Core Viewpoint - Brompton Split Banc Corp. is set to execute a stock split of its class A shares due to strong performance, with class A shareholders receiving additional shares on a specified date [1][4]. Group 1: Stock Split Details - The class A shareholders of record on October 27, 2025, will receive 17 additional class A shares for every 100 shares held [1]. - The stock split is subject to approval from the Toronto Stock Exchange [1]. - The class A shares will commence trading on an ex-split basis on October 27, 2025, with no fractional shares issued [4]. Group 2: Financial Performance - Over the past 10 years, class A shares have delivered an 18.4% annual total return based on net asset value, outperforming the S&P/TSX Equal Weight Diversified Banks Total Return Index by 5.1% and the S&P/TSX Composite Total Return Index by 6.6% [3][7]. - Class A shareholders have received cash distributions totaling $23.45 per share since inception [3]. Group 3: Distribution and Growth - Following the stock split, class A shareholders will continue to receive monthly cash distributions targeted at $0.10 per share, leading to an expected increase of approximately 17% in total distributions [2]. - The Fund offers a distribution reinvestment plan for class A shareholders to reinvest distributions and benefit from compound growth [2]. Group 4: Investment Strategy - The Fund invests in an approximately equal-weighted portfolio of common shares from the six largest Canadian banks, with up to 10% of total assets in global financial companies for diversification [5].

Core Viewpoint - Brompton Split Banc Corp. plans to execute a stock split of its class A shares due to strong performance, with class A shareholders receiving 17 additional shares for every 100 shares held, pending approval from the Toronto Stock Exchange [1][4]. Group 1: Stock Split Details - The stock split will take effect for class A shareholders of record on October 27, 2025, and trading on an ex-split basis will commence on October 28, 2025 [1][4]. - No fractional shares will be issued, and the number of shares received will be rounded down to the nearest whole number [4]. Group 2: Shareholder Benefits - Class A shareholders will continue to receive monthly cash distributions targeted at $0.10 per share, leading to an expected increase of approximately 17% in total distributions [2]. - The Fund offers a distribution reinvestment plan for class A shareholders to reinvest distributions without commission, enhancing compound growth potential [2]. Group 3: Performance Metrics - Over the past 10 years, class A shares have delivered an annual total return of 18.4%, outperforming the S&P/TSX Equal Weight Diversified Banks Total Return Index by 5.1% and the S&P/TSX Composite Total Return Index by 6.6% [3][7]. - Since inception, class A shareholders have received cash distributions totaling $23.45 per share [3]. Group 4: Fund Composition - The Fund invests equally in common shares of the six largest Canadian banks and may allocate up to 10% of its total assets in global financial companies for diversification and return potential [5].

SBC Medical Group Holdings Conference Summary Company Overview - SBC Medical Group Holdings Inc. trades on NASDAQ under the symbol SBC and is headquartered in Irvine, California, and Tokyo, Japan. The company provides management services and products to cosmetic treatment centers [4][5]. Core Business and Performance - SBC primarily offers comprehensive management support services to franchise clinics, focusing on aesthetic medicine. The company generates income through franchise fees and has diversified its offerings to include orthopedics, ophthalmology, health treatment, and infertility treatment [5][6]. - The total number of franchise clinics has increased to 259, with a net addition of 36 clinics since the previous year [6]. - Despite severe competition in Japan's aesthetic medicine industry, the number of customers has steadily increased, reaching 6.3 million annually [7]. Financial Performance - In February 2024, SBC began restructuring its business, which included revising franchise fees. This led to an 18% year-on-year decline in total revenue [8]. - Increased point redemption by customers reduced revenue, impacting management service revenues, while procurement and rental revenue rose due to higher purchases of medical materials [9]. - The company acquired MB carrier lounge, adding Zoom clinic to its network, which operates six clinics known for customizable laser treatments [9][10]. Strategic Initiatives - SBC launched NIO Skin Clinic in April, targeting expert-level customers with advanced global treatments, which has quickly gained popularity [12]. - The company is enhancing its medical tourism strategy, particularly focusing on Chinese tourists, by increasing its presence on social media and hosting promotional events [13]. - SBC is concentrating on high-growth areas such as orthopedics and AG treatment, responding to Japan's aging demographics [14]. Management and Global Expansion - The company has strengthened its management structure in the U.S. by hiring experienced professionals from various industries [15][16]. - SBC is committed to expanding its global business, including launching Japanese language services in Singapore [16]. Financial Strategy and Shareholder Returns - SBC maintains a robust financial base with sufficient cash on hand for domestic and global growth, including M&A opportunities [17]. - The company is considering new share issuance and partial sales by the founder to improve liquidity and accessibility for a broader investor base [18]. - SBC conducted its first share buyback program from May to July, which positively contributed to its share price and liquidity [18]. Future Outlook - The company aims to strengthen its core business in Japan while expanding into general medical areas and establishing a solid foundation in the U.S. and Southeast Asia [28]. - SBC plans to balance growth investment with shareholder returns, prioritizing funds for growth while ensuring support from a wider range of investors [25][26]. Key Takeaways - SBC Medical Group Holdings is focused on expanding its aesthetic medicine services while diversifying into other medical fields. - The company is undergoing strategic restructuring to position itself for future growth despite recent revenue declines. - There is significant growth potential in the aesthetic medicine market in Japan, with only about 10% of the population currently utilizing these services [22]. - SBC is actively working on enhancing its brand visibility and liquidity to attract more institutional investors [18].

Core Viewpoint - Emerging Growth Research has initiated coverage on SBC Medical Group Holdings, Inc. with a Buy-Extended rating and a 12-month price target of $9.00, which is more than double the company's recent closing price of $4.06 [1][2]. Company Overview - SBC Medical Group Holdings, Inc. was founded in 2000 as Shonan Beauty Clinic in Japan and has become a leading global healthcare management company specializing in cosmetic treatments [5]. - The company operates across various sectors including dermatology, aesthetic surgery, hair removal, orthopedics, ophthalmology, fertility, and dentistry, with a focus on international expansion [5]. Market Position - SBC operates 259 clinics across Japan, Vietnam, and Singapore, with over 6.3 million annual patient visits and a 72% repeat rate, making it the largest player in Japan's fragmented cosmetic treatment industry [8]. - The company is executing an international strategy with recent acquisitions in Singapore and plans for further expansion in Southeast Asia and the U.S. [8]. Financial Performance - As of Q2 2025, SBC held $153 million in cash against just $7 million in long-term debt, with net cash representing approximately 35% of SBC's market capitalization [8]. - Q2 2025 revenue was $43.4 million, down 18% year-over-year, primarily due to revised franchising fees and the exit from staffing services, although underlying procedure volumes grew with a 16% increase in clinic count [8]. Valuation Insights - Despite short-term revenue pressures, Emerging Growth Research views SBC as heavily undervalued, with a DCF analysis implying a fair value of $9.19 per share, rounded down to the $9.00 price target [8].

