PROVISIONS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q, as well as information included in, or incorporated by reference from, future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company contains or may contain "forward-looking statements" within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in this document reflect management's best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may," "will," "believe," "project," "forecast," "expect," "estimate," "anticipate," and "plan." These uncertainties include a potential material adverse impact on our business and results of operations as a result of changes in consumer shopping trends and changes in manufacturer distribution channels; laws and regulations could require us to modify current business practices and incur increased costs including increases in minimum wages; changes in the general economic environment; changes in consumer tastes, hair product innovation, fashion trends and consumer spending patterns; ~~compliance with Nasdaq listing requirements;~~ our ability to realize the anticipated benefits of the Alline Acquisition; reliance on franchise royalties and overall success of our franchisees’ salons; our salons' dependence on a third-party supplier agreement for merchandise; our and our franchisees' ability to attract, train and retain talented stylists and salon leaders; the success of our franchisees, which operate independently; data security and privacy compliance and our ability to manage cyber threats and protect the security of potentially sensitive information about our guests, franchisees, employees, vendors or ~~company~~Company information; the ability of the Company to maintain a satisfactory relationship with Walmart; marketing efforts to drive traffic to our franchisees' and company-owned salons; our ability to maintain and enhance the value of our brands; reliance on legacy information technology systems; reliance on external vendors; the use of social media; the effectiveness of our enterprise risk management program; potential challenges with the planning or implementation of our new enterprise resource planning system; our ability to minimize risks associated with owning and operating additional salons; ability to generate sufficient cash flow to satisfy our debt service obligations; compliance with covenants in our financing arrangement; premature termination of agreements with our franchisees; the continued ability of the Company to implement cost reduction initiatives and achieve expected cost savings; continued ability to compete in our business markets; potential liabilities related to the employee retention credit received by Alline; ~~changes~~reliance inon ~~trade~~our ~~policies,~~management ~~treaties~~team and other key personnel, ~~tariffs~~including ~~and~~a ~~customs~~successful ~~duties~~search ~~and~~for ~~taxes;~~a ~~reliance~~new onCEO; ~~our~~the ~~management~~ability ~~team~~to attract and ~~other~~retain key personnel; the continued ability to maintain an effective system of internal control over financial reporting; changes in tax exposure; the ability of our Tax Preservation Plan to protect the future availability of the Company's tax assets; potential litigation and other legal or regulatory proceedings; or other factors not listed above. Additional information concerning potential factors that could affect future financial results is set forth under Item 1A on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q, and 8-K and Proxy Statements on Schedule 14A.

3635

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in interest rates and changes in foreign currency exchange rates. There has been no material change to the factors discussed within Part II, Item 7A in the Company's June 30, ~~2024~~2025, Annual Report on Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. Management, with the participation of the CEO and CFO, evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), at the end of the period. Based on their evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~March~~September 3130, 2025.

Changes in Internal Control Over Financial Reporting

There were no material changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The Company is a defendant in various lawsuits and claims arising out of the normal course of business. Like certain other franchisors, the Company has been faced with allegations of franchise regulation and agreement violations. Additionally, because the Company may be the tenant under a master lease for a location subleased to a franchisee, the Company faces allegations of non-payment of rent and associated charges. Litigation is inherently unpredictable, and the outcome of these matters cannot presently be determined. Although the actions are being vigorously defended, the Company could, in the future, incur judgments or enter into settlements of claims that could have a material adverse effect on its results of operations in any particular period.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2024, except as follows~~2025.

~~Business and Industry Risks~~37

We may be unable to successfully realize the anticipated benefits of the Alline Acquisition.

On December 19, 2024, we acquired Alline, a former franchisee of Regis, which immediately prior to the acquisition owned and operated 314 stores under our Cost Cutters, Holiday Hair, and Supercuts brand names (the Alline Stores). The success of the Alline Acquisition depends on our ability to successfully integrate the Alline Stores with our existing limited network of company-owned stores and operate the Alline Stores as company-owned stores. The anticipated benefits of the Alline Acquisition may not be realized fully, or at all, or may take longer to realize than expected. We may face significant challenges in realizing the anticipated benefits of the Alline Acquisition, including, without limitation:

•the diversion of management’s attention from ongoing business concerns and performance shortfalls as a result of the devotion of management’s attention to the integration of the Alline Stores and Alline personnel;

•retaining key business relationships and retaining and attracting employees and stylists;

•potential unknown liabilities associated with the Alline Acquisition; and

•unforeseen expenses and delays related to the integration of Alline Stores into our system.

Many of these factors will be outside of our control and any one of them could result in increased costs, decreased revenue, including royalty revenue, or increased operating costs, which may have a materially adverse effect on our business, financial condition, and results of operation.

Operating Risks

Materially increasing the number of salons that we own and operate could expose us to additional risk and adversely affect our financial results.

