UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-41462

SBC Medical Group Holdings Incorporated

(Exact Name of Registrant as Specified in Its Charter)

Delaware	88-1192288
(State or Other Jurisdiction of<br><br>Incorporation or Organization)	(I.R.S. Employer<br><br>Identification Number)
200 Spectrum Center Dr., STE 300<br><br>Irvine, California	92618
---	---
(Address of Principal Executive Offices)	(Zip Code)

949-593-0250

(Registrant’s telephone number, including area code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	SBC	The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	SBCWW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2026, the registrant had 102,846,943 shares of common stock outstanding, after deducting 1,034,308 shares of treasury stock. An additional 270,000 shares are held by a wholly-owned subsidiary; such shares are outstanding but are not entitled to vote pursuant to Section 160(c) of the Delaware General Corporation Law and are presented as treasury stock in the consolidated balance sheet pursuant to ASC 810-10-45-5.

Website and Social Media Disclosure

SBC Medical Group Holdings Incorporated uses its website (https://sbc-holdings.com/en) to distribute company information and makes available free of charge a variety of information for investors, including our filings with the Securities and Exchange Commission (“SEC”), as soon as reasonably practicable after electronically filing that material with, or furnishing it, to the SEC. The information that we post on our website may be deemed material. Accordingly, investors should monitor our website, in addition to following our press releases, filings with the SEC, and public conference calls and webcasts. In addition, investors may opt in to automatically receive email alerts and other information about us when enrolling their email address by visiting the “Email Alerts” section under the “Resources” tab on our website. We do not incorporate the information contained on, or accessible through, our website or related social media channels into this Quarterly Report on Form 10-Q (“Quarterly Report”).

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company. These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” or similar expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

future financial performance of the Company;
changes in the market and level of demand for our products and services;
the expansion plans and opportunities of the Company;
political, economic or industry conditions, or conditions affecting the financial and capital markets, including the effect of trade policy;
the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflicts in the Middle East and Eastern Europe;
the ability of the Company to access additional capital;
the ability of the Company to maintain the listing of the Company’s common stock on Nasdaq;
public securities’ potential liquidity and trading;
the impact from the outcome of any known and unknown litigation;
the ability of the Company to forecast and maintain an adequate rate of revenue growth and appropriately plan its expenses;
expectations regarding future expenditures of the Company;
the future mix of revenue and effect on gross margins of the Company;
the attraction and retention of qualified directors, officers, employees and key personnel of the Company;
the ability to protect and enhance the Company’s corporate reputation and brand;
expectations concerning the relationships and actions of the Company and its affiliates with third parties;
the impact from future regulatory, judicial, and legislative changes in the Company’s industry;
the ability to locate and acquire complementary products or product candidates and integrate those into the Company’s business;
future arrangements with, or investments in, other entities or associations;

intense competition and competitive pressures from other companies in the industries in which the Company operates; and
other factors detailed under “Part I, Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026 (the “Annual Report”).

These forward-looking statements are based on information available as of the date of this Quarterly Report, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements.

New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company assess the impact of all such risk factors on the business of the Company, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. As a result of a number of known and unknown risks and uncertainties, the actual results or performance of the Company may be materially different from those expressed or implied by these forward-looking statements. These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Quarterly Report are more fully described elsewhere in this Quarterly Report and in the Annual Report, particularly in “Part I, Item 1A. Risk Factors” of the Annual Report.

SBC Medical Group Holdings Incorporated

FORM 10-Q FOR THE QUARTER ENDED

March 31, 2026

		Page
PART I - FINANCIAL INFORMATION		F-1
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9
PART II - OTHER INFORMATION		10
Item 1.	Legal Proceedings	10
Item 1A.	Risk Factors	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	10
Item 4.	Mine Safety Disclosures	10
Item 5.	Other Information	10
Item 6.	Exhibits	11
Signatures		13

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SBC MEDICAL GROUP HOLDINGS INCORPORATED

INDEX TO FINANCIAL STATEMENTS

	Page
Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (Unaudited)	F-2
Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2026 and 2025 (Unaudited)	F-4
Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025 (Unaudited)	F-5
Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (Unaudited)	F-6
Notes to Unaudited Consolidated Financial Statements	F-8

F-1

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS

	March 31,<br>2026		December 31,<br>2025
ASSETS
Current assets:
Cash and cash equivalents	$	167,305,095	$	163,773,838
Accounts receivable		2,980,193		2,388,021
Accounts receivable – related parties		33,784,532		27,511,730
Inventories		2,323,880		2,792,617
Short-term investments – related parties		313,865		319,193
Finance lease receivables, current – related parties		13,326,150		12,832,355
Income tax recoverable		1,173,913		1,175,510
Customer loans receivable, current		6,659,837		8,705,999
Prepaid expenses and other current assets		10,912,717		11,724,852
Total current assets		238,780,182		231,224,115
Non-current assets:
Property and equipment, net		7,287,369		7,539,392
Intangible assets, net		47,152,285		47,742,888
Long-term investments, net		1,198,583		1,299,366
Equity method investments		20,312,642		20,312,642
Goodwill, net		15,398,049		15,432,061
Finance lease receivables, non-current – related parties		12,548,800		13,746,513
Operating lease right-of-use assets		11,084,198		8,366,569
Finance lease right-of-use assets		392,118		450,874
Deferred tax assets		4,975,629		4,014,294
Customer loans receivable, non-current		3,454,969		4,824,977
Long-term prepayments		705,430		393,270
Long-term investments in MCs – related parties		17,539,564		17,837,293
Other assets		7,189,758		7,263,692
Total non-current assets		149,239,394		149,223,831
Total assets	$	388,019,576	$	380,447,946
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	19,168,072	$	16,988,384
Accounts payable – related parties		527,624		651,463
Bank and other borrowings, current		8,987,118		9,099,046
Advances from customers		1,011,249		1,415,762
Advances from customers – related parties		4,217,057		5,357,221
Income tax payable		8,450,440		8,821,853
Operating lease liabilities, current		5,521,371		4,416,960
Finance lease liabilities, current		118,297		132,946
Accrued liabilities and other current liabilities		11,896,371		11,544,695
Due to related party		2,670,016		2,692,673
Total current liabilities		62,567,615		61,121,003

F-2

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS — (Continued)

			December 31,<br>2025
Non-current liabilities:
Bank and other borrowings, non-current	31,447,900			33,734,438
Deferred tax liabilities	16,215,816			16,374,832
Operating lease liabilities, non-current	5,731,514			4,136,257
Finance lease liabilities, non-current	93,600			116,527
Other liabilities	1,578,954			1,660,183
Total non-current liabilities	55,067,784			56,022,237
Total liabilities	117,635,399			117,143,240
Commitments and contingencies (Note 19)
Stockholders’ equity:
Preferred stock (0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding as of March 31, 2026 and December 31, 2025)	—			—
Common stock (0.0001 par value, 400,000,000 shares authorized, 103,881,251 shares issued, and 102,576,943 shares outstanding as of March 31, 2026 and December 31, 2025)	10,388			10,388
Additional paid-in capital	72,867,424			72,867,424
Treasury stock (at cost, 1,304,308 shares as of March 31, 2026 and December 31, 2025)	(7,749,997	)		(7,749,997	)
Retained earnings	251,756,691			240,448,620
Accumulated other comprehensive loss	(61,541,134	)		(57,294,239	)
Total SBC Medical Group Holdings Incorporated stockholders’ equity	255,343,372			248,282,196
Non-controlling interests	15,040,805			15,022,510
Total stockholders’ equity	270,384,177			263,304,706
Total liabilities and stockholders’ equity	388,019,576		$	380,447,946

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-3

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


			2025
Revenues, net – related parties	37,955,060		$	45,257,145
Revenues, net	5,105,502			2,071,556
Total revenues, net	43,060,562			47,328,701
Cost of revenues (including cost of revenues from related parties of 124,389 and 3,456,928 for the three months ended March 31, 2026 and 2025, respectively)	12,713,828			9,595,617
Gross profit	30,346,734			37,733,084
Operating expenses:
Selling, general and administrative expenses (including selling, general and administrative expenses from related parties of 343,393 and nil for the three months ended March 31, 2026 and 2025, respectively)	12,626,719			13,531,010
Total operating expenses	12,626,719			13,531,010
Income from operations	17,720,015			24,202,074
Other income (expenses):
Interest income	121,369			55,333
Interest expense	(114,806	)		(6,207	)
Foreign currency exchange gain (loss), net	861,678			(1,058,526	)
Other income	491,564			151,328
Other expenses	(223,209	)		(638,733	)
Gain on redemption of life insurance policies	—			8,746,138
Total other income	1,136,596			7,249,333
Income before income taxes	18,856,611			31,451,407
Income tax expense	7,527,591			9,959,457
Net income	11,329,020			21,491,950
Less: net income (loss) attributable to non-controlling interests	20,949			(10,496	)
Net income attributable to SBC Medical Group Holdings Incorporated	11,308,071		$	21,502,446
Other comprehensive income (loss):
Foreign currency translation adjustment	(4,249,549	)	$	9,808,327
Total comprehensive income	7,079,471			31,300,277
Less: comprehensive income (loss) attributable to non-controlling interests	18,295			(36,832	)
Comprehensive income attributable to SBC Medical Group Holdings Incorporated	7,061,176		$	31,337,109
Net income per share attributable to SBC Medical Group Holdings Incorporated
Basic and diluted	0.11		$	0.21
Weighted average shares outstanding
Basic and diluted	102,576,943			103,276,637

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-4

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

	Common Stock				Additional<br>Paid-in		Treasury Stock						Retained		Accumulated<br>Other<br>Comprehensive			Total SBC<br>Medical<br>Group<br>Holdings<br>Incorporated<br>Stockholders’			Non-<br>controlling			Total<br>Stockholders’
	Number		Amount		Capital		Number			Amount			Earnings		Loss			Equity			Interests			Equity
Balance as of December 31, 2025		103,881,251	$	10,388	$	72,867,424		(1,304,308	)	$	(7,749,997	)	$	240,448,620	$	(57,294,239	)	$	248,282,196		$	15,022,510		$	263,304,706
Net income		—		—		—		—			—			11,308,071		—			11,308,071			20,949			11,329,020
Foreign currency translation adjustment		—		—		—		—			—			—		(4,246,895	)		(4,246,895	)		(2,654	)		(4,249,549	)
Balance as of March 31, 2026		103,881,251	$	10,388	$	72,867,424		(1,304,308	)	$	(7,749,997	)	$	251,756,691	$	(61,541,134	)	$	255,343,372		$	15,040,805		$	270,384,177
	Common Stock				Additional<br>Paid-in			Treasury Stock						Retained		Accumulated<br>Other<br>Comprehensive			Total SBC<br>Medical<br>Group<br>Holdings<br>Incorporated<br>Stockholders’		Non-<br>controlling			Total<br>Stockholders’
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Number		Amount		Capital			Number			Amount			Earnings		Loss			Equity		Interests			Equity
Balance as of December 31, 2024		103,020,816	$	10,302	$	62,513,923			(270,000	)	$	(2,700,000	)	$	189,463,007	$	(54,178,075	)	$	195,109,157	$	(86,999	)	$	195,022,158
Issuance of common stock as incentive shares		860,435		86		(86	)		—			—			—		—			—		—			—
Net income (loss)		—		—		—			—			—			21,502,446		—			21,502,446		(10,496	)		21,491,950
Foreign currency translation adjustment		—		—		—			—			—			—		9,834,663			9,834,663		(26,336	)		9,808,327
Balance as of March 31, 2025		103,881,251	$	10,388	$	62,513,837			(270,000	)	$	(2,700,000	)	$	210,965,453	$	(44,343,412	)	$	226,446,266	$	(123,831	)	$	226,322,435

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-5

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months<br>Ended March 31,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	11,329,020		$	21,491,950
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		670,434			628,304
Non-cash lease expense		1,420,824			985,184
Provision for (reversal of) credit losses		(31,353	)		25,102
Fair value change of long-term investments		80,301			140,581
Gain on redemption of life insurance policies		—			(8,746,138	)
Gain on disposal of property and equipment		—			(12,375	)
Deferred income taxes		(1,086,473	)		7,016,227
Changes in operating assets and liabilities:
Accounts receivable		(627,606	)		(147,925	)
Accounts receivable - related parties		(6,821,339	)		(295,505	)
Inventories		442,643			(124,279	)
Finance lease receivables - related parties		264,252			(2,779,253	)
Customer loans receivable		3,270,347			4,501,760
Prepaid expenses and other current assets		629,253			(3,150,243	)
Long-term prepayments		31,592			98,164
Other assets		(66,265	)		318,351
Accounts payable		2,484,437			3,235,017
Accounts payable - related parties		(114,689	)		441,481
Notes payables - related parties		—			(548,077	)
Advances from customers		(386,997	)		(328,791	)
Advances from customers - related parties		(1,066,776	)		(2,114,829	)
Income tax payable		(245,955	)		(17,635,239	)
Operating lease liabilities		(1,424,716	)		(1,036,605	)
Accrued liabilities and other current liabilities		543,412			63,764
Other liabilities		(62,408	)		(98,005	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		9,231,938			1,928,621
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(124,995	)		(253,725	)
Prepayments for property and equipment		(423,870	)		(501,253	)
Purchase of long-term investments		—			(635,145	)
Long-term loans to others		—			(12,783	)
Repayments from related parties		—			70,000
Repayments from others		20,840			30,680
Proceeds from disposal of property and equipment		—			323,419
NET CASH USED IN INVESTING ACTIVITIES		(528,025	)		(978,807	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from related parties		—			15,000
Repayments of bank and other borrowings		(1,782,479	)		(55,873	)
Repayments of finance lease liabilities		(37,278	)		(223,454	)
Repayments to related parties		(22,657	)		(16,053	)
NET CASH USED IN FINANCING ACTIVITIES		(1,842,414	)		(280,380	)
Effect of exchange rate changes		(3,330,242	)		6,342,297
NET CHANGE IN CASH AND CASH EQUIVALENTS		3,531,257			7,011,731

F-6

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

	For the Three Months<br>Ended March 31,
	2026		2025
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF THE PERIOD		163,773,838		125,044,092
CASH AND CASH EQUIVALENTS AS OF THE END OF THE PERIOD	$	167,305,095	$	132,055,823
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest expense	$	114,806	$	6,207
Cash paid for income taxes, net	$	8,848,074	$	20,577,290
NON-CASH INVESTING AND FINANCING ACTIVITIES
Property and equipment transferred from long-term prepayments	$	68,691	$	125,287
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	19,664	$	102,599
Finance lease right-of-use assets obtained in exchange for finance lease liabilities	$	—	$	581,129
Remeasurement of operating lease liabilities and right-of-use assets due to lease modifications	$	4,260,931	$	358,358
Payables to related parties in connection with loan services provided	$	—	$	1,922,224
Issuance of common stock as incentive shares	$	—	$	86
Redemption proceeds receivable on life insurance policies	$	—	$	17,735,717

The accompanying notes are an integral part of these unaudited consolidated financial statements.