Financial Data and Key Metrics Changes - Total revenue declined by 18% year on year due to strategic restructuring and increased point redemption by customers [5][6][21] - The elevated effective tax rate was primarily due to non-deductibility of some executive compensation and temporary timing differences in aircraft sales recognition [6][7] Business Line Data and Key Metrics Changes - The average customer spending is trending lower than last year, but there are early signs of recovery in certain areas such as the gorilla clinic [5][6] - The Jun clinic and Neo Skin clinic are achieving an average spend per customer that exceeds existing clinics, indicating strong growth potential [12][13] Market Data and Key Metrics Changes - The aesthetics medicine industry in Japan is experiencing severe competition, yet customer visits have increased to 6,310,000 annually, with a high repeat rate of 72% [4][5] - The dermatological aesthetics segment is showing a higher growth rate, presenting significant growth potential [10] Company Strategy and Development Direction - The company is implementing a multi-brand strategy tailored to different market segments to meet diverse customer needs [10][14] - The focus is on enhancing the medical tourism business, particularly targeting Chinese tourists [15] - The company aims to expand its clinic network from 260 to 1,000 clinics over the next ten years [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that while there were negative factors impacting performance, they believe the business will improve moving forward [35][41] - The company is entering a phase of growth investment after completing business restructuring [44] Other Important Information - The company conducted its first-ever share buyback from May to July, which positively impacted share price and liquidity [22][44] - The company is considering new share issuance and partial sale by the founder to improve accessibility for a broader investor base [22][46] Q&A Session Summary Question: Are the new clinics starting up as planned? - Newly opened clinics are seeing steady customer visits, with an increase in male customers noted [24][25] Question: What is the future pricing trend? - The company is adopting a multi-brand strategy with different pricing tiers to meet varying customer needs [26] Question: Can you explain the growth strategy regarding organic and inorganic growth? - The company plans to proactively open new clinics and conduct M&A, with a strong track record of turning around acquired clinics [27][29] Question: How many clinics are you planning to open in Japan? - The company aims to increase the number of clinics to 1,000 over the next ten years [32] Question: What is the outlook for future profitability? - The company expects to secure sufficient margins and improve overall profitability as new clinics are established [34] Question: How is the company addressing the current share price trend? - The company is focusing on improving liquidity through share buybacks and considering dividend payments [43][44] Question: What are the plans for the CEO's shareholding? - The CEO is considering selling shares to improve liquidity and fund investments [46]

Investor Presentation August 2025 2Q2025 Disclaimer This presentation contains forward-looking statements. Forward-looking statements are not historical facts or statements of current conditions but instead represent only the Company's beliefs regarding future events and performance, many of which, by their nature, are inherently uncertain and outside of the Company's control. These forward-looking statements reflect the Company's current views with respect to, among other things, the Company's financial pe ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This part details SBC Medical Group Holdings Incorporated's unaudited financial statements and management's analysis [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements of SBC Medical Group Holdings Incorporated, including the Balance Sheets, Statements of Operations and Comprehensive Income, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and accompanying notes, for the periods ended June 30, 2025 and 2024, and December 31, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheets | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | **Total Assets** | $315,299,257 | $266,083,154 | | Cash and cash equivalents | $152,740,882 | $125,044,092 | | Accounts receivable – related parties | $48,920,843 | $28,846,680 | | Total current assets | $241,342,038 | $184,451,020 | | Cryptocurrencies | $535,882 | $0 | | **Total Liabilities** | $70,646,686 | $71,060,996 | | Total current liabilities | $60,681,611 | $61,191,890 | | **Total Stockholders' Equity** | $244,652,571 | $195,022,158 | | Retained earnings | $213,423,693 | $189,463,007 | - Total assets increased by approximately **$49.2 million** from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents and accounts receivable from related parties[19](index=19&type=chunk) - Total stockholders' equity increased by approximately **$49.6 million**, largely due to an increase in retained earnings and additional paid-in capital[21](index=21&type=chunk) [Consolidated Statements of Operations and Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section details the company's financial performance, including revenues, expenses, and net income Consolidated Statements of Operations and Comprehensive Income | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues, net | $43,358,847 | $53,102,080 | $90,687,548 | $107,910,122 | | Gross profit | $30,010,577 | $39,419,675 | $67,743,661 | $78,939,050 | | Income from operations | $14,554,192 | $27,290,560 | $38,756,266 | $51,751,445 | | Net income attributable to SBC Medical Group Holdings Incorporated | $2,458,240 | $18,484,408 | $23,960,686 | $37,242,160 | | Basic and diluted EPS | $0.02 | $0.20 | $0.23 | $0.40 | - Total revenues decreased by **18.35%** for the three months ended June 30, 2025, and by **15.96%** for the six months ended June 30, 2025, compared to the same periods in 2024[24](index=24&type=chunk) - Net income attributable to SBC Medical Group Holdings Incorporated saw a significant decrease of **86.70%** for the three months and **35.66%** for the six months ended June 30, 2025, year-over-year[24](index=24&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines changes in the company's equity, including common stock, retained earnings, and capital Consolidated Statements of Changes in Stockholders' Equity | Metric | December 31, 2024 | June 30, 2025 | | :------------------------------------------------ | :---------------- | :-------------- | | Common Stock (Amount) | $10,302 | $10,388 | | Additional Paid-in Capital | $62,513,923 | $72,196,114 | | Treasury Stock | $(2,700,000) | $(5,115,262) | | Retained Earnings | $189,463,007 | $213,423,693 | | Accumulated Other Comprehensive Loss | $(54,178,075) | $(35,922,942) | | Total SBC Medical Group Holdings Incorporated Stockholders' Equity | $195,109,157 | $244,591,991 | | Non-controlling Interests | $(86,999) | $60,580 | | Total Stockholders' Equity | $195,022,158 | $244,652,571 | - Total stockholders' equity increased by **$49,630,413** from December 31, 2024, to June 30, 2025, driven by net income, a deemed contribution from property disposal, and positive foreign currency translation adjustments, partially offset by common stock repurchases[26](index=26&type=chunk) - The Company repurchased **512,809 shares** of common stock for **$2,415,262** during the six months ended June 30, 2025[26](index=26&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by (used in) operating activities | $(6,411,168) | $22,874,760 | | Net cash provided by (used in) investing activities | $15,397,998 | $(9,405,716) | | Net cash provided by (used in) financing activities | $6,901,719 | $(109,341) | | Effect of exchange rate changes | $11,808,241 | $(12,679,865) | | Net change in cash and cash equivalents | $27,696,790 | $679,838 | | Cash and cash equivalents at end of period | $152,740,882 | $103,702,770 | - Operating activities shifted from providing **$22.9 million** in cash in H1 2024 to using **$6.4 million** in H1 2025, primarily due to changes in accounts receivable, finance lease receivables, and income tax payable[28](index=28&type=chunk) - Investing activities generated **$15.4 million** in H1 2025, a significant improvement from using **$9.4 million** in H1 2024, largely due to proceeds from life insurance policy redemptions[28](index=28&type=chunk) - Financing activities provided **$6.9 million** in H1 2025, mainly from a deemed contribution related to property disposal, contrasting with cash used in H1 2024[30](index=30&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information for the financial statements [NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS](index=12&type=section&id=NOTE%201%20%E2%80%94%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) This note describes the company's formation, business activities, and corporate structure - SBC Medical Group Holdings Incorporated (SBC Holding) was formed through a reverse recapitalization on September 17, 2024, with Pono Capital Two, Inc. merging into SBC USA (Legacy SBC); SBC USA was the accounting acquirer[33](index=33&type=chunk)[35](index=35&type=chunk)[37](index=37&type=chunk) - The Company is primarily engaged in providing comprehensive management services to medical corporations and their clinics, including trademark licensing, medical equipment sales, procurement, and loyalty program management[34](index=34&type=chunk)[208](index=208&type=chunk) - The Company's corporate structure includes major subsidiaries in Japan, the United States, and Singapore, as well as a Variable Interest Entity (VIE), Aikawa Medical Management, Inc[44](index=44&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines key accounting principles, methods, and estimates used in preparing financial statements - The financial statements are prepared in accordance with U.S. GAAP and include the Company, its subsidiaries, and consolidated VIEs; interim results are not necessarily indicative of full-year results[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - The Company reports AHH and its subsidiaries on a three-month calendar lag, with exceptions for significant transactions[51](index=51&type=chunk) - The Company does not consolidate Medical Corporations (MCs) in Japan, as it does not have a majority voting interest or controlling financial interest, despite holding equity interests; these are recorded as long-term investments in MCs – related parties[58](index=58&type=chunk)[59](index=59&type=chunk) - Effective