Previously, we transitioned to a fully franchised business model. However, in connection with the Alline Acquisition, we acquired 314 stores under our Cost Cutters, Holiday Hair, and Supercuts brand names. We now operate approximately 7.6% of the salons in our system.

Operating salons can expose us to additional risks or exacerbate those risks to which we are already exposed as a franchisor. Operating additional salons inherently increases the operating lease costs, advertising and marketing expenses, professional fees and other expenses. Furthermore, as a result of the Alline Acquisition, we increased our number of employees by more than 1,600. This increase in employees may expose us to additional liability and operating costs, such as risks associated with labor shortages, minimum wage requirements, employment taxes, increased overtime pay and benefits, increased costs for insurance, employment and labor liability, and regulatory compliance risks. We could also be subject to additional liability such as property, environmental and other liability as a result of being a direct operator and lessee of additional salons and liability arising from regulatory compliance. Furthermore, it may create additional costs, expose us to additional legal and compliance risks, cause disruption to our business and impact our financial condition and results of operation.

Financial and Economic Risks

Any audit by the Internal Revenue Service with respect to Alline’s receipt of an employee retention credit under The Coronavirus Aid, Relief, and Economic Security (CARES) Act could result in additional taxes or costs to Alline for which we may ultimately be liable.

Alline applied for and received an employee retention credit (ERC) under the CARES Act amounting to approximately $29 million. In July 2023, the Internal Revenue Service (IRS) stated its intention to shift its focus to review ERC claims for compliance concerns, including intensifying audit work. Although Alline received the amounts related to the ERC from the IRS, no formal determination regarding Alline’s eligibility to claim the ERC was received, and such eligibility remains subject to audit by the IRS. If the IRS audits Alline during the applicable statute of limitations period and finds that Alline was not eligible to receive all or part of the ERC, Alline would be required to return some or all of the ERC to the IRS, together with any applicable interest and penalties. While the former owners of Alline would be required to indemnify us for any such amounts required to be repaid to the IRS (together with any applicable interest and penalties, and all reasonable costs and expenses incurred by us in defending or addressing any matters related to the ERC), we may not ultimately be able to timely or fully recoup such amounts from the former owners of Alline. If we are ultimately required to repay the ERC, and we are unable to sufficiently recover such amounts from the former owners of Alline, our financial condition, results of operations and liquidity may be materially adversely affected.

The recent uncertainty of trade policies, treaties, tariffs and customs duties and taxes may have a significant impact on our financial statements.

There is currently significant uncertainty about the future relationship between the United States and various other countries, including China, Mexico, Canada, and the European Union, with respect to trade policies, treaties, tariffs and customs duties and taxes. If tariffs, trade restrictions or trade barriers are expanded, increased or interpreted by a court or governmental agency to apply to more of our products, then our exposure to future taxes and duties on such imported products and components could be significant and could have a material effect on our financial results and we may be required to raise prices on certain imported products and services.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

Item 5. Other Information

During the three months ended ~~March~~September 3130, 2025, no director or officer of the Company adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

4038

Item 6. Exhibits

Exhibit 3.1						Certificate of Designation of Series A Junior Participating Preferred Stock (Incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed on January 30, 2024.)
Exhibit 4.1						Tax Benefits Preservation Plan, dated as of January 29, 2024, between Regis Corporation and Equiniti Trust Company, LLC (which includes the Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Regis Corporation as Exhibit A to the Plan, the Form of Rights Certificate as Exhibit B to the Plan, and the Summary of Rights to Purchase Series A Junior Participating Preferred Stock as Exhibit C to the Plan) (Incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed on January 30, 2024.)
Exhibit 4.2						Amendment No. 1 to Tax Benefits Preservation Plan, dated as of January 27, 2025, by and between Regis Corporation and Equiniti Trust Company, LLC (Incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed on January 28, 2025.)
Exhibit 10.1						Regis Corporation Executive Long-Term Cash Incentive Plan (Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed on January 29, 2025.)
Exhibit 31.1						President and Chief Executive Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2						Executive Vice President and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32						Chief Executive Officer and Chief Financial Officer of Regis Corporation: Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101						The following financial information from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly period ended ~~March~~September 3130, 2025, formatted in Inline Xtensible Business Reporting Language (iXBRL) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) the Condensed Consolidated Statements of Shareholders' Equity ~~(Deficit)~~; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.
Exhibit 104						The cover page from Regis Corporation's Quarterly Report on Form 10-Q for the quarterly ~~and year-to-date~~ period ended ~~March~~September 3130, 2025, formatted in iXBRL (included as Exhibit 101).

4139

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 13, 2025	By:	/s/ KERSTEN D. ZUPFER
Date: November 12, 2025	By:	/s/ KERSTEN D. ZUPFER
		Kersten D. Zupfer,
		Executive Vice President and Chief Financial Officer
		(Principal Accounting Officer)

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