SBC 10-Q Quarter ended June 30, 2025

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 June 30, 2025

OR

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

For the transition period from __________ to __________

Commission File Number: 001-41462

SBC Medical Group Holdings Incorporated

(Exact Name of Registrant as Specified in Its Charter)

Delaware		88-1192288
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

200 Spectrum Center Dr. STE 300 Irvine , CA		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 July 31, 2025, the registrant had 103,881,251 shares of Common Stock issued and outstanding.

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 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;
	●	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;
	●	the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and
	●	other factors detailed under “Part I, Item 1A. Risk Factors” of the Annual Report on Form 10-K filed with the SEC by the Company on March 28, 2025 (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 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

June 30, 2025

Table of Contents

		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	11
Item 4.	Controls and Procedures	11
PART II - OTHER INFORMATION		12
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Mine Safety Disclosures	12
Item 5.	Other Information	12
Item 6.	Exhibits	13
Signatures		14

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SBC MEDICAL GROUP HOLDINGS INCORPORATED

INDEX TO FINANCIAL STATEMENTS

		Page
Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (Unaudited)		F-2
Consolidated Statements of Operations and Comprehensive Income for the three and six months ended June 30, 2025 and 2024 (Unaudited)		F-4
Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2025 and 2024 (Unaudited)		F-5
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited)		F-6
Notes to Unaudited Consolidated Financial Statements		F-8

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS

		June 30, 2025				December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents		$	152,740,882			$	125,044,092
Accounts receivable			2,350,368				1,413,433
Accounts receivable – related parties			48,920,843				28,846,680
Accounts receivable			48,920,843				28,846,680
Inventories			1,705,237				1,494,891
Finance lease receivables, current – related parties			9,128,931				5,992,585
Customer loans receivable, current			10,552,623				10,382,537
Prepaid expenses and other current assets			14,051,746				11,276,802
Other receivables – related parties			1,891,408				—
Total current assets			241,342,038				184,451,020
Non-current assets:
Property and equipment, net			8,058,016				8,771,902
Intangible assets, net			1,584,543				1,590,052
Long-term investments, net			3,593,087				3,049,972
Goodwill, net			5,011,511				4,613,784
Cryptocurrencies			535,882				—
Finance lease receivables, non-current – related parties			13,197,979				8,397,582
Operating lease right-of-use assets			4,583,393				5,267,056
Finance lease right-of-use assets			516,932				—
Deferred tax assets			2,343,302				9,798,071
Customer loans receivable, non-current			5,934,636				5,023,551
Long-term prepayments			1,755,292				1,745,801
Long-term investments in MCs – related parties			19,381,422				17,820,910
Long-term investments			19,381,422				17,820,910
Other assets			7,461,224				15,553,453
Total non-current assets			73,957,219				81,632,134
Total assets		$	315,299,257			$	266,083,154
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	16,290,206			$	13,875,179
Accounts payable – related parties			3,245,989				659,044
Accounts payable			3,245,989				659,044
Current portion of long-term loans			69,420				96,824
Notes and other payables, current – related parties			3,272,048				26,255
Advances from customers			512,123				820,898
Advances from customers – related parties			10,333,007				11,739,533
Advances from customers			10,333,007				11,739,533
Income tax payable			14,133,163				18,705,851
Operating lease liabilities, current			3,623,871				4,341,522
Finance lease liabilities, current			161,340				—
Accrued liabilities and other current liabilities			6,229,797				8,103,194
Due to related party			2,810,647				2,823,590
Total current liabilities			60,681,611				61,191,890

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED BALANCE SHEETS — (Continued)

		June 30, 2025				December 31, 2024
Non-current liabilities:
Long-term loans			7,031,506				6,502,682
Notes and other payables, non-current – related parties			—				5,334
Deferred tax liabilities			353,517				926,023
Operating lease liabilities, non-current			1,208,516				1,241,526
Finance lease liabilities, non-current			164,721				—
Other liabilities			1,206,815				1,193,541
Total non-current liabilities			9,965,075				9,869,106
Total liabilities			70,646,686				71,060,996
Stockholders’ equity:
Preferred stock ($ 0.0001 par value, 20,000,000 shares authorized; no shares issued and outstanding as of June 30, 2025 and December 31, 2024)			—				—
Common stock ($ 0.0001 par value, 400,000,000 shares authorized, 103,881,251 and 103,020,816 shares issued, 103,098,442 and 102,750,816 shares outstanding as of June 30, 2025 and December 31, 2024, respectively)			10,388				10,302
Additional paid-in capital			72,196,114				62,513,923
Treasury stock (at cost, 782,809 and 270,000 shares as of June 30, 2025 and December 31, 2024, respectively)			( 5,115,262	)			( 2,700,000	)
Retained earnings			213,423,693				189,463,007
Accumulated other comprehensive loss			( 35,922,942	)			( 54,178,075	)
Total SBC Medical Group Holdings Incorporated stockholders’ equity			244,591,991				195,109,157
Non-controlling interests			60,580				( 86,999	)
Total stockholders’ equity			244,652,571				195,022,158
Total liabilities and stockholders’ equity		$	315,299,257			$	266,083,154

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

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

		2025				2024				2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2025				2024				2025				2024
Revenues, net – related parties		$	38,944,898			$	51,039,038			$	84,202,043			$	101,509,245
Revenues, net			4,413,949				2,063,042				6,485,505				6,400,877
Total revenues, net			43,358,847				53,102,080				90,687,548				107,910,122
Cost of revenues (including cost of revenues from related parties of $ 4,669,602 and $ 3,616,103 for the three months ended June 30, 2025 and 2024, and $ 8,126,530 and $ 5,413,462 for the six months ended June 30, 2025 and 2024, respectively)			13,348,270				13,682,405				22,943,887				28,971,072
Gross profit			30,010,577				39,419,675				67,743,661				78,939,050
Operating expenses:
Selling, general and administrative expenses (including selling, general and administrative expenses from related parties of $ 415,767 and nil for the three months ended June 30, 2025 and 2024, and $ 415,767 and nil for the six months ended June 30, 2025 and 2024, respectively)			15,456,385				12,129,115				28,987,395				27,187,605
Total operating expenses			15,456,385				12,129,115				28,987,395				27,187,605
Income from operations			14,554,192				27,290,560				38,756,266				51,751,445
Other income (expenses):
Interest income			22,882				11,644				78,215				29,333
Interest expense			( 49,651	)			( 7,424	)			( 55,858	)			( 10,432	)
Other income			33,771				306,291				185,099				655,972
Other expenses			( 1,132,465	)			( 514,636	)			( 2,829,724	)			( 1,951,292	)
Gain on redemption of life insurance policies			—				—				8,746,138				—
Change in fair value of cryptocurrencies			111,632				—				111,632				—
Gain on disposal of subsidiary			—				—				—				3,813,609
Total other income (expenses)			( 1,013,831	)			( 204,125	)			6,235,502				2,537,190
Income before income taxes			13,540,361				27,086,435				44,991,768				54,288,635
Income tax expense			11,100,509				8,529,110				21,059,966				16,981,094
Net income			2,439,852				18,557,325				23,931,802				37,307,541
Less: net income (loss) attributable to non-controlling interests			( 18,388	)			72,917				( 28,884	)			65,381
Net income attributable to SBC Medical Group Holdings Incorporated		$	2,458,240			$	18,484,408			$	23,960,686			$	37,242,160
Other comprehensive income (loss):
Foreign currency translation adjustment		$	8,623,269			$	( 9,046,549	)		$	18,431,596			$	( 19,240,401	)
Total comprehensive income			11,063,121				9,510,776				42,363,398				18,067,140
Less: comprehensive income (loss) attributable to non-controlling interests			184,411				22,000				147,579				( 70,000	)
Comprehensive income attributable to SBC Medical Group Holdings Incorporated		$	10,878,710			$	9,488,776			$	42,215,819			$	18,137,140
Net income per share attributable to SBC Medical Group Holdings Incorporated*
Basic and diluted		$	0.02			$	0.20			$	0.23			$	0.40
Weighted average shares outstanding*
Basic and diluted			103,507,249				94,192,433				103,392,580				94,192,433

*	Retrospectively restated for effect of reverse recapitalization on September 17, 2024.

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

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

		Number				Amount				Capital				Number				Amount				Earnings				Loss				Equity				Interests				Equity
		Common Stock								Additional Paid-in				Treasury Stock								Retained				Accumulated Other Comprehensive				Total SBC Medical Group Holdings Incorporated Stockholders’				Non- controlling				Total 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
Net income (loss)			—				—				—				—				—				2,458,240				—				2,458,240				( 18,388	)			2,439,852
Repurchase of common stock			—				—				—				( 512,809	)			( 2,415,262	)			—				—				( 2,415,262	)			—				( 2,415,262	)
Deemed contribution in connection with price modification on disposal of property and equipment			—				—				9,682,277				—				—				—				—				9,682,277				—				9,682,277
Foreign currency translation adjustment			—				—				—				—				—				—				8,420,470				8,420,470				202,799				8,623,269
Balance as of June 30, 2025			103,881,251			$	10,388			$	72,196,114				( 782,809	)		$	( 5,115,262	)		$	213,423,693			$	( 35,922,942	)		$	244,591,991			$	60,580			$	244,652,571

		Number				Amount				Capital				Earnings				Loss				Equity				Interests				Equity
		Common Stock								Additional Paid-in				Retained				Accumulated Other Comprehensive				Total SBC Medical Group Holdings Incorporated Stockholders’				Non- controlling				Total Stockholders’
		Number				Amount				Capital				Earnings				Loss				Equity				Interests				Equity
Balance as of December 31, 2023			94,192,433			$	9,419			$	36,879,281			$	142,848,732			$	( 37,578,255	)		$	142,159,177			$	1,651,072			$	143,810,249
Disposal of subsidiary			—				—				—				—				—				—				( 1,221,795	)			( 1,221,795	)
Net income (loss)			—				—				—				18,757,752				—				18,757,752				( 7,536	)			18,750,216
Foreign currency translation adjustment			—				—				—				—				( 10,109,388	)			( 10,109,388	)			( 84,464	)			( 10,193,852	)
Balance as of March 31, 2024			94,192,433				9,419				36,879,281				161,606,484				( 47,687,643	)			150,807,541				337,277				151,144,818
Balance			94,192,433			$	9,419			$	36,879,281			$	161,606,484			$	( 47,687,643	)		$	150,807,541			$	337,277			$	151,144,818
Net income			—				—				—				18,484,408				—				18,484,408				72,917				18,557,325
Foreign currency translation adjustment			—				—				—				—				( 8,995,632	)			( 8,995,632	)			( 50,917	)			( 9,046,549	)
Balance as of June 30, 2024			94,192,433			$	9,419			$	36,879,281			$	180,090,892			$	( 56,683,275	)		$	160,296,317			$	359,277			$	160,655,594
Balance			94,192,433			$	9,419			$	36,879,281			$	180,090,892			$	( 56,683,275	)		$	160,296,317			$	359,277			$	160,655,594