F-7

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS

Business Overview

SBC Medical Group Holdings Incorporated was originally incorporated under the laws of the state of Delaware on March 11, 2022 as a special purpose acquisition corporation under the name Pono Capital Two, Inc. (“Pono”) for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

SBC Medical Group, Inc. (formerly known as SBC Medical Group Holdings Incorporated, “Legacy SBC”), through its consolidated subsidiaries and variable interest entity (“VIE”), is principally engaged in the medical industry and provides comprehensive management services to the medical corporations and their clinics, including but not limited to licensure of the use of the trademark and brand name of “Shonan Beauty Clinic”, sales of medical equipment, medical consumables procurement services, and management of customer loyalty program, etc.

Reverse Recapitalization

On September 17, 2024, Pono consummated the merger transaction pursuant to the agreement by and among Pono, Pono Two Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and a wholly-owned subsidiary of Pono, and Legacy SBC (the “Merger Agreement”), whereby Merger Sub merged with and into Legacy SBC, the separate corporate existence of Merger Sub ceased and Legacy SBC survived the merger as a wholly owned subsidiary of Pono (the “Merger”). The Merger and the other transactions contemplated by the Merger Agreement are collectively referred to as the “Business Combination.” In connection with the closing of the Business Combination, Pono changed its name to “SBC Medical Group Holdings Incorporated” and Legacy SBC changed its name to “SBC Medical Group, Inc.” and the existing equity holders of Legacy SBC exchanged their equity interests of Legacy SBC for equity interests of Pono.

On September 17, 2024, in connection with the closing of the Business Combination, the Company received net cash of $11,707,417. The Company also assumed $416,799 in prepaid expenses and other current assets, $1,108 in accounts payable, $14,431 in income tax payable, $2,700,000 in convertible note payable, which was subsequently converted to 270,000 shares upon the closing of the Business Combination, $1,000,789 in accrued liabilities and other current liabilities, common stock of $508 and additional paid-in capital of $8,407,380.

The total net cash proceeds from the Business Combination of $11,707,417 were available to repay certain indebtedness, transaction costs and for general corporate purposes, which primarily consisted of investment banking, legal, accounting, and other professional fees as follows:

Cash—Pono working capital cash	$	766,735
Cash—Pono trust		16,731,409
Less: transaction costs and advisory fees		5,790,727
Net proceeds from Pono Merger	$	11,707,417

The Business Combination was accounted for as a reverse recapitalization under the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Legacy SBC was determined to be the accounting acquirer and Pono was treated as the acquired company for financial reporting purposes. Accordingly, the financial statements of the combined company represent a continuation of the financial statements of Legacy SBC.

Unless the context indicates otherwise, any references herein to the “Company”, “we”, “us” and “our” refer to 1) Legacy SBC and its consolidated subsidiaries and VIE, prior to the consummation of the Business Combination, and to 2) SBC Medical Group Holdings Incorporated (formerly Pono Capital Two, Inc.) and its consolidated subsidiaries and VIE, following the Business Combination. Reference herein to “Pono” refers to Pono Capital Two, Inc. prior to the consummation of the Business Combination.

Reorganization

In June 2020 and April 2022, SBC Inc., a company incorporated in Japan in June 2007, and Advice Innovation Co., Ltd., a company incorporated in Japan in December 2018, were merged with and into SBC Medical Group Co., Ltd. (“SBC Japan”), respectively, with SBC Japan being the surviving entity in such mergers. SBC Japan is a company incorporated in Japan in September 2017 and previously known as Aikawa Medical Management Co., Ltd.

In April 2023, SBC Japan acquired 100% equity interest of L’Ange Cosmetique Co., Ltd. (“L’Ange Sub”), a company incorporated in Japan in June 2003, and Shobikai Co., Ltd. (“Shobikai Sub”), a company incorporated in Japan in June 2014, through share exchange. As a result, L’Ange Sub and Shobikai Sub became wholly owned subsidiaries of SBC Japan.

F-8

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS (cont.)

In August 2023, SBC Japan and L’Ange Sub disposed of their entire equity interest in Ai Inc. and Lange Inc., respectively, both incorporated in the Federated States of Micronesia in January 2022, for cash. As a result, Ai Inc. and Lange Inc. ceased to be subsidiaries of the Company, with the related investment in capital being treated as a deemed distribution and the disposal proceeds treated as a deemed contribution.

In September 2023, Legacy SBC acquired 100% equity interest of SBC Japan through share exchange with one share of its common stock. As a result, SBC Japan became a wholly owned subsidiary of Legacy SBC.

The above reorganization has been accounted for as a recapitalization among entities under common control since the same controlling shareholder controlled these entities before and after the reorganization. The consolidation of the Company has been accounted for at historical cost and prepared on the basis as if the transactions had become effective as of the beginning of the earliest period presented in the accompanying unaudited consolidated financial statements.

Corporate Structure

As of March 31, 2026, the Company’s major subsidiaries and VIE are as follows:

Name	Place of<br>Incorporation	Date of<br>Incorporation or<br>Acquisition	Percentage of<br>Ownership	Principal<br>Activities
Subsidiaries
SBC Medical Group, Inc.	United States	January 20, 2023	100%	Investment holding
SBC Medical Group Co., Ltd.*	Japan	June 18, 2003	100%	Franchising, procurement, management, rental and marketing services
Liesta Co., Ltd.	Japan	December 15, 2020	100%	Real estate brokerage services
SBC Sealane Co., Ltd.	Japan	June 7, 2022	100%	Leasehold improvement services
Medical Payment Co., Ltd.	Japan	June 30, 2022	75%	Loan services
SBC Medical Consulting Co., Ltd.	Japan	August 2, 2022	100%	Human resource services
MB career lounge Co., Ltd.	Japan	July 17, 2025	100%	Management supporting services
Waqoo, Inc.	Japan	December 19, 2025	54%	Medical support and direct-to-consumer services
Cell Pro Japan Co., Ltd.	Japan	December 19, 2025	54%	Regenerative medicine, contract review and processing, and cosmetics and raw materials business
SBC Medical M&A Advisory Co., Ltd.	Japan	January 7, 2026	100%	M&A brokerage and financial advisory services
Shoubikai Medical Vietnam Co., Ltd.	Vietnam	August 29, 2013	100%	Cosmetic clinic
SBC Irvine, LLC	United States	December 27, 2018	100%	Management services for cosmetic clinic in the United States
SBC Healthcare Inc.	United States	December 16, 2019	100%	Management services for cosmetic clinic in the United States
Aesthetic Healthcare Holdings Pte. Ltd.	Singapore	November 20, 2024	100%	Investment holding
Wen & Weng Family Clinic Pte. Ltd. **	Singapore	November 20, 2024	100%	General outpatient medical services
Wen & Weng Medical Group Pte. Ltd. **	Singapore	November 20, 2024	100%	Healthcare-related businesses
Rochor Clinic Pte. Ltd. **	Singapore	November 20, 2024	100%	General outpatient medical services
Dermasolutions Pte. Ltd. **	Singapore	November 20, 2024	100%	Cosmetic and dermatological treatments and products
Dermasolutions Services Pte. Ltd. **	Singapore	November 20, 2024	100%	Cosmetic services and products
SBC MEDICAL APAC PTE. LTD.	Singapore	March 26, 2025	100%	Asia-Pacific regional headquarters
VIE
Aikawa Medical Management, Inc.	United States	May 10, 2017	VIE	Management services for cosmetic clinic in the United States

* In January 2025, the Company effected a merger in which SBC Japan and Shobikai Sub merged with and into L’Ange Sub. As a result, the separate corporate existence of SBC Japan and Shobikai Sub ceased, with L’Ange Sub continuing as the surviving company. Following the merger, L’Ange Sub changed its name to SBC Medical Group Co., Ltd., which is herein referred to as “SBC Japan.” In January 2026, the Company effected a merger in which SBC Marketing Co., Ltd. merged with and into SBC Japan. As a result, the separate corporate existence of SBC Marketing Co., Ltd. ceased, with SBC Japan continuing as the surviving company.

** Subsidiaries of Aesthetic Healthcare Holdings Pte. Ltd. (“AHH”)

F-9

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The unaudited consolidated financial statements do not include all of the information and disclosure required by U.S. GAAP for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2025.

The unaudited consolidated financial statements include the financial statements of the Company, its subsidiaries, and consolidated VIE for which the Company is the primary beneficiary. The results of the subsidiaries are consolidated from the date on which the Company obtained control and continue to be consolidated until the date that such control ceases. All significant transactions and balances among the Company’s subsidiaries, including the VIE, have been eliminated upon consolidation.

Reporting Lag

The Company reports AHH and its subsidiaries, which were acquired in November 2024, and Waqoo, Inc. and its subsidiary, Cell Pro Japan Co., Ltd., which were acquired in December 2025, on a three-month calendar lag allowing for the timely preparation of financial statements.

The Company recognizes its portion of the earnings or losses for its equity method investment in OT Midco Holdings, LLC (“OT Midco”) on a three-month calendar lag to ensure consistency and timely filing of the Company's financial statements. See Note 4 for further information with respect to the investment in OT Midco.

This three-month reporting lag is with the exception of significant transactions or events that occur during the intervening period, if any.

Variable Interest Entities

In accordance with ASC Topic 810, “Consolidation”, the Company identifies its variable interests and analyzes to determine if the entity in which the Company has a variable interest is a VIE. Determination if a variable interest is a VIE includes both quantitative and qualitative consideration. For those entities determined to be VIEs within the scope of the VIE model, a further quantitative and qualitative analysis is performed to determine if the Company is deemed the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant.

The Company would consolidate those entities in which it is determined to be the primary beneficiary. The Company based its qualitative analysis on its review of the design of the entity, its organizational structure including decision-making ability and the relevant development, operating management and financial agreements.

The Company evaluates its relationship with its VIE on an ongoing basis to determine whether it continues to be the primary beneficiary of its consolidated VIE, or whether it has become the primary beneficiary of the VIE it does not consolidate.

Voting Model

If a legal entity fails to meet any of the three characteristics of a VIE, we then evaluate such entity under the voting model. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting rights and that other equity holders do not have substantive participating rights.

F-10

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Assessment of Medical Corporations in Japan

SBC Japan is designated as a medical service corporation (the “MSC”) to provide services to the Medical Corporations (the “MCs”) in Japan. To maintain and strengthen the business relationship, the Company has acquired equity interests in the following MCs throughout the years.

Name of the MC
Medical Corporation Shobikai	100	%	%
Medical Corporation Kowakai	100	%	%
Medical Corporation Nasukai	100	%	%
Medical Corporation Aikeikai	100	%	%
Medical Corporation Jukeikai	100	%	%
Medical Corporation Ritz Cosmetic Surgery	100	%	%

As non-profit organizations, MCs are required to comply with the medical-related laws and regulations of the Japanese Medical Care Act (the “Act”, “Medical Care Act”). In accordance with the Act, the highest authority of MCs is its general meeting of members (the “Members”), with each Member having one voting right. The Company, through the MSC, has no right to elect the Members, no decision-making ability and no right to dividend or any profit distribution, but has the right to receive distribution of the residual assets of the MCs.