January 1, 2025, the Company adopted ASU No. 2023-08, requiring cryptocurrencies to be measured at fair value with changes recognized in net income[72](index=72&type=chunk) - Revenue is recognized from franchising, procurement, management, rental, and other services; franchising and management service fees were revised effective April 1, 2025, based on clinic size, scale, and performance[100](index=100&type=chunk)[104](index=104&type=chunk)[114](index=114&type=chunk) [NOTE 3 — VARIABLE INTEREST ENTITY](index=24&type=section&id=NOTE%203%20%E2%80%94%20VARIABLE%20INTEREST%20ENTITY) This note details the consolidation of Aikawa Medical Management, Inc. as the Company's Variable Interest Entity - The Company consolidates Aikawa Medical Management, Inc. (AMM) as its Variable Interest Entity (VIE), having determined it is the primary beneficiary under ASC Topic 810[139](index=139&type=chunk) AMM Financials | AMM Financials | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Total Assets | $4,941,308 | $5,017,620 | | Total Liabilities | $11,072,653 | $11,079,074 | AMM Financials | AMM Financials | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $41,002 | $40,470 | $81,472 | $188,860 | | Net loss | $(75,430) | $(72,449) | $(57,759) | $(123,370) | AMM Cash Flows | AMM Cash Flows | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(75,467) | $(101,725) | | Net cash provided by investing activities | $25,000 | $50,000 | | Net cash used in financing activities | $(27,942) | $(49,424) | [NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=26&type=section&id=NOTE%204%20%E2%80%94%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) This note provides a breakdown of prepaid expenses and other current assets, highlighting changes over the period Prepaid Expenses and Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Advances to suppliers | $13,442,495 | $9,693,043 | | Other receivables | $359,738 | $1,558,223 | | Others | $249,513 | $25,536 | | **Total** | **$14,051,746** | **$11,276,802** | - Prepaid expenses and other current assets increased by **$2,774,944**, or **24.61%**, from December 31, 2024, to June 30, 2025, primarily due to a significant increase in advances to suppliers[143](index=143&type=chunk) [NOTE 5 — FINANCE LEASE RECEIVABLES](index=26&type=section&id=NOTE%205%20%E2%80%94%20FINANCE%20LEASE%20RECEIVABLES) This note details the Company's finance lease receivables, including future payments and unearned interest Finance Lease Receivables | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Future minimum lease payments receivable | $22,385,136 | $14,427,511 | | Less: unearned interest income | $(58,226) | $(37,344) | | **Finance lease receivables** | **$22,326,910** | **$14,390,167** | | Current portion | $9,128,931 | $5,992,585 | | Non-current portion | $13,197,979 | $8,397,582 | - Total finance lease receivables increased by **$7,936,743**, or **55.15%**, from December 31, 2024, to June 30, 2025, indicating growth in leasing medical equipment to customers[144](index=144&type=chunk) [NOTE 6 — PROPERTY AND EQUIPMENT, NET](index=27&type=section&id=NOTE%206%20%E2%80%94%20PROPERTY%20AND%20EQUIPMENT,%20NET) This note presents the net value of property and equipment, including depreciation and impairment Property and Equipment, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Subtotal (Gross) | $21,005,646 | $20,015,462 | | Less: accumulated depreciation | $(10,235,056) | $(8,749,391) | | Less: accumulated impairment | $(2,712,574) | $(2,494,169) | | **Property and equipment, net** | **$8,058,016** | **$8,771,902** | - Net property and equipment decreased by **$713,886**, or **8.14%**, from December 31, 2024, to June 30, 2025, primarily due to increased accumulated depreciation and impairment, despite an increase in gross assets[146](index=146&type=chunk) - Depreciation expense for the six months ended June 30, 2025, was **$1,169,040**, a decrease from **$1,315,539** in the same period of 2024[146](index=146&type=chunk) [NOTE 7 — CRYPTOCURRENCIES](index=27&type=section&id=NOTE%207%20%E2%80%94%20CRYPTOCURRENCIES) This note outlines the Company's cryptocurrency holdings, cost basis, fair value, and unrealized gains Cryptocurrencies | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :------------------ | | Bitcoin (Units) | 5 | 0 | | Bitcoin (Cost Basis) | $424,250 | $0 | | Bitcoin (Fair Value) | $535,882 | $0 | | Unrealized gain on cryptocurrencies (6 months ended June 30, 2025) | $111,632 | N/A | - The Company began holding cryptocurrencies (Bitcoin) in 2025, with a fair value of **$535,882** as of June 30, 2025, resulting in an unrealized gain of **$111,632** for the six months ended June 30, 2025[148](index=148&type=chunk) [NOTE 8 — INTANGIBLE ASSETS, NET](index=27&type=section&id=NOTE%208%20%E2%80%94%20INTANGIBLE%20ASSETS,%20NET) This note details the net value of intangible assets, including amortization and impairment Intangible Assets, Net | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Subtotal (Gross) | $19,676,078 | $18,172,847 | | Less: accumulated amortization | $(2,311,006) | $(2,072,849) | | Less: accumulated impairment | $(15,780,529) | $(14,509,946) | | **Intangible assets, net** | **$1,584,543** | **$1,590,052** | - Net intangible assets slightly decreased by **$5,509**, or **0.35%**, from December 31, 2024, to June 30, 2025, primarily due to increased accumulated amortization and impairment[149](index=149&type=chunk) - Amortization expense for the six months ended June 30, 2025, was **$54,445**, a significant decrease from **$533,883** in the same period of 2024[149](index=149&type=chunk) [NOTE 9 — LONG-TERM INVESTMENTS, NET](index=29&type=section&id=NOTE%209%20%E2%80%94%20LONG-TERM%20INVESTMENTS,%20NET) This note provides information on the Company's long-term investments in private and public entities Long-Term Investments, Net | Category | June 30, 2025 | December 31, 2024 | | :---------------------------------------------------------------- | :-------------- | :------------------ | | Investments in private entities without observable price changes | $1,870,365 | $1,719,770 | | Investment in a public entity with readily determinable fair value – related party | $2,344,824 | $2,478,531 | | Investment in a public entity with readily determinable fair value | $626,782 | $0 | | Less: accumulated impairment | $(1,248,884) | $(1,148,329) | | **Long-term investments, net** | **$3,593,087** | **$3,049,972** | - Net long-term investments increased by **$543,115**, or **17.81%**, from December 31, 2024, to June 30, 2025, primarily due to new investments in private and public entities, partially offset by impairment[153](index=153&type=chunk) - The Company recognized unrealized losses on long-term investments in public entities of **$340,568** for the six months ended June 30, 2025, compared to **$1,045,557** in the same period of 2024[153](index=153&type=chunk)[154](index=154&type=chunk) [NOTE 10 — OTHER ASSETS](index=29&type=section&id=NOTE%2010%20%E2%80%94%20OTHER%20ASSETS) This note details other assets, including security deposits, life insurance, and long-term loans Other Assets | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Security deposits | $3,256,499 | $2,921,855 | | Corporate-owned life insurance policies | $3,447,790 | $11,563,720 | | Long-term loans receivable, primarily student loans | $585,232 | $578,995 | | Others | $171,703 | $488,883 | | **Total** | **$7,461,224** | **$15,553,453** | - Other assets decreased significantly by **$8,092,229**, or **52.03%**, from December 31, 2024, to June 30, 2025, mainly due to a substantial decrease in corporate-owned life insurance policies[155](index=155&type=chunk) [NOTE 11 — ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES](index=29&type=section&id=NOTE%2011%20%E2%80%94%20ACCRUED%20LIABILITIES%20AND%20OTHER%20CURRENT%20LIABILITIES) This note provides a breakdown of accrued liabilities and other current liabilities, including tax and wages Accrued Liabilities and Other Current Liabilities | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Individual income tax withheld on behalf of employees | $704,988 | $859,446 | | Wages and bonus payables | $4,012,004 | $3,173,679 | | Consumption tax payable | $1,372,530 | $3,827,080 | | **Total** | **$6,229,797** | **$8,103,194** | - Accrued liabilities and other current liabilities decreased by **$1,873,397**, or **23.12%**, from December 31, 2024, to June 30, 2025, primarily due to a decrease in consumption tax payable and individual income tax withheld[156](index=156&type=chunk) [NOTE 12 — LONG-TERM LOANS](index=30&type=section&id=NOTE%2012%20%E2%80%94%20LONG-TERM%20LOANS) This note details the Company's long-term loans, including amounts, portions, and interest rates Long-Term Loans | Category | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :------------------ | | Total long-term loans | $7,100,926 | $6,599,506 | | Current portion | $(69,420) | $(96,824) | | **Non-current portion** | **$7,031,506** | **$6,502,682** | - Total long-term loans increased by **$501,420**, or **7.60%**, from December 31, 2024, to June 30, 2025, with a weighted average interest rate of **1.20%** and a weighted average maturity of **2.42 years** as of June 30, 2025[158](index=158&type=chunk) - Interest expense for the six months ended June 30, 2025, was **$50,635**, a significant increase from **$10,432** in the same period of 2024[159](index=159&type=chunk) [NOTE 13 — LEASES — AS A LESSEE](index=31&type=section&id=NOTE%2013%20%E2%80%94%20LEASES%20%E2%80%94%20AS%20A%20LESSEE) This note outlines the Company's lease obligations as a lessee, including finance and operating costs Lease Costs | Lease Costs | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Total finance lease costs | $46,143 | $0 | | Operating lease costs | $2,197,506 | $1,927,643 | | Short-term lease costs | $155,328 | $180,053 | | **Total lease costs** | **$2,398,977** | **$2,107,696** | Lease Liabilities | Lease Liabilities | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Operating lease liabilities, non-current | $1,208,516 | $1,241,526 | | Finance lease liabilities, non-current | $164,721 | $0 | - Total lease costs increased by **$291,281**, or **13.82%**, for the six months ended June 30, 2025, compared to the same period in 2024, driven by the introduction of finance lease costs[165](index=165&type=chunk) - The weighted average remaining lease term for operating leases was **1.75 years** (2.03 years in 2024) and for finance leases was **2.60 years** (N/A in 2024) as of June 30, 2025[165](index=165&type=chunk) [NOTE 14 — INCOME TAXES](index=32&type=section&id=NOTE%2014%20%E2%80%94%20INCOME%20TAXES) This