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

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

		2025				2024
		For the Six Months Ended June 30,
		2025				2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	23,931,802			$	37,307,541
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense			1,264,405				1,849,422
Non-cash lease expense			2,185,744				1,923,890
Provision for credit losses			283,752				62,804
Fair value change of long-term investments			384,523				1,045,557
Gain on disposal of subsidiary			—				( 3,813,609	)
Gain on redemption of life insurance policies			( 8,746,138	)			—
Gain on disposal of property and equipment			( 10,804	)			( 902	)
Change in fair value of cryptocurrencies			( 111,632	)			—
Deferred income taxes			7,452,983				( 3,322,728	)
Changes in operating assets and liabilities:
Accounts receivable			( 789,577	)			( 1,423,412	)
Accounts receivable – related parties			( 17,039,113	)			5,843,499
Accounts receivable			( 17,039,113	)			5,843,499
Inventories			( 717,972	)			561,921
Finance lease receivables – related parties			( 6,482,967	)			( 1,759,556	)
Customer loans receivable			8,081,703				7,521,267
Prepaid expenses and other current assets			( 1,349,225	)			( 1,488,347	)
Long-term prepayments			211,988				( 41,412	)
Other assets			85,907				( 1,007,431	)
Accounts payable			1,165,217				( 8,960,556	)
Accounts payable – related parties			2,455,865				—
Notes and other payables – related parties			( 5,031,570	)			( 5,101,368	)
Advances from customers			( 369,616	)			( 755,977	)
Advances from customers – related parties			( 2,363,891	)			( 4,663,233	)
Advances from customers			( 2,363,891	)			( 4,663,233	)
Income tax payable			( 6,030,526	)			5,462,133
Operating lease liabilities			( 2,275,398	)			( 1,998,196	)
Accrued liabilities and other current liabilities			( 2,508,035	)			( 4,444,172	)
Other liabilities			( 88,593	)			77,625
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES			( 6,411,168	)			22,874,760
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment			( 560,431	)			( 1,565,333	)
Purchase of convertible note			—				( 1,700,000	)
Prepayments for property and equipment			( 705,351	)			—
Advances to related parties			—				( 617,804	)
Payments made on behalf of related parties			( 1,836,541	)			( 5,245,990	)
Purchase of long-term investments			( 652,555	)			—
Purchase of cryptocurrencies			( 424,250	)			—
Long-term loans to others			( 13,134	)			( 62,489	)
Repayments from related parties			70,000				555,000
Repayments from others			56,307				44,748
Proceeds from redemption of life insurance policies			17,735,717				—
Disposal of subsidiary, net of cash disposed of			—				( 815,819	)
Proceeds from disposal of property and equipment			1,728,236				1,971
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES			15,397,998				( 9,405,716	)

SBC MEDICAL GROUP HOLDINGS INCORPORATED

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

		For the Six Months Ended June 30,
		2025				2024
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from related parties			15,000				—
Repayments of long-term loans			( 74,256	)			( 59,217	)
Repayments of finance lease liabilities			( 278,097	)			—
Repayments to related parties			( 27,943	)			( 50,124	)
Repurchase of common stock			( 2,415,262	)			—
Deemed contribution in connection with price modification on disposal of property and equipment			9,682,277				—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			6,901,719				( 109,341	)
Effect of exchange rate changes			11,808,241				( 12,679,865	)
NET CHANGE IN CASH AND CASH EQUIVALENTS			27,696,790				679,838
CASH AND CASH EQUIVALENTS AS OF THE BEGINNING OF THE PERIOD			125,044,092				103,022,932
CASH AND CASH EQUIVALENTS AS OF THE END OF THE PERIOD		$	152,740,882			$	103,702,770
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest expense		$	55,858			$	10,432
Cash paid for income taxes, net		$	19,637,454			$	16,191,178
NON-CASH INVESTING AND FINANCING ACTIVITIES
Property and equipment transferred from long-term prepayments		$	246,188			$	—
Operating lease right-of-use assets obtained in exchange for operating lease liabilities		$	104,437			$	—
Finance lease right-of-use assets obtained in exchange for finance lease liabilities		$	612,466			$	—
Remeasurement of operating lease liabilities and right-of-use assets due to lease modifications		$	1,160,680			$	1,376,034
Payables to related parties in connection with loan services provided		$	8,175,342			$	16,085,387
Issuance of common stock as incentive shares		$	86			$	—

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

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 (“SBC Holding”) 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, “SBC USA”, “Legacy SBC”), through its consolidated subsidiaries and variable interest entity (“VIE”), is principally engaged in medical industry to provide 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’s 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 SBC USA (the “Merger Agreement”), whereby Merger Sub merged with and into SBC USA, the separate corporation existence of Merger Sub ceased and SBC USA survived the merger as a wholly owned subsidiary of Pono (“Pono Merger”). In connection with the consummation of Pono Merger, Pono changed its name to “SBC Medical Group Holdings Incorporated” and SBC USA changed its name to “SBC Medical Group, Inc.” and, among other transactions contemplated by the Merger Agreement, the existing equity holders of SBC USA exchanged their equity interests of SBC USA for equity interests of Pono.

On September 17, 2024, the Company received net cash of $ 11,707,417 from Pono Merger. 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 consummation of Pono Merger, $ 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 funds from Pono Merger 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:

SCHEDULE OF PROCEEDS FROM MERGER

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

Pono Merger was accounted for as a reverse recapitalization under the accounting principles generally accepted in the United States of America (“U.S. GAAP”). SBC USA 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 SBC USA.

Unless the context indicates otherwise, any references herein to the “Company”, “we”, “us” and “our” refer to 1) SBC USA and its consolidated subsidiaries and VIE, prior to the consummation of Pono Merger, and to 2) SBC Holding and its consolidated subsidiaries and VIE, following Pono Merger; and reference herein to “Pono” refers to SBC Holding prior to the consummation of Pono Merger.

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.

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. cease 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, SBC USA 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 SBC USA.

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 consolidated financial statements.

Corporate Structure

As of June 30, 2025, the Company’s major subsidiaries and VIE are as follows:

SCHEDULE OF MAJOR SUBSIDIARIES

Name		Place of Incorporation		Date of Incorporation or Acquisition		Percentage of Ownership				Principal Activities
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 and rental services for the medical corporations

F- 8

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Name		Place of Incorporation		Date of Incorporation or Acquisition		Percentage of Ownership				Principal Activities
Liesta Co., Ltd.		Japan		December 15, 2020			100	%		Real estate brokerage services
SBC Sealane Co., Ltd.		Japan		June 7, 2022			100	%		Construction services
SBC Marketing Co., Ltd.		Japan		June 30, 2022			100	%		Marketing 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
Shoubikai Medical Vietnam Co., Ltd.		Vietnam		August 29, 2013			100	%		Cosmetic clinic
SBC Healthcare Inc.		United States		December 16, 2019			100	%		Management services for cosmetic clinic in the United States
SBC Irvine, LLC		United States		December 27, 2018			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
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.”

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

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 consisting 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, 2024.

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.

The Company reports AHH and its subsidiaries, which were acquired in November 2024, on a three-month calendar lag allowing for the timely preparation of financial statements. 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.

F- 9

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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.

SCHEDULE OF ACQUIRED EQUITY INTERESTS

Name of the MC		Percentage of Equity Interest Acquired				Percentage of Voting Interest Held
Medical Corporation Shobikai			100	%			0	%
Medical Corporation Kowakai			100	%			0	%
Medical Corporation Nasukai			100	%			0	%
Medical Corporation Aikeikai			100	%			0	%
Medical Corporation Jukeikai			100	%			0	%
Medical Corporation Ritz Cosmetic Surgery			100	%			0	%

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 MSCs, 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 Company and the MCs are disclosed in Note 17 — Related Party Transactions.

(b) Foreign Currency

The Company maintains its books and record 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.

F- 10

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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:

SCHEDULE OF LOCAL CURRENCY EXCHANGE RATES

		June 30, 2025				June 30, 2024
Current JPY:US$1 exchange rate			144.1650				160.8680
Average JPY:US$1 exchange rate			148.4720				152.1868
Exchange rate			148.4720				152.1868

(c) 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 and implicit interest rate of operating and finance leases. 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.

(d) Customer Loans Receivable, and Notes and Other Payables — Related Parties

In February 2023, the Company started to provide loan services to certain customers of the related-party MCs (“End Customers”). Once a loan is granted to finance an End Customer’s purchase, the End Customer is required to repay the Company in monthly installments. The loans provided to the End Customers are 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 $ 305,227 and $ 172,701 for the three months ended June 30, 2025 and 2024, respectively, and generated interest income of $ 588,643 and $ 490,210 for the six months ended June 30, 2025 and 2024 , respectively, from the loan services, which were included in revenues.

Management periodically evaluates individual End Customer’s 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 June 30, 2025 and 2024, the Company recorded $ 258,650 and nil allowance for doubtful accounts, respectively, for customers receivable. During the six months ended June 30, 2025 and 2024, the Company recorded $ 353,752 and nil allowance for doubtful accounts, respectively, for customer loans receivable.

Prior to January 2025, when a loan was granted to an End Customer, the Company issued a promissory note to the related party MC to settle the purchase transaction on behalf of the End Customer. The Company repays each promissory note when the corresponding loan is fully repaid by the End Customer or earlier if mutually agreed. These promissory notes are unsecured and bear no interest. Starting in January 2025, instead of issuing a promissory note to the MC upon loan issuance, the Company pays the transaction amount directly in cash to the MC on behalf of the End Customer in the month following the purchase.

F- 11

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

(e) Cryptocurrencies

Cryptocurrencies are included in non -current assets in the unaudited consolidated balance sheets because the Company holds them for long-term investment purposes.

Effective January 1, 2025, the Company adopted ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) using a modified retrospective approach, which requires cryptocurrency assets to be measured at fair value each reporting period with changes in fair value recorded in net income or loss. The adoption of ASU 2023-08 did not have impact on the Company’s prior years’ consolidated financial statements as the Company did not hold cryptocurrencies prior to the adoption.

The Company purchases Bitcoins through Coinbase, Inc., a cryptocurrency exchange, which are initially recorded at cost and subsequently measured at fair value in the consolidated balance sheets. The Company determines the fair value of its cryptocurrency in accordance with ASC 820, Fair Value Measurement , based on quoted prices on active exchange(s) that are identified as the principal market(s) for such assets (Level I inputs). The cost basis of cryptocurrencies is determined using the average cost method. The change in fair value of cryptocurrencies is recorded in “Other income (expenses)” as a non-operating item in the unaudited consolidated statements of operations. Purchases and sales of cryptocurrencies, if any, are included within investing activities in the accompanying consolidated statements of cash flows.

(f) 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.

(g) 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.

(h) Long-term Investments, Net

Investments in equity securities with readily determinable fair values

The Company holds 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).

F- 12

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

(i) 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.

(j) 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):

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

F- 13

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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.

	(i)	the timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
	(ii)	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.

F- 14

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

(k) 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”.

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, rather than charging the same flat fee for all MCs/clinics, the monthly service fee to each MC and to each clinic of the MCs is determined by the facility type, operational tenure, operational performance of each clinic of the MCs. The revenue is recognized over time as services are rendered.

