RGS 10-K & 10-Q changes, risk factors and insider trading

On December 19, 2024, we acquired Alline,314 a former franchiseestores, of Regis, which immediately261 priorremain toin theoperation acquisitionas ownedof andJune operated30, 314 stores2026, under our Cost Cutters, Holiday Hair, and Supercuts brand names (Alline, or the Alline Stores) from a former franchisee (the Alline Acquisition). 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:

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

In our U.S. markets, numerous laws and regulations at the federal, state, and local levels can affect our business. Legal requirements are frequently changed and subject to interpretations, and we are unable to predict the ultimate cost of compliance with these requirements or their effect on our operations. If we or our franchisees fail to comply with any present or future laws or regulations, we or they could be subject to future liabilities or a prohibition on the operation of salonssalons, and we could be prohibited from offering franchises for sale in certain states.

A number of U.S. states, Canadian provinces, and municipalities in which we do business have recently increased, or are considering increasing, the minimum wage, with increases generally phased over several years depending upon the size of the employer. Increases in minimum wages, employment taxes and overtime pay result in an increase in salon operating costs, and the salons' ability to offset these increases through price increases may be limited. In fact, increases in minimum wages have increased salon operating costs over the last five years. In addition, a growing number of states, provincesprovinces, and municipalities have passed, or are considering passing, requirements for paid sick leave, family leave, predictive scheduling (which imposes penalties for changing an employee's shift as it nears), and other requirements that increase the administrative complexity and cost of managing a workforce. Increases in costs for our franchisees could lead to reduced profitability of salons, which may lead to salon closures. Finally, changes in labor laws designed to facilitate union organizing could increase the likelihood of stylists being subjected to greater organized labor influence. If a significant portion of stylists were to become unionized, it would have an adverse effect on salon operationsoperations, which could adversely impactsimpact our business and financial results.

Various state and federal laws govern our relationships with our franchisees and our potential sale of a franchise. If we fail to comply with these laws, we may subject the Company and our personnel to claims lodged by our franchisees,franchisees or applicants, as well as federal and state government agencies, and those claims may include, among others, fraud, misrepresentation, unfair business practicespractices, and wrongful terminations. As a result of those claims, we could be liable for fines, damages, stop ordersorders, or other penalties. A franchisee or government agency may bring legal action against us based on the franchisee/franchisor relationship. Also, under the franchise business model, we may face claims and liabilities based on vicarious liability, joint-employer liabilityliability, or other theories or liabilities. All such legal actions could not only result in changes to laws and interpretations, which could make it more difficult to appropriately support our franchisees and, consequently, impact our performance, but could also result in expensive litigation with our franchisees, third partiesparties, or government agencies, which could adversely affect both our profits and our important relationships with our franchisees. In addition, other regulatory or legal developments may result in changes to laws or to the franchisee/franchisor relationship that could negatively impact the franchise business model and, accordingly, our profits.

We are also subject to federal statutes and regulations, including the rules promulgated by the U.S. Federal Trade Commission, as well as certain state laws governing the offer and sale of franchises. Many state franchise laws impose substantive requirements on franchise agreements, including limitations on non-competition provisions and on provisions concerning the termination or non-renewal of a franchise. Some states require that certain materials be filed for a franchisor to be registered and approved before franchises can be offered or sold in that state. The failure to obtain or retain licenses or approvals to sell franchises could have a material adverse effect on our business, financial condition, results of operationsoperations, and prospects.

In addition to employment and franchise laws, we are also subject to a wide range of federal, state, provincial, and local laws and regulations in the jurisdictions in which we operate, including those affecting public companies, product manufacturing and salesale, and those governing the franchisee/franchisor relationship. Compliance with new, complex, and changing laws may cause our expenses to increase. In addition, any non-compliance with laws or regulations could result in penalties, fines, product recallsrecalls, and enforcement actions or otherwise restrict our ability to market certain products or attract or retain employees, which could adversely affect our business, financial condition, and results of operations.

Our success is substantially dependent on franchise royalties and the overall success of our franchisees' salons. ManySome franchisees have seen a decline in revenues in recent years which reduces their profitability. As a result, franchise salon closures have increased, which reduces our royalty income. In addition, franchisees may be unable to pay their royalties which could decrease cash collections. Some franchisees have stopped paying rents as they come due, reduced operating hours, or closed before the lease end date, which are violations of the lease agreements and may result in penalties depending on the lease, which may increase our cash outflows when the franchisee subleases from us, or we guarantee the lease. Franchisees who decide to close their salons when there is not another franchisee willing to take over their business decreases the size of our fleet and our royalty revenues.

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 feesfees, and other expenses. Furthermore, as a result of the Alline Acquisition, we initially 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.operations.

We depend on a third-party preferred supplier agreement for merchandise. If our supplier is unable to source the products at the prices expected by our franchisees, our franchisees' profitability and our profitability may be adversely impacted. Further, events or circumstances beyond our control, including economic instability and other impactful events and circumstances in the regions in which our supplier and its manufacturers are located, the financial instability of our supplier, our supplier's failure to meet our terms and conditions or our supplier standards, product safety and quality issues, disruption or delay in the transportation of products from our supplier and its manufacturers to our salons, transport availability and cost, transport security, inflationinflation, tariff instability, and other factors relating to the supplier and the areas in which it operates, may adversely impact our and our franchisees' profitability.