note details the Company's income tax expense, effective tax rates, and jurisdictions - The Company is subject to income taxes in the United States (federal **21%**, California **6.98%**), Japan (effective statutory rate ~**34.69%**), Vietnam (**20%**), and Singapore (**17%**)[168](index=168&type=chunk)[170](index=170&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) Income Tax Expense | Income Tax Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Current | $10,663,753 | $11,491,256 | $13,606,983 | $20,303,822 | | Deferred | $436,756 | $(2,962,146) | $7,452,983 | $(3,322,728) | | **Total** | **$11,100,509** | **$8,529,110** | **$21,059,966** | **$16,981,094** | Effective Tax Rate | Effective Tax Rate | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :----------------------------- | :----------------------------- | | Effective tax rate | 46.81% | 31.28% | - Total income tax expense increased by **$4,078,872**, or **24.02%**, for the six months ended June 30, 2025, compared to the same period in 2024, mainly due to increased deferred tax expenses and JPY appreciation[175](index=175&type=chunk) - The effective tax rate increased to **46.81%** for the six months ended June 30, 2025, from **31.28%** in 2024, primarily due to a taxable gain from a deemed contribution related to the disposal of an aircraft under Japanese tax law[175](index=175&type=chunk)[256](index=256&type=chunk) [NOTE 15 — SHAREHOLDERS' EQUITY](index=33&type=section&id=NOTE%2015%20%E2%80%94%20SHAREHOLDERS'%20EQUITY) This note provides details on the Company's common stock, share repurchases, and warrants - As of June 30, 2025, the Company had **103,881,251 shares** issued and **103,098,442 shares** outstanding[179](index=179&type=chunk) - In February 2025, the Company issued **860,435 common shares** as incentive shares to Mehana Capital LLC[177](index=177&type=chunk) - In May 2025, the board approved a share repurchase plan of up to **$5.0 million**; by June 30, 2025, the Company repurchased **512,809 shares** for approximately **$2.4 million**, with **$2.6 million** remaining[178](index=178&type=chunk) Warrants Activity | Warrants Activity | As of January 1, 2025 | As of June 30, 2025 | | :------------------------ | :-------------------- | :-------------------- | | Number of Warrants | 12,134,375 | 12,134,375 | | Weighted Average Exercise Price | $11.50 | $11.50 | | Weighted Average Remaining Term (Years) | 4.80 | 4.30 | | Vested and exercisable | 12,134,375 | 12,134,375 | [NOTE 16 — DISAGGREGATION OF REVENUES](index=34&type=section&id=NOTE%2016%20%E2%80%94%20DISAGGREGATION%20OF%20REVENUES) This note breaks down the Company's total revenues by service streams and highlights changes Revenue Stream | Revenue Stream | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Franchising revenue | $10,007,581 | $14,626,256 | $25,726,863 | $29,736,524 | | Procurement revenue | $15,756,519 | $13,536,608 | $30,089,302 | $26,732,592 | | Management services revenue | $5,138,578 | $16,705,597 | $13,866,681 | $32,360,267 | | Rental services revenue | $6,851,176 | $3,453,173 | $12,491,690 | $7,071,114 | | Others | $5,604,993 | $4,780,446 | $8,513,012 | $12,009,625 | | **Total** | **$43,358,847** | **$53,102,080** | **$90,687,548** | **$107,910,122** | - Total revenues decreased by **18.35%** for the three months and **15.96%** for the six months ended June 30, 2025, compared to the prior year, primarily due to significant declines in franchising and management services revenue[182](index=182&type=chunk) - Procurement revenue and rental services revenue showed growth, with rental services nearly doubling for the three-month period[182](index=182&type=chunk) [NOTE 17 — RELATED PARTY TRANSACTIONS](index=35&type=section&id=NOTE%2017%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) This note discloses material transactions and balances with related parties, including Medical Corporations - The Company has material transactions with various related parties, including Medical Corporations (MCs) where the CEO's relatives are members, and entities controlled by the CEO[186](index=186&type=chunk) Related Party Revenue | Related Party Revenue | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Medical Corporation Shobikai | $22,515,192 | $26,205,206 | | Medical Corporation Kowakai | $20,022,253 | $25,998,681 | | Medical Corporation Nasukai | $22,535,537 | $24,113,981 | | **Total Revenues, net – related parties** | **$84,202,043** | **$101,509,245** | Related Party Balances | Related Party Balances | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :------------------ | | Accounts receivable – related parties | $48,920,843 | $28,846,680 | | Finance lease receivables – related parties | $22,326,910 | $14,390,167 | | Long-term investments in MCs – related parties | $19,381,422 | $17,820,910 | | Accounts payable – related parties | $3,245,989 | $659,044 | | Advances from customers – related parties | $10,333,007 | $11,739,533 | | Due to related party (Yoshiyuki Aikawa) | $2,810,647 | $2,823,590 | - Revenues from related parties decreased by **$17,307,202**, or **17.05%**, for the six months ended June 30, 2025, compared to the same period in 2024[188](index=188&type=chunk) - In June 2025, the Company recorded a deemed contribution of approximately **$9.68 million** in connection with a price modification on the disposal of an aircraft to General Incorporated Association SBC, a CEO-controlled entity[195](index=195&type=chunk) [NOTE 18 — SEGMENT REPORTING](index=40&type=section&id=NOTE%2018%20%E2%80%94%20SEGMENT%20REPORTING) This note clarifies the Company operates as a single reporting segment for operational decisions - Management determined the Company operates as a single reporting segment, with the CEO reviewing consolidated results for operational decisions, performance assessment, and resource allocation[197](index=197&type=chunk)[198](index=198&type=chunk) - Substantially all revenues are derived from providing comprehensive management services to Medical Corporations (MCs) and their clinics[197](index=197&type=chunk) [NOTE 19 — COMMITMENT](index=40&type=section&id=NOTE%2019%20%E2%80%94%20COMMITMENT) This note discloses a subsidiary's guarantee of the CEO's debt, with no liability recorded - As of June 30, 2025, a subsidiary guaranteed the CEO's debt for **$266,573**, but no liability was recorded as payment under the guarantee was not probable[200](index=200&type=chunk) [NOTE 20 — SUBSEQUENT EVENTS](index=40&type=section&id=NOTE%2020%20%E2%80%94%20SUBSEQUENT%20EVENTS) This note reports significant events after the reporting period, including legislation, acquisitions, and shares - On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA), which includes tax provisions effective from 2025 to 2027; the Company is currently assessing its impact[201](index=201&type=chunk) - On July 17, 2025, the Company acquired MB Career Lounge Co., Ltd., a Japanese medical institution management support service provider, for approximately **$13.7 million** in cash[202](index=202&type=chunk) - On July 22, 2025, the Company completed its 2025 Share Repurchase Program, repurchasing an aggregate of **1,034,308 shares** for approximately **$5 million**[203](index=203&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=42&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of SBC Medical Group Holdings Incorporated's financial condition, results of operations, liquidity, and cash flows for the three and six months ended June 30, 2025 and 2024. It highlights key financial performance metrics, revenue stream changes, operating expense variances, and the impact of foreign exchange rates [Overview](index=42&type=section&id=Overview) This section provides an overview of the Company's business combination, operations, and services - SBC Medical Group Holdings Incorporated (formerly Pono Capital Two, Inc.) completed a business combination with Legacy SBC on September 17, 2024, and its common stock began trading on Nasdaq under 'SBC'[207](index=207&type=chunk) - The Company provides comprehensive management services to **252 franchisee cosmetic treatment centers** and **five independently operated clinics** in Japan, through its subsidiary SBC Medical Group Co., Ltd. (SBC Japan)[208](index=208&type=chunk)[209](index=209&type=chunk) - Services include advertising, staff management, booking, facility rentals, construction, procurement of medical equipment and consumables, provision of cosmetic products, licensing of medical technologies, IT solutions, customer rewards programs, and payment tools[208](index=208&type=chunk) [Financial Overview](index=43&type=section&id=Financial%20Overview) This section summarizes key financial metrics and outlines the Company's mission Financial Overview | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $43,358,847 | $53,102,080 | $90,687,548 | $107,910,122 | | Net income attributable to SBC Medical Group Holdings Incorporated | $2,458,240 | $18,484,408 | $23,960,686 | $37,242,160 | | Cash flows provided by (used in) operating activities | N/A | N/A | $(6,411,168) | $22,874,760 | | Retained earnings (as of June 30, 2025) | N/A | N/A | $213,423,693 | N/A | - The Company's mission is to provide quality comprehensive management services to Medical Corporations and expand its 'Shonan Beauty Clinic' brand globally, strengthening its market position in Japan, Vietnam, and Singapore[215](index=215&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) This section analyzes the Company's financial performance, comparing revenues, costs, and expenses [Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024](index=43&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the Company's financial results for the three months ended June 30, 2025, and 2024 Comparison of Results of Operations (Three Months) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Variance Amount | Variance % | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Revenues, net | $43,358,847 | $53,102,080 | $(9,743,233) | (18.35)% | | Cost of revenues | $13,348,270 | $13,682,405 | $(334,135) | (2.44)% | | Gross profit | $30,010,577 | $39,419,675 | $(9,409,098) | (23.87)% | | Operating expenses | $15,456,385 | $12,129,115 | $3,327,270 | 27.43% | | Income from operations | $14,554,192 | $27,290,560 | $(12,736,368) | (46.67)% | | Net income attributable to SBC Medical Group Holdings Incorporated | $2,458,240 | $18,484,408 | $(16,026,168) | (86.70)% | - Net income decreased by **86.70%** due to lower franchising and management services revenue, increased operating expenses (especially office, utility, and consulting fees), and higher