F- 15

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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 and will return the over-collection resulting from such discounts to MCs.

Management Services Revenue

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

Loyalty program management services

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

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

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 royalty income. When a MC’s customers redeem such points, the Company reimburses MC in an amount equivalent to the used free points and records it as a reduction of the revenue recognized.

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

Labor supporting services

The Company generates revenue by dispatching staff to MCs to provide a range of services, primarily including IT, and administrative services. The Company recognizes the revenue over the time when services are rendered.

Function supporting services

The revenue is derived from providing functional supporting services to MCs, such as accounting and human resources, and IT management services. The Company recognizes revenue based on a monthly service fee over the time when services are rendered. Since April 2025, the amount of 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.

F- 16

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Rental Services Revenue

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

Other Revenues

The Company generates other miscellaneous revenues such as medicine dispensed sales revenue, brokerage services revenue, construction services revenue, interest income, beauty and health services revenue, etc. These revenues are recognized when the Company satisfies performance obligations.

(l) 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 $ 973,933 and $ 223,094 for the three months ended June 30, 2025 and 2024, respectively, and $ 1,656,099 and $ 934,724 for the six months ended June 30, 2025 and 2024, respectively.

(l) 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 six months ended June 30, 2025, customer A, B and C represent 25 %, 25 % and 22 % of the Company’s total revenues, respectively. For the six months ended June 30, 2024, customer A, B, C and D represent 24 %, 22 %, 24 % and 10 % of the Company’s total revenues, respectively.

As of June 30, 2025, customer A, B and C account for 27 %, 25 % and 24 % of the Company’s total outstanding accounts receivable, respectively. As of December 31, 2024, customer A, B, C and D account for 17 %, 28 %, 26 % and 10 % of the Company’s total outstanding accounts receivable, respectively.

For the six months ended June 30, 2025, no vendor represents more than 10 % of the Company’s total purchases. For the six months ended June 30, 2024, vendor A represents 15 % of the Company’s total purchases.

As of June 30, 2025, vendor A, B and C represent 13 %, 12 % and 11 % of the Company’s total outstanding accounts payable. As of December 31, 2024, vendor A and B represent 12 % and 15 % of the Company’s total outstanding accounts payable, respectively.

(m) 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.

(n) 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.

F- 17

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

(o) 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 June 30, 2025 and December 31, 2024, 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.

Assets measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 are summarized below.

SCHEDULE OF FAIR VALUE ON A RECURRING BASIS

Fair Value Measurements as of June 30, 2025
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at June 30, 2025
Long-term investments:
Equity investments at fair value with readily determinable fair value		$	2,971,606				—				—			$	2,971,606
Cryptocurrencies:
Bitcoin		$	535,882				—				—			$	535,882

Fair Value Measurements as of December 31, 2024
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Unobservable Inputs (Level 3)				Fair Value at December 31, 2024
Long-term investments:
Equity investments at fair value with readily determinable fair value		$	2,478,531				—				—			$	2,478,531
Cryptocurrencies:
Bitcoin		$	—				—				—			$	—

F- 18

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

(p) 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 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.

(q) Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which requires entities that hold crypto assets to subsequently measure such assets at fair value with changes recognized in net income each reporting period. This accounting update also improves the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. ASU 2023-08 is effective for all entities for annual periods beginning after December 15, 2024, including interim periods within those fiscal years. The Company adopted ASU 2023-08 on January 1, 2025. See Note 2(e) and Note 7 for relevant cryptocurrency disclosures.

In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvement to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024, and for annual periods beginning after December 15, 2025 for all other entities, on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

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.

F- 19

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 — VARIABLE INTEREST ENTITY (cont.)

The following amounts and balances of AMM were included in the Company’s unaudited consolidated financial statements as of June 30, 2025 and December 31, 2024 and for the three and six months ended June 30, 2025 and 2024:

SCHEDULE OF CONSOLIDATED FINANCIAL STATEMENTS OF VARIABLE INTEREST ENTITY

		June 30, 2025				December 31, 2024
ASSETS
Current assets
Cash and cash equivalents		$	21,893			$	41,247
Accounts receivable			33,992				20,076
Prepaid expenses and other current assets			10,831				32,493
Total Current Assets			66,716				93,816
Property and equipment, net			1,799,372				1,799,372
Loans receivables from subsidiaries of the Company			3,072,945				3,122,157
Other assets			2,275				2,275
Total Non-current Assets			4,874,592				4,923,804
Total Assets		$	4,941,308			$	5,017,620
LIABILITIES
Current Liabilities
Accounts payable		$	18,450			$	18,904
Accrued liabilities and other current liabilities			17,824				17,824
Due to related party			2,769,076				2,797,018
Total Current Liabilities			2,805,350				2,833,746
Loan payable to a subsidiary of the Company			8,267,303				8,245,328
Total Non-current Liabilities			8,267,303				8,245,328
Total Liabilities		$	11,072,653			$	11,079,074

		2025				2024				2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2025				2024				2025				2024
Revenues		$	41,002			$	40,470			$	81,472			$	188,860
Cost of revenues		$	—			$	—			$	—			$	56,510
Total operating expenses		$	116,431			$	112,919			$	164,231			$	255,720
Net loss		$	( 75,430	)		$	( 72,449	)		$	( 57,759	)		$	( 123,370	)

		2025				2024
		For the Six Months Ended June 30,
		2025				2024
Net cash used in operating activities		$	( 75,467	)		$	( 101,725	)
Net cash provided by investing activities		$	25,000			$	50,000
Net cash used in financing activities		$	( 27,942	)		$	( 49,424	)

F- 20

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of June 30, 2025 and December 31, 2024, prepaid expenses and other current assets consist of the following:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

		June 30, 2025				December 31, 2024
Advances to suppliers		$	13,442,495			$	9,693,043
Other receivables *			359,738				1,558,223
Others			249,513				25,536
Total		$	14,051,746			$	11,276,802

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

NOTE 5 — FINANCE LEASE RECEIVABLES

As of June 30, 2025 and December 31, 2024, finance lease receivables consist of the following:

SCHEDULE OF FINANCE LEASE RECEIVABLES

		June 30, 2025				December 31, 2024
Future minimum lease payments receivable		$	22,385,136			$	14,427,511
Estimated residual value			—				—
Gross finance lease receivables			22,385,136				14,427,511
Less: unearned interest income			( 58,226	)			( 37,344	)
Finance lease receivables		$	22,326,910			$	14,390,167
Finance lease receivables, current		$	9,128,931			$	5,992,585
Finance lease receivables, non-current		$	13,197,979			$	8,397,582

As of June 30, 2025, maturities of the Company’s gross finance lease receivables are as follows:

SCHEDULE OF MATURITIES OF THE FINANCE LEASE RECEIVABLES

Years ending December 31,
Remaining of 2025		$	4,422,594
2026			10,085,856
2027			7,515,219
2028			361,467
2029 and thereafter			—
Total		$	22,385,136

F- 21

SBC MEDICAL GROUP HOLDINGS INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 — PROPERTY AND EQUIPMENT, NET

As of June 30, 2025 and December 31, 2024, property and equipment, net consist of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT

		June 30, 2025				December 31, 2024
Land		$	1,799,372			$	2,008,132
Buildings and facilities attached to buildings			5,544,046				5,373,424
Machinery, equipment and automobiles			4,500,722				4,312,270
Aircraft			3,817,767				3,510,376
Software			5,343,739				4,811,260
Subtotal			21,005,646				20,015,462
Less: accumulated depreciation			( 10,235,056	)			( 8,749,391	)
Less: accumulated impairment			( 2,712,574	)			( 2,494,169	)
Property and equipment, net		$	8,058,016			$	8,771,902

Depreciation expense was $ 564,158 and $ 570,730 for the three months ended June 30, 2025 and 2024, respectively, and $ 1,169,040 and $ 1,315,539 for the six months ended June 30, 2025 and 2024, respectively.

The Company recognized a loss on disposal of property and equipment of $ 1,571 and a gain on disposal of property and equipment of $ 902 for the three months ended June 30, 2025 and 2024, respectively, and a gain on disposal of property and equipment of $ 10,804 and $ 902 for the six months ended June 30, 2025 and 2024, respectively.

NOTE 7 — CRYPTOCURRENCIES

As of June 30, 2025 and December 31, 2024, cryptocurrencies consist of the following:

SCHEDULE OF DIGITAL ASSETS, NET

						June 30, 2025												December 31, 2024
		Units				Cost Basis				Fair Value				Units				Cost Basis				Fair Value
Bitcoin			5			$	424,250			$	535,882				—			$	—			$	—
Total						$	424,250			$	535,882							$	—			$	—

The following table presents a roll-forward of the Company’s cryptocurrencies holdings during the six months ended June 30, 2025:

SCHEDULE OF RECONCILIATION OF DIGITAL ASSET, NET

		Bitcoin Fair Value
Cryptocurrencies at December 31, 2024		$	—
Purchases of cryptocurrencies			424,250
Unrealized gain on cryptocurrencies			111,632
Cryptocurrencies at June 30, 2025		$	535,882

NOTE 8 — INTANGIBLE ASSETS, NET

As of June 30, 2025 and December 31, 2024, intangible assets, net consist of the following:

SCHEDULE OF INTANGIBLE ASSETS

		June 30, 2025				December 31, 2024
Patent use right		$	18,034,891			$	16,582,795
Trademarks			1,324,011				1,237,820
Customer Relationships			206,344				192,911
Others			110,832				159,321
Subtotal			19,676,078				18,172,847
Less: accumulated amortization			( 2,311,006	)			( 2,072,849	)
Less: accumulated impairment			( 15,780,529	)			( 14,509,946	)
Intangible assets, net		$	1,584,543			$	1,590,052

Amortization expense was $ 41,073 and $ 260,215 for the three months ended June 30, 2025 and 2024, respectively, and $ 54,445 and $ 533,883 for the six months ended June 30, 2025 and 2024, respectively.

Estimated future amortization expense related to intangible assets as of June 30, 2025 is as follows:

SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS

Years ending December 31,		Amortization Expense
Remaining of 2025		$	84,961
2026			169,922
2027			169,922
2028			88,495
2029			67,202
Thereafter			1,004,041
Total		$	1,584,543

F- 22

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 — LONG-TERM INVESTMENTS, NET

As of June 30, 2025 and December 31, 2024, long-term investments, net consist of the following:

SCHEDULE OF LONG-TERM INVESTMENTS

		June 30, 2025				December 31, 2024
Investments in private entities or organizations that do not report NAV per share:
Entities or organizations without observable price changes		$	1,870,365			$	1,719,770
Investment in a public entity with readily determinable fair value – related party			2,344,824				2,478,531
Investment in a public entity with readily determinable fair value			626,782				—
Less: accumulated impairment			( 1,248,884	)			( 1,148,329	)
Long-term investments, net		$	3,593,087			$	3,049,972

The Company recognized an unrealized loss on long-term investment in a public entity with readily determinable fair value – related party of $ 180,622 and $ 107,046 for the three months ended June 30, 2025 and 2024, respectively, and an unrealized loss of $ 340,568 and $ 1,045,557 for the six months ended June 30, 2025 and 2024, respectively.