The normal operations of our business and our investments in technology involve processing, transmitting and storing potentially sensitive personal information about our guests, employees, franchisees, vendors and our Company, all of which require the appropriate and secure utilization of such information and subjects us to increased focus regarding our data security compliance. Cyber-attacks, including ransomware, designed to gain access to sensitive information by breaching mission critical systems of large organizations (and their third-party vendors) are constantly evolving and high-profile electronic security breaches leading to unauthorized release of sensitive information have occurred at a number of large U.S. companies in recent years. Furthermore, there has been heightened legislative and regulatory focus on data security in the U.S. and abroad, including requirements for varying levels of customer notification in the event of a data breach. These laws are changing rapidly and vary among jurisdictions. We will continue our efforts to meet any applicable privacy and data security obligations; however, it is possible that certain new obligations may be difficult to meet and could increase our costs. We rely on commercially available systems, software, and tools to provide security for processing, transmitting, and storing of sensitive information. As the risk of cyber-attacks increases, our related insurance premiums may also increase. Despite the security measures and processes we have in place, our efforts (and those of our third-party vendors) to protect sensitive guest, employee, franchisee, vendor, and Company information may not be successful in preventing a breach in our systems or detecting and responding to a breach on a timely basis. We have, from time to time, experienced threats to, and incidents involving, our systems and information, none of which have been material to date. As a result of a security incident or breach in our systems, our systems could be interrupted or damaged, and/or sensitive information could be accessed by third parties. If that occurred, our guests could lose confidence in our ability to protect their information, which could cause them to stop visiting our salons altogether or our franchisees could exit the system due to lack of confidence. Such events could also lead to lost future sales and adversely affect our results of operations. In addition, as the regulatory environment relating to retailers and other companies' obligations to protect sensitive data becomes stricter, a material failure on our part to comply with applicable regulations could potentially subject us to fines, penalties, other regulatory sanctions, or lawsuits with the possibility of substantial damages. The costs to remediate security incidents or breaches that may occur could be material. Also, as cyber-attacks become more frequent, intense, and sophisticated, the costs of proactive defensive measures may increase. Furthermore, while our franchisees are independently responsible for data security at their franchised salon locations, a security incident or breach at a franchised salon location could negatively affect public perception of our brands. More broadly, our incident response preparedness and disaster recovery planning efforts may be inadequate or ill-suited for a security incidentincident, and we could suffer disruption of operations or adverse effects to our operating results.

As of June 30, 2025,2026, we had 1,049984 SmartStyle or Cost Cutters salons within Walmart locations. Walmart is our largest landlord. Business within each of those 1,049 salons relies primarily on the traffic of visitors to the Walmart location, so our success is tied to Walmart's success in bringing shoppers into their stores. We have limited control over the locations and markets in which we open new locations, as we only have potential opportunities in locations offered to us by Walmart. Furthermore, Walmart has the right to (a) close up to 100 salons per year for any reason, upon payment of certain buyout fees; (b) terminate lease agreements for breach, such as if we failed to conform with required operating hours, subject to a notice and cure period; (c) non-renew the lease agreements if salons fail to reach certain sales thresholds; (d) impose penalties for failing to meet required operation hours; and (e) terminate the lease if the Walmart store is closed. Future franchising activity is dependent upon a continued relationship between us and Walmart, as well as Walmart's approval of our proposed franchisee on a location-by-location basis. Further, Walmart may attempt to impose changes to the terms and conditions of our agreements, which may be contrary to our economic interests. Operating these salons adds complexity in overseeing franchise compliance and coordination with Walmart. Additionally, there are various remodel requirements of our franchisees, whether it be upon lease expiration or the remodeling of a Walmart location. To the extent Walmart accelerates the pace of their own store remodels, our salons in remodeled Walmart locations would be held to the same standard. The cost of these remodels may be prohibitive to our franchisees and could lead to the Company bearing a portion of the cost, or closures if the remodel requirement is not satisfied.

Our future growth and profitability may depend on the effectiveness, efficiency and spending levels of our marketing and advertising efforts to drive awareness and traffic to our salons. In addition, delivering a quality guest experience is crucial to drive repeat visits to our salons. We are focusing on improving guest experiences to provide brand differentiation and preference as well as ensureensuring our guests' needs are met. If our marketing, advertising, and improved guest experience efforts do not generate sufficient customer traffic and repeat visits to our salons, our business, financial condition, and results of operations may be adversely affected. Additionally, we plan to continue expanding our digital marketing efforts, including seeking additional options for loyalty and therewards software to complement our current system. The success of those efforts is dependent upon our franchisees’ proper continued use of the Zenoti salon technology platform, accurate and consistent guest data capture, and customers continuing to opt-in to receive marketing messages from us.