Since the not-for-profit entities scope exception to the variable interest model is applicable to the MCs, the Company evaluates its business relationship, franchisor-franchisee agreements and/or services agreements with the MCs in Japan under the voting model. The Company has concluded that consolidation of the MCs is not appropriate for the periods presented as it does not have a majority voting interest in the Members of the MCs nor does it have a controlling financial interest in the MCs. The equity interests in the MCs held by the Company are recorded as long-term investments in MCs — related parties on the unaudited consolidated balance sheets. The transactions between the MCs and the Company are disclosed in Note 17 — Related Party Transactions.

(b) Foreign Currency

The Company maintains its books and records in its local currency, mainly Japanese YEN (“JPY” or “¥”), which is a functional currency as being the primary currency of the economic environment in which its operation is conducted. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited statements of operations.

The reporting currency of the Company is the United States Dollars (“US$” or “$”), and the accompanying financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translations of Financial Statements”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive loss within the unaudited statements of changes in stockholders’ equity.

Translation of amounts from local currency of the Company into US$1 has been made at the following exchange rates:

		March 31, 2025
Current :US1 exchange rate	159.3040		149.4840
Average :US1 exchange rate	156.9101		152.5417

All values are in US Dollars.

(c) Non-controlling Interests

Non-controlling interests in the unaudited consolidated balance sheets represent the portion of the equity in the subsidiaries not attributable, directly or indirectly, to the Company. The portion of the income or loss applicable to the non-controlling interests in subsidiaries is also separately reflected in the unaudited statements of operations.

F-11

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(d) Use of Estimates

In preparing the unaudited consolidated financial statements in conformity with U.S. GAAP, management is required to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, useful lives and impairment of long-lived assets, impairment of goodwill, impairment of long-term investments in MCs — related parties, valuation allowance of deferred tax assets, uncertain income tax positions, the recognition and measurement of impairment of investments in securities, allowance for credit losses, implicit interest rate of operating and finance leases, and liability associated with unredeemed loyalty points. Management bases its estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results could differ from those estimates.

(e) Reclassification

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings or financial position.

(f) Customer Loans Receivable

In February 2023, the Company started to provide loan services to certain customers of the related-party MCs (“End Customers”). Once a loan was granted to finance an End Customer’s purchase, the End Customer was required to repay the Company in monthly installments. The loans provided to the End Customers were unsecured, interest-bearing, and due in three months to five years, depending on the End Customers’ choice of the loan service term.

The Company records the customer loans receivables at gross loan receivables less unamortized costs of issuance fees or discounts, which are amortized over the life of the loan to interest income. The Company generated interest income of $249,123 and $283,416 for the three months ended March 31, 2026 and 2025, respectively, from the loan services, which were included in revenues.

Management periodically evaluates individual End Customers’ financial condition, credit history and the current economic conditions to make adjustments in the allowance when necessary. Customer loans receivable is charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. During the three months ended March 31, 2026 and 2025, the Company recorded a reversal of allowance for doubtful accounts of $31,353 and provision for doubtful accounts of $95,102, respectively, for customer loans receivable.

When a loan was granted to an End Customer, the Company paid the transaction amount directly in cash to the MC on behalf of the End Customer in the month following the purchase.

The loan services were suspended in November 2025, no new loans have been originated since then, and all related payables to MCs were settled as of December 31, 2025.

(g) Intangible Assets, Net

Intangible assets with an indefinite life are not amortized and are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired.

Intangible assets with finite lives are initially recorded at cost and amortized on a straight-line basis over the estimated economic useful lives of the respective assets. Acquired intangible assets from business combinations and asset acquisitions are recognized and measured at fair value at the time of acquisition. Those assets represent assets with finite lives are further amortized on a straight-line basis over the estimated useful lives of the respective assets.

The estimated useful lives of intangible assets are as follows:

	Useful Life
Trademark	10 – 20 years
Customer relationships	3 – 11 years
Service agreement	25 years
Developed technology	16 years
Others	3 – 8 years

F-12

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(h) Goodwill, Net

Goodwill represents the excess of the purchase price over the fair value of the identifiable assets and liabilities acquired in the business combination. In accordance with FASB ASC Topic 350, “Intangibles-Goodwill and Others”, goodwill is subject to at least an annual assessment for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value based test.

The Company would recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill allocated to that reporting unit.

When performing the annual impairment test, the Company has the option of performing a qualitative or quantitative assessment to determine if an impairment has occurred. If a qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would be required to perform a quantitative impairment analysis for goodwill. The quantitative analysis requires a comparison of the fair value of the reporting unit to its carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The fair value is generally determined using the income approach with the discounted cash flow valuation method, which requires management to make significant estimates and assumptions related to forecasted revenues and cash flows and the discount rates.

(i) Impairment of Long-lived Assets Other Than Goodwill

Long-lived assets with finite lives, primarily property and equipment, intangible assets, operating lease right-of-use assets and finance lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value.

(j) Investments in Securities

Available-for-sale debt securities

The Company’s short-term investments consist of debt securities classified as available-for-sale, which are measured at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss) and realized gain and losses included in other income (expenses).

Investments in equity securities with readily determinable fair values

The Company holds long-term investments in equity securities of publicly listed companies, for which the Company does not have significant influence. Investments in equity securities with readily determinable fair values are measured at fair value and any changes in fair value are recognized in other income (expenses).

Investments in privately held companies and organizations that do not report Net Asset Value (the “NAV”) per share

The Company’s long-term investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative, under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses).

The Company recognizes both realized and unrealized gain and losses in its unaudited consolidated statements of operations and comprehensive income, classified with other income (expenses). Unrealized gains and losses represent observable price changes for investments in privately held entities that do not report NAV per share. Realized gains and losses represent the difference between proceeds received upon disposition of investments and their historical or adjusted cost. Impairments are realized losses, which result in an adjusted cost, and represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share, if impairments are deemed other than temporary, to their estimated fair values.

F-13

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(k) Equity Method Investments

Investments in LLC

The Company uses the equity method to account for investments in limited liability companies ("LLC") that maintain a specific ownership account for each investor, in which we do not have a controlling financial interest but have the ability to influence the operating and financial policies of the investees.

Under the equity method of accounting, the Company initially recognizes the investments at cost and subsequently adjusts the carrying amount of the investments for its share of earnings or losses reported by the investees, distributions received, and other-than-temporary impairments.

(l) Long-term Investments in MCs — Related Parties

Long-term investments in MCs — related parties represent the payments to obtain equity interests of the MCs in Japan, made by the Company through SBC Japan, a company designated as a MSC in Japan. In accordance with the Act and articles of incorporation of the MCs, which are non-profit organizations, the equity interest holders of MCs are prohibited from receiving any profit distribution from MCs but have the right to receive distribution of the residual assets of the MCs in proportion to the amount of their contribution. As of the balance sheet dates, the investments represent probable future economic benefit to be realized at the time of dissolution of MCs or the equity interests being sold.

The investments in MCs — related parties are accounted for using a measurement alternative, under which these investments are measured at cost, less impairment, and adjusted for observable price changes. The Company reviews the investments in MCs for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The payments made for such investments are classified as investing activities in the unaudited consolidated statements of cash flows. The MCs are considered related parties as the relatives of the Chief Executive Officer (“CEO”) of the Company being the Members of the MCs. Also see Note 2(a) for further details.

(m) Leases

The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.

The Company classifies its leases as either finance leases or operating leases if it is the lessee, or sales-type, direct financing, or operating leases if it is the lessor. The following criteria is used to determine if a lease is a finance lease (as a lessee) or sales-type or direct financing lease (as a lessor):

ownership is transferred from lessor to lessee by the end of the lease term;
an option to purchase is reasonably certain to be exercised;
the lease term is for the major part of the underlying asset’s remaining economic life;
the present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or
the underlying asset is specialized and is expected to have no alternative use at the end of the lease term.

If any of the above criteria is met, the Company accounts for the lease as a finance, a sales-type, or a direct financing lease. If none of the criteria is met, the Company accounts for the lease as an operating lease.

Lessee accounting

The Company recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received; and (iii) initial direct costs incurred by the Company.

F-14

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

As the rates implicit on the Company’s leases for which it is the lessee are not readily determinable, the Company uses its incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining the incremental borrowing rate, the Company assesses multiple variables such as lease term, collateral, economic conditions, and its creditworthiness.

From time to time, we may enter into sublease agreements with third parties. Our subleases generally do not relieve us of our primary obligations under the corresponding head lease. As a result, we account for the head lease based on the original assessment at lease inception. We determine if the sublease arrangement is either a sales-type, direct financing, or operating lease at inception of the sublease. If the total remaining lease cost on the head lease for the term of the sublease is greater than the anticipated sublease income, the right-of-use asset is assessed for impairment. Our subleases are generally operating leases and we recognize sublease income on a straight-line basis over the sublease term.

Lessor accounting — operating leases

The Company accounts for the revenue from its lease contracts by utilizing the single component accounting policy. This policy requires the Company to account for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single component if two criteria are met.

the timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
the lease component would be classified as an operating lease if it were accounted for separately.

Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases. Nonlease components consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for utilities, repairs and maintenance and common area expenses.

If the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under the lease accounting standard and classify these revenues as rental income.

The Company commences recognition of rental income related to the operating leases at the date the property is ready for its intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. Any amounts received but will be recognized as revenue in future periods are classified as advances from customers in the Company’s unaudited consolidated balance sheets.

Lessor accounting — sales-type leases

The Company purchases medical equipment from vendors and leases them to its customers, who are required to pay installments throughout the term of the leases. The lease agreements include lease payments that are fixed, do not contain residual value guarantees or variable lease payments. The lease terms are based on the non-cancellable term of the lease and the buyer may have options to terminate the lease in advance when meets certain conditions. The customers obtain control of the medical equipment when they physically possess the equipment.

The Company recognizes sales from sales-type leases equal to the present value of the minimum lease payments discounted using the implicit interest rate in the lease and cost of sales equal to carrying amount of the asset being leased and any initial direct costs incurred, less the present value of the unguaranteed residual. Interest income from the leases is recognized over the lease terms and included in revenues, net.

The Company excludes from the measurement of its lease revenues any tax assessed by a governmental authority that is both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer.

(n) Revenue Recognition

The Company recognizes revenue from franchising services, procurement services, management services and other services or product sales under ASC Topic 606, “Revenue from Contracts with Customers”.

F-15

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. Revenue amount represents the invoiced value, net of consumption tax and applicable local government levies, if any. The consumption tax on sales is calculated at 10% of gross sales. The Company does not have significant remaining unfulfilled performance obligations or contract balances.

The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on the evaluation of whether (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis.

The Company recognizes revenue from rental services under ASC Topic 842, “Leases”.

The Company currently generates its revenue from the following main sources:

Franchising Revenue

The Company generates franchising revenue by licensing its intellectual properties, including but not limited to the Company’s brand name (“Shonan Beauty Clinic”), trade name, patents, and trademarks, and by providing consulting services to enhance the value of “Shonan Beauty Clinic” brand, as a franchisor pursuant to franchise agreements with the medical corporations (the “MCs”) in Japan. Prior to April 2025, revenue was based on a fixed amount to each MC and a fixed amount to each clinic of the MCs; starting from April 2025, the clinic-level monthly fee is determined based on the facility type, operational tenure, and operational performance of each clinic of the MCs, rather than a uniform flat fee for all clinics. The revenue is recognized over time as services are rendered.

Procurement Revenue

The Company generates procurement services revenue by purchasing primarily advertising services and medical materials from qualified vendors on behalf of MCs to maintain brand quality consistency. Procurement services revenue is recognized at the point in time upon the delivery of products or over time as services are performed. Occasionally, the Company receives vendor discounts on certain large purchases. It recognizes revenue based on actual payments. Prior to June 2025, any over-collection resulting from such discounts was returned to MCs; since June 2025, it is retained for future transactions.

Management Services Revenue

The Company provides loyalty program management services, labor supporting services, function supporting services, and management consulting services to MCs.

Loyalty program management services

The Company awards loyalty points on behalf of MCs to MCs’ customers, who earn loyalty points from each qualified purchase made at the loyalty program participating clinics of MCs, in exchange for a handling fee. The revenue is based on a percentage of the related payment amount made by MCs’ customers and is recognized when the loyalty points are awarded.

At the time loyalty points are awarded, an MC pays the Company cash in an amount equivalent to the awarded loyalty points, which is recorded as advances from customers. When an MC’s customers redeem the loyalty points, the Company returns the cash back to the MC in an amount equivalent to the redeemed loyalty points. The awarded loyalty points expire if an MC’s customer does not make any additional qualified purchase at a participating clinic within a year. The Company accumulates and tracks the points on behalf of MCs until the loyalty points expire at which time the Company recognizes an amount equivalent to the expired loyalty points as revenue.

The Company also awards certain points to MCs’ customers on behalf of MCs for free in order to increase the volume of MC’s sales, from which the Company earns other types of revenues, such as procurement revenue. When an MC’s customers redeem such points, the Company reimburses the MC in an amount equivalent to the used free points. The redemption of such points is recorded as a reduction of the revenue recognized.

F-16

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

The Company is an agent in the management of loyalty programs, and as a result, revenues are recognized net of the cost of redemptions.

Labor supporting services

The Company generates revenue by dispatching staff to MCs to provide a range of services, primarily including IT, and administrative services. The Company recognizes the revenue over the time when services are rendered. Starting from April 2025, the monthly fee for each clinic is determined using the same key criteria described above under “Franchising Revenue.”