The Company recognized an unrealized loss on long-term investment in a public entity with readily determinable fair value of $ 63,320 and $ 43,955 for the three and six months ended June 30, 2025, respectively.

NOTE 10 — OTHER ASSETS

As of June 30, 2025 and December 31, 2024, other assets consist of the following:

SCHEDULE OF OTHER ASSETS

		June 30, 2025				December 31, 2024
Security deposits		$	3,256,499			$	2,921,855
Corporate-owned life insurance policies			3,447,790				11,563,720
Long-term loans receivable, primarily student loans			585,232				578,995
Others			171,703				488,883
Total		$	7,461,224			$	15,553,453

NOTE 11 — ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES

As of June 30, 2025 and December 31, 2024, accrued liabilities and other current liabilities consist of the following:

SCHEDULE OF ACCRUED AND OTHER CURRENT LIABILITIES

		June 30, 2025				December 31, 2024
Individual income tax withheld on behalf of employees		$	704,988			$	859,446
Wages and bonus payables			4,012,004				3,173,679
Consumption tax payable			1,372,530				3,827,080
Liabilities assumed in connection with purchase of property and equipment			26,526				25,312
Excise and franchise tax payable			39,008				15,095
Others			74,741				202,582
Total		$	6,229,797			$	8,103,194

F- 23

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 — LONG-TERM LOANS

As of June 30, 2025 and December 31, 2024, the Company’s long-term loans from banks and other financial institution consist of the following:

SCHEDULE OF LONG TERM LOANS

Indebtedness		Weighted Average Interest Rate*				Weighted Average Years to Maturity*				June 30, 2025				December 31, 2024
Guaranteed loans
Fixed rate loan			0.01	%			0.03			$	80,824			$	90,274
Variable rate loans			1.19	%			2.39				7,020,102				6,473,490
Subtotal			1.20	%			2.42				7,100,926				6,563,764
Unsecured loan
Fixed rate loan			—				—				—				35,742
Subtotal			—				—				—				35,742
Total long-term loans			1.20	%			2.42				7,100,926				6,599,506
Less: current portion											( 69,420	)			( 96,824	)
Non-current portion										$	7,031,506			$	6,502,682

*	Pertained to information for loans outstanding as of June 30, 2025.

The Company borrowed loans from various banks and a financial institution for working capital purposes.

Interest expense was $ 46,674 and $ 7,424 for the three months ended June 30, 2025 and 2024, respectively, and $ 50,635 and $ 10,432 for the six months ended June 30, 2025 and 2024, respectively.

The guarantee information of the Company’s outstanding loans as of June 30, 2025 and December 31, 2024 consists of the following:

SCHEDULE OF OUTSTANDING LOANS

		June 30, 2025				December 31, 2024
Co-guaranteed by CEO of subsidiaries within the Company’s organizational structure and Tokyo Credit Guarantee Association		$	164,430			$	185,766
Guaranteed by a subsidiary within the Company’s organizational structure		$	6,936,496			$	6,377,998

As of June 30, 2025, future minimum payments for long-term loans are as follows:

SCHEDULE OF MATURITIES OF LONG TERM DEBT

Years ending December 31,		Principal Repayment
Remaining of 2025		$	31,818
2026			69,420
2027			6,999,688
Thereafter			—
Total		$	7,100,926

F- 24

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 equipment, with terms of four 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 six months ended June 30, 2025 and 2024, 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:

SCHEDULE OF LEASE COSTS

										2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2025				2024				2025				2024
Finance lease costs:
Amortization of finance lease right-of-use assets		$	30,870			$	—			$	40,920			$	—
Interest on finance lease liabilities			2,977				—				5,223				—
Total finance lease costs			33,847				—				46,143				—
Operating lease costs			1,211,006				872,955				2,197,506				1,927,643
Short-term lease costs			114,987				100,939				155,328				180,053
Total lease costs		$	1,359,840			$	973,894			$	2,398,977			$	2,107,696

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

SCHEDULE OF SUPPLEMENTAL INFORMATION OPERATING LEASES

		For the Six Months Ended June 30,
		2025				2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases		$	2,275,398			$	1,992,121
Operating cash flows from finance leases			5,223				—
Financing cash flows from finance leases			278,097				—
Non-cash information:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities			104,437				—
Finance lease right-of-use assets obtained in exchange for finance lease liabilities			612,466				—
Remeasurement of operating lease liabilities and right-of-use assets due to lease modifications			1,160,680				1,376,034
Weighted average remaining lease term (years)
Operating leases			1.75				2.03
Finance leases			2.60				—
Weighted average discount rate (per annum)
Operating leases			0.69	%			0.19	%
Finance leases			5.05	%			—

F- 25

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

As of June 30, 2025, the future maturity of operating and finance lease liabilities is as follows:

SCHEDULE OF MATURITY OF LEASE LIABILITIES

Years ending December 31,		Operating Leases				Finance Leases
Remaining of 2025		$	2,424,090			$	83,804
2026			1,644,921				134,201
2027			471,460				77,234
2028			141,390				43,778
2029			132,086				7,095
Thereafter			59,765				—
Total undiscounted lease payments			4,873,712				346,112
Less: imputed interest			( 41,325	)			( 20,051	)
Present value of lease liabilities			4,832,387				326,061
Less: lease liabilities, current			( 3,623,871	)			( 161,340	)
Lease liabilities, non-current		$	1,208,516			$	164,721

NOTE 14 — INCOME TAXES

United States

SBC Holding, SBC USA, 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 %.

For information on the recent One Big Beautiful Bill Act and the potential impacts thereof on our tax provision, see Note 20 — Subsequent Event.

Japan

The Company conducts its major businesses in Japan and is subject to tax in this jurisdiction. During the six months ended June 30, 2025 and 2024, substantially all the taxable income of the Company is 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 six months ended June 30, 2025 and 2024.

F- 26

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 — INCOME TAXES (cont.)

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 six months ended June 30, 2025 and 2024, the Company’s income tax expenses are as follows:

SCHEDULE OF INCOME TAX EXPENSES

										2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2025				2024				2025				2024
Current		$	10,663,753			$	11,491,256			$	13,606,983			$	20,303,822
Deferred			436,756				( 2,962,146	)			7,452,983				( 3,322,728	)
Total		$	11,100,509			$	8,529,110			$	21,059,966			$	16,981,094

The effective tax rate was 46.81 % and 31.28 % for the six months ended June 30, 2025 and 2024, 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.

In February 2025, the Company issued 860,435 shares of common stock, with no proceeds, to Mehana Capital LLC as incentive shares pursuant to the Non-Redemption Agreements entered into in May 2023 by and among Pono, Mehana Capital LLC, and certain unaffiliated stockholders, including Wolverine Flagship Fund Trading Limited, Amethyst Arbitrage International Master Fund, Radcliffe SPAC Master Fund, L.P., and Verition Multi-Strategy Master Fund Ltd.

In May 2025, the Company’s board of directors approved a share repurchase plan (“2025 Share Repurchase Program”), authorizing the repurchases of up to $ 5.0 million of the Company’s common stock. During the six months ended June 30, 2025, the Company repurchased 512,809 shares of common stock at an average price of $ 4.66 per share, totaling approximately $ 2.4 million under the 2025 Share Repurchase Program. As of June 30, 2025, approximately $ 2.6 million remained available under the 2025 Share Repurchase Program.

As of June 30, 2025 and December 31, 2024, there were 103,881,251 and 103,020,816 shares issued, 103,098,442 and 102,750,816 shares outstanding, respectively, and no preferred stock issued and outstanding.

F- 27

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 — SHAREHOLDERS’ EQUITY (cont.)

Stock-based compensation

The following table summarizes the stock option/warrant activities and related information for the six months ended June 30, 2025 and 2024:

SCHEDULE OF STOCK OPTION/WARRANTS ACTIVITIES

		Number of Warrants				Weighted Average Exercise Price				Weighted Average Remaining Term (Years)				Intrinsic Value
As of January 1, 2024			4,918,998			$	0.0064				10.00			$	—
Granted			449,190				0.0001				10.00				—
Exercised			—				—				—				—
Forfeited/Cancelled			( 2,180,190	)			0.0001				—				—
As of June 30, 2024			3,187,998			$	0.0098				10.00			$	—
As of January 1, 2025			12,134,375			$	11.50				4.80			$	—
Granted			—				—				—				—
Exercised			—				—				—				—
Forfeited/Cancelled			—				—				—				—
As of June 30, 2025			12,134,375			$	11.50				4.30			$	—
Vested and exercisable as of June 30, 2025			12,134,375			$	11.50				4.30			$	—

NOTE 16 — DISAGGREGATION OF REVENUES

Revenues generated from different revenue streams consist of the following:

SCHEDULE OF DISAGGREGATION OF REVENUE

		2025				2024				2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2025				2024				2025				2024
Franchising revenue		$	10,007,581			$	14,626,256			$	25,726,863			$	29,736,524
Procurement revenue			15,756,519				13,536,608				30,089,302				26,732,592
Management services revenue			5,138,578				16,705,597				13,866,681				32,360,267
Rental services revenue			6,851,176				3,453,173				12,491,690				7,071,114
Others			5,604,993				4,780,446				8,513,012				12,009,625
Total		$	43,358,847			$	53,102,080			$	90,687,548			$	107,910,122

During the six months ended June 30, 2025 and 2024, the Company recognized revenue of $ 843,755 and $ 1,970,889 from the opening balance of advances from customers, respectively; and recognized no revenue from the opening balance of advances from customers — related parties.

As of June 30, 2025 and December 31, 2024, and for the six months ended June 30, 2025 and 2024, substantially all of our long-lived assets and revenues generated were attributed to the Company’s operations in Japan.