The efficient operation of our business is dependent on our management information systems. We rely heavily on our management information systems to collect daily sales information and guest demographics, monitor salon performance, generate payroll information, and other functions. Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, hacker attempts, security breachesbreaches, and natural disasters. Certain capabilities or entire systems may become outdated which could limit functionality. These management information systems may require upgrades or replacements periodically, which involve implementation and other operational risks. In addition, our management information systems are developed and maintained by external vendors, including the Zenoti salon technology platform used by our franchisees and company-owned salons. The failure of our management information systems to perform as we anticipate, to meet the continuously evolving needs of our business, or to provide an affordable long-term solution, could disrupt our business operations and result in other negative consequences, including remediation costs, loss of revenue and reputational damage. Further, if our external vendors fail to adequately provide technical support for any one of our key existing management information systems or if new or updated components are not integrated smoothly, we could experience service disruptions that could result in the loss of important data, increase our expenses, decrease our revenues and generally harm our business, reputation and brands. Any such conduct with respect to our franchisees could also result in litigation.

We arehave implementingimplemented a new enterprise resource planning system, and challenges witharising from the planningimplementation or implementationthe ongoing operation of the system may impact our internal control over financial reporting, businessbusiness, and operations.

We arehave undertakingcompleted a multi-year process of implementing an enterprise resource planning (“ERP”) system, which iswas a major undertaking that will replacereplaced most of our existing financial systems. AnThe new ERP systemsystem, which was implemented August 1, 2026, is used to maintain financial records, enhance data security and operational functionality and resiliency, and provide timely information to management related to the operation of athe business. The implementation will requirerequired the integration of the new ERP system with existing information systems and business processes. Our ERP planning has required,processes and the ongoing planning and future implementation of the new ERP will continue to require,require investment of significant capital and human resources, requiringincluding the attention of members of our management team. AnyWhile the initial implementation is complete, we may continue to encounter deficiencies in the design,design or delays or issues encountered in the implementation,operation of the new ERP system that could result in significantly greater capital expenditures and employee time and attention than currently contemplated and could adversely affect our ability to operate our business, including effective management of our invoicing and accounts receivable and collections processes, our ability to file timely reports with the SECSEC, or otherwise affect the proper and efficient operation of our controls. If the system as implemented, or after necessary investments, does not result in our ability to maintain accurate books and records, our financial condition, results of operations, and cash flows could be materially adversely impacted. If we are unable to adequately plan, implement and maintain procedures and controls relating to our ERP, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired and impact the effectiveness of our internal control over financial reporting. All of the above could result in harm to our reputation or our customers and franchisees, as well as expose us to regulatory actions or claims, any of which could materially impact our business, results of operations, financial conditioncondition, and stock price.

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. As of June 30, 2026, the statute of limitations remains open on $10 million of the total ERC Alline received. 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.

Competition on a market-by-market basis remains challenging as many smaller chain competitors are franchise systems with local operating strength in certain markets and the hair salon industry, as a whole, is fragmented and highly competitive for customers, stylistsstylists, and prime locations. Therefore, our ability to attract guests, raise prices and secure suitable locations in certain markets can be adversely impacted by this competition. Our strategies for competing are complicated by the fact that we have multiple brands in multiple segments, which compete on different factors. We also face significant competition for prime real estate, particularly in strip malls. We compete for lease locations not only with other hair salons, but with a wide variety of businesses looking for similar square footage and high-quality locations. If we are unable to successfully compete, we may lose market share and our ability to grow same-store sales and increase our revenue and earnings may be impaired.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and effectively prevent and detect material fraud. If we cannot provide reliable financial reports or prevent or detect material fraud, our operating results could be materially misstated. There can be no assurances that we will be able to prevent control deficiencies from occurring, which could cause us to incur unforeseen costs, reduce investor confidence, cause the market price of our common stock to decline, or have other potential adverse consequences. Commencing with our fiscal 2023 audit, and as a result of our smallernon-accelerated reporting companyfiler status, we are not required to obtain, nor did we obtain, an audit of our system of internal controls over financial reporting. However, if our public float exceeds $75 million as of the last business day of our second fiscal quarter, we would no longer qualify as a non-accelerated filer and would be required to include an attestation report from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting in future annual reports. Obtaining such an attestation could require significant management time and resources, and there can be no assurance that our independent auditors would not identify one or more material weaknesses in our internal controls at that time, which could adversely affect investor confidence and the market price of our common stock.

On January 28, 2024, our Board of Directors authorized and declared a dividend of one preferred stock purchase right for each outstanding share of Common Stock. See Note 114 to the Consolidated Financial Statements for additional information on the terms and operation of the 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 submitsubmitted the Extension to its shareholders for ratification atand the nextshareholders annualsubsequently orapproved specialthe meetingratification ofon itsOctober shareholders.28, 2025. By extending the Plan, the Board of Directors is seeking to protect the Company’s ability to use its NOLs and other tax attributes to offset potential future income tax liabilities. The Company’s ability to use such NOLs and other tax attributes would be substantially limited if the Company experiences an "ownership change,” as defined in Section 382. The Plan is intended to make it more difficult for the Company to undergo an ownership change by deterring any person from acquiring 4.95% or more of the outstanding shares of stock without the approval of the Board of Directors. However, there can be no assurance that the Plan will prevent an "ownership change” from occurring for purposes of Section 382, and events outside of our control and which may not be subject to the Plan, such as sales of our stock by certain existing shareholders, may result in such an "ownership change” in the future. If we have undergone or, in the future undergo, an ownership change that applies to our Tax Assets, our ability to use these Tax Assets could be substantially limited after the ownership change, and this limit could have a substantial adverse effect on our cash flows and financial position including but not limited to a change in the valuation allowance on our deferred tax assets.