Function supporting services

The revenue is derived from providing functional supporting services to MCs, such as accounting and human resources services. The Company recognizes revenue based on a monthly service fee over the time when services are rendered. Starting from April 2025, the monthly fee for each clinic is determined using the same key criteria described above under “Franchising Revenue.”

Management consulting services

The Company generates revenue by providing consulting services to MCs in relation to business operations of cosmetic dermatology. The Company recognizes the revenue over the time when services are rendered.

Rental Services Revenue

The Company generates rental income from operating leases and sales-type leases, which is accounted for under ASC Topic 842. Operating lease revenue is generally recognized on a straight-line basis over the terms of the lease agreements and sales-type lease revenue is generally recognized on the lease commitment date. Also see Note 2(m).

Other Revenues

The Company generates other miscellaneous revenues such as beauty and health services revenue, leasehold improvement services revenue, real estate brokerage services revenue, interest income, etc. These revenues are recognized when the Company satisfies performance obligations.

(o) Advertising Expenses

Advertising expenses consist primarily of costs of promotion and marketing for the Company’s image and services and are included in selling, general and administrative expenses. The Company expenses advertising costs as incurred or the first time the advertising takes place, whichever is earlier, in accordance with the ASC 720-35, “Advertising Costs”. The advertising expenses were $567,346 and $682,166 for the three months ended March 31, 2026 and 2025, respectively.

(p) Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, finance lease receivables and customer loans receivable. The Company places its cash and cash equivalents with financial institutions. The Company does not require collateral or other security to support financial instruments subject to credit risk. The Company conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable.

For the three months ended March 31, 2026, customer A, B and C represented 24%, 21% and 19% of the Company’s total revenues, respectively. For the three months ended March 31, 2025, customer A, B and C represented 24%, 26% and 23% of the Company’s total revenues, respectively.

As of March 31, 2026, customer A, B and C accounted for 27%, 27% and 25% of the Company’s total outstanding accounts receivable, respectively. As of December 31, 2025, customer A, B and C accounted for 22%, 24% and 23% of the Company’s total outstanding accounts receivable, respectively.

For the three months ended March 31, 2026 and 2025, no vendor represented more than 10% of the Company’s total purchases.

As of March 31, 2026, vendor A, B and C represented 11%, 11% and 16% of the Company’s total outstanding accounts payable, respectively. As of December 31, 2025, vendor A, B and C represented 14%, 22% and 14% of the Company’s total outstanding accounts payable, respectively.

F-17

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

(q) Segment Reporting

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making operating decisions, assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

Management determined the Company’s operations constitute a single reporting segment for the three months ended March 31, 2026 and 2025.

(r) Related Parties and Transactions

The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC Topic 850, “Related Party Disclosures,” and other relevant ASC standards.

Parties, which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be related if they are subject to common control or common significant influence.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

(s) Fair Value Measurements

The Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value:

Level 1: quoted prices in active markets for identical assets or liabilities;
Level 2: inputs other than Level 1 that are observable, either directly or indirectly; or
Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

As of March 31, 2026 and December 31, 2025, the carrying values of current assets and current liabilities approximated their fair values reported in the unaudited consolidated balance sheets due to the short-term maturities of these instruments. Debt that bears variable interest rates index to prime also approximates fair value as it reprices when market interest rates change.

F-18

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Assets measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 are summarized below.

Fair Value Measurements as of March 31, 2026
	Quoted <br>Prices in <br>Active <br>Markets for <br>Identical <br>Assets <br>(Level 1)		Significant <br>Other <br>Observable <br>Inputs <br>(Level 2)		Unobservable <br>Inputs <br>(Level 3)		Fair <br>Value at <br>March 31,<br>2026
Short-term investments:
Available-for-sale debt security	$	—		313,865		—	$	313,865
Long-term investments:
Equity investments at fair value with readily determinable fair value	$	761,563		—		—	$	761,563
Fair Value Measurements as of December 31, 2025
---	---	---	---	---	---	---	---	---
	Quoted <br>Prices in <br>Active <br>Markets for <br>Identical <br>Assets <br>(Level 1)		Significant <br>Other <br>Observable <br>Inputs <br>(Level 2)		Unobservable <br>Inputs <br>(Level 3)		Fair <br>Value at <br>December 31,<br>2025
Short-term investments:
Available-for-sale debt security	$	—		319,193		—	$	319,193
Long-term investments:
Equity investments at fair value with readily determinable fair value	$	854,927		—		—	$	854,927

(t) Stock-Based Compensation

The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation — Stock Compensation”, under which the Company determines whether stock-based compensation awards should be classified and accounted for as an equity award. There were no liability awards granted during any of the periods stated herein. For all grants of stock-based compensation classified as equity awards, the cost of services received from employees and non-employees in exchange for awards is recognized in the unaudited consolidated statements of operations and comprehensive income based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures and cancellations as they occur.

(u) Recent Accounting Pronouncements

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in ASU 2025-05 provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606 by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those fiscal years, with early adoption permitted. The Company adopted this standard on January 1, 2026. The adoption of this standard and the practical expedient did not have a material impact on its unaudited consolidated financial statements and related disclosures.

F-19

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements. In January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. ASU 2025-11 is effective for public business entities for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. For entities other than public business entities, this amendment is effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

F-20

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — VARIABLE INTEREST ENTITY

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb losses, or the right to receive the expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive benefits from the entity that could potentially be significant to the VIE.

The Company followed ASC Topic 810, “Consolidation”, utilizing a qualitative approach, and determined that it is the primary beneficiary of its VIE, Aikawa Medical Management, Inc. (“AMM”) and consolidated the result of operations, financial conditions, and cash flows of AMM in the consolidated financial statements.

The following amounts and balances of AMM were included in the Company’s unaudited consolidated financial statements as of March 31, 2026 and December 31, 2025 and for the three months ended March 31, 2026 and 2025:

	March 31,<br>2026		December 31,<br>2025
ASSETS
Current assets
Cash and cash equivalents	$	4,202,107	$	4,238,149
Accounts receivable		10,615		10,615
Prepaid expenses and other current assets		10,831		10,831
Total Current Assets		4,223,553		4,259,595
Property and equipment, net		—		—
Loans receivables from subsidiaries of the Company		3,077,945		3,077,945
Other assets		2,276		2,276
Total Non-current Assets		3,080,221		3,080,221
Total Assets	$	7,303,774	$	7,339,816
LIABILITIES
Current Liabilities
Accounts payable	$	19,327	$	19,327
Accrued liabilities and other current liabilities		17,824		17,824
Due to related party		2,628,445		2,733,324
Total Current Liabilities		2,665,596		2,770,475
Loan payable to a subsidiary of the Company		8,268,544		8,265,846
Total Non-current Liabilities		8,268,544		8,265,846
Total Liabilities	$	10,934,140	$	11,036,321
	For the Three Months<br>Ended March 31,
---	---	---	---	---	---
	2026			2025
Revenues	$	—		$	40,470
Total operating expenses	$	21,884		$	47,800
Net income (loss)	$	(16,084	)	$	17,671
	For the Three Months<br>Ended March 31,
---	---	---	---	---	---	---
	2026			2025
Net cash used in operating activities	$	(16,084	)	$	(3,644	)
Net cash provided by investing activities	$	—		$	25,000
Net cash used in financing activities	$	(104,879	)	$	(16,052	)

F-21

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 — EQUITY METHOD INVESTMENTS

On December 29, 2025, the Company acquired 10,732,089 common units of OT Midco Holdings, LLC (“OT Midco”), representing approximately 18.2% of the voting interest in OT Midco, for a total consideration of $20.3 million, including transaction costs of approximately $0.3 million. The CEO of the Company was designated by the Company as a director of the investee.

OT Midco is an intermediate holding company of Orange Twist, LLC and its subsidiaries (collectively, “OrangeTwist”). Through this investment, the Company holds an indirect minority interest in OrangeTwist.

The Company recognizes its portion of the earnings or losses for its equity method investment in OT Midco on a three-month lag. Accordingly, given the investment closing date of December 29, 2025, the earnings or losses from this investment will be reflected commencing with the Company’s unaudited consolidated financial statements for the three months ended June 30, 2026.

NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of March 31, 2026 and December 31, 2025, prepaid expenses and other current assets consist of the following:

	March 31,<br>2026		December 31,<br>2025
Advances to suppliers	$	10,046,717	$	11,111,347
Other receivables*		433,430		486,326
Others		432,570		127,179
Total	$	10,912,717	$	11,724,852

* Represent reimbursement receivables from a business partner and other miscellaneous receivables.

NOTE 6 — FINANCE LEASE RECEIVABLES

As of March 31, 2026 and December 31, 2025, finance lease receivables consist of the following:

	March 31,<br>2026			December 31,<br>2025
Future minimum lease payments receivable	$	25,968,747		$	26,636,777
Estimated residual value		—			—
Gross finance lease receivables		25,968,747			26,636,777
Less: unearned interest income		(93,797	)		(57,909	)
Finance lease receivables	$	25,874,950		$	26,578,868
Finance lease receivables, current	$	13,326,150		$	12,832,355
Finance lease receivables, non-current	$	12,548,800		$	13,746,513

As of March 31, 2026, maturities of the Company’s gross finance lease receivables are as follows:

Years ending December 31,
Remainder of 2026	$	10,166,581
2027		10,911,850
2028		4,631,340
2029		258,976
2030 and thereafter		—
Total	$	25,968,747

F-22

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 — PROPERTY AND EQUIPMENT, NET

As of March 31, 2026 and December 31, 2025, property and equipment, net consist of the following:

	March 31,<br>2026			December 31,<br>2025
Buildings and facilities attached to buildings	$	4,263,742		$	4,287,588
Machinery, equipment and automobiles		4,327,910			4,228,598
Aircraft		237,404			241,434
Software		5,781,313			5,879,421
Construction in progress		2,046,737			2,041,608
Subtotal		16,657,106			16,678,649
Less: accumulated depreciation		(7,876,866	)		(7,667,935	)
Less: accumulated impairment		(1,492,871	)		(1,471,322	)
Property and equipment, net	$	7,287,369		$	7,539,392

Depreciation expense was $388,581 and $604,882 for the three months ended March 31, 2026 and 2025, respectively.

The Company recognized a gain of nil and $12,375 on disposal of property and equipment for the three months ended March 31, 2026 and 2025, respectively.

NOTE 8 — INTANGIBLE ASSETS, NET

As of March 31, 2026 and December 31, 2025, intangible assets, net consist of the following:

	March 31,<br>2026			December 31,<br>2025
Patent use right	$	16,320,996		$	16,598,040
Trademarks		1,312,033			1,315,508
Customer relationships		1,927,515			1,928,056
Service agreement		20,450,143			20,797,278
Developed technology		24,143,765			24,143,765
Others		114,224			114,514
Subtotal		64,268,676			64,897,161
Less: accumulated amortization		(2,835,519	)		(2,630,988	)
Less: accumulated impairment		(14,280,872	)		(14,523,285	)
Intangible assets, net	$	47,152,285		$	47,742,888

Amortization expense was $250,001 and $13,372 for the three months ended March 31, 2026 and 2025, respectively.

Estimated future amortization expense related to intangible assets as of March 31, 2026 is as follows:

Years ending December 31,	Amortization<br>Expense
Remainder of 2026	$	1,989,541
2027		2,652,722
2028		2,572,274
2029		2,551,238
2030		2,550,249
Thereafter		34,836,261
Total	$	47,152,285

F-23

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — LONG-TERM INVESTMENTS, NET

As of March 31, 2026 and December 31, 2025, long-term investments, net consist of the following:

	March 31,<br>2026			December 31,<br>2025
Investments in private entities or organizations that do not report NAV per share:
Entities or organizations without observable price changes	$	1,692,619		$	1,721,351
Investment in a public entity with readily determinable fair value		761,563			854,927
Less: accumulated impairment		(1,255,599	)		(1,276,912	)
Long-term investments, net	$	1,198,583		$	1,299,366

The Company recognized an unrealized loss of $80,301 on long-term investment in a public entity with readily determinable fair value and an unrealized gain of $19,365 for the three months ended March 31, 2026 and 2025, respectively.

The Company recognized an unrealized loss of $159,946 on its long-term investment in Waqoo, Inc. ("Waqoo"), a public entity with readily determinable fair value, for the three months ended March 31, 2025. Prior to the Company's acquisition of Waqoo on December 19, 2025, Waqoo was a related party because the Company's CEO was its principal shareholder.