F- 28

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS

The related parties had material transactions for the six months ended June 30, 2025 and 2024 consist of the following:

Name of Related Parties		Nature of Relationship as of June 30, 2025
Yoshiyuki Aikawa		Controlling shareholder, director and CEO 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 Junikai		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
Japan Medical & Beauty Inc.		Controlled by the CEO of the Company
SBC Inc.		Controlled by the CEO of the Company
Hariver Inc.		Controlled by the CEO of the Company
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
AI Med Inc.		The CEO of the Company is a principal shareholder of AI Med Inc.
SBC Irvine MC		Significantly influenced by the Company
SBC Tokyo Medical University		The CEO of the Company is the chairman of SBC Tokyo Medical University
SBC Shonan Osteopathic Clinic Inc.		The CEO of the Company is a principal shareholder of SBC Shonan Osteopathic Clinic Inc.
General Incorporated Association Taiseikai		The relatives of CEO of the Company being the Members of General Incorporated Association Taiseikai
General Incorporated Association SBC		The CEO of the Company being the Member of General Incorporated Association SBC
Skynet Academy Co., Ltd.		Subsidiary of Hariver, Inc., a company controlled by the CEO of the Company
Kijimadairakanko Inc.		Subsidiary of SBC Inc., a company controlled by the CEO of the Company

F- 29

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

During the three and six months ended June 30, 2025 and 2024, the transactions with related parties are as follows:

SCHEDULE OF RELATED PARTY TRANSACTIONS

Revenues, net – related parties		2025				2024					2025				2024
		For the Three Months Ended June 30,									For the Six Months Ended June 30,
Revenues, net		2025				2024				2025				2024
Medical Corporation Shobikai		$	10,962,737			$	13,086,609			$	22,515,192			$	26,205,206
Medical Corporation Kowakai			8,909,329				12,410,044				20,022,253				25,998,681
Medical Corporation Nasukai			10,244,692				12,053,758				22,535,537				24,113,981
Medical Corporation Aikeikai			3,646,228				5,505,514				7,288,931				11,113,976
Medical Corporation Jukeikai			890,237				1,792,189				2,064,207				3,698,101
Medical Corporation Ritz Cosmetic Surgery			1,044,588				1,764,569				2,558,211				2,672,883
Japan Medical & Beauty Inc.			10,373				9,608				20,206				19,713
Hariver Inc.			5,186				4,804				10,103				9,856
SBC Inc.			206				310				314				1,842
Public Interest Foundation SBC Medical Promotion Foundation			30				6				41				59
General Incorporated Association SBC			—				304				—				304
SBC Tokyo Medical University			2,155				8,012				16,317				40,817
SBC Shonan Osteopathic Clinic Inc.			—				1,107				—				2,880
Yoshiyuki Aikawa			800				10,672				29,987				54,130
AI Med Inc.			98				58				190				207
SBC Irvine MC			37,753				347,337				239,538				682,057
Medical Corporation Association Furinkai			2,304,254				2,587,472				4,938,946				4,880,109
Medical Corporation Association Junikai			879,282				1,455,672				1,948,521				2,013,450
Medical Corporation Association Taiseikai			—				993				—				993
Skynet Academy Co., Ltd.			6,915				—				13,471				—
Kijimadairakanko Inc.			35				—				78				—
Total		$	38,944,898			$	51,039,038			$	84,202,043			$	101,509,245

Cost of revenues		2025				2024					2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
Cost of revenues		2025				2024				2025				2024
Medical Corporation Nasukai		$	65,959			$	—			$	65,959			$	—
Medical Corporation Aikeikai			3,742				—				3,742				—
Japan Medical & Beauty Inc.			4,502,380				3,616,103				7,801,736				5,413,462
SBC Tokyo Medical University			94,295				—				183,689				—
Kijimadairakanko Inc.			3,226				—				71,404				—
Total		$	4,669,602			$	3,616,103			$	8,126,530			$	5,413,462

Selling, general and administrative expenses		2025				2024					2025				2024
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
Selling, general and administrative expenses		2025				2024				2025				2024
Medical Corporation Shobikai		$	354,930			$	—			$	354,930			$	—
Medical Corporation Kowakai			3,697				—				3,697				—
Medical Corporation Nasukai			15,178				—				15,178				—
Medical Corporation Aikeikai			28,218				—				28,218				—
Medical Corporation Jukeikai			791				—				791				—
Medical Corporation Association Junikai			337				—				337				—
Medical Corporation Association Furinkai			429				—				429				—
SBC Inc.			7				—				7				—
General Incorporated Association SBC			12,180				—				12,180				—
Total		$	415,767			$	—			$	415,767			$	—

As of June 30, 2025 and December 31, 2024, the balances with related parties are as follows:

Accounts receivable		June 30, 2025				December 31, 2024
Medical Corporation Shobikai		$	14,064,516			$	5,091,430
Medical Corporation Nasukai			12,696,547				8,552,722
Medical Corporation Kowakai			12,226,967				7,742,251
Medical Corporation Aikeikai			4,936,342				3,071,378
Medical Corporation Jukeikai			1,494,312				993,944
Medical Corporation Association Furinkai			1,164,544				1,263,602
Medical Corporation Ritz Cosmetic Surgery			1,430,776				817,283
Medical Corporation Association Junikai			226,361				283,298
Hariver Inc.			1,908				—
SBC Tokyo Medical University			605				536
AI Med Inc.			36				33
SBC Inc.			288				137
Public Interest Foundation SBC Medical Promotion Foundation			66				36
SBC Shonan Osteopathic Clinic Inc.			—				4
SBC Irvine MC			677,515				693,850
Kijimadairakanko Inc.			60				336,176
Total		$	48,920,843			$	28,846,680
Accounts receivable with related parties		$	48,920,843			$	28,846,680

F- 30

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

Finance lease receivables		June 30, 2025				December 31, 2024
Medical Corporation Shobikai		$	4,201,316			$	1,877,291
Medical Corporation Kowakai			4,241,594				2,490,705
Medical Corporation Nasukai			6,659,496				3,872,683
Medical Corporation Aikeikai			1,580,515				1,047,821
Medical Corporation Ritz Cosmetic Surgery			2,333,678				2,479,771
Medical Corporation Jukeikai			407,692				500,244
Medical Corporation Association Furinkai			1,947,518				1,891,412
Medical Corporation Association Junikai			928,218				197,452
SBC Shonan Osteopathic Clinic Inc.			26,883				32,788
Total			22,326,910				14,390,167
Finance lease receivables			22,326,910				14,390,167
Less: current portion			( 9,128,931	)			( 5,992,585	)
Finance lease receivables Less: current portion			( 9,128,931	)			( 5,992,585	)
Non-current portion		$	13,197,979			$	8,397,582
Finance lease receivables Non-current portion		$	13,197,979			$	8,397,582

Other receivables		June 30, 2025				December 31, 2024
Medical Corporation Shobikai		$	672,427			$	—
Medical Corporation Kowakai			443,278				—
Medical Corporation Nasukai			419,358				—
Medical Corporation Aikeikai			215,926				—
Medical Corporation Jukeikai			75,800				—
Medical Corporation Ritz Cosmetic Surgery			64,619				—
Total		$	1,891,408			$	—

Due from related party, net		June 30, 2025				December 31, 2024
SBC Irvine MC		$	2,766,013			$	2,836,013
Less: allowance for credit loss			( 2,766,013	)			( 2,836,013	)
Total		$	—			$	—
Due from related party, net		$	—			$	—

Long-term investments in MCs		June 30, 2025				December 31, 2024
Medical Corporation Shobikai		$	6,936			$	6,378
Medical Corporation Kowakai			6,936				6,378
Medical Corporation Nasukai			6,936				6,378
Medical Corporation Aikeikai			6,936				6,378
Medical Corporation Jukeikai			7,460,610				6,859,913
Medical Corporation Ritz Cosmetic Surgery			11,893,068				10,935,485
Total		$	19,381,422			$	17,820,910
Long-term investments in MCs – related parties		$	19,381,422			$	17,820,910

Accounts payable		June 30, 2025				December 31, 2024
Japan Medical & Beauty Inc.		$	1,993,737			$	659,044
SBC Tokyo Medical University			34,682				—
Kijimadairakanko Inc.			3,568				—
Medical Corporation Shobikai			305,853				—
Medical Corporation Nasukai			292,118				—
Medical Corporation Kowakai			362,910				—
Medical Corporation Aikeikai			112,416				—
Medical Corporation Jukeikai			33,611				—
Medical Corporation Association Furinkai			39,926				—
Medical Corporation Ritz Cosmetic Surgery			13,146				—
Medical Corporation Association Junikai			50,855				—
SBC Shonan Osteopathic Clinic Inc.			2,584				—
General Incorporated Association SBC			583				—
Total		$	3,245,989			$	659,044
Accounts payable		$	3,245,989			$	659,044

Advances from customers		June 30, 2025				December 31, 2024
Medical Corporation Shobikai		$	4,389,144			$	5,076,300
Medical Corporation Kowakai			529,366				1,801,034
Medical Corporation Nasukai			726,562				1,745,069
Medical Corporation Aikeikai			158,652				379,931
Medical Corporation Jukeikai			57,179				140,170
Medical Corporation Ritz Cosmetic Surgery			22,214				45,701
SBC Shonan Osteopathic Clinic Inc.			21,716				16,395
Medical Corporation Association Furinkai			1,700,347				940,007
Medical Corporation Association Junikai			2,727,827				1,594,926
Total		$	10,333,007			$	11,739,533
Advances from customers		$	10,333,007			$	11,739,533

F- 31

SBC MEDICAL GROUP HOLDINGS INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 — RELATED PARTY TRANSACTIONS (cont.)

Notes and other payables		June 30, 2025				December 31, 2024
Medical Corporation Shobikai		$	710,513			$	4,653
Medical Corporation Kowakai			582,673				14,672
Medical Corporation Nasukai			621,202				8,827
Medical Corporation Aikeikai			228,791				2,236
Medical Corporation Jukeikai			66,495				—
Medical Corporation Ritz Cosmetic Surgery			82,767				1,201
General Incorporated Association SBC			979,607				—
Total			3,272,048				31,589
Notes payable – related parties			3,272,048				31,589
Less: current portion			( 3,272,048	)			( 26,255	)
Notes payable – related parties Less: current portion			( 3,272,048	)			( 26,255	)
Non-current portion		$	—			$	5,334
Notes payable – related parties Non-current portion		$	—			$	5,334

Due to related party		June 30, 2025				December 31, 2024
Yoshiyuki Aikawa		$	2,810,647			$	2,823,590
Total		$	2,810,647			$	2,823,590
Due to related party		$	2,810,647			$	2,823,590

		For the Six Months Ended June 30,
Allowance for credit loss movement		2025				2024
Beginning balance		$	2,836,013			$	3,238,209
Provision for credit loss			—				62,804
Reversal of credit loss			( 70,000	)			—
Ending balance		$	2,766,013			$	3,301,013

The balances of due to and due from related parties represent the outstanding loans to and from related parties, respectively, as of June 30, 2025 and December 31, 2024. These loans are non-secured, interest-free and due on demand.

In June 2025, the Company entered into a memorandum of sale for an aircraft pursuant to the property sales agreement dated August 18, 2023 with General Incorporated Association SBC, an entity controlled by the CEO of the Company, who is also the controlling shareholder of the Company. The original sale price was increased by approximately $ 9.68 million, which was recorded as a deemed contribution in connection with price modification on disposal of property and equipment in the Company’s unaudited consolidated statements of changes in stockholders’ equity.

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

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 substantially all derived from providing comprehensive management services to MCs and their clinics.

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 in 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 are 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 — COMMITMENT

As of June 30, 2025 and December 31, 2024, a subsidiary of the Company provided a guarantee on the debt of its CEO in the amounts of $ 266,573 and $ 262,095 , respectively. As of June 30, 2025 and December 31, 2024, the Company did not record a liability in the unaudited consolidated balance sheets for the guarantee because it was not probable that the Company would be required to make payments under the guarantee.

NOTE 20 — SUBSEQUENT EVENTS

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 OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements and will recognize the income tax effects in the consolidated financial statements beginning in the period in which the OBBBA was signed into law.

On July 17, 2025, the Company acquired 100% equity interest in MB Career Lounge Co., Ltd., a company providing management support services for medical institutions in Japan for cash consideration of approximately $ 13.7 million.

On July 22, 2025, the Company completed its 2025 Share Repurchase Program. Under the program, the Company repurchased an aggregate of 1,034,308 shares of its common stock for a total cash consideration of approximately $ 5 million, of which 521,499 shares of common stock were repurchased during the period from July 1, 2025 to July 22, 2025.