Regis Corporation (the Company) franchises, owns, and operates beauty salons. As of June 30, 2025,2026, the Company franchised or owned 3,9413,712 salons in North America and the United Kingdom. Each of the Company's salon concepts generally offer similar salon products and serviceshair and serve the mass market.services. As of June 30, 2025,2026, we had 1,7771,611 corporate employees worldwide. See discussion within Part I, Item 1 of this Form 10-K.

In December 2024, the Company acquired the Alline Salon Group (the Alline Acquisition), its largest franchisee, consisting of 314 salons.salons, of which 261 salons remain in operation as of June 30, 2026. 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.

On June 30, 2022, the Company sold its Opensalon® Pro (OSP) software-as-a-service solution to Soham Inc. (Zenoti). The Company received $13.0 million in proceeds in June 2022 and received an additional $5.0 million in proceeds in fiscal year 2023, offset by a $0.5 million transaction fee. In fiscal year 2024, the Company received an additional $2.0 million of proceeds that had been previously held back for general indemnity provisions.provisions, Inand in fiscal year 2025, the Company received $8.5 million in additional proceeds related to salons migrating to Zenoti. The Zenoti migration was successfully completed in fiscal year 2025.2025 and therefore the Company did not receive any additional proceeds from Zenoti in fiscal year 2026. As a result of the sale, the Company classified the OSP business as discontinued operations in the financial statements as discussed in Note 3 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

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 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 fiscal year 2025,2026, a net 430199 and 30 franchise and company-owned salons, excluding any impact from the Alline Acquisition,respectively, 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 revenue and expenses.

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

During fiscal year 2025,2026, royalties decreased $5.9$3.6 million, or 9.2%,6.2%, mainly due to a decrease in franchise salon count primarily caused by franchise salon closures and the conversion of franchise salons acquired in the Alline Acquisition.Acquisition to company-owned in December 2024.

During fiscal year 2025,2026, fees decreased $0.5$2.5 million, or 4.9%,25.8%, primarily due to salon closuresclosures. andAdditionally, lowerthe rebateprior feesyear fromresults franchiseinclude productthe vendors,recognition offset partially byof terminated franchise fees related to the acquisition of the Alline salons.Alline.

Advertising fund contributions decreased $3.8$0.5 million, or 14.8%,2.3%, during fiscal year 2025,2026, primarily due to the decrease in franchiselower salon count and a decrease in advertising fund contribution rates.count.

During fiscal year 2025,2026, company-owned salon revenue increased $36.4$34.6 million, or 498.6%,79.2%, due primarilyto toadditional revenues generated by the increase in salon count as a result of the Alline Acquisition.Acquisition in the second quarter of fiscal year 2025.

The increasedecrease of $1.4$4.8 million, or 3.1%,10.3%, in general and administrative expense during fiscal year 20252026 was primarily due to acquisitionlower relatedcorporate costscompensation ofand $1.4franchise million,brokerage expenses, as well as operatinglower expenseseducation relatedevent tocosts, Alline,partially offset partially by company-widehigher costcompany-owned savinggeneral measures.and administrative expense.

The increase of $5.0$3.0 million, or 90.9%,28.6%, in rent expense during fiscal year 20252026 was primarily due to rent expense associated with the salons acquired in the Alline Acquisition salon rent expense.Acquisition.

Advertising fund expense decreased $3.8$0.5 million, or 14.8%,2.3%, during fiscal year 2025,2026, primarily due to the decrease in franchiselower salon count and a decrease in advertising fund contribution rates.count.

Company-owned salon expense increased $26.0$24.9 million, or 509.8%,80.1%, during fiscal year 2025,2026, asprimarily adue resultto the full year of expenses generated by the strategicsalons acquired in the Alline Acquisition.

The decreaseincrease of $0.9$1.1 million, or 23.1%,36.7%, in depreciation and amortization during fiscal year 20252026 was primarily due to company-owneddepreciation salonexpense closures,associated partiallywith offsetthe byassets acquired in the Alline Acquisition.

The Company recorded long-lived asset impairment charges of $0.4$0.1 million and $0.8$0.4 million in fiscal years 20252026 and 2024,2025, respectively. The decrease in long-lived asset impairment was primarily due to more right-of-use assets being impairedcharges in fiscal year 20242026 resultingis fromdue to recognizing impairment on a single salon while the fiscal year 2025 impairment related to subleasing excess corporate office space to unrelated third parties.