NOTE 10 — OTHER ASSETS

As of March 31, 2026 and December 31, 2025, other assets consist of the following:

	March 31,<br>2026		December 31,<br>2025
Security deposits	$	3,005,067	$	3,104,497
Corporate-owned life insurance policies		3,547,716		3,487,391
Long-term loans receivable, primarily student loans		488,751		513,326
Others		148,224		158,478
Total	$	7,189,758	$	7,263,692

NOTE 11 — ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES

As of March 31, 2026 and December 31, 2025, accrued liabilities and other current liabilities consist of the following:

	March 31,<br>2026		December 31,<br>2025
Individual income tax withheld on behalf of employees	$	754,775	$	1,059,398
Wages and bonus payables		4,049,387		3,892,930
Consumption tax payable		1,722,331		1,161,676
Loyalty program future point redemption obligation		5,166,413		5,247,162
Others		203,465		183,529
Total	$	11,896,371	$	11,544,695

F-24

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — BANK AND OTHER BORROWINGS

As of March 31, 2026 and December 31, 2025, the Company’s borrowings from banks and other financial institutions consist of the following:

Indebtedness				March 31,<br>2026			December 31,<br>2025
Guaranteed loans
Fixed rate loan	1.25	%	1.57	$	49,584		$	58,412
Variable rate loans	1.72	%	1.98		7,517,776			7,635,865
Subtotal	1.72	%	1.98		7,567,360			7,694,277
Unsecured loans
Fixed rate loans	2.33	%	0.38		149,204			149,204
Variable rate loans	1.16	%	4.46		31,505,520			33,777,069
Variable rate loans borrowed under revolving lines of credit	1.24	%	0.19		1,212,934			1,212,934
Subtotal	1.16	%	4.29		32,867,658			35,139,207
Total loans	1.27	%	3.86		40,435,018			42,833,484
Less: current portion					(8,987,118	)		(9,099,046	)
Non-current portion				$	31,447,900		$	33,734,438

* Pertained to information for loans outstanding as of March 31, 2026.

The Company borrowed funds from various banks and financial institutions for working capital, securities investments, and mergers and acquisitions ("M&A") purposes.

Interest expense related to the borrowings presented above was $111,860 and $3,961 for the three months ended March 31, 2026 and 2025, respectively.

As of March 31, 2026 and December 31, 2025, the Company had borrowings under revolving lines of credit as follows:

Line of credit *	March 31,<br>2026		December 31,<br>2025
Maximum available amounts	$	1,915,158	$	1,915,158
Borrowed amounts **	$	1,212,934	$	1,212,934

* These revolving lines of credit automatically renew annually unless canceled in writing.

** Borrowings typically have three-month to one-year terms.

The guarantee information of the Company’s outstanding loans as of March 31, 2026 and December 31, 2025 consists of the following:

	March 31,<br>2026		December 31,<br>2025
Co-guaranteed by CEO of subsidiaries within the Company’s organizational structure and Tokyo Credit Guarantee Association	$	101,685	$	122,047
Guaranteed by subsidiaries within the Company's organizational structure	$	7,465,675	$	7,572,230

F-25

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — BANK AND OTHER BORROWINGS (cont.)

As of March 31, 2026, future minimum payments for bank and other borrowings are as follows:

Years ending December 31,	Principal<br>Repayment
Remainder of 2026	$	7,231,423
2027		13,735,668
2028		7,326,957
2029		6,795,762
2030		5,345,208
Thereafter		—
Total	$	40,435,018

NOTE 13 — LEASES — AS A LESSEE

The Company has entered into operating leases for offices and sublease purposes, with terms ranging from two to seven years, and finance leases for certain medical and office equipment, with terms of four to five years. The estimated effect of lease renewal and termination options, as applicable, that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right-of-use assets and lease liabilities was included in the unaudited consolidated financial statements.

During the three months ended March 31, 2026 and 2025, certain operating leases were guaranteed by related parties of the Company.

Operating lease expenses for lease payments are recognized on a straight-line basis over the lease term. Finance lease costs include amortization, which is recognized on a straight-line basis over the expected life of the leased assets, and interest expenses, which are recognized following an effective interest rate method. Leases with an initial term of twelve months or less are not recorded in the unaudited consolidated balance sheets.

The components of lease costs are as follows:

	For the Three Months<br>Ended March 31,
	2026		2025
Finance lease costs:
Amortization of finance lease right-of-use assets	$	31,852	$	10,050
Interest on finance lease liabilities		2,946		2,246
Total finance lease costs		34,798		12,296
Operating lease costs		1,445,659		986,500
Short-term lease costs		48,080		40,341
Total lease costs	$	1,528,537	$	1,039,137

F-26

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 — LEASES — AS A LESSEE (cont.)

The following table presents supplemental information related to the Company’s leases:

	For the Three Months<br>Ended March 31,
	2026			2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,424,716		$	1,036,605
Operating cash flows from finance leases		2,946			2,246
Financing cash flows from finance leases		37,278			223,454
Non-cash information:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities		19,664			102,599
Finance lease right-of-use assets obtained in exchange for finance lease liabilities		—			581,129
Remeasurement of operating lease liabilities and right-of-use assets due to lease modifications		4,260,931			358,358
Weighted average remaining lease term (years)
Operating leases		2.38			1.74
Finance leases		2.18			2.77
Weighted average discount rate (per annum)
Operating leases		0.92	%		0.67	%
Finance leases		5.22	%		5.01	%

As of March 31, 2026, the future maturity of operating and finance lease liabilities is as follows:

Years ending December 31,	Operating<br>Leases			Finance<br>Leases
Remainder of 2026	$	4,257,027		$	93,292
2027		4,076,606			77,025
2028		2,748,357			43,969
2029		250,041			7,369
2030		54,085			—
Thereafter		—			—
Total undiscounted lease payments		11,386,116			221,655
Less: imputed interest		(133,231	)		(9,758	)
Present value of lease liabilities		11,252,885			211,897
Less: lease liabilities, current		(5,521,371	)		(118,297	)
Lease liabilities, non-current	$	5,731,514		$	93,600

NOTE 14 — INCOME TAXES

United States

SBC Medical Group Holdings Incorporated, SBC Medical Group, Inc., SBC Healthcare Inc., SBC Irvine, LLC, and Aikawa Medical Management, Inc. are incorporated in the United States and subject to federal income tax rate at 21% and California state income tax rate at 6.98%.

On July 4, 2025, President Trump signed into law the legislation commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The impacts of OBBBA were reflected in our results for the three-month period ended March 31, 2026, and there was no material impact on our unaudited consolidated financial statements.

F-27

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 — INCOME TAXES (cont.)

Japan

The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. During the three months ended March 31, 2026 and 2025, substantially all the taxable income of the Company was generated in Japan. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority. Income taxes in Japan applicable to the Company are imposed by the national, prefectural, and municipal governments, and in the aggregate resulted in an effective statutory rate of approximately 34.69% for the three months ended March 31, 2026 and 2025.

Vietnam

Shoubikai Medical Vietnam Co., Ltd. is incorporated in Vietnam and subject to income tax rate at 20% statutory tax rate with respect to the assessable income generated from Vietnam.

Singapore

Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, and SBC MEDICAL APAC PTE. LTD. are incorporated in Singapore and subject to income tax rate at 17% statutory tax rate with respect to the assessable profits generated from Singapore.

For the three months ended March 31, 2026 and 2025, the Company’s income tax expenses are as follows:

	For the Three Months<br>Ended March 31,
	2026			2025
Current	$	8,614,064		$	2,943,230
Deferred		(1,086,473	)		7,016,227
Total	$	7,527,591		$	9,959,457

The effective tax rate was 39.92% and 31.67% for the three months ended March 31, 2026 and 2025, respectively.

NOTE 15 — SHAREHOLDERS' EQUITY

The Company is authorized to issue 400,000,000 shares of common stock, par value of $0.0001 per share (“Common Stock”), and 20,000,000 shares of undesignated preferred stock, par value of $0.0001 per share.

As of March 31, 2026 and December 31, 2025, the Company had 103,881,251 shares issued and 102,576,943 shares outstanding on each date, with no preferred stock issued or outstanding.

F-28

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 — SHAREHOLDERS' EQUITY (cont.)

Warrants

The following table summarizes the stock option/warrant activities and related information for the three months ended March 31, 2026 and 2025:

		Weighted <br>Average<br>Exercise <br>Price			Intrinsic <br>Value
As of January 1, 2025	12,134,375	$	11.50	4.80	$	—
Granted	—		—	—		—
Exercised	—		—	—		—
Forfeited/Cancelled	—		—	—		—
As of March 31, 2025	12,134,375	$	11.50	4.55	$	—
As of January 1, 2026	12,134,375	$	11.50	3.80	$	—
Granted	—		—	—		—
Exercised	—		—	—		—
Forfeited/Cancelled	—		—	—		—
As of March 31, 2026	12,134,375	$	11.50	3.55	$	—
Vested and exercisable as of March 31, 2026	12,134,375	$	11.50	3.55	$	—

Each warrant entitles the registered holder to purchase one share of common stock at $11.50 per share.

NOTE 16 — DISAGGREGATION OF REVENUES

Revenues generated from different revenue streams consist of the following:

	For the Three Months<br>Ended March 31,
	2026		2025
Franchising revenue	$	9,091,740	$	15,719,282
Procurement revenue		12,344,366		14,332,783
Management services revenue		11,929,791		8,728,103
Rental services revenue		3,435,922		5,640,514
Others		6,258,743		2,908,019
Total	$	43,060,562	$	47,328,701

During the three months ended March 31, 2026 and 2025, the Company recognized revenue of $1,413,371 and $843,755 from the opening balance of advances from customers, respectively; and recognized revenue of $1,073,520 and nil from the opening balance of advances from customers — related parties, respectively.

As of March 31, 2026 and December 31, 2025, and for the three months ended March 31, 2026 and 2025, substantially all of our long-lived assets and revenues generated were attributed to the Company’s operations in Japan.

F-29

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS

The related parties that had material transactions for the three months ended March 31, 2026 and 2025 consist of the following:

Name of Related Parties	Nature of Relationship as of March 31, 2026
Yoshiyuki Aikawa	Controlling shareholder, director and CEO of the Company
Yoshiko Aikawa	Mother of the Company's CEO and serving as a director of SBC Japan, a principal operating subsidiary of the Company
Medical Corporation Shobikai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Kowakai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Nasukai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Aikeikai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Jukeikai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Ritz Cosmetic Surgery	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Association Furinkai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Association Junikai	The relatives of CEO of the Company being the Members of the MC
Medical Corporation Misakikai	The relatives of CEO of the Company being the Members of the MC
General Incorporated Association Miotokai	The relatives of CEO of the Company being the Members of the MC
Hariver Inc.	Controlled by the CEO of the Company
Skynet Academy Co., Ltd.	Subsidiary of Hariver, Inc., a company controlled by the CEO of the Company
Japan Medical & Beauty Inc.	Controlled by the CEO of the Company
AI Med Inc.	The CEO of the Company is a principal shareholder of AI Med Inc.
Co-medical Co., Ltd.	The CEO of the Company is a principal shareholder of Co-medical Co., Ltd.
SBC Inc.	Controlled by the CEO of the Company
SBC Shonan Osteopathic Clinic Inc.	The CEO of the Company is a principal shareholder of SBC Shonan Osteopathic Clinic Inc.
General Incorporated Association SBC	The CEO of the Company being the Member of General Incorporated Association SBC
Public Interest Foundation SBC Medical Promotion Foundation	The relative of CEO of the Company being a Member of Public Interest Foundation SBC Medical Promotion Foundation
SBC Tokyo Medical University	The CEO of the Company is the chairman of SBC Tokyo Medical University
SBC Irvine MC	Significantly influenced by the Company
MEDIROM Healthcare Technologies Inc. ("MEDIROM")	Fumitoshi Fujiwara, an independent director and Chairman of the Audit Committee of the Company, serves as a Director and Chief Financial Officer of MEDIROM, a company listed on Nasdaq.
SBC Kijimadaira Resort Inc.	Previously a subsidiary of SBC Inc., a company controlled by the CEO of the Company; Merged with and into SBC Inc. on July 1, 2025, and corporate existence ceased.