income tax expense[218](index=218&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[234](index=234&type=chunk)[236](index=236&type=chunk) - JPY appreciation had a favorable impact of **$1,058,367** on net revenues and **$59,556** on net income for the three months ended June 30, 2025[221](index=221&type=chunk) [Revenues, Net](index=43&type=section&id=Revenues,%20Net%20(Three%20Months)) This section analyzes the changes in net revenues across various service streams for the three-month period Revenues, Net (Three Months) | Revenue Stream | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Variance Amount | Variance % | | :------------------------ | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Franchising revenue | $10,007,581 | $14,626,256 | $(4,618,675) | (31.58)% | | Procurement revenue | $15,756,519 | $13,536,608 | $2,219,911 | 16.40% | | Management services revenue | $5,138,578 | $16,705,597 | $(11,567,019) | (69.24)% | | Rental services revenue | $6,851,176 | $3,453,173 | $3,398,003 | 98.40% | | Others | $5,604,993 | $4,780,446 | $824,547 | 17.25% | | **Total** | **$43,358,847** | **$53,102,080** | **$(9,743,233)** | **(18.35)%** | - Franchising revenue decreased by **31.58%** due to a revised fee structure for MC clinics, partially offset by JPY appreciation[222](index=222&type=chunk) - Management services revenue decreased by **69.24%** due to the discontinuation of clinic operation staff supporting services and a decrease in customer rewards program revenue, along with fee structure revisions[224](index=224&type=chunk) - Rental services revenue increased by **98.40%** due to demand for medical equipment from new and existing clinics[225](index=225&type=chunk) [Cost of Revenues](index=44&type=section&id=Cost%20of%20Revenues%20(Three%20Months)) This section discusses the factors influencing the cost of revenues for the three months ended June 30, 2025 - Cost of revenues decreased by **2.44%** to **$13,348,270** for the three months ended June 30, 2025, from **$13,682,405** in 2024; this was mainly due to cost reduction efforts and the discontinuation of clinic operation supporting services, partially offset by higher purchase costs for laser hair removal equipment[218](index=218&type=chunk)[227](index=227&type=chunk) [Gross Profit](index=44&type=section&id=Gross%20Profit%20(Three%20Months)) This section analyzes the changes in gross profit, primarily driven by shifts in high-margin revenue streams - Gross profit decreased by **23.87%** to **$30,010,577** for the three months ended June 30, 2025, from **$39,419,675** in 2024, primarily due to the decline in high-margin franchising and management services revenue[218](index=218&type=chunk)[228](index=228&type=chunk) [Operating Expenses](index=45&type=section&id=Operating%20Expenses%20(Three%20Months)) This section details changes in operating expenses, including salaries, consulting, advertising, and office Operating Expenses (Three Months) | Expense Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Variance Amount | Variance % | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Salaries and welfare | $6,765,517 | $7,872,447 | $(1,106,930) | (14.06)% | | Consulting and professional service fees | $3,878,036 | $2,578,115 | $1,299,921 | 50.42% | | Advertising expense | $973,933 | $223,094 | $750,839 | 336.56% | | Office, utility and other expenses | $2,074,334 | $7,300 | $2,067,034 | 28,315.53% | | **Total** | **$15,456,385** | **$12,129,115** | **$3,327,270** | **27.43%** | - Total operating expenses increased by **27.43%**, driven by a significant rise in office, utility, and other expenses (**28,315.53%**) due to large-scale office supply replacement, and increased consulting and professional service fees (**50.42%**) related to listing expenses[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Salaries and welfare decreased by **14.06%** due to the disposal of a subsidiary and reduced compensation for the CEO[232](index=232&type=chunk) [Other Income (Expenses)](index=45&type=section&id=Other%20Income%20(Expenses)%20(Three%20Months)) This section reviews other income and expenses, including interest, foreign exchange, and cryptocurrency Other Income (Expenses) (Three Months) | Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Variance Amount | Variance % | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Interest income | $22,882 | $11,644 | $11,238 | 96.51% | | Interest expense | $(49,651) | $(7,424) | $(42,227) | 568.79% | | Other income | $33,771 | $306,291 | $(272,520) | (88.97)% | | Other expenses | $(1,132,465) | $(514,636) | $(617,829) | 120.05% | | Change in fair value of cryptocurrencies | $111,632 | $0 | $111,632 | 100.00% | | **Total** | **$(1,013,831)** | **$(204,125)** | **$(809,706)** | **396.67%** | - Total other expenses increased by **396.67%**, primarily due to increased foreign exchange losses from intercompany loan balances and the recognition of a **$111,632** gain from the change in fair value of cryptocurrencies (new in 2025)[233](index=233&type=chunk) [Income Tax Expense](index=46&type=section&id=Income%20Tax%20Expense%20(Three%20Months)) This section analyzes income tax expense and effective tax rate, highlighting deferred taxes and JPY - Income tax expense increased by **30.15%** to **$11,100,509** for the three months ended June 30, 2025, from **$8,529,110** in 2024, mainly due to increased deferred tax expenses and JPY appreciation[234](index=234&type=chunk) - The effective tax rate rose to **81.98%** from **31.49%**, largely due to a taxable gain from a deemed contribution related to the disposal of an aircraft[235](index=235&type=chunk) [Net Income](index=46&type=section&id=Net%20Income%20(Three%20Months)) This section reports the net income for the three months ended June 30, 2025, and its year-over-year change - Net income decreased by **86.85%** to **$2,439,852** for the three months ended June 30, 2025, from **$18,557,325** in 2024[236](index=236&type=chunk) [Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024](index=46&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) This section compares the Company's financial results for the six months ended June 30, 2025, and 2024 Comparison of Results of Operations (Six Months) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variance Amount | Variance % | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Revenues, net | $90,687,548 | $107,910,122 | $(17,222,574) | (15.96)% | | Cost of revenues | $22,943,887 | $28,971,072 | $(6,027,185) | (20.80)% | | Gross profit | $67,743,661 | $78,939,050 | $(11,195,389) | (14.18)% | | Operating expenses | $28,987,395 | $27,187,605 | $1,799,790 | 6.62% | | Income from operations | $38,756,266 | $51,751,445 | $(12,995,179) | (25.11)% | | Net income attributable to SBC Medical Group Holdings Incorporated | $23,960,686 | $37,242,160 | $(13,281,474) | (35.66)% | - Net income decreased by **35.66%** for the six months ended June 30, 2025, primarily due to reduced franchising and management services revenue, increased operating expenses, and higher income tax expense, despite a significant gain on redemption of life insurance policies[239](index=239&type=chunk)[248](index=248&type=chunk)[250](index=250&type=chunk)[255](index=255&type=chunk)[257](index=257&type=chunk) - JPY appreciation had a favorable impact of **$2,213,636** on net revenues and **$526,004** on net income for the six months ended June 30, 2025[241](index=241&type=chunk) [Revenues, Net](index=46&type=section&id=Revenues,%20Net%20(Six%20Months)) This section analyzes the changes in net revenues across various service streams for the six-month period Revenues, Net (Six Months) | Revenue Stream | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variance Amount | Variance % | | :------------------------ | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Franchising revenue | $25,726,863 | $29,736,524 | $(4,009,661) | (13.48)% | | Procurement revenue | $30,089,302 | $26,732,592 | $3,356,710 | 12.56% | | Management services revenue | $13,866,681 | $32,360,267 | $(18,493,586) | (57.15)% | | Rental services revenue | $12,491,690 | $7,071,114 | $5,420,576 | 76.66% | | Others | $8,513,012 | $12,009,625 | $(3,496,613) | (29.12)% | | **Total** | **$90,687,548** | **$107,910,122** | **$(17,222,574)** | **(15.96)%** | - Franchising revenue decreased by **13.48%** due to the revised fee structure, partially offset by JPY appreciation[242](index=242&type=chunk) - Management services revenue decreased by **57.15%** due to the discontinuation of clinic operation staff supporting services and reduced customer rewards program revenue, along with fee structure revisions[244](index=244&type=chunk) - Rental services revenue increased by **76.66%** due to increased demand for medical equipment from new and existing clinics[245](index=245&type=chunk) [Cost of Revenues](index=47&type=section&id=Cost%20of%20Revenues%20(Six%20Months)) This section discusses the factors influencing the cost of revenues for the six months ended June 30, 2025 - Cost of revenues decreased by **20.80%** to **$22,943,887** for the six months ended June 30, 2025, from **$28,971,072** in 2024, driven by cost reduction efforts and the discontinuation of clinic operation supporting services, partially offset by higher purchase costs for laser hair removal equipment[239](index=239&type=chunk)[247](index=247&type=chunk) [Gross Profit](index=47&type=section&id=Gross%20Profit%20(Six%20Months)) This section analyzes the changes in gross profit, primarily driven by shifts in high-margin revenue streams - Gross profit decreased by **14.18%** to **$67,743,661** for the six months ended June 30, 2025, from **$78,939,050** in 2024, mainly due to the decline in high-margin franchising and management services revenue[239](index=239&type=chunk)[248](index=248&type=chunk) [Operating Expenses](index=48&type=section&id=Operating%20Expenses%20(Six%20Months)) This section details changes in operating expenses, including salaries, consulting, advertising, and office Operating Expenses (Six Months) | Expense Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variance Amount | Variance % | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Salaries and welfare | $13,207,259 | $14,386,288 | $(1,179,029) | (8.20)% | | Consulting and professional service fees | $7,176,118 | $5,208,876 | $1,967,242 | 37.77% | | Advertising expense | $1,656,099 | $934,724 | $721,375 | 77.18% | | Office, utility and other expenses | $3,591,521 | $2,698,973 | $892,548 | 33.07% | | **Total** | **$28,987,395** | **$27,187,605** | **$1,799,790** | **6.62%** | - Total operating expenses increased by **6.62%**, driven by higher