The $5.1$0.4 million decreaseincrease in interest expense during fiscal year 20252026 was primarily due to lesshigher debt outstanding.outstanding, offset partially by declining interest rates.

Other, net improveddeclined $2.0$0.7 million in fiscal year 2025,2026, primarily due to unclaimedforeign propertycurrency and corporate office sublease income.adjustments.

Income Tax Benefit (Expense)

During fiscal year 2026, the Company recognized an income tax benefit of $1.1 million with a corresponding effective tax rate of (18.3)%. During fiscal year 2025, the Company recognized an income tax benefit of $115.5 millionmillion, with a corresponding effective tax rate of (7,519.3)%%, primarily due to the partial release of the valuation allowance on our deferred tax assets, compared to recognizing an income tax expense of $0.9 million, with a corresponding effective tax rate of 1.0% during fiscal year 2024.assets. See Note 10 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

The Company recorded no income from discontinued operations, net of taxtax, ofin fiscal year 2026 compared to $6.5 million and $2.0 million in fiscal years 2025 and 2024, respectively. Income in fiscal year 2025 is due to proceeds from the sale of OSP2025, related to contingent proceeds earned based on the number of salons migratingthat migrated to the Zenoti platform, partially offset by a non-cash income tax expense allocated to discontinued operations, and income in fiscal year 2024 is due to the receipt of sales proceeds related to the sale of OSP that had previously been held back for general indemnity provisions.operations. See Note 3 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

Franchise revenue decreased $29.3$20.2 million during fiscal year 2025.2026. The decrease in franchise revenue was primarily due to the decrease in franchise rental income, royalties, and advertising fund collectionsfees as a result of lower salon count, primarily driven by the Alline portfolio moving to the Company-owned segment.segment mid-fiscal year 2025. During fiscal year 2025,2026, franchisees constructed (net of relocations) and closed 188 and 448207 franchise salons, respectively.

Company-owned salon revenue improved $36.4$34.6 million in fiscal year 2025,2026, primarily due to thea Allinefull Acquisition,year partiallyof offsetincome generated by the closuresalons ofacquired loss-generatingin company-ownedthe salons.Alline Acquisition.

During fiscal year 2025,2026, cash provided by operating activities was $13.7$13.1 million. Cash provided by operations improveddecreased slightly year over year due primarily to anthe $8.4use million build inof restricted ad fund cash,cash in fiscal year 2026, versus a build of restricted ad fund cash in the prior fiscal year, offset partially by our lower cost structure, less cash used for working capital, and lower cash interest.structure.

During fiscal year 2025,2026, cash used in investing activities of $11.5$2.0 million was primarily related to $18.6capital million used in the Alline Acquisition, partially offset by $8.5 million received related to the sale of OSP.expenditures.

During fiscal year 2025,2026, cash providedused byin financing activities of $3.6$2.3 million was primarily arelated resultto of proceeds from issuancerepayments of long-term debt, partially offset by netproceeds paymentsfrom onissuance theof revolvingcommon creditstock facility.related to options and warrants exercised.

In June 2024, the Company entered into a new credit agreement between TCW Asset Management Company, LLC, and MidCap Financial Trust Company which includes a $25.0 million revolving credit facility, a term loan of $105.0 million with a $10.0 million minimum liquidity covenant that expires in June 2029. On December 19, 2024, the Company amended the 2024 Credit Agreement for an additional $15.0 million term loan. The 2024 Credit Agreement, as amended, includes typical provisions and financial covenants, including leverage and fixed-charge coverage ratio covenants. As of June 30, 2025, the unused available credit under the revolving credit facility was $19.0 million, outstanding letters of credit were $6.0 million, and total liquidity per the agreement was $25.9 million. The interest rate on the 2024 Credit Agreement is based on the secured overnight financing rate (SOFR) plus margin. The agreement utilizes an interest rate margin that is subject to change year-over-year. The margin applicable to the new term loan and revolving credit facility is subject to change based on the Company's total leverage ratio, remeasured atannually on a specificpredetermined pointdate duringset by the year.lender. When the Company's total leverage ratio is greater than or equal to 3.75 to 1.00, the margin applicable to the new term loan and revolving credit facility is 9.00%. If the Company's leverage ratio is less than 3.75 to 1.00, the margin rate is 8.50%. In either scenario, the Company has elected the option to pay 4.5% of the margin isas paid-in-kind (PIK) interest (added to the principal balance and thereafter accruing interest), and the remainder is paid currently in cash. The marginSOFR base rate applicable to the debt has a floor of 2.50% per annum. The interest rate applicable to any letter of credit is 5.25% and paid currently in cash. See additional discussion in Note 8 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

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 (deficit) at fiscal year end, was as follows:

Non-current deferred benefits of $5.6$5.7 million includesinclude $1.6$1.5 million related to a non-qualified deferred salary plan, a salary deferral program of $1.6$1.4 million and a bonus deferral plan of $2.4$2.8 million related to established contractual payment obligations under retirement and severance agreements for a small number of employees. See Note 4 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K.