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, which 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 and 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, including but not limited to advertising and marketing needs across various platforms (such as social media networks), staff management (such as recruitment and training), booking reservations for franchisee clinic customers, assistance with franchisee employee housing rentals and facility rentals, construction and design of franchisee clinics, medical equipment and medical consumables procurement ( resale ), the provision of cosmetic products to franchisee 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 franchisee clinic’s customer rewards program (customer loyalty point program), and payment tools for the franchisee clinics.

Our wholly owned subsidiary, SBC Medical Group Co., Ltd., a Japan corporation (“SBC Medical Sub”, or “SBC Japan”) is designated as a “medical service corporation” in Japan. In Japan, a medical service corporation is a legal entity that provides management service to “medical corporations”. The management services are conducted through franchisor-franchisee contracts and/or service contracts between SBC Medical Sub and the medical corporations that own all 252 of the treatment centers in Japan as of June 30, 2025. These clinics provide include but are not limited to breast augmentation, liposuction, rejuvenation treatments (including treatment of wrinkles, acne, scars, cellulite, excess fat, discoloration, and signs of aging), laser skin toning and spot removal, eyes double fold surgery, rhinoplasty, treatment of osmidrosis and hyperhidrosis, hair transplants, gynecological formation treatments, laser hair removal, face line surgeries, cosmetical dental procedures, tattoo removal, lasik eye surgery, lateral canthoplasty, brow lift procedures, androgenetic alopecia treatment, and cheek sagging prevention methods. In addition, similar management services are provided to five independently operated clinics.

The Company’s subsidiaries have entered into franchisor-franchisee contracts and service contracts with six medical corporations, consisting of Medical Corporation Shobikai, Medical Corporation Kowakai, Medical Corporation Nasukai, Medical Corporation Aikeikai, Medical Corporation Jukeikai and Medical Corporation Ritz Cosmetic Surgery. In addition, the Company has entered into service contracts since September 2023 with two additional medical corporations, Medical Corporation Association Furinkai and Medical Corporation Association Junikai (collectively with the six franchisee medical corporations, the “Medical Corporations” or “MCs”). All of the Medical Corporations 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. 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 the Medical Corporations (except Medical Corporation Association Furinkai and Medical Corporation Association Junikai). 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 and Medical Corporation Association Junikai), the Company or SBC Medical Sub does not have voting control over the corporate actions at general meetings of members** of the Medical Corporations 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 June 30, 2025 and 2024, we generated revenues of $43,358,847 and $53,102,080, respectively, we reported net income attributable to SBC Medical Group Holdings Incorporated of $2,458,240 and $18,484,408, respectively. For the six months ended June 30, 2025 and 2024, we generated revenues of $90,687,548 and $107,910,122, respectively, we reported net income attributable to SBC Medical Group Holdings Incorporated of $23,960,686 and $37,242,160, respectively, and cash flows provided by (used in) operating activities of $(6,411,168) and $22,874,760, respectively. As of June 30, 2025, we had retained earnings of $213,423,693.

Our primary mission is to provide quality comprehensive management services to the Medical Corporations 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 “Description of Business” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 28, 2025.

Results of Operations

Comparison of Results of Operations for the Three Months Ended June 30, 2025 and 2024

The following table summarizes our operating income as reflected in our unaudited consolidated statements of operations and comprehensive income for the three months ended June 30, 2025 and 2024, and presents information regarding amounts and percentage changes during those periods.

		For the Three Months Ended June 30,
		2025								2024								Variance
		Amount				% of revenue				Amount				% of revenue				Amount				%
Revenues, net (including net revenues provided to related parties)		$	43,358,847				100.00	%		$	53,102,080				100.00	%		$	(9,743,233	)			(18.35	)%
Cost of revenues (including cost of revenues from related parties)			13,348,270				30.79	%			13,682,405				25.77	%			(334,135	)			(2.44	)%
Gross profit			30,010,577				69.21	%			39,419,675				74.23	%			(9,409,098	)			(23.87	)%
Operating expenses (including selling, general and administrative expenses from related parties)			15,456,385				35.65	%			12,129,115				22.84	%			3,327,270				27.43	%
Income from operations			14,554,192				33.56	%			27,290,560				51.39	%			(12,736,368	)			(46.67	)%
Other income			(1,013,831	)			(2.34	)%			(204,125	)			(0.38	)%			(809,706	)			396.67	%
Income before income taxes			13,540,361				31.22	%			27,086,435				51.01	%			(13,546,074	)			(50.01	)%
Income tax expense			11,100,509				25.60	%			8,529,110				16.05	%			2,571,399				30.15	%
Net income			2,439,852				5.63	%			18,557,325				34.95	%			(16,117,473	)			(86.85	)%
Less: net income (loss) attributable to non-controlling interests			(18,388	)			(0.04	)%			72,917				0.14	%			(91,305	)			(125.22	)%
Net income attributable to SBC Medical Group Holdings Incorporated		$	2,458,240				5.67	%		$	18,484,408				34.81	%		$	(16,026,168	)			(86.70	)%

Revenues, Net

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

		For the Three Months Ended June 30,								Variance
		2025				2024				Amount				%
Franchising revenue		$	10,007,581			$	14,626,256			$	(4,618,675	)			(31.58	)%
Procurement revenue			15,756,519				13,536,608				2,219,911				16.40	%
Management services revenue			5,138,578				16,705,597				(11,567,019	)			(69.24	)%
Rental services revenue			6,851,176				3,453,173				3,398,003				98.40	%
Others			5,604,993				4,780,446				824,547				17.25	%
Total		$	43,358,847			$	53,102,080			$	(9,743,233	)			(18.35	)%

Revenues, net, decreased by 18.35% from $53,102,080 for the three months ended June 30, 2024 to $43,358,847 for the three months ended June 30, 2025.

Japanese Yen (“JPY”) against the U.S. dollar appreciated during the three months ended June 30, 2025, compared to the three months June 30, 2024. The spot rate against the dollar was 144.1650 yen on June 30, 2025 compared to 160.8680 yen on June 30, 2024 and the average rate against the dollar was 144.0297 yen for the three months ended June 30, 2025 compared to 156.0476 yen for the same period in 2024. For the three months ended June 30, 2025 and 2024, we generated net revenues of $43,358,847 (JPY6,245 million) and $53,102,080 (JPY8,286 million), respectively, we reported net income of $2,439,852 (JPY310 million) and $18,557,325 (JPY2,894 million), respectively. Overall, the favorable impacts of the period-to-period foreign exchange rate changes on net revenues and net income were $1,058,367 and $59,556, respectively, for the three months ended June 30, 2025.

The main reasons for the variance of $9,743,233 in revenues, net per revenue stream are as follows:

Franchising Revenue

Franchising revenue for the three months ended June 30, 2025, decreased to $10,007,581 by $4,618,675, or 31.58%, from $14,626,256 for the same period in 2024. 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, partially offset by the appreciation of JPY.

Procurement Revenue

The procurement revenue for the three months ended June 30, 2025 increased to $15,756,519 by $2,219,911, or 16.40%, from $13,536,608 for the same period in 2024. This increase was mainly due to the orders from MCs for the new types of medical materials, as well as the appreciation of JPY.

Management Services Revenue

The management services revenue for the three months ended June 30, 2025 decreased to $5,138,578 by $11,567,019, or 69.24%, from $16,705,597 for the same period in 2024. This decrease was mainly due to (i) the discontinuation of clinic operation staff supporting services that had been provided by Shobikai Sub to MCs since the third quarter of 2024, because the Company completed the merger of Shobikai Sub with and into Lange Sub and the related business license, held by Shobikai Sub, became invalid upon the merger in January 2025, (ii) the decrease in the revenue in connection with customer rewards program offered to customers of the franchisee clinics and (iii) 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, partially offset by the appreciation of JPY.

Rental Services Revenue

The rental services revenue for the three months ended June 30, 2025 increased to $6,851,176 by $3,398,003, or 98.40%, from $3,453,173 for the same period in 2024. This increase was mainly due to the opening of new clinics resulting in the increased demand for medical equipment from new clinics and replacing laser hair removal equipment from existing clinics as well as the appreciation of JPY.

Others

The other revenues for the three months ended June 30, 2025 increased to $5,604,993 by $824,547, or 17.25%, from $4,780,446 for the same period in 2024. This increase was mainly due to revenues from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, which were acquired in November 2024 , offset by the disposal of its subsidiaries, Kijimadairakanko Inc. and Skynet Academy Co., Ltd. in December 2024.

Cost of Revenues

Cost of revenues for the three months ended June 30, 2025 was $13,348,270 compared to $13,682,405 for the same period in 2024. The decrease was mainly due to the Company’s effort of the cost reduction, as well as the discontinuation of clinic operation supporting services provided by Shobikai Sub to MCs since the third quarter of 2024, and the Company then terminated the employment of the related staff. Th e decrease was partially offset by higher purchase costs resulting from replacing laser hair removal equipment from MCs .

Gross Profit

Gross profit for the three months ended June 30, 2025 was $30,010,577 compared to $39,419,675 for the same period in 2024. The decrease in gross profit by $9,409,098 or 23.87% was mainly due to the decrease in franchising revenue and management services revenue with relatively high gross margin as a result of the factors described above.

Operating Expenses

Operating expenses for the three months ended June 30, 2025 and 2024 were as follows:

		For the Three Months Ended June 30,								Variance
		2025				2024				Amount				%
Salaries and welfare		$	6,765,517			$	7,872,447			$	(1,106,930	)			(14.06	)%
Depreciation and amortization expense			471,763				258,654				213,109				82.39	%
Consulting and professional service fees			3,878,036				2,578,115				1,299,921				50.42	%
Advertising expense			973,933				223,094				750,839				336.56	%
Taxes and dues			591,817				149,278				442,539				296.45	%
Recruiting expense			142,247				491,067				(348,820	)			(71.03	)%
Lease expense			558,738				549,160				9,578				1.74	%
Office, utility and other expenses			2,074,334				7,300				2,067,034				28,315.53	%
Total		$	15,456,385			$	12,129,115			$	3,327,270				27.43	%

The operating expenses increased to $15,456,385 for the three months ended June 30, 2025 by $3,327,270, or 27.43%, from $12,129,115 for the same period in 2024. The increase was mainly due to the increase in office, utility and other expenses, and consulting and professional service fees, partially offset by the decrease in salaries and welfare.

Office, utility and other expenses increased by $2,067,034, or 28,315.53%, to $2,074,334 for the three months ended June 30, 2025 from $7,300 for the same period in 2024, mainly due to the large-scale replacement of office supplies during the quarter.

Consulting and professional service fees increased by $1,299,921, or 50.42%, to $3,878,036 for the three months ended June 30, 2025 from $2,578,115 for the same period in 2024, mainly due to the increase in legal, tax, and market research expenses associated with the Company’s listing.

Salaries and welfare decreased by $1,106,930, or 14.06%, to $6,765,517 for the three months ended June 30, 2025 from $7,872,447 for the same period in 2024, mainly due to the disposal a subsidiary, Kijimadairakanko Inc. in December 2024 and the decrease for the compensation to the director and CEO of the Company.