consulting and professional service fees (**37.77%**) related to listing expenses and increased office, utility, and other expenses (**33.07%**) due to office supply replacement[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk) - Salaries and welfare decreased by **8.20%** due to the disposal of a subsidiary and reduced CEO compensation[253](index=253&type=chunk) [Other Income (Expenses)](index=48&type=section&id=Other%20Income%20(Expenses)%20(Six%20Months)) This section reviews other income and expenses, including interest, foreign exchange, and life insurance Other Income (Expenses) (Six Months) | Category | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variance Amount | Variance % | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Interest income | $78,215 | $29,333 | $48,882 | 166.65% | | Interest expense | $(55,858) | $(10,432) | $(45,426) | 435.45% | | Other income | $185,099 | $655,972 | $(470,873) | (71.78)% | | Other expenses | $(2,829,724) | $(1,951,292) | $(878,432) | 45.02% | | Gain on redemption of life insurance policies | $8,746,138 | $0 | $8,746,138 | 100.00% | | Change in fair value of cryptocurrencies | $111,632 | $0 | $111,632 | 100.00% | | Gain on disposal of subsidiary | $0 | $3,813,609 | $(3,813,609) | (100.00)% | | **Total** | **$6,235,502** | **$2,537,190** | **$3,698,312** | **145.76%** | - Total other income (expenses), net, increased by **145.76%**, primarily due to an **$8.7 million** gain on redemption of life insurance policies in 2025, offset by the absence of a **$3.8 million** gain on subsidiary disposal recognized in 2024[254](index=254&type=chunk) - Increased foreign exchange losses from intercompany loan balances and a **$111,632** gain from cryptocurrency fair value changes also contributed[254](index=254&type=chunk) [Income Tax Expense](index=49&type=section&id=Income%20Tax%20Expense%20(Six%20Months)) This section analyzes income tax expense and effective tax rate, highlighting deferred taxes and JPY - Income tax expense increased by **24.02%** to **$21,059,966** for the six months ended June 30, 2025, from **$16,981,094** in 2024, mainly due to increased deferred tax expenses and JPY appreciation[255](index=255&type=chunk) - The effective tax rate rose to **46.81%** from **31.28%**, largely due to a taxable gain from a deemed contribution related to the disposal of an aircraft[256](index=256&type=chunk) [Net Income](index=49&type=section&id=Net%20Income%20(Six%20Months)) This section reports the net income for the six months ended June 30, 2025, and its year-over-year change - Net income decreased by **35.85%** to **$23,931,802** for the six months ended June 30, 2025, from **$37,307,541** in 2024[257](index=257&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the Company's ability to meet obligations, including cash and capital deployment Liquidity and Capital Resources | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $152,740,882 | $125,044,092 | | Accounts receivable | $51,271,211 | $30,260,113 | | Working capital balance | $180,660,427 | N/A | - Cash and cash equivalents increased by **$27,696,790** to **$152,740,882** as of June 30, 2025, from **$125,044,092** at December 31, 2024[259](index=259&type=chunk) - The Company believes its current cash, cash equivalents, and operational cash flows, along with potential borrowings, will be sufficient to meet working capital needs for the next 12 months[260](index=260&type=chunk)[261](index=261&type=chunk) - The Company plans to deploy capital for investment opportunities aligned with its growth strategy in the global medical aesthetics market[262](index=262&type=chunk) [Cash Flows for the six months ended June 30, 2025 and 2024](index=50&type=section&id=Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030,%202025%20and%202024) This section analyzes cash flows from operating, investing, and financing activities Cash Flows (Six Months) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Variance Amount | Variance % | | :--------------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Net cash provided by (used in) operating activities | $(6,411,168) | $22,874,760 | $(29,285,928) | (128.03)% | | Net cash provided by (used in) investing activities | $15,397,998 | $(9,405,716) | $24,803,714 | (263.71)% | | Net cash provided by (used in) financing activities | $6,901,719 | $(109,341) | $7,011,060 | (6,412.11)% | | Net change in cash and cash equivalents | $27,696,790 | $679,838 | $27,016,952 | 3,974.03% | - Operating activities shifted from a net cash inflow of **$22.9 million** in H1 2024 to a net cash outflow of **$6.4 million** in H1 2025, primarily due to increases in accounts receivable and finance lease receivables from related parties[266](index=266&type=chunk)[267](index=267&type=chunk) - Investing activities generated **$15.4 million** in H1 2025, a significant improvement from a **$9.4 million** outflow in H1 2024, mainly driven by **$17.7 million** in proceeds from life insurance policy redemptions[268](index=268&type=chunk)[269](index=269&type=chunk) - Financing activities provided **$6.9 million** in H1 2025, largely due to a **$9.7 million** deemed contribution from property disposal, offsetting common stock repurchases[270](index=270&type=chunk) [Recent Developments](index=50&type=section&id=Recent%20Developments) This section highlights key events after the reporting period, including legislation and repurchases - The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, with various tax provisions effective from 2025 to 2027, the impact of which is being assessed[271](index=271&type=chunk) - The Company completed its **$5 million** share repurchase program on July 22, 2025, repurchasing a total of **1,034,308 shares**[272](index=272&type=chunk)[203](index=203&type=chunk) [Contractual Obligations](index=50&type=section&id=Contractual%20Obligations) This section outlines the Company's future payment commitments under leases and long-term loans Contractual Obligations - Lease Payments | Years ending December 31, | Finance Lease | Operating Lease | | :------------------------ | :------------ | :-------------- | | Remaining of 2025 | $83,804 | $2,424,090 | | 2026 | $134,201 | $1,644,921 | | 2027 | $77,234 | $471,460 | | 2028 | $43,778 | $141,390 | | 2029 | $7,095 | $132,086 | | Thereafter | $0 | $59,765 | | **Total undiscounted lease payments** | **$346,112** | **$4,873,712** | Contractual Obligations - Principal Repayment | Years ending December 31, | Principal Repayment | | :------------------------ | :------------------ | | Remaining of 2025 | $31,818 | | 2026 | $69,420 | | 2027 | $6,999,688 | | 2028 and thereafter | $0 | | **Total** | **$7,100,926** | - The Company has significant operating and finance lease liabilities for offices, sublease purposes, and medical equipment[273](index=273&type=chunk) - Future minimum bank and other borrowing payments total **$7,100,926**, with a substantial portion (**$6,999,688**) due in 2027[277](index=277&type=chunk) [Off-Balance Sheet Arrangements (Off-Balance Sheet Transactions)](index=52&type=section&id=Off-Balance%20Sheet%20Arrangements%20(Off-Balance%20Sheet%20Transactions)) This section confirms the absence of any off-balance sheet arrangements as of the reporting dates - There were no off-balance sheet arrangements as of June 30, 2025, and December 31, 2024[278](index=278&type=chunk) [Foreign Exchange Rate Risk](index=52&type=section&id=Foreign%20Exchange%20Rate%20Risk) This section discusses the Company's exposure to foreign currency exchange rate fluctuations - The Company is exposed to foreign currency exchange rate fluctuations, particularly between the Japanese yen (JPY) and the U.S. dollar (USD), as most revenues and costs are JPY-denominated while reporting is in USD; a weakening JPY negatively impacts financial results[279](index=279&type=chunk) [Critical Accounting Policies and Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section addresses significant accounting policies and estimates requiring management judgment - The Company's consolidated financial statements are prepared in conformity with U.S. GAAP, requiring management judgments, estimates, and assumptions; no material changes to critical accounting policies and estimates were reported from those disclosed in the Annual Report on Form 10-K for 2024[280](index=280&type=chunk)[281](index=281&type=chunk) [Emerging Growth Company](index=52&type=section&id=Emerging%20Growth%20Company) This section explains the Company's 'emerging growth company' status and reporting exemptions - The Company is an 'emerging growth company' under the JOBS Act, allowing it to take advantage of certain exemptions from reporting requirements, such as auditor attestation and reduced executive compensation disclosures[282](index=282&type=chunk) - The Company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, meaning it will adopt new standards at the same time as private companies[283](index=283&type=chunk) [Smaller Reporting Company](index=52&type=section&id=Smaller%20Reporting%20Company) This section details the Company's 'smaller reporting company' status and disclosure obligations - The Company is also a 'smaller reporting company,' which allows for reduced disclosure obligations, including providing only two years of audited financial statements[284](index=284&type=chunk) - It will remain a smaller reporting company until its market value of non-affiliate common stock exceeds **$250 million**, or its annual revenue exceeds **$100 million** and market value exceeds **$700 million**[284](index=284&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, SBC Medical Group Holdings Incorporated is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[285](index=285&type=chunk) [ITEM 4. Controls and Procedures](index=53&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, identifying material weaknesses that rendered them ineffective as of June 30, 2025. Despite these weaknesses, management believes the financial statements fairly present the Company's financial condition and results of operations - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to identified material weaknesses[286](index=286&type=chunk) - Despite the material weaknesses, management believes the unaudited consolidated financial statements fairly present the Company's financial condition and results of operations[287](index=287&type=chunk) - The material weaknesses previously identified in the Annual Report remained unremediated as of June 30, 2025, and the Company is committed to ongoing improvements[288](index=288&type=chunk)[291](index=291&type=chunk) [PART II - OTHER INFORMATION](index=54&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part includes legal proceedings, risk factors, equity sales, and other disclosures [ITEM 1. Legal Proceedings](index=54&type=section&id=ITEM%201.