Operating leases primarily represent long-term obligations for the rental of salons, including leases for company-owned locations, as well as salon franchisee lease obligations, which are reimbursed to the Company by franchisees. Regarding franchisee subleases, we generally retain the right to the related salon assets, net of any outstanding obligations, in the event of a default by a franchise owner. Additionally, as a result of having assigned its interest in obligations under certain real estate leases directly to franchisees, the Company is secondarily liable on such lease agreements as guarantor. Declines in system-wide revenue in certain brands over the past few years have increased the risk of default by franchisees, which may be material.

As of June 30, 2025,2026, and 2024,2025, the franchise reporting unit had $173.2$172.4 million and $173.1 million of goodwill, respectively, and the company-owned segment had goodwill of $10.3 million goodwillin relatingeach period related to the Alline Acquisition as of June 30, 2025.Acquisition. See Note 5 to the Consolidated Financial Statements in Part II, Item 8, of this Form 10-K. The Company assesses goodwill impairment on an annual basis as of April 30, 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 amount.

In applying the goodwill impairment assessment, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unitsunit is less than its carrying value (Step 0). Qualitative factors may include, but are not limited to, economic, market and industry conditions, cost factors, and overall financial performance of the reporting unit. If after assessing these qualitative factors, the Company determines it is more likely than not that the carrying value is less than the fair value, then performing Step 1 of the goodwill impairment assessment is unnecessary.

During fiscal years 2026, 2025, 2024, and 2023,2024, the Company recognized long-lived asset impairment charges of $0.1 million, $0.4 million, and $0.8 million, and $0.1 million, respectively, related to ROU assets on the Consolidated Statements of Operations in Part II, Item 8 of this Form 10-K. The impairment loss for each salon asset group that was recognized was allocated among the long-lived assets of the group on a pro-rata basis using their relative carrying amounts. Additionally, the impairment losses did not reduce the carrying amount of an individual asset below its fair value, including the ROU assets included in the salon asset groups. Assessing the long-lived assets for impairment requires management to make assumptions and to apply judgment which can be affected by economic conditions and other factors that can be difficult to predict. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions it uses to calculate impairment losses for its long-lived assets, including its ROU assets. If actual results are not consistent with the estimates and assumptions used in the calculations, the Company may be exposed to future impairment losses that could be material.

•We have determined that it is more likely than not that the majority of our U.S. federal and state deferred tax assets will be realizable as of June 30, 2025. In determining the need, or continued need, for a valuation allowance, we considered the weighting of the positive and negative evidence, which includes, among other things, recent historical income and losses, future growth, forecasted earnings and expected future taxable income. As of June 30, 2025, we achieved three years of cumulative U.S. income when considering pre-tax income adjusted for permanent differences and other comprehensive losses. Based on all available positive and negative evidence, having demonstrated sustained profitability, which is objective and verifiable, and taking into account anticipated future earnings, we concludeddetermined that it is more likely than not that the majority of our U.S. federal and state deferred tax assets will be realizable. As such, we released $110.2 million of our valuation allowance associated with the U.S. federal and state deferred tax assets. A valuation allowance will remain on certain U.S. tax credit carryforwards and state deferred tax assets in which we have concluded that it is more likely than not that they will expire unused.

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, 2025.2025, except as follows: The risk factor related to the search for a new Chief Executive Officer has been removed as the Company has appointed a new CEO, Susan Lintonsmith, as previously disclosed in our Current Report on Form 8-K filed on March 16, 2026.

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 feesfees, and asset retirement obligation costs.

Regis Corporation (NasdaqGM:RGS) is a leader in the beauty salon industry. As of DecemberMarch 31, 2025,2026, the Company franchised or owned 3,8293,770 locations, primarily in North America. Our locations consisted of 3,5513,497 franchised salons and 278273 company-owned salons. Regis’ franchised and corporate locations operate under concepts such as Supercuts®, SmartStyle®, Cost Cutters®, Roosters® and First Choice Haircutters®. As of DecemberMarch 31, 2025,2026, the Company had 1,7321,655 employees of which 1,5651,497 were acquired as part of the Alline acquisition.

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 DecemberMarch 31, 2025.2026. As of DecemberMarch 31, 2025,2026, and June 30, 2025, the franchise reporting unit had goodwill of $173.1$172.8 million and $173.2$173.1 million, respectively, and the company-owned reporting unit had goodwill of $10.3 million as of both DecemberMarch 31, 2025,2026, and June 30, 2025.

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 sixnine months ended DecemberMarch 31, 2025,2026, a net 96150 franchise salons and 1621 company-owned salons have closed.

Three and SixNine Months Ended DecemberMarch 31, 2025,2026, Compared with Three and SixNine Months Ended DecemberMarch 31, 20242025

During the three and sixnine months ended DecemberMarch 31, 2025,2026, royalties decreased $1.2$0.3 million and $2.8$3.1 million, or 8.1%2.2% and 9.2%,7.0%, respectively, primarily due to a decrease in franchise salon count caused by franchise salon closuresclosures. andThe decrease for the nine months ended March 31, 2026, includes a greater impact from the Alline acquisition.acquisition conversion of franchise salons to company-owned as these salons converted in December 2024.