Other Income (Expenses)

Other income (expenses) for the three months ended June 30, 2025 and 2024, were as follows:

		For the Three Months Ended June 30,								Variance
		2025				2024				Amount				%
Interest income		$	22,882			$	11,644			$	11,238				96.51	%
Interest expense			(49,651	)			(7,424	)			(42,227	)			568.79	%
Other income			33,771				306,291				(272,520	)			(88.97	)%
Other expenses			(1,132,465	)			(514,636	)			(617,829	)			120.05	%
Change in fair value of cryptocurrencies			111,632				—				111,632				100.00	%
Total		$	(1,013,831	)		$	(204,125	)		$	(809,706	)			396.67	%

In particular, the other income was $33,771 for the three months ended June 30, 2025, as compared to $306,291 for the three months ended June 30, 2024, mainly due to the decrease in the foreign exchange gain. The other expense was $1,132,465 for the three months ended June 30, 2025, as compared to $514,636 for the three months ended June 30, 2024, mainly due to the increase in the foreign exchange losses arising from intercompany loan balances between the Company and its subsidiary. Change in fair value of cryptocurrencies was $111,632 for the three months ended June 30, 2025, as compared to nil for the three months ended June 30, 2024, due to the Company purchased cryptocurrencies in the three months ended June 30, 2025 resulting in the fair value change of the cryptocurrencies during the current period.

Income Tax Expense

Income tax expense for the three months ended June 30, 2025 was $11,100,509 compared to $8,529,110 for the same period in 2024. The increase in income tax expense by $2,571,399 or 30.15% was mainly due to the increase of deferred tax expenses recognized and the appreciation of JPY.

The effective tax rate was 81.98% and 31.49% for the three months ended June 30, 2025 and 2024, respectively. The increase of 50.49 percentage points was mainly due to the deemed contribution in connection with the price modification on disposal of an aircraft to General Incorporated Association SBC, an entity controlled by the CEO of the Company, who is also the controlling shareholder of the Company, which was treated as a taxable gain under the Japanese tax law for the three months ended June 30, 2025.

Net Income

As a result of the foregoing, we reported a net income of $2,439,852 for the three months ended June 30, 2025, representing a decrease of $16,117,473 or 86.85% from $18,557,325 for the three months ended June 30, 2024.

Net Loss Attributable to Non-controlling Interests

Net loss attributable to non-controlling interests was $18,388 for the three months ended June 30, 2025, as compared to net income attributable to non-controlling interests of $72,917 for the three months ended June 30, 2024.

Comparison of Results of Operations for the Six Months Ended June 30, 2025 and 2024

The following table summarizes our operating income as reflected in our unaudited consolidated statements of operations and comprehensive income for the six months ended June 30, 2025 and 2024, and presents information regarding amounts and percentage changes during those periods.

		For the Six Months Ended June 30,
		2025								2024								Variance
		Amount				% of revenue				Amount				% of revenue				Amount				%
Revenues, net (including net revenues provided to related parties)		$	90,687,548				100.00	%		$	107,910,122				100.00	%		$	(17,222,574	)			(15.96	)%
Cost of revenues (including cost of revenues from related parties)			22,943,887				25.30	%			28,971,072				26.85	%			(6,027,185	)			(20.80	)%
Gross profit			67,743,661				74.70	%			78,939,050				73.15	%			(11,195,389	)			(14.18	)%
Operating expenses (including selling, general and administrative expenses from related parties)			28,987,395				31.96	%			27,187,605				25.19	%			1,799,790				6.62	%
Income from operations			38,756,266				42.74	%			51,751,445				47.96	%			(12,995,179	)			(25.11	)%
Other income			6,235,502				6.88	%			2,537,190				2.35	%			3,698,312				145.76	%
Income before income taxes			44,991,768				49.62	%			54,288,635				50.31	%			(9,296,867	)			(17.12	)%
Income tax expense			21,059,966				23.22	%			16,981,094				15.73	%			4,078,872				24.02	%
Net income			23,931,802				26.39	%			37,307,541				34.58	%			(13,375,739	)			(35.85	)%
Less: net income (loss) attributable to non-controlling interests			(28,884	)			(0.03	)%			65,381				0.06	%			(94,265	)			(144.18	)%
Net income attributable to SBC Medical Group Holdings Incorporated		$	23,960,686				26.42	%		$	37,242,160				34.51	%		$	(13,281,474	)			(35.66	)%

Revenues, Net

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

		For the Six Months Ended June 30,								Variance
		2025				2024				Amount				%
Franchising revenue		$	25,726,863			$	29,736,524			$	(4,009,661	)			(13.48	)%
Procurement revenue			30,089,302				26,732,592				3,356,710				12.56	%
Management services revenue			13,866,681				32,360,267				(18,493,586	)			(57.15	)%
Rental services revenue			12,491,690				7,071,114				5,420,576				76.66	%
Others			8,513,012				12,009,625				(3,496,613	)			(29.12	)%
Total		$	90,687,548			$	107,910,122			$	(17,222,574	)			(15.96	)%

Revenues, net, decreased by 15.96% from $107,910,122 for the six months ended June 30, 2024 to $90,687,548 for the six months ended June 30, 2025.

Japanese Yen (“JPY”) against the U.S. dollar appreciated during the six months ended June 30, 2025, compared to the six months June 30, 2024. The spot rate against the dollar was 144.1650 yen on June 30, 2025 compared to 160.8680 yen on June 30, 2024 and the average rate against the dollar was 148.4720 yen for the six months ended June 30, 2025 compared to 152.1868 yen for the same period in 2024. For the six months ended June 30, 2025 and 2024, we generated net revenues of $90,687,548 (JPY13,465 million) and $107,910,122 (JPY16,422 million), respectively, we reported net income of $23,931,802 (JPY3,562 million) and $37,307,541 (JPY5,678 million), respectively. Overall, the favorable impacts of the period-to-period foreign exchange rate changes on net revenues and net income were $2,213,636 and $526,004, respectively, for the six months ended June 30, 2025.

The main reasons for the variance of $17,222,574 in revenues, net per revenue stream are as follows:

Franchising Revenue

Franchising revenue for the six months ended June 30, 2025 decreased to $25,726,863 by $4,009,661, or 13.48%, from $29,736,524 for the same period in 2024. 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, partially offset by the appreciation of JPY.

Procurement Revenue

The procurement revenue for the six months ended June 30, 2025 increased to $30,089,302 by $3,356,710, or 12.56%, from $26,732,592 for the same period in 2024. This increase was mainly due to the orders from MCs for the new types of medical materials, as well as the appreciation of JPY.

Management Services Revenue

The management services revenue for the six months ended June 30, 2025 decreased to $13,866,681 by $18,493,586, or 57.15%, from $32,360,267 for the same period in 2024. This decrease was mainly due to (i) the discontinuation of clinic operation staff supporting services that had been provided by Shobikai Sub to MCs since the third quarter of 2024, because the Company completed the merger of Shobikai Sub with and into Lange Sub and the related business license that was held by Shobikai Sub became invalid upon the completion of the merger in January 2025, (ii) the decrease in the revenue in connection with customer rewards program offered to customers of the franchisee clinics and (iii) 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, partially offset by the appreciation of JPY.

Rental Services Revenue

The rental services revenue for the six months ended June 30, 2025 increased to $12,491,690 by $5,420,576, or 76.66%, from $7,071,114 for the same period in 2024. This increase was mainly due to opening of new clinics resulting in the increased demand for medical equipment from new clinics and replacing laser hair removal equipment from existing clinics as well as the appreciation of JPY.

Others

The other revenues for the six months ended June 30, 2025 decreased to $8,513,012 by $3,496,613, or 29.12%, from $12,009,625 for the same period in 2024. This decrease was mainly due to the disposal of its subsidiaries, Kijimadairakanko Inc. and Skynet Academy Co., Ltd., in December 2024, offset by revenues from Aesthetic Healthcare Holdings Pte. Ltd. and its subsidiaries, which were acquired in November 2024.

Cost of Revenues

Cost of revenues for the six months ended June 30, 2025 was $22,943,887 compared to $28,971,072 for the same period in 2024. The decrease was mainly due to the Company’s effort of the cost reduction, as well as the discontinuation of clinic operation supporting services provided by Shobikai Sub to MCs since the third quarter of 2024, and the Company then terminated the employment of the related staff. As a result, cost of revenues decreased overall, despite a partial offset from higher purchase costs resulting from replacing laser hair removal equipment from MCs.

Gross Profit

Gross profit for the six months ended June 30, 2025 was $67,743,661 compared to $78,939,050 for the same period in 2024. The decrease in gross profit by $11,195,389 or 14.18% was mainly due to the decrease in franchising revenue and management services revenue with relatively high gross margin as a result of the factors described above.

Operating Expenses

Operating expenses for the six months ended June 30, 2025 and 2024 were as follows:

		For the Six Months Ended June 30,								Variance
		2025				2024				Amount				%
Salaries and welfare		$	13,207,259			$	14,386,288			$	(1,179,029	)			(8.20	)%
Depreciation and amortization expense			933,168				1,227,358				(294,190	)			(23.97	)%
Consulting and professional service fees			7,176,118				5,208,876				1,967,242				37.77	%
Advertising expense			1,656,099				934,724				721,375				77.18	%
Taxes and dues			837,279				249,334				587,945				235.81	%
Recruiting expense			386,624				1,248,122				(861,498	)			(69.02	)%
Lease expense			1,199,327				1,233,930				(34,603	)			(2.80	)%
Office, utility and other expenses			3,591,521				2,698,973				892,548				33.07	%
Total		$	28,987,395			$	27,187,605			$	1,799,790				6.62	%

The operating expenses increased to $28,987,395 for the six months ended June 30, 2025 by $1,799,790, or 6.62%, from $27,187,605 for the same period in 2024. The increase was mainly due to the increase in office, utility and other expenses, and consulting and professional service fees, partially offset by the decrease in salaries and welfare.

Consulting and professional service fees increased by $1,967,242, or 37.77%, to $7,176,118 for the six months ended June 30, 2025 from $5,208,876 for the same period in 2024, mainly due to the increase in legal, tax, and market research expenses associated with the Company’s listing.

Office, utility and other expenses increased by $892,548, or 33.07%, to $3,591,521 for the six months ended June 30, 2025 from $2,698,973 for the same period in 2024, mainly due to the large-scale replacement of office supplies during the quarter.

Salaries and welfare decreased by $1,179,029, or 8.20%, to $13,207,259 for the six months ended June 30, 2025 from $14,386,288 for the same period in 2024, mainly due to the disposal a subsidiary, Kijimadairakanko Inc. in December 2024 and the decrease for the compensation to the director and CEO of the Company.