%20Legal%20Proceedings) SBC Medical Group Holdings Incorporated is not currently a party to any material litigation or legal proceedings that would have a material adverse effect on its business, financial condition, or results of operations - The Company is not currently involved in any material litigation or legal proceedings[293](index=293&type=chunk) - There are no known legal proceedings, investigations, or claims with a more than remote possibility of materially adversely affecting the business[293](index=293&type=chunk) [ITEM 1A. Risk Factors](index=54&type=section&id=ITEM%201A.%20Risk%20Factors) Investing in the Company's securities involves a high degree of risk, as detailed in the Annual Report on Form 10-K. No material changes to these risk factors have occurred since the Annual Report filing - Investing in the Company's securities carries a high degree of risk, as described in the Annual Report[294](index=294&type=chunk) - No material changes to the risk factors have been identified since the filing of the Annual Report[294](index=294&type=chunk) - Additional unknown or currently immaterial risk factors could emerge and adversely affect the business[295](index=295&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's share repurchase activities during the three months ended June 30, 2025, under its publicly announced program Unregistered Sales of Equity Securities and Use of Proceeds | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | :-------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | | May 1, 2025 – May 31, 2025 | 78,156 | $4.38 | 78,156 | | June 1, 2025 – June 30, 2025 | 434,653 | $4.71 | 434,653 | | **Total** | **512,809** | N/A | **512,809** | - The Company initiated a **$5 million** share repurchase program on May 15, 2025, for common stock, which was completed on July 22, 2025, repurchasing a total of **1,034,308 shares** for approximately **$5 million**[296](index=296&type=chunk)[203](index=203&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=54&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[297](index=297&type=chunk) [ITEM 4. Mine Safety Disclosures](index=54&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable[298](index=298&type=chunk) [ITEM 5. Other Information](index=54&type=section&id=ITEM%205.%20Other%20Information) This section discloses a Rule 10b5-1 trading arrangement adopted by the CEO and Chairman, Yoshiyuki Aikawa - On June 22, 2025, CEO and Chairman Yoshiyuki Aikawa adopted a Rule 10b5-1 trading arrangement for the potential sale of up to **1,030,000 shares** of common stock[299](index=299&type=chunk) - The plan is effective from September 22, 2025, to September 22, 2026, or until all shares are sold[299](index=299&type=chunk) [ITEM 6. Exhibits](index=55&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report, including merger agreements, corporate governance documents, employment agreements, and certifications - The exhibits include various amendments to the Agreement and Plan of Merger, corporate organizational documents (Certificate of Incorporation, Bylaws), an executive employment agreement, and certifications (302 and 906)[304](index=304&type=chunk) [SIGNATURES](index=56&type=section&id=SIGNATURES) The report is duly signed on behalf of SBC Medical Group Holdings Incorporated by Yuya Yoshida, Chief Financial Officer, on August 13, 2025 - The Quarterly Report was signed by Yuya Yoshida, Chief Financial Officer, on August 13, 2025[308](index=308&type=chunk)

[Press Release Announcement](index=1&type=section&id=Press%20Release%20Announcement) [SBC Medical Group Holdings Announces Second Quarter 2025 Financial Results](index=1&type=section&id=SBC%20Medical%20Group%20Holdings%20Announces%20Second%20Quarter%202025%20Financial%20Results) SBC Medical Group Holdings Incorporated announced its financial results for the second quarter and first half of fiscal year 2025, covering the three and six months ended June 30, 2025 - SBC Medical Group Holdings (NASDAQ: SBC) announced Q2 and H1 FY2025 financial results on August 13, 2025[1](index=1&type=chunk) [Reporting Scope and Definitions](index=1&type=section&id=Reporting%20Scope%20and%20Definitions) [Definitions and Scope for Financial Reporting](index=1&type=section&id=Definitions%20and%20Scope%20for%20Financial%20Reporting) The report clarifies that financial figures and customer counts include various SBC brand clinics and franchisees, while noting that EBITDA and EBITDA Margin are non-GAAP financial measures requiring reconciliation - EBITDA and EBITDA Margin are non-GAAP financial measures, with reconciliations provided in a dedicated section[2](index=2&type=chunk) - Financial figures take into account the franchising of SBC brand clinics, Rize Clinic, Gorilla Clinic, AHH, and JUN CLINIC[2](index=2&type=chunk) - Customer counts include SBC, Rize, Gorilla, and AHH clinics, but exclude JUN CLINIC and free counseling, for periods from July 1, 2024, to June 30, 2025[2](index=2&type=chunk) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) SBC Medical Group experienced significant year-over-year financial declines in Q2 2025, with total revenues decreasing 18% and net income attributable to the company plummeting 87%, despite expanding its franchise network and increasing its customer base | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Total revenues | $43 million | $53.1 million | -18% | | Income from operations | $15 million | $27.3 million | -47% | | Net Income attributable to SBC Medical Group | $2.5 million | $18.5 million | -87% | | Earnings per share (EPS) | $0.02 | $0.20 | -90% | | EBITDA | $15 million | $28.1 million | -46% | | EBITDA margin | 35% | 53% | -18 ppts | | Return on equity | 4% | 48% | -44 ppts | - Number of Franchise Locations increased by **36** to **259** as of June 30, 2025[3](index=3&type=chunk) - Number of customers in the last twelve months ended June 30, 2025, increased **14%** year-over-year to **6.31 million**[3](index=3&type=chunk) [First Half 2025 Highlights](index=2&type=section&id=First%20Half%202025%20Highlights) For the first half of fiscal year 2025, total revenues decreased 16% year-over-year to $91 million, with net income down 36% and EBITDA down 25%, attributed to strategic shifts like business discontinuation and divestitures | Metric | H1 2025 | H1 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Total revenues | $91 million | $107.9 million | -16% | | Income from operations | $39 million | $51.8 million | -25% | | Net Income attributable to SBC Medical Group | $24 million | $37.2 million | -36% | | Earnings per share (EPS) | $0.23 | $0.40 | -42.5% | | EBITDA | $40 million | $53.6 million | -25% | | EBITDA margin | 44% | 50% | -6 ppts | - Revenue decline was primarily due to the completed discontinuation of the staffing business, targeted divestitures, and revision of the fee structure[4](index=4&type=chunk) - Key initiatives include the acquisition of MB career lounge to enhance management support services and the joining of JUN CLINIC to the network[4](index=4&type=chunk) [Detailed Second Quarter 2025 Financial Results](index=3&type=section&id=Detailed%20Second%20Quarter%202025%20Financial%20Results) [Second Quarter 2025 Financial Results Overview](index=3&type=section&id=Second%20Quarter%202025%20Financial%20Results) The detailed Q2 2025 financial results confirm significant year-over-year declines in revenue, net income, and EBITDA, primarily driven by strategic business changes and unfavorable foreign exchange impacts [Revenue Analysis](index=3&type=section&id=Revenue%20Analysis) Total revenues for Q2 2025 decreased by 18% year-over-year to $43 million, primarily due to a revised fee structure, discontinuation of staffing services, and divestiture of SNA and Kijimadaira, partially offset by growth in procurement and rental services - Total revenues were **$43 million**, representing an **18%** year-over-year decrease[6](index=6&type=chunk) - The decrease was primarily due to a revised fee structure for franchising services (implemented April 2025), discontinuation of staffing services business, and divestiture of SNA and Kijimadaira[6](index=6&type=chunk) - The revenue decline was partially offset by growth in procurement, rental services, and other revenue streams[6](index=6&type=chunk) [Net Income Analysis](index=3&type=section&id=Net%20Income%20Analysis) Net income attributable to SBC Medical Group for Q2 2025 significantly decreased to $2.5 million from $18.5 million in the same period of 2024, an 87% decline, largely due to unfavorable changes in other income and expenses, primarily higher foreign exchange losses | Metric | Q2 2025 | Q2 2024 | YoY Change | | :-------------------------------- | :------ | :------ | :--------- | | Net Income attributable to SBC Medical Group | $2.5 million | $18.5 million | -87% | - The decrease in net income was largely attributed to unfavorable changes in other income and expenses, primarily due to higher foreign exchange losses[7](index=7&type=chunk) [EBITDA Analysis](index=3&type=section&id=EBITDA%20Analysis) EBITDA for Q2 2025 decreased by 46% year-over-year to $15 million, primarily driven by lower revenue following the termination of the staffing services business, the deconsolidation of SNA and Kijimadaira, and a revision of the fee structure | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----- | :------ | :------ | :--------- | | EBITDA | $15 million | $28.1 million | -46% | - The decrease in EBITDA was primarily due to lower revenue following the termination of the staffing services business, the deconsolidation of SNA and Kijimadaira, and revision of the fee structure[8](index=8&type=chunk) [Conference Call Information](index=3&type=section&id=Conference%20Call) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) SBC Medical Group Holdings held a conference call on August 13, 2025, to discuss its financial results, with registration and access to presentation materials and an archived webcast available online - A conference call was held on Wednesday, August 13, 2025, at 8:30 am Eastern Time (9:30 pm Japan Time) to discuss financial results[9](index=9&type=chunk) - Attendees could register in advance via a provided link to access the viewing site, speaker information, and past investor relations materials[9](index=9&type=chunk) - Earnings presentation materials were available 10 minutes before the call, and a replay will be accessible until August 13, 2026, on the Company's Investor