During the three and six months ended DecemberMarch 31, 2025,2026, fees decreased $1.1 million and $1.8$0.5 million, or 37.9% and 34.0%, respectively,20.8%, primarily due to salon closures. During the nine months ended March 31, 2026, fees decreased $2.3 million, or 29.9%, as a result of salon closures in the current year, as well as terminated franchise fees related to the Alline acquisition in the prior year periods and salon closures.period.

During the three andmonths sixended March 31, 2026, advertising fund contributions remained flat compared to the prior year period. During the nine months ended DecemberMarch 31, 2025,2026, advertising fund contributions decreased $0.2 million and $0.2 million, or 3.6% and 1.8%, respectively,1.2%, primarily due to lower salon count.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, franchise rental income decreased $2.8$3.9 million and $7.1$10.9 million, or 14.0%23.1% and 17.0%,18.6%, respectively, primarily due to franchisees signing their own leases and the decrease in franchise salon count caused by franchise salon closures and the Alline acquisition.count.

During the three and six months ended DecemberMarch 31, 2025,2026, company-owned salon revenue increased $15.7 million and $35.2$0.1 million, respectively,or 0.5%, primarily due to the closure of underperforming salons. During the nine months ended March 31, 2026, company-owned salon revenue increased $35.3 million, from $3.5$23.2 million to $19.2 million and $4.2 million to $39.4$58.5 million, respectively, due to the increase in company-owned salon count becauserelated ofto the Alline acquisition.

General and administrative expense for the three and sixnine months ended DecemberMarch 31, 2025,2026, decreased $0.9$1.2 million and $3.6$4.8 million, or 8.0%10.7% and 14.3%,13.2%, respectively, primarily due to lower broker fees, severance, and stock-basedcorporate compensation expenseexpenses in the current year period.period and lapping of education events, offset partially by increased company-owned general and administrative expense.

During the three andmonths sixended March 31, 2026, advertising fund expense remained flat compared to the prior year period. During the nine months ended DecemberMarch 31, 2025,2026, advertising fund expense decreased $0.2 million and $0.2 million, or 3.6% and 1.8%, respectively,1.2%, primarily due to lower salon count.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, franchise rent expense decreased $2.8$3.9 million and $7.1$10.9 million, or 14.0%23.1% and 17.0%,18.6%, respectively, primarily due to franchisees signing their own leases and the decrease in franchise salon count caused by franchise salon closures and the Alline acquisition.count.

Company-owned salon expense, for the three and sixnine months ended DecemberMarch 31, 2025,2026, increased $11.8$0.2 million and $25.8$26.0 million from $1.9$13.8 million to $13.7$14.0 million and from $2.7$16.5 million to $28.5$42.5 million, respectively, primarily due to the Alline acquisition in the prior year period.

Depreciation and amortization for the three and sixnine months ended DecemberMarch 31, 2025,2026, increased $0.3$0.2 million and $0.7$0.9 million, or 60.0%28.6% and 77.8%,56.3%, respectively, primarily due to depreciation expense associated with the assets acquired in the Alline acquisition.

In the three and sixnine months ended DecemberMarch 31, 2025,2026, the Company did not record any long-lived asset impairments. In the three and sixnine months ended DecemberMarch 31, 2024,2025, the Company recorded long-lived asset impairment charges of $0 and $0.4 million, respectively,million related to the right-of-use asset associated with the corporate office lease.

TheFor $0.5the three months ended March 31, 2026, interest expense decreased $0.1 million andor 2.0%, primarily due to declining interest rates. The $0.8 million increase in interest expense for the three and sixnine months ended DecemberMarch 31, 2025, respectively,2026, was primarily due to higher debt outstandingoutstanding, comparedoffset topartially theby threedeclining and six months ended December 31, 2024.rates. Cash interest increaseddecreased $0.2 million for the three months ended March 31, 2026, and sixremained flat for the nine months ended DecemberMarch 31, 2025,2026, compared to the prior year periods.

The $1.0 million gain on earn-out liability in the sixnine months ended DecemberMarch 31, 2025,2026, is due to a change in the estimated fair value expected to be paid in conjunction with the Alline acquisition.

Other, net primarily relates to corporate sublease income and foreign currency gains and losses. Other, net increaseddecreased $0.8$0.1 million and $0.4increased $0.3 million, respectively, in the three and sixnine months ended DecemberMarch 31, 2025,2026, primarily due to a higher unfavorableforeign currency adjustmentgains inand thelosses prior year periods.adjustments.

During the three months ended DecemberMarch 31, 2025,2026, the Company recognized a tax expense of $1.0$0.2 million, with a corresponding effective tax rate of 68.7%,17.7%, as compared to recognizing a small tax benefit with a corresponding effective tax rate of (0.4)% during the three months ended March 31, 2025. During the nine months ended March 31, 2026, the Company recognized a tax expense of $0.1$1.7 million, with a corresponding effective tax rate of 39.8% during the three months ended December 31, 2024. During the six months ended December 31, 2025, the Company recognized a tax expense of $1.5 million, with a corresponding effective tax rate of 45.9%,40.0%, as compared to recognizing a tax benefit of $0.1 million, with a corresponding effective tax rate of 5.3%6.2% during the sixnine months ended DecemberMarch 31, 2024.2025. See Note 5 to the unaudited Condensed Consolidated Financial Statements.