Other Income (Expenses)

Other income (expenses) for the six months ended June 30, 2025 and 2024, were as follows:

		For the Six Months Ended June 30,								Variance
		2025				2024				Amount				%
Interest income		$	78,215			$	29,333			$	48,882				166.65	%
Interest expense			(55,858	)			(10,432	)			(45,426	)			435.45	%
Other income			185,099				655,972				(470,873	)			(71.78	)%
Other expenses			(2,829,724	)			(1,951,292	)			(878,432	)			45.02	%
Gain on redemption of life insurance policies			8,746,138				—				8,746,138				100.00	%
Change in fair value of cryptocurrencies			111,632				—				111,632				100.00	%
Gain on disposal of subsidiary			—				3,813,609				(3,813,609	)			(100.00	)%
Total		$	6,235,502			$	2,537,190			$	3,698,312				145.76	%

Other income (expenses), net was $6,235,502 for the six months ended June 30, 2025 compared to $2,537,190 for the same period in 2024. The increase in other income (expense) by $3,698,312 or 145.76% was mainly due to a gain on redemption of life insurance policies of $8,746,138 in 2025, and the absence in 2025 of a gain on disposal of subsidiary of $3,813,609 recognized in 2024. In addition, the other income was $185,099 for the six months ended June 30, 2025, as compared to $655,972 for the six months ended June 30, 2024, mainly due to the decrease in the foreign exchange gains. The other expense was $2,829,724 for the six months ended June 30, 2025, as compared to $1,951,292 for the six months ended June 30, 2024, mainly due to the increase in the foreign exchange losses arising from intercompany loan balances between the Company and its subsidiary. Change in fair value of cryptocurrencies was $111,632 for the six months ended June 30, 2025, as compared to nil for the six months ended June 30, 2024, due to the Company purchased cryptocurrencies in the six months ended June 30, 2025, which resulted in the fair value change of the cryptocurrencies during the current period.

Income Tax Expense

Income tax expense for the six months ended June 30, 2025 was $21,059,966 compared to $16,981,094 for the same period in 2024. The increase in income tax expense by $4,078,872 or 24.02% was mainly due to the increase of deferred tax expenses recognized and the appreciation of JPY.

The effective tax rate was 46.81% and 31.28% for the six months ended June 30, 2025 and 2024, respectively. The increase of 15.53 percentage points was mainly due to the deemed contribution in connection with the price modification on disposal of an aircraft to General Incorporated Association SBC, an entity controlled by the CEO of the Company, who is also the controlling shareholder of the Company, which was treated as a taxable gain under the Japanese tax law for the six months ended June 30, 2025.

Net Income

As a result of the foregoing, we reported a net income of $23,931,802 for the six months ended June 30, 2025, representing a decrease of $13,375,739 or 35.85% from $37,307,541 for the six months ended June 30, 2024.

Net Income (Loss) Attributable to Non-controlling Interests

Net loss attributable to non-controlling interests was $28,884 for the six months ended June 30, 2025, as compared to net income attributable to non-controlling interests of $65,381 for the six months ended June 30, 2024.

Liquidity and Capital Resources

As of June 30, 2025, the Company had $152,740,882 in cash and cash equivalents compared to $125,044,092 as of December 31, 2024. In addition, the Company had $51,271,211 in accounts receivable as of June 30, 2025 compared to $30,260,113 as of December 31, 2024. 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 June 30, 2025, the Company’s working capital balance was $180,660,427. 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 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 and stockholder working capital, as needed.

The Company evaluates its capital allocation practices with the objective of enhancing shareholder 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.

Cash Flows for the six months ended June 30, 2025 and 2024

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

		For the Six Months Ended June 30,								Variance
		2025				2024				Amount				%
Net cash provided by (used in) operating activities		$	(6,411,168	)		$	22,874,760			$	(29,285,928	)			(128.03	)%
Net cash provided by (used in) investing activities			15,397,998				(9,405,716	)			24,803,714				(263.71	)%
Net cash provided by (used in) financing activities			6,901,719				(109,341	)			7,011,060				(6,412.11	)%
Effect of exchange rate changes			11,808,241				(12,679,865	)			24,488,106				(193.13	)%
Net change in cash and cash equivalents			27,696,790				679,838				27,016,952				3,974.03	%
Cash and cash equivalents as of the beginning of the period			125,044,092				103,022,932				22,021,160				21.38	%
Cash and cash equivalents as of the end of the period		$	152,740,882			$	103,702,770			$	49,038,112				47.29	%

Operating Activities

Net cash used in operating activities was $6,411,168 for the six months ended June 30, 2025, mainly derived from net income of $23,931,802 for the period, reconciled by a gain on redemption of life insurance policies of $8,746,138 and deferred income tax expense of $7,452,983, and net changes in operating assets and liabilities, which mainly included an increase in accounts receivable - related parties of $17,039,113, an increase in finance lease receivables – related parties of $6,482,967, a decrease in customer loans receivable of $8,081,703, an increase accounts payable to related parties - current of $2,455,865, a decrease in notes and other payables - related parties of $5,031,570, a decrease in advances from customers – related parties of $2,363,891, a decrease in income tax payable of $6,030,526, and a decrease in accrued liabilities and other current liabilities of $2,508,035.

Net cash provided by operating activities was $22,874,760 for the six months ended June 30, 2024, mainly derived from net income of $37,307,541 for the period, reconciled by a gain on disposal of subsidiary of $3,813,609, deferred income taxes of $3,322,728, and net changes in operating assets and liabilities, which mainly included a decrease in accounts receivable – related parties of $5,843,499, a decrease in customer loans receivable of $7,521,267, a decrease in accounts payable of $8,960,556, a decrease in notes and other payables – related parties of $5,101,368, a decrease in advance from customers – related parties of $4,663,233, a decrease in accrued liabilities and other current liabilities of $4,444,172 and an increase in income tax payable of $5,462,133.

Investing Activities

During the six months ended June 30, 2025, net cash provided by investing activities of $15,397,998 was mainly the result of proceeds from redemption of life insurance policies of $17.7 million, offset by the payments made on behalf of related parties of $1.8 million .

During the six months ended June 30, 2024, net cash used in investing activities of $9,405,716 was mainly the result of payments made on behalf of a related parties of $5.2 million, purchase of convertible note of $1.7 million, purchase of property and equipment of $1.6 million, and disposal of subsidiary, net of cash disposed of $0.8 million.

Financing Activities

During the six months ended June 30, 2025, net cash provided by financing activities of $6,901,719 was mainly due to the deemed contribution in connection with the price modification on disposal of property and equipment of $9.7 million, offset by repurchase of common stock of $2.4 million.

During the six months ended June 30, 2024, net cash used in financing activities of $109,341 was mainly due to the repayments of long-term loans of $0.06 million.

Recent Developments

One Big Beautiful Bill Act

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 OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements and will recognize the income tax effects in the consolidated financial statements beginning in the period in which the OBBBA was signed into law.

Share Repurchase Program

See PART II — OTHER INFORMATION, ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS for information regarding the Company’s share repurchase program.

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 equipment.

As of June 30, 2025, the future maturity of lease liabilities is as follows:

Years ending December 31,		Finance Lease				Operating Lease
Remaining of 2025		$	83,804			$	2,424,090
2026			134,201				1,644,921
2027			77,234				471,460
2028			43,778				141,390
2029			7,095				132,086
Thereafter			—				59,765
Total undiscounted lease payments			346,112				4,873,712
Less: imputed interest			(20,051	)			(41,325	)
Total lease liabilities		$	326,061			$	4,832,387

Bank and Other Borrowings

The Company borrowed loans from various banks and a financial institution for working capital purpose.

As of June 30, 2025, future minimum borrowing payments are as follows:

Years ending December 31,		Principal Repayment
Remaining of 2025		$	31,818
2026			69,420
2027			6,999,688
2028 and thereafter			—
Total		$	7,100,926

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

There are no off-balance sheet arrangements as of June 30, 2025 and December 31, 2024.

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 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 on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 28, 2025.

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 June 30, 2025 to provide reasonable assurance that information required to be disclosed in reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure due to identification of material weaknesses.

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 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, 2024, filed with the SEC on March 28, 2025. The material weaknesses previously identified in the Annual Report remained un-remediated as of June 30, 2025.

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

Other than the remediation efforts described above, there have been no material changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended June 30, 2025, 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

We may be subject to legal proceedings, investigations and claims incidental to the conduct of our business from time to time. We are not currently a party to any material litigation or other legal proceedings brought against us. We are also not aware of any legal proceeding, investigation or claim, or other legal exposure that has a more than remote possibility of having a material adverse effect on our business, financial condition or results of operations.

ITEM 1A. RISK FACTORS

Investing in our securities involves a high degree of risk. These risks are more fully described under “Part I, Item 1A. Risk Factors” of the Annual Report in addition to the information in this Quarterly 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 not presently known to us or that we currently deem immaterial may also impair our business or results of operations. If any such risks materialize, 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

Issuer Purchases of Equity Securities

During the three months ended June 30, 2025, we purchased common stock as set forth below:

Period		Total Number of Shares Purchased				Average Price Paid per Share				Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs				Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
														(in millions)
April 1, 2025 – April 30, 2025			—			$	—				—			$	—
May 1, 2025 – May 31, 2025			78,156				4.38				78,156				4.7
June 1, 2025 – June 30, 2025			434,653				4.71				434,653				2.6
Total			512,809								512,809

On May 15, 2025, the Company announced the initiation of a share repurchase program for up to $5 million in shares of common stock for the period from May 20, 2025 through May 20, 2026. The Board of Directors authorized repurchases in open market transactions, including under a Rule 10b5-1 trading plan and in accordance with Rule 10b-18 under the Exchange Act. All share repurchases set forth above were made using cash resources. On July 22, 2025, the Company completed its previously announced share repurchase program. Under the program, the Company repurchased an aggregate of 1,034,308 shares of its common stock for a total cash consideration of approximately $ 5 million, exhausting the full authorization.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

On June 22, 2025 , Yoshiyuki Aikawa , our Chief Executive Officer and Chairman , adopted a Rule 10b5-1 trading arrangement, which provides for the potential sale of up to 1,030,000 shares of the Company’s common stock. Dr. Aikawa’s 10b5-1 plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and unless otherwise terminated pursuant to its terms, provides for sales from September 22, 2025 to September 22, 2026 or an earlier date on which all shares thereunder are sold.

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 statement of affairs as of the date they were made or at any other time.

Exhibit 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 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 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 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 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 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 Medical 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 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 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 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 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 Current Report on Form 8-K filed on June 18, 2025) 2 .
3.2		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 on September 20, 2024).
10.1		Amended and Restated Executive Employment Agreement between SBC Medical Group Holdings Incorporated and Yuya Yoshida, dated as of April 28, 2025 (incorporated by reference to Exhibit 10.9 to the Annual Report on Form 10-K/A filed on May 9, 2025) 3 .
31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, 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) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, 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.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

² NTD: replace hyperlink: https://www.sec.gov/ix?doc=/Archives/edgar/data/1930313/000164117225015572/form8-k.htm

³ NTD: add hyperlink: https://www.sec.gov/Archives/edgar/data/1930313/000164117225009366/ex10-9.htm Miki’s employment agreement was also filed with the 10-K/A but I don’t think that was required since Miki is not an NEO. To discuss.

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: August 13, 2025		/s/ Yuya Yoshida
	Name:	Yuya Yoshida
	Title:	Chief Financial Officer
		(Authorized Signatory and Principal Financial Officer)