F-30

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

During the three months ended March 31, 2026 and 2025, the transactions with related parties are as follows:

	For the Three Months<br>Ended March 31,
Revenues, net	2026		2025
Medical Corporation Shobikai	$	10,460,422	$	11,552,455
Medical Corporation Kowakai		7,972,011		11,112,924
Medical Corporation Nasukai		8,903,370		12,290,845
Medical Corporation Aikeikai		3,099,413		3,642,703
Medical Corporation Jukeikai		2,528,294		1,173,970
Medical Corporation Ritz Cosmetic Surgery		773,550		1,513,623
Japan Medical & Beauty Inc.		9,560		9,833
Hariver Inc.		5,736		4,917
SBC Inc.		267		108
Public Interest Foundation SBC Medical Promotion Foundation		13		11
SBC Tokyo Medical University		48,253		14,162
Yoshiyuki Aikawa		—		29,187
AI Med Inc.		107		92
SBC Irvine MC		—		201,785
Medical Corporation Association Furinkai		2,658,007		2,634,692
Medical Corporation Association Junikai		1,293,712		1,069,239
Skynet Academy Co., Ltd.		6,373		6,556
SBC Kijimadaira Resort Inc.		—		43
Medical Corporation Misakikai		181,633		—
General Incorporated Association Miotokai		14,339		—
Total	$	37,955,060	$	45,257,145
	For the Three Months<br>Ended March 31,
---	---	---	---	---
Cost of revenues	2026		2025
Japan Medical & Beauty Inc.	$	124,389	$	3,299,356
SBC Tokyo Medical University		—		89,394
SBC Inc.		—		68,178
Total	$	124,389	$	3,456,928
	For the Three Months<br>Ended March 31,
---	---	---	---	---
Selling, general and administrative expenses	2026		2025
Medical Corporation Shobikai	$	123,936	$	—
Medical Corporation Kowakai		7,155		—
Medical Corporation Nasukai		1,836		—
Medical Corporation Aikeikai		23,911		—
Medical Corporation Jukeikai		863		—
SBC Inc.		923		—
Japan Medical & Beauty Inc.		3,677		—
SBC Tokyo Medical University		86,906		—
General Incorporated Association SBC		2,850		—
Co-medical Co., Ltd.		1,468		—
Medical Corporation Misakikai		86,650		—
Yoshiko Aikawa		3,218		—
Total	$	343,393	$	—

F-31

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

As of March 31, 2026 and December 31, 2025, the balances with related parties are as follows:

Accounts receivable	March 31,<br>2026		December 31,<br>2025
Medical Corporation Shobikai	$	9,261,110	$	6,618,853
Medical Corporation Nasukai		9,076,620		7,268,301
Medical Corporation Kowakai		8,538,744		6,930,382
Medical Corporation Aikeikai		2,745,888		2,938,667
Medical Corporation Jukeikai		1,669,007		920,649
Medical Corporation Association Furinkai		922,610		1,065,239
Medical Corporation Ritz Cosmetic Surgery		850,541		978,614
Medical Corporation Association Junikai		563,220		700,794
SBC Tokyo Medical University		27,025		5,614
AI Med Inc.		51		33
SBC Inc.		219		382
Public Interest Foundation SBC Medical Promotion Foundation		27		30
General Incorporated Association SBC		—		5,171
Medical Corporation Misakikai		124,291		73,734
General Incorporated Association Miotokai		5,179		5,267
Total	$	33,784,532	$	27,511,730
Short-term investments	March 31,<br>2026		December 31,<br>2025
---	---	---	---	---
MEDIROM Healthcare Technologies Inc.	$	313,865	$	319,193
Total	$	313,865	$	319,193
Finance lease receivables	March 31,<br>2026			December 31,<br>2025
---	---	---	---	---	---	---
Medical Corporation Shobikai	$	5,087,848		$	4,830,319
Medical Corporation Kowakai		4,904,411			5,586,393
Medical Corporation Nasukai		6,430,143			6,633,510
Medical Corporation Aikeikai		2,037,290			2,206,227
Medical Corporation Ritz Cosmetic Surgery		1,587,949			1,885,804
Medical Corporation Jukeikai		1,873,023			953,857
Medical Corporation Association Furinkai		1,219,433			1,432,106
Medical Corporation Association Junikai		2,721,898			3,033,529
SBC Shonan Osteopathic Clinic Inc.		12,955			17,123
Total		25,874,950			26,578,868
Less: current portion		(13,326,150	)		(12,832,355	)
Non-current portion	$	12,548,800		$	13,746,513
Due from related party, net	March 31,<br>2026			December 31,<br>2025
---	---	---	---	---	---	---
SBC Irvine MC	$	2,762,999		$	2,762,999
Less: allowance for credit loss		(2,762,999	)		(2,762,999	)
Total	$	—		$	—
Long-term investments in MCs	March 31,<br>2026		December 31,<br>2025
---	---	---	---	---
Medical Corporation Shobikai	$	6,277	$	6,384
Medical Corporation Kowakai		6,277		6,384
Medical Corporation Nasukai		6,277		6,384
Medical Corporation Aikeikai		6,277		6,384
Medical Corporation Jukeikai		6,751,613		6,866,219
Medical Corporation Ritz Cosmetic Surgery		10,762,843		10,945,538
Total	$	17,539,564	$	17,837,293

F-32

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

Accounts payable	March 31,<br>2026		December 31,<br>2025
Japan Medical & Beauty Inc.	$	57,278	$	48,839
Medical Corporation Shobikai		162,737		230,354
Medical Corporation Kowakai		77,006		101,565
Medical Corporation Nasukai		97,181		127,750
Medical Corporation Aikeikai		49,210		57,068
Medical Corporation Jukeikai		8,238		8,718
Medical Corporation Association Furinkai		9,258		11,674
Medical Corporation Ritz Cosmetic Surgery		5,934		10,462
General Incorporated Association SBC		—		536
SBC Tokyo Medical University		31,387		31,919
SBC Shonan Osteopathic Clinic Inc.		271		958
Medical Corporation Misakikai		25,706		21,620
Yoshiko Aikawa		3,418		—
Total	$	527,624	$	651,463
Advances from customers	March 31,<br>2026		December 31,<br>2025
---	---	---	---	---
Medical Corporation Shobikai	$	1,340,056	$	1,712,820
Medical Corporation Kowakai		909,593		1,145,776
Medical Corporation Nasukai		868,398		1,098,435
Medical Corporation Aikeikai		345,807		430,305
Medical Corporation Jukeikai		82,765		100,808
Medical Corporation Ritz Cosmetic Surgery		54,803		64,569
Medical Corporation Association Furinkai		299,914		370,797
Medical Corporation Association Junikai		315,721		433,711
Total	$	4,217,057	$	5,357,221
Due to related party	March 31,<br>2026		December 31,<br>2025
---	---	---	---	---
Yoshiyuki Aikawa	$	2,670,016	$	2,692,673
Total	$	2,670,016	$	2,692,673
	For the Three Months<br>Ended March 31,
---	---	---	---	---	---
Allowance for credit loss movement	2026		2025
Beginning balance	$	2,762,999	$	2,836,013
Provision for credit loss		—		—
Reversal of credit loss		—		(70,000	)
Ending balance	$	2,762,999	$	2,766,013

The balances of due to and due from related parties represent outstanding loans from and to related parties, respectively, as of March 31, 2026 and December 31, 2025. These loans are unsecured, interest-free and due on demand.

For the three months ended March 31, 2026 and 2025, the Company paid officer compensation of approximately JPY60 million ($382,385 and $393,335, respectively) to Yoshiko Aikawa, the mother of the Company's CEO, and recorded it in selling, general and administrative expenses. Ms. Aikawa served as the Representative Director of the Company's principal operating subsidiary, SBC Medical Group Co., Ltd. (SBC Japan), until March 25, 2026. On that date, she resigned from her position as Representative Director and continues to serve as a director of the subsidiary.

Also see Note 2(a), 9, 12, 13, 16 and 19 for more transactions with related parties.

F-33

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 — SEGMENT REPORTING

The Company’s chief operating decision maker (“CODM”), Chief Executive Officer, reviews consolidated results of operations to make decisions, therefore the Company views its operations and manages its business as a single operating segment. The Company’s revenues for its single operating segment are derived from providing comprehensive management services to MCs and their clinics for the three months ended March 31, 2026 and 2025.

The accounting policies for the single operating segment are the same as those described in Note 2. The CODM evaluates performance for the Company’s single operating segment and decides how to allocate resources based on the Company’s consolidated net income that is reported in the unaudited consolidated statements of operations and comprehensive income as net income. The measure of segment assets is reported on the unaudited consolidated balance sheets as total assets. The CODM allocates resources across the Company based on consolidated net income derived during the annual budgeting process and throughout the year in monitoring actual results compared to budget and updated forecasts. These results are used to assess segment performance.

The operating segment financial information regularly reviewed by the CODM, inclusive assets, revenues, expenses, profit or loss, and noncash items, is presented on a consolidated basis in the same amount and using the same captions as those included in the unaudited consolidated statements of operations and comprehensive income, unaudited consolidated balance sheets, and unaudited consolidated statements of cash flows. There are no additional segment expense categories regularly provided to the CODM. Therefore, there are also no amounts classified as other segment items requiring disclosure.

NOTE 19 — COMMITMENTS AND CONTINGENCIES

Guarantees

As of March 31, 2026 and December 31, 2025, a subsidiary of the Company provided a guarantee on the debt of its CEO in the amounts of $219,601 and $228,210, respectively. As of March 31, 2026 and December 31, 2025, the Company did not record a liability in the unaudited consolidated balance sheets for the guarantee because, based on the management's assessment, it was not probable that the Company would be required to make payments under the guarantee.

Investment Commitment (OT Midco)

In addition to the $20 million investment in OT Midco discussed in Note 4, the Company has committed to make an additional $5 million investment in cash, payable in December 2026 or such other month as may be mutually agreed upon by the Company and the investee. The Company will recognize the additional investment when the additional cash investment is made.

Litigation

From time to time, the Company is involved in legal proceedings, claims and other matters arising in the ordinary course of business. The Company assesses the likelihood of an adverse outcome and, where appropriate, establishes accruals for loss contingencies in accordance with applicable accounting guidance. If a loss is reasonably possible, the Company discloses the nature of the contingency and an estimate of the possible loss or range of loss, or states that such an estimate cannot be made.

On February 11, 2026, a purported stockholder class action complaint was filed against the Company and its directors in the Court of Chancery of the State of Delaware, alleging violations under Delaware General Corporation Law Section 141(k) and Delaware common law, due to the Company’s charter wrongly restricting the removal of directors to “only for cause.” The complaint seeks an unspecified amount of declaratory and injunctive relief, class certification, and an award of attorneys’ fees and costs, among other relief as the court may deem just and proper. The Company cannot reasonably estimate a range of loss for this action as of the date the unaudited consolidated financial statements are issued.

NOTE 20 — SUBSEQUENT EVENTS

In April 2026, the Company completed a secondary public offering of 3,565,000 shares of common stock, at a price of $3.25 per share, including 465,000 shares pursuant to the underwriters' option to purchase additional shares. All of the shares were sold by the Company's CEO (the "Seller"). The Company did not sell any shares or receive any proceeds from the offering, nor did it repurchase any shares from the Seller. In connection with the offering, the Company incurred approximately $1.4 million in transaction costs.

F-34

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis summarize the significant factors affecting our operating results, financial condition, liquidity, and cash flows for the periods presented below. The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”). The forward-looking statements contained herein are based on management’s judgment, assumptions made by management and information currently available to it. Actual results could differ materially from those discussed or implied in the forward-looking statements as a result of various factors, including those described elsewhere in this Quarterly Report and the Annual Report, particularly in “Part I, Item 1A. Risk Factors” of the Annual Report and the section entitled “Cautionary Note Regarding Forward-Looking Statements” herein.

Unless the context otherwise requires, any reference in this section of this Quarterly Report to the “Company,” “SBC,” “we,” “us” or “our” refers to Legacy SBC (defined below) and its consolidated subsidiaries and variable interest entity (“VIE”), prior to the consummation of the Business Combination and to SBC Medical Group Holdings Incorporated, together with its consolidated subsidiaries and VIE, following the Business Combination.

Overview

SBC Medical Group, Inc. (formerly known as SBC Medical Group Holdings Incorporated), a Delaware corporation and subsidiary of the Company (“Legacy SBC”) is a management company headquartered in Irvine, California and Tokyo, Japan, that provides management services to cosmetic treatment centers mainly in Japan.

On September 17, 2024, Legacy SBC consummated its going-public business combination with Pono Capital Two, Inc. (“Business Combination”). In connection with the closing of the Business Combination, Pono Capital Two, Inc. changed its name to SBC Medical Group Holdings Incorporated and the Company’s common stock began trading on Nasdaq under the ticker symbol “SBC”.

The Company and its subsidiaries are primarily focused on providing comprehensive management services to franchisee clinics. These services include advertising and marketing across various platforms (such as social media networks), staff management (such as recruitment and training), booking and reservation services for franchisee clinic customers. We also support franchisee clinics through assistance with employee housing rentals and facility rentals, leasehold improvement services and design of clinics, medical equipment and medical consumables procurement (resale), the provision of cosmetic products to clinics for resale to clinic customers, licensure of the use of patent-pending and non-patented medical technologies, trademark and brand use, IT software solutions (including but not limited to remote medical consultations), management of the customer rewards program (customer loyalty point program), and payment tools.

Our wholly owned subsidiary, SBC Medical Group Co., Ltd., a Japanese corporation (“SBC Medical Sub”, or “SBC Japan”), is designated as a “medical service corporation”. In Japan, a medical service corporation is a legal entity that provides management services to “medical corporations”. The management services are conducted through franchisor-franchisee contracts and/or service contracts between SBC Medical Sub and the medical corporations (and, where applicable, other entities) that own domestic franchisee treatment centers in Japan. These treatment centers provide services including but are not limited to breast augmentation, liposuction, rejuvenation treatments (including treatment of wrinkles, acne, scars, cellulite, excess fat, discoloration, and signs of aging), laser skin toning and spot removal, eyes double fold surgery, rhinoplasty, treatment of osmidrosis and hyperhidrosis, hair transplants, gynecological formation treatments, laser hair removal, face line surgeries, cosmetic dental procedures, tattoo removal, lasik eye surgery, lateral canthoplasty, brow lift procedures, androgenetic alopecia treatment, and cheek sagging prevention methods. Separately, we also enter into franchise arrangements with certain independently operated clinics in Japan pursuant to our Partner Doctor Independence Support Program Agreements, which differ in certain respects from our arrangements with the medical corporations and/or general incorporated associations.