Income from discontinued operations in the three and sixnine months ended DecemberMarch 31, 2024,2025, relates to 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.

Three and SixNine Months Ended DecemberMarch 31, 2025,2026, Compared with Three and SixNine Months Ended DecemberMarch 31, 20242025

Franchise revenue decreased $5.4$4.7 million and $11.8$16.5 million during the three and sixnine months ended DecemberMarch 31, 2025. The decrease in franchise revenue during the three and six months ended December 31, 2025, was2026, primarily due to the decrease in franchise salonrental countincome causeddue byto salonfranchisees closuressigning their own leases, and the Allinedecrease acquisition..in franchise salon count.

During the three and sixnine months ended DecemberMarch 31, 2025,2026, franchise adjusted EBITDA totaled $6.2 million and $12.6$18.9 million, a decrease of $0.2$0.1 million and $1.8 million, respectively, compared to the three and sixnine months ended DecemberMarch 31, 2024.2025. The decline in the three and sixnine months ended DecemberMarch 31, 2025,2026, was primarily due to a decreasedecreases in royalties and fees, offset partially by decreased general and administrative expenses.

Three and SixNine Months Ended DecemberMarch 31, 2025,2026, Compared with Three and SixNine Months Ended DecemberMarch 31, 20242025

Company-ownedDuring the three months ended March 31, 2026, company-owned salon revenue increased $15.7$0.1 million and $35.2 million during the three and six months ended December 31, 2025, respectively,million, primarily due to the closure of underperforming salons. Company-owned salon revenue increased $35.3 million during the nine months ended March 31, 2026, primarily due to the impact of the Alline acquisition.

In the three and sixnine months ended DecemberMarch 31, 2025,2026, company-owned salon adjusted EBITDA improved $1.1$0.6 million and $2.9$3.6 million, respectively, primarily due to income generated by the salons acquired in the Alline acquisition generating income forin the current year periods.

In June 2024, theThe Company entered intohas a 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.

As of DecemberMarch 31, 2025,2026, cash and cash equivalents were $18.4$22.9 million, with $17.6$21.9 million and $0.8$1.0 million within the United States and Canada, respectively.

As of DecemberMarch 31, 2025,2026, the Company's borrowing arrangements include a $116.7$116.4 million term loan, $8.3$9.7 million of paid-in-kind interest and a $25.0 million revolving credit facility that matures in June 2029. As of DecemberMarch 31, 2025,2026, the unused available credit under the revolving credit facility was $19.0 million, and total available liquidity, net of the $10.0 million minimum liquidity covenant, was $27.4$31.9 million. See Note 9 to the unaudited Condensed Consolidated Financial Statements.

The Company's most significant contractual cash requirements as of DecemberMarch 31, 2025,2026, 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.

During the sixnine months ended DecemberMarch 31, 2025,2026, cash provided by operating activities was $3.9$8.9 million compared to $0.8$7.0 million in the sixnine months ended DecemberMarch 31, 2024,2025, primarily due to higher operating income in the current year period.period, offset partially by cash accumulated in the ad fund in the prior year.

During the sixnine months ended DecemberMarch 31, 2025,2026, cash used in investing activities of $1.2$1.4 million was primarily due to capital expenditures. During the sixnine months ended DecemberMarch 31, 2024,2025, cash used in investing activities of $10.6$10.9 million was primarily related to the $18.6 million used in the Alline acquisition, partially offset by proceeds from the sale of OSP of $8.5 million.

During the sixnine months ended DecemberMarch 31, 2025,2026, cash used in financing activities was $1.4$1.7 million, primarily as a result of the repayment of long-term debt of $2.1$2.4 million, partially offset by proceeds from the issuance of common stock. During the sixnine months ended DecemberMarch 31, 2024,2025, cash provided by financing activities was $7.7$7.2 million, primarily as a result of $15.0 million of proceeds from the issuance of long-term debt and $4.3 million of borrowings under the revolving credit facility partially offset by repayments of the revolving credit facility of $10.2 million.

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 DecemberMarch 31, 2025,2026, 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, 2025, for additional information regarding our financing arrangements.

In May 2000, the Board approved a stock repurchase program with no stated expiration date. Since that time and through DecemberMarch 31, 2025,2026, 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 Company last purchased shares through this program in fiscal year 2020. As of DecemberMarch 31, 2025,2026, a total accumulated 1.5 million shares have been cumulatively repurchased for $595.4 million. At DecemberMarch 31, 2025,2026, $54.6 million remain outstanding under the approved stock repurchase program. The Company does not expect to repurchase shares in fiscal year 2026.

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; 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 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; reliance on our management team and other key personnel, including a successful search for a new CEOpersonnel; the ability to attract and 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.