Relations website[10](index=10&type=chunk) [About the Company](index=4&type=section&id=About%20SBC%20Medical) [About SBC Medical Group Holdings](index=4&type=section&id=About%20SBC%20Medical%20Group%20Holdings) SBC Medical, headquartered in Irvine, California, and Tokyo, Japan, is a global owner, operator, and provider of management services and products to cosmetic treatment centers, primarily focusing on franchise clinics - SBC Medical owns and provides management services and products to cosmetic treatment centers, with headquarters in Irvine, California, and Tokyo, Japan[11](index=11&type=chunk) - The company primarily focuses on providing comprehensive management services to franchise clinics, including advertising, staff management, booking, facility rentals, procurement, product provision, technology licensing, IT solutions, customer rewards, and payment tools[11](index=11&type=chunk) [Non-GAAP Measures and Forward-Looking Statements](index=4&type=section&id=Non-GAAP%20Measures%20and%20Forward-Looking%20Statements) [Use of Non-GAAP Financial Measures](index=4&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) SBC Medical uses non-GAAP measures like EBITDA and EBITDA margin to evaluate operating results and for financial decision-making, acknowledging they are not U.S. GAAP defined and providing GAAP reconciliations to mitigate limitations - The Company uses non-GAAP measures, such as EBITDA and EBITDA margin, for evaluating operating results and financial and operational decision-making[12](index=12&type=chunk) - Non-GAAP financial measures are not defined under U.S. GAAP and should not be considered in isolation or as a substitute for GAAP measures[13](index=13&type=chunk) - Limitations of non-GAAP measures are mitigated by reconciling them to the most comparable U.S. GAAP performance measures[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward%20Looking%20Statements) This press release contains forward-looking statements regarding future events and performance, which are inherently uncertain and subject to various risks, uncertainties, and changes in circumstances, with no commitment to publicly update or revise them except as required by law - The press release contains forward-looking statements regarding future events, performance, financial performance, growth, business prospects, and capital deployment plans[14](index=14&type=chunk) - These statements are inherently uncertain, outside the Company's control, and subject to various risks, uncertainties, assumptions, or changes in circumstances[14](index=14&type=chunk) - The Company cautions readers not to place undue reliance on forward-looking statements and does not undertake any obligation to release publicly any updates or revisions, except as required by law[14](index=14&type=chunk) [Unaudited Consolidated Financial Statements](index=5&type=section&id=Unaudited%20Consolidated%20Financial%20Statements) [Unaudited Consolidated Balance Sheets](index=5&type=section&id=UNAUDITED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, SBC Medical Group Holdings reported a significant increase in total assets to $315.3 million from $266.1 million at December 31, 2024, primarily driven by higher cash and cash equivalents and accounts receivable, while total liabilities remained relatively stable and total stockholders' equity increased substantially to $244.7 million | Balance Sheet Item | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total assets | $315,299,257 | $266,083,154 | +$49,216,103 | | Total liabilities | $70,646,686 | $71,060,996 | -$414,310 | | Total stockholders' equity | $244,652,571 | $195,022,158 | +$49,630,413 | | Cash and cash equivalents | $152,740,882 | $125,044,092 | +$27,696,790 | | Accounts receivable – related parties | $48,920,843 | $28,846,680 | +$20,074,163 | | Retained earnings | $213,423,693 | $189,463,007 | +$23,960,686 | [Unaudited Consolidated Statements of Operations and Comprehensive Income](index=7&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20AND%20COMPREHENSIVE%20INCOME) For Q2 2025, total revenues decreased 18.3% year-over-year to $43.4 million, leading to an 86.5% drop in net income attributable to SBC Medical Group to $2.5 million, while H1 2025 saw total revenues decrease 16.0% to $90.7 million, with net income decreasing 35.6% to $24.0 million | Metric | Q2 2025 | Q2 2024 | YoY Change (Q2) | H1 2025 | H1 2024 | YoY Change (H1) | | :-------------------------------- | :------ | :------ | :-------------- | :------ | :------ | :-------------- | | Total revenues, net | $43,358,847 | $53,102,080 | -18.3% | $90,687,548 | $107,910,122 | -16.0% | | Gross profit | $30,010,577 | $39,419,675 | -23.8% | $67,743,661 | $78,939,050 | -14.2% | | Income from operations | $14,554,192 | $27,290,560 | -46.6% | $38,756,266 | $51,751,445 | -25.1% | | Net income attributable to SBC Medical Group Holdings Incorporated | $2,458,240 | $18,484,408 | -86.7% | $23,960,686 | $37,242,160 | -35.7% | | Basic and diluted EPS | $0.02 | $0.20 | -90.0% | $0.23 | $0.40 | -42.5% | - Foreign currency translation adjustment resulted in a gain of **$8.6 million** in Q2 2025, compared to a loss of **$9.0 million** in Q2 2024[20](index=20&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=9&type=section&id=UNAUDITED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash used in operating activities was $6.4 million, a significant reversal from $22.9 million provided in the prior year, offset by a substantial increase in net cash provided by investing activities to $15.4 million, largely due to proceeds from life insurance policy redemptions, and net cash provided by financing activities of $6.9 million | Cash Flow Activity | H1 2025 | H1 2024 | Change | | :-------------------------------- | :------------ | :------------ | :----- | | Net cash provided by (used in) operating activities | $(6,411,168) | $22,874,760 | -$29,285,928 | | Net cash provided by (used in) investing activities | $15,397,998 | $(9,405,716) | +$24,803,714 | | Net cash provided by (used in) financing activities | $6,901,719 | $(109,341) | +$7,011,060 | | Net change in cash and cash equivalents | $27,696,790 | $679,838 | +$27,016,952 | | Cash and cash equivalents as of the end of the period | $152,740,882 | $103,702,770 | +$49,038,112 | - Proceeds from redemption of life insurance policies significantly contributed to investing activities, totaling **$17.7 million** in H1 2025[24](index=24&type=chunk) - The effect of exchange rate changes positively impacted cash by **$11.8 million** in H1 2025, reversing a negative impact of **$12.7 million** in H1 2024[25](index=25&type=chunk) [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=RECONCILIATION%20OF%20GAAP%20TO%20NON-GAAP%20FINANCIAL%20MEASURES) [Unaudited Reconciliations of GAAP and Non-GAAP Results](index=11&type=section&id=Unaudited%20Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) The reconciliation table provides a clear bridge from GAAP income from operations to non-GAAP EBITDA, showing EBITDA of $15.2 million (35% margin) for Q2 2025 and $40.0 million (44% margin) for H1 2025, both significantly lower year-over-year due to operational changes | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Total revenues, net | $43,358,847 | $53,102,080 | $90,687,548 | $107,910,122 | | Income from operations (GAAP) | $14,554,192 | $27,290,560 | $38,756,266 | $51,751,445 | | Depreciation and amortization expense | $636,101 | $830,945 | $1,264,405 | $1,849,422 | | EBITDA (Non-GAAP) | $15,190,293 | $28,121,505 | $40,020,671 | $53,600,867 | | EBITDA margin | 35% | 53% | 44% | 50% | [Investor Relations Contacts](index=12&type=section&id=Contacts) [Investor Relations Contacts](index=12&type=section&id=Investor%20Relations%20Contacts) Contact information for investor relations is provided for both Asia, through SBC Medical Group Holdings, and the US, through ICR LLC - For investor relations in Asia, contact Hikaru Fukui, Head of Investor Relations at SBC Medical Group Holdings Incorporated (ir@sbc-holdings.com)[28](index=28&type=chunk) - For investor relations in the US, contact Bill Zima, Managing Partner at ICR LLC (bill.zima@icrinc.com)[28](index=28&type=chunk)

Company Overview - SBC Medical Group Holdings Incorporated is a global franchise and provider of services for aesthetic clinics, headquartered in Irvine, California and Tokyo, Japan [6] - The company focuses on providing comprehensive management services to franchisee clinics, including advertising, staff management, booking reservations, and medical equipment procurement [6] Leadership Appointment - Shinya Inoue has been appointed as Chief Marketing Officer (CMO) effective July 1, 2025 [1][2] - Inoue will lead efforts to enhance the brand value of the group's portfolio, including Shonan Beauty Clinic, and will focus on digital innovation in marketing [2][3] Experience and Background of Shinya Inoue - Inoue has extensive experience in brand strategy and integrated marketing, having worked at companies such as P&G Japan, Eli Lilly Japan, Adobe, and KDDI [4] - He previously served as CMO at Pioneer Corporation, where he was responsible for launching the marketing organization and restructuring planning and communication areas [4] Strategic Vision - The company aims to strengthen its global competitiveness and contribute to the sustainable advancement of the medical aesthetics industry through strategic initiatives [3] - Inoue expressed commitment to making aesthetic medicine more accessible and transforming it into a more approachable part of everyday life [5]

Group 1 - SBC Medical Group Holdings Incorporated recently participated in several prominent investor conferences in May and June 2025, delivering webcast presentations and conducting one-on-one meetings with institutional investors [1][3] - The company is headquartered in Irvine, California, and Tokyo, Japan, and focuses on providing management services and products to cosmetic treatment centers [2] - SBC Medical offers comprehensive management services to franchisee clinics, including advertising, staff management, booking reservations, employee housing assistance, clinic construction, medical equipment procurement, and IT software solutions [2] Group 2 - The main speakers at the recent investor conferences included Yuya Yoshida (CFO), Hikaru Fukui (Head of IR), and Stephen Rodgers (Head of Overseas Department) [3] - Key conferences attended by SBC Medical include the Zacks SCR Life Sciences Virtual Investor Forum, Sidoti Small-Cap Virtual Conference, Noble Capital Markets' Emerging Growth Virtual Equity Conference, and Lytham Partners Spring 2025 Virtual Investor Conference [3]