The Company’s subsidiaries have entered into franchisor-franchisee contracts and service contracts with seven medical corporations, consisting of Medical Corporation Shobikai, Medical Corporation Kowakai, Medical Corporation Nasukai, Medical Corporation Aikeikai, Medical Corporation Jukeikai, Medical Corporation Ritz Cosmetic Surgery and, effective as of June 2025, Medical Corporation Association Furinkai. In addition, the Company has entered into service contracts since September 2023 with Medical Corporation Association Furinkai and Medical Corporation Association Junikai; and in July 2025 with Medical Corporation Misakikai and General Incorporated Association Miotokai, following the acquisition of MB career lounge Co., Ltd. (collectively with the seven franchisee medical corporations, the “Medical Corporations and/or General Incorporated Associations” or “MCs”). All of the Medical Corporations and General Incorporated Associations are deemed to be related parties of the Company since relatives of the CEO of the Company are the members* of general meetings of members** of the Medical Corporations or General Incorporated Associations. The CEO of the Company was previously a member* of the six franchisee Medical Corporations until he ceased being a member* in July 2023. The Company, through SBC Medical Sub, owns equity interests*** of six franchisee medical corporations. Although the Company, through SBC Medical Sub, has an equity interest*** to the rights to receive a distribution of residual assets in proportion to the amount of contribution in certain circumstances as provided in the Japanese Medical Care Act and in the articles of incorporation (except Medical Corporation Association Furinkai, Medical Corporation Association Junikai, Medical Corporation Misakikai and General Incorporated Association Miotokai), the Company or SBC Medical Sub does not have voting control over the corporate actions at general meetings of members** of the Medical Corporations or General Incorporated Associations per the requirements of the Japanese Medical Care Act.

* “Members (or shain) of general meeting of members (or shain)” means one of the organs of a Japanese Medical Corporation, and element of general meeting of members (as explained below) of the Medical Corporation. Each member (or shain) of general meeting of members (or shain) has one voting right.

** “General meeting of members (or shain)” means one of the organs of a Japanese Medical Corporation, and the highest decision-making body of the Medical Corporation, of which the main duties include the election and dismissal of directors (or riji) and corporate auditors (or kanji) of the Medical Corporation, and the approval of financial statements and statutory business reports of the Medical Corporation.

*** “Equity interest (or mochibun)” means the right to receive distribution of the residual assets of a Japanese Medical Corporation in proportion to the amount of contribution (Article 10.3.3.2 brackets of the Supplementary Provision of the Japanese Medical Care Act.). However, the procedures for an equity interest (or mochibun) holder to exercise and realize the right to receive distribution of the residual assets of the Medical Corporation is more complicated than that of a stock corporation due to the restrictions under the Medical Care Act.

Financial Overview

For the three months ended March 31, 2026 and 2025, we generated revenues of $43,060,562 and $47,328,701, respectively, we reported net income attributable to SBC Medical Group Holdings Incorporated of $11,308,071 and $21,502,446, respectively, and cash flows provided by operating activities of $9,231,938 and $1,928,621, respectively. As of March 31, 2026, we had retained earnings of $251,756,691.

Our primary mission is to provide high-quality comprehensive management services to the MCs and expand our “Shonan Beauty Clinic” brand. We plan to achieve the mission by maintaining and strengthening our market position and brand in the cosmetic medical treatment management market in Japan, Vietnam and Singapore, and by growing our presence globally.

Further information regarding our business is provided in “Part I, Item 1. Business” of our Annual Report.

Results of Operations

Comparison of Results of Operations for the Three Months Ended March 31, 2026 and 2025

Because we acquired control of Waqoo, Inc. ("Waqoo") on December 19, 2025 and consolidated the financial information of Waqoo and its subsidiary on a three-month reporting lag, Waqoo’s results of operations did not materially impact our consolidated results for the three months ended March 31, 2026.

The following table summarizes our operating income as reflected in our unaudited consolidated statements of operations and comprehensive income for the three months ended March 31, 2026 and 2025, and presents information regarding amounts and percentage changes during those periods.

	For the Three Months<br>Ended March 31,
	2026					2025						Variance
	Amount		% of revenue			Amount			% of revenue			Amount			%
Revenues, net (including net revenues provided to related parties)	$	43,060,562		100.00	%	$	47,328,701			100.00	%	$	(4,268,139	)		(9.02	)%
Cost of revenues (including cost of revenues from related parties)		12,713,828		29.53	%		9,595,617			20.27	%		3,118,211			32.50	%
Gross profit		30,346,734		70.47	%		37,733,084			79.73	%		(7,386,350	)		(19.58	)%
Operating expenses (including selling, general and administrative expenses from related parties)		12,626,719		29.32	%		13,531,010			28.59	%		(904,291	)		(6.68	)%
Income from operations		17,720,015		41.15	%		24,202,074			51.14	%		(6,482,059	)		(26.78	)%
Other income		1,136,596		2.64	%		7,249,333			15.32	%		(6,112,737	)		(84.32	)%
Income before income taxes		18,856,611		43.79	%		31,451,407			66.45	%		(12,594,796	)		(40.05	)%
Income tax expense		7,527,591		17.48	%		9,959,457			21.04	%		(2,431,866	)		(24.42	)%
Net income		11,329,020		26.31	%		21,491,950			45.41	%		(10,162,930	)		(47.29	)%
Less: net income (loss) attributable to non-controlling interests		20,949		0.05	%		(10,496	)		(0.02	)%		31,445			(299.59	)%
Net income attributable to SBC Medical Group Holdings Incorporated	$	11,308,071		26.26	%	$	21,502,446			45.43	%	$	(10,194,375	)		(47.41	)%

Note: Percentages are calculated as a percentage of total revenue and may not sum due to rounding.

Revenues, Net

Revenues, net generated from different revenue streams consist of the following:

	For the Three Months<br>Ended March 31,				Variance
	2026		2025		Amount			%
Franchising revenue	$	9,091,740	$	15,719,282	$	(6,627,542	)		(42.16	)%
Procurement revenue		12,344,366		14,332,783		(1,988,417	)		(13.87	)%
Management services revenue		11,929,791		8,728,103		3,201,688			36.68	%
Rental services revenue		3,435,922		5,640,514		(2,204,592	)		(39.08	)%
Others		6,258,743		2,908,019		3,350,724			115.22	%
Total	$	43,060,562	$	47,328,701	$	(4,268,139	)		(9.02	)%

Revenues, net, decreased by 9.02% from $47,328,701 for the three months ended March 31, 2025 to $43,060,562 for the three months ended March 31, 2026.

Japanese Yen (“JPY”) depreciated against the U.S. dollar during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The average rate against the dollar was 156.9101 yen for the three months ended March 31, 2026 compared to 152.5417 yen for the same period in 2025. For the three months ended March 31, 2026 and 2025, we generated net revenues of $43,060,562 (JPY 6,757 million) and $47,328,701 (JPY 7,220 million), respectively, we reported net income of $11,329,020 (JPY 1,778 million) and $21,491,950 (JPY 3,252 million), respectively. Overall, the unfavorable impacts of the period-to-period foreign exchange rate changes on net revenues and net income were $1,233,130 and $324,425, respectively, for the three months ended March 31, 2026.

The main reasons for the variance of $4,268,139 in revenues, net per revenue stream are as follows:

Franchising Revenue

Franchising revenue for the three months ended March 31, 2026 decreased to $9,091,740 by $6,627,542, or 42.16%, from $15,719,282 for the same period in 2025. This decrease was mainly due to the revision of the fee structure for determining service fees for each clinic of MCs based on the size, scale and performance of each clinic effective as of April 1, 2025.

Procurement Revenue

The procurement revenue for the three months ended March 31, 2026 decreased to $12,344,366 by $1,988,417, or 13.87%, from $14,332,783 for the same period in 2025. This decrease was mainly due to a decline in orders from MCs for medical materials, reflecting a temporary increase in procurement activities associated with the business expansion of MCs in the same period of the prior year.

Management Services Revenue

The management services revenue for the three months ended March 31, 2026 increased to $11,929,791 by $3,201,688, or 36.68%, from $8,728,103 for the same period in 2025. This increase was mainly due to the lower point redemption, which was accounted as a reduction of loyalty program management revenue, resulting from the revision of program policy effective in June 2025, partially offset by the decrease resulting from the revision of the fee structure for determining service fees for each clinic of MCs based on the size, scale and performance of each clinic effective as of April 1, 2025.

Rental Services Revenue

The rental services revenue for the three months ended March 31, 2026 decreased to $3,435,922 by $2,204,592, or 39.08%, from $5,640,514 for the same period in 2025. This decrease was mainly due to a decline in revenue from rentals of laser hair removal equipment to existing clinics, as the prior-year period included a higher level of such rentals primarily associated with clinic openings.

Others

The other revenues for the three months ended March 31, 2026 increased to $6,258,743 by $3,350,724, or 115.22%, from $2,908,019 for the same period in 2025. This increase was mainly due to higher revenue related to leasehold improvement services revenue as well as higher revenues from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, which were acquired in November 2024 and consolidated in the Company's financial statements with three-month reporting lag, as the current-year period reflected three months of their results compared with only one month in the prior-year period.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2026 was $12,713,828 compared to $9,595,617 for the same period in 2025. The increase was mainly due to higher costs related to leasehold improvement services, the inclusion of three months of costs from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries in the current-year period under the Company’s three-month reporting lag, compared with only one month in the prior-year period, and higher personnel costs resulting from an increase in headcount to support newly established departments since April 2025, partially offset by lower costs associated with the decline in revenue from rentals of laser hair removal equipment to existing clinics.

Gross Profit

Gross profit for the three months ended March 31, 2026 was $30,346,734 compared to $37,733,084 for the same period in 2025. The decrease in gross profit by $7,386,350 or 19.58% was mainly due to the decrease in franchising revenue with relatively high gross margin as a result of the factors described above.

Operating Expenses

Operating expenses for the three months ended March 31, 2026 and 2025 were as follows:

	For the Three Months<br>Ended March 31,				Variance
	2026		2025		Amount			%
Salaries and welfare	$	6,197,751	$	6,441,742	$	(243,991	)		(3.79	)%
Depreciation and amortization expense		310,536		461,405		(150,869	)		(32.70	)%
Consulting and professional service fees		3,474,589		3,298,082		176,507			5.35	%
Advertising expense		567,346		682,166		(114,820	)		(16.83	)%
Taxes and dues		82,365		245,462		(163,097	)		(66.44	)%
Recruiting expense		247,884		244,377		3,507			1.44	%
Lease expense		602,246		640,589		(38,343	)		(5.99	)%
Office, utility and other expenses		1,144,002		1,517,187		(373,185	)		(24.60	)%
Total	$	12,626,719	$	13,531,010	$	(904,291	)		(6.68	)%

The operating expenses decreased to $12,626,719 for the three months ended March 31, 2026 by $904,291, or 6.68%, from $13,531,010 for the same period in 2025. The decrease was mainly due to the decrease in office, utility and other expenses and the depreciation of JPY, partially offset by the increase in consulting and professional service fees.

Office, utility and other expenses decreased by $373,185, or 24.60%, to $1,144,002 for the three months ended March 31, 2026 from $1,517,187 for the same period in 2025, mainly due to the decrease in insurance expenses.

Other Income (Expenses)

Other income (expenses) for the three months ended March 31, 2026 and 2025, were as follows:

	For the Three Months<br>Ended March 31,						Variance
	2026			2025			Amount			%
Interest income	$	121,369		$	55,333		$	66,036			119.34	%
Interest expense		(114,806	)		(6,207	)		(108,599	)		1,749.62	%
Foreign currency exchange gain (loss), net		861,678			(1,058,526	)		1,920,204			(181.40	)%
Other income		491,564			151,328			340,236			224.83	%
Other expenses		(223,209	)		(638,733	)		415,524			(65.05	)%
Gain on redemption of life insurance policies		—			8,746,138			(8,746,138	)		(100.00	)%
Total	$	1,136,596		$	7,249,333		$	(6,112,737	)		(84.32	)%

Other income (expenses), net was $1,136,596 for the three months ended March 31, 2026 compared to $7,249,333 for the same period in 2025. The decrease in other income (expense) by $6,112,737 or 84.32% was mainly due to a gain on redemption of life insurance policies of $8,746,138 in 2025, partially offset by foreign currency exchange gain resulting from the depreciation of the Japanese Yen.

Income Tax Expense

Income tax expense for the three months ended March 31, 2026 was $7,527,591 compared to $9,959,457 for the same period in 2025. The decrease in income tax expense by $2,431,866 or 24.42% was mainly due to the decrease in income before income taxes.

The effective tax rate was 39.92% and 31.67% for the three months ended March 31, 2026 and 2025, respectively. The increase of 8.25 percentage points was mainly due to deferred tax assets related to losses incurred by certain entities that are not considered more likely than not to be realized due to the lack of sufficient future taxable income at those entities.

Net Income

As a result of the foregoing, we reported net income of $11,329,020 for the three months ended March 31, 2026, representing a decrease of $10,162,930 or 47.29% from $21,491,950 for the three months ended March 31, 2025.

Net Income Attributable to Non-controlling Interests

Net income attributable to non-controlling interests was $20,949 for the three months ended March 31, 2026, as compared to net loss attributable to non-controlling interests of $10,496 for the three months ended March 31, 2025.

Liquidity and Capital Resources

As of March 31, 2026, the Company had $167,305,095 in cash and cash equivalents compared to $163,773,838 as of December 31, 2025. In addition, the Company had $36,764,725 in accounts receivable as of March 31, 2026 compared to $29,899,751 as of December 31, 2025. The Company’s accounts receivable includes balances due from customers for the services and goods provided by the Company and accepted by customers.

As of March 31, 2026, the Company’s working capital balance was $176,212,567. In assessing liquidity, management monitors and analyzes the Company’s cash and cash equivalents, ability to generate sufficient future earnings, and operating and capital investment commitments. The Company believes that its current cash and cash equivalents from operations and borrowings from banks will be sufficient to meet its working capital needs for the next 12 months from the date of issuance of the unaudited consolidated financial statements included in this Quarterly Report.

To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of indebtedness, equity financings or a combination of these potential sources of funds. While we face uncertainties regarding the size and timing of our fundraising, which will be affected by general economic, financial, and other factors that may be beyond our control, we believe that we will be able to continue to meet our current business needs through the use of cash flows generated from operations.

The Company evaluates its capital allocation practices with the objective of enhancing stockholder value, while considering performance, the business environment, macroeconomic conditions and other relevant factors. The Company expects to deploy capital for investment opportunities that align with its growth strategy, selectively pursuing prospects in the expanding global medical aesthetics market. Additionally, the Company continues to evaluate alternative methods for deployment of capital, including in the form of dividends to stockholders and repurchases of shares of common stock. The actual timing, manner and value of any such options will depend on several factors, including the market price of our stock, general market and economic conditions, our liquidity requirements, applicable legal requirements and other business considerations.

Cash Flows for the Three Months Ended March 31, 2026 and 2025

The following table provides a summary of our cash flows for the periods indicated.

	For the Three Months<br>Ended March 31,						Variance
	2026			2025			Amount			%
Net cash provided by operating activities	$	9,231,938		$	1,928,621		$	7,303,317			378.68	%
Net cash used in investing activities		(528,025	)		(978,807	)		450,782			(46.05	)%
Net cash used in financing activities		(1,842,414	)		(280,380	)		(1,562,034	)		557.11	%
Effect of exchange rate changes		(3,330,242	)		6,342,297			(9,672,539	)		(152.51	)%
Net change in cash and cash equivalents		3,531,257			7,011,731			(3,480,474	)		(49.64	)%
Cash and cash equivalents as of the beginning of the period		163,773,838			125,044,092			38,729,746			30.97	%
Cash and cash equivalents as of the end of the period	$	167,305,095		$	132,055,823		$	35,249,272			26.69	%

Operating Activities

Net cash provided by operating activities was $9,231,938 for the three months ended March 31, 2026, mainly derived from net income of $11,329,020 for the period, reconciled by a non-cash lease expense of $1,420,824 and deferred income tax benefit of $1,086,473, and net changes in operating assets and liabilities, which mainly included an increase in accounts receivable - related parties of $6,821,339, an increase in accounts payable of $2,484,437, a decrease in customer loans receivable of $3,270,347, and a decrease in operating lease liabilities of $1,424,716.

Net cash provided by operating activities was $1,928,621 for the three months ended March 31, 2025, mainly derived from net income of $21,491,950 for the period, reconciled by a gain on redemption of life insurance policies of $8,746,138 and deferred income tax expense of $7,016,227, and net changes in operating assets and liabilities, which mainly included an increase in finance lease receivables – related parties of $2,779,253, a decrease in customer loans receivable of $4,501,760, an increase in prepaid expenses and other current assets of $3,150,243, an increase in accounts payable of $3,235,017, a decrease in advances from customers – related parties of $2,114,829, and a decrease in income tax payable of $17,635,239.

Investing Activities

During the three months ended March 31, 2026, net cash used in investing activities of $528,025 was mainly the result of prepayments for property and equipment of $0.4 million and purchase of property and equipment of $0.1 million.

During the three months ended March 31, 2025, net cash used in investing activities of $978,807 was mainly the result of purchase of long-term investments of $0.6 million, and prepayments for property and equipment of $0.5 million, offset by proceeds from disposal of property and equipment of $0.3 million.

Financing Activities

During the three months ended March 31, 2026, net cash used in financing activities of $1,842,414 was mainly due to the repayments of bank and other borrowings of $1.8 million.

During the three months ended March 31, 2025, net cash used in financing activities of $280,380 was mainly due to the repayments of finance lease liabilities of $0.2 million.

Recent Developments

There have been no material recent developments during the quarter ended March 31, 2026, other than as otherwise disclosed in this Quarterly Report.

Contractual Obligations

Lease Agreements

The Company holds a significant number of leases classified as operating leases for offices and sublease purposes, and finance leases for certain medical and office equipment.

As of March 31, 2026, the future maturity of lease liabilities is as follows:

Years ending December 31,	Finance Lease			Operating Lease
Remaining of 2026	$	93,292		$	4,257,027
2027		77,025			4,076,606
2028		43,969			2,748,357
2029		7,369			250,041
2030		—			54,085
Thereafter		—			—
Total undiscounted lease payments		221,655			11,386,116
Less: imputed interest		(9,758	)		(133,231	)
Total lease liabilities	$	211,897		$	11,252,885

Bank and Other Borrowings

The Company borrowed funds from various banks and other financial institutions for working capital, securities investments, and mergers and acquisitions purposes.

As of March 31, 2026, future minimum borrowing payments are as follows:

Years ending December 31,	Principal <br>Repayment
Remaining of 2026	$	7,231,423
2027		13,735,668
2028		7,326,957
2029		6,795,762
2030		5,345,208
Thereafter		—
Total	$	40,435,018

Off-Balance Sheet Arrangements (Off-Balance Sheet Transactions)

There are no off-balance sheet arrangements as of March 31, 2026 and December 31, 2025.

Foreign Exchange Rate Risk

We are exposed to foreign currency exchange rate fluctuations because our business is primarily conducted in Japan and most of our revenues and costs are denominated in Japanese yen, whereas our reporting currency is the U.S. dollar. The weakening of the Japanese yen against the U.S. dollar would have a negative impact on our financial results and vice versa.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.

We believe that there have been no material changes to our critical accounting policies and estimates from those disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of our Annual Report.

Emerging Growth Company

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we will take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

Smaller Reporting Company

Additionally, we are a “smaller reporting company,” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the last business day of our second fiscal quarter, or (ii) our annual revenue exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the last business day of our second fiscal quarter. If we continue to be a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from these certain reduced disclosure requirements that are available to smaller reporting companies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based on this evaluation, management concluded that our disclosure controls and procedures were not effective as of March 31, 2026 due to the previously identified material weaknesses in our internal control over financial reporting. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Despite the identified material weaknesses, we believe that our unaudited consolidated financial statements and other information contained in this Quarterly Report fairly present, in all material respects, our financial condition and results of operations for the periods presented.

We remain committed to the ongoing improvements in our disclosure controls and internal control over financial reporting, including execution of the remediation plan disclosed under “Part II, Item 9A. Controls and Procedures” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 27, 2026. The material weaknesses previously identified in the Annual Report remained un-remediated as of March 31, 2026.

Inherent Limitation on the Effectiveness of Internal Control

The effectiveness of any system of internal control over financial reporting is subject to inherent limitations. These include the exercise of judgment in designing, implementing, and operating controls, as well as the inherent inability to completely eliminate the risk of misconduct or error. Accordingly, while we aim to establish robust controls, any system, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Additionally, the design of our disclosure controls and procedures is impacted by resource constraints and the necessity for management to balance the benefits of potential controls against their associated costs. Moreover, projections of effectiveness into future periods are subject to risks that controls may become inadequate over time due to evolving conditions or diminished compliance. We will continue to monitor and enhance our internal control as necessary or appropriate, but we cannot provide assurance that these improvements will fully eliminate all risks of material misstatement.

Changes in Internal Control over Financial Reporting

Except for the remediation efforts described above, there have been no material changes in our internal control over financial reporting during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information required by this item is incorporated by reference to Note 19 (Commitments and Contingencies) to the unaudited consolidated financial statements.

ITEM 1A. RISK FACTORS

Investing in our securities involves a high degree of risk. In addition to the information in this Quarterly Report, these risks are more fully described under “Part I, Item 1A. Risk Factors” of the Annual Report. There have been no material changes to the risk factors set forth in the Annual Report. Any of these factors could result in a material adverse effect on our results of operations or financial condition.

Additional risk factors that are not presently known to us or that we currently deem immaterial may also impair our business or results of operations. If any such risk materializes, it could have a material adverse effect on our business, financial condition, results of operations, and growth prospects and cause the trading price of our securities to decline. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

During the three months ended March 31, 2026, none of our directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.

The agreements and other documents filed as exhibits to this Quarterly Report are not intended to provide factual information or other disclosures other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

Exhibit<br><br>No.	Description
2.1	Agreement and Plan of Merger, dated January 31, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on February 2, 2023).
2.2	First Amendment to the Agreement and Plan of Merger, dated April 26, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on May 1, 2023).
2.3	Second Amendment to the Agreement and Plan of Merger, dated May 30, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two,Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on June 2, 2023).
2.4	Third Amendment to the Agreement and Plan of Merger, dated June 15, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on June 16, 2023).
2.5	Amended and Restated Agreement and Plan of Merger, dated June 21, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on June 22, 2023).
2.6	First Amendment to the Amended and Restated Agreement and Plan of Merger, dated September 8, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on September 11, 2023).
2.7	Second Amendment to the Amended and Restated Agreement and Plan of Merger, dated October 26, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to Form 8-K filed by Pono Capital Two, Inc. with the SEC on October 26, 2023).
2.8	Third Amendment to the Amended and Restated Agreement and Plan of Merger, dated December 28, 2023, by and among Pono Capital Two, Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two, Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on December 29, 2023).

2.9	Fourth Amendment to the Amended and Restated Agreement and Plan of Merger, dated April 22, 2024, by and among Pono Capital Two,Inc., Pono Two Merger Sub, Inc., SBC Medical Group Holdings Incorporated, Mehana Capital LLC in its capacity as the representative of the stockholders of Pono Capital Two,Inc., and Yoshiyuki Aikawa in his personal capacity and his capacity as the representative of the stockholders of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K filed by Pono Capital Two, Inc. with the SEC on April 23, 2024).
3.1	Fifth Amended and Restated Certificate of Incorporation of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026).
3.2	Certificate of Correction of Fifth Amended and Restated Certificate of Incorporation of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026).
3.3	Amended and Restated Bylaws of SBC Medical Group Holdings Incorporated (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by SBC Medical Group Holdings Incorporated on September 20, 2024).
31.1	Certification of the Principal Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104	Cover page formatted as Inline XBRL and contained in Exhibit 101.

SIGNATURES

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

	SBC Medical Group Holdings Incorporated
Dated: May 14, 2026	By:	/s/ Yuya Yoshida
	Name:	Yuya Yoshida
	Title:	Chief Financial Officer
		(Authorized Signatory and Principal Financial Officer)

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Yoshiyuki Aikawa, certify that:

I have reviewed this quarterly report on Form 10-Q of SBC Medical Group Holdings Incorporated;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2026

By:	/s/ Yoshiyuki Aikawa
Name	Yoshiyuki Aikawa
Title:	Chairman and Chief Executive Officer<br><br>(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a)/15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Yuya Yoshida, certify that:

I have reviewed this quarterly report on Form 10-Q of SBC Medical Group Holdings Incorporated;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2026

By:	/s/ Yuya Yoshida
Name	Yuya Yoshida
Title:	Chief Financial Officer<br><br>(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SBC Medical Group Holdings Incorporated (the “Company”) for the quarterly period ended March 31, 2026, as filed with the Securities and Exchange Commission (the “Report”), I, Yoshiyuki Aikawa, Chief Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

Date: May 14, 2026

By:	/s/ Yoshiyuki Aikawa
Name:	Yoshiyuki Aikawa
Title:	Chairman and Chief Executive Officer<br><br>(Principal Executive Officer)

* The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SBC Medical Group Holdings Incorporated (the “Company”) for the quarterly period ended March 31, 2026, as filed with the Securities and Exchange Commission (the “Report”), I, Yuya Yoshida, Chief Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

Date: May 14, 2026

By:	/s/ Yuya Yoshida
Name:	Yuya Yoshida
Title:	Chief Financial Officer<br><br>(Principal Financial Officer)

* The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-41462

SBC Medical Group Holdings Incorporated

949-593-0250

Not Applicable

Table of Contents

Website and Social Media Disclosure

Cautionary Note Regarding Forward-Looking Statements

Table of Contents

Table of Contents

SBC Medical Group Holdings Incorporated

FORM 10-Q FOR THE QUARTER ENDED

March 31, 2026

Table of Contents

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SBC MEDICAL GROUP HOLDINGS INCORPORATED

INDEX TO FINANCIAL STATEMENTS

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS — (Continued)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS

Business Overview

Reverse Recapitalization

Reorganization

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Corporate Structure

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation and Principles of Consolidation

Reporting Lag

Variable Interest Entities

Voting Model

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assessment of Medical Corporations in Japan

(b) Foreign Currency

(c) Non-controlling Interests

Table of Contents

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(d) Use of Estimates

For the transition period from to