UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to _______ to _______ Commission File Number: 000-22333 Solésence, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Delaware 36-3687863 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ...

Financial Data and Key Metrics Changes - Revenue for the second quarter was $20.4 million, representing a 56% increase year over year, marking a record quarter for the company [8][10] - Gross profit increased by 55% to $5.9 million, with a gross profit margin of 29% for both periods, expanding by six percentage points from the previous year [10] - Net income for the second quarter was $2.7 million, compared to $0.9 million for the same period in 2024, benefiting from approximately $1.2 million in net credits from the federal government's employee retention credit program [11] Business Line Data and Key Metrics Changes - Shipment volume increased by 102% and production volume increased by 127% compared to the year ago period, indicating strong operational performance [16] - The company successfully resolved production issues with a new brand partner, leading to continued new orders from that account [16] Market Data and Key Metrics Changes - The company anticipates demand to slow in 2025 due to tariffs affecting global purchasing decisions and consumer buying habits, but still projects a record revenue year [20] - Current shipped and open orders are valued at over $60 million, compared to $50 million in 2024, indicating strong demand trends [22] Company Strategy and Development Direction - The company uplisted its common shares on NASDAQ, enhancing visibility and liquidity, and was added to the Russell 3000 and Russell 2000 indices [6][7] - The company is focused on leveraging patented technology and specialized formulations to maintain a competitive edge in the beauty market [23][24] - Financial flexibility was enhanced by amending loan agreements to increase borrowing capacity from $14.2 million to $23 million, allowing for better support of growth initiatives [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term prospects despite anticipated near-term demand headwinds due to macroeconomic conditions [22][37] - The company is committed to continuous innovation and improving operational efficiencies to drive stronger EBITDA performance in the second half of the year [25][37] Other Important Information - The company showcased new products at Cosmoprof North America, highlighting its commitment to innovation and market leadership [12][13] - A search for a new Chief Financial Officer is ongoing, with expectations to announce a candidate soon [27] Q&A Session Summary Question: Insights on profit margins and scaling challenges - Management indicated that improvements in manufacturing efficiency and better utilization of production lines are expected to enhance gross profit margins in the coming quarters [30][34] Question: Further details on operational improvements - Management elaborated on the implementation of process improvements to achieve first-time quality, which is anticipated to lower costs and improve efficiency [33][34]

Solésence Second Quarter 2025 Earnings Release [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Solésence reported record Q2 2025 revenue of **$20.4 million** (+**56%** YoY) and strong net income, enhancing financial flexibility [Key Accomplishments](index=1&type=section&id=Key%20Accomplishments) Strong commercial execution, Russell Index inclusion, and enhanced financial flexibility marked key accomplishments - Joined the broad-market Russell 3000® and small-cap Russell 2000® Indexes[7](index=7&type=chunk) - Management highlighted effective commercial execution and consistent on-time delivery to partners as key drivers for the quarter's performance[2](index=2&type=chunk) - Amended loan agreements to fuel growth initiatives, enhancing financial flexibility by increasing borrowing capacity[5](index=5&type=chunk)[7](index=7&type=chunk) [Q2 2025 Financial Performance](index=1&type=section&id=Q2%202025%20Financial%20Performance) Q2 2025 revenue grew **56%** to **$20.4 million**, with net income of **$2.7 million** aided by ERC Q2 2025 vs Q2 2024 Financials | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $20.4M | $13.0M | +56% | | Gross Profit | $5.9M | $3.7M | +59% | | Gross Margin | 29% | 29% | Stable | | Net Income | $2.7M | $0.9M | +200% | - Net income for Q2 2025 included an Employee Retention Credit (ERC) net receipt of approximately **$1.2 million** plus related interest[8](index=8&type=chunk) [Q2 2025 Operational Performance](index=1&type=section&id=Q2%202025%20Operational%20Performance) Record operational volumes (+**102%** shipment) supported by expanded debt facilities to **$23.0 million** Year-over-Year Operational Volume Growth | Metric | YoY Change | | :--- | :--- | | Shipment Volume | +102% | | Production Volume | +127% | - Expanded debt facilities from **$14.2 million** to a maximum borrowing capacity of **$23.0 million** and extended the maturity date to April 30, 2027[8](index=8&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) Unaudited consolidated financial statements detail Q2 2025 performance, including Balance Sheet, Income Statement, and Adjusted EBITDA [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets reached **$60.0 million** and equity **$18.2 million** as of June 30, 2025, with increased liabilities Balance Sheet Summary (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $38,770 | $29,348 | | **Total Assets** | **$59,956** | **$50,002** | | Total Current Liabilities | $33,036 | $25,773 | | **Total Liabilities** | $41,768 | $35,056 | | **Total Stockholders' Equity** | **$18,188** | **$14,946** | [Consolidated Statements of Operations (GAAP)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20%28GAAP%29) Q2 2025 net revenue was **$20.4 million** with net income of **$2.7 million** (**$0.04** EPS), significantly up YoY Q2 Statement of Operations (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Revenue | $20,359 | $13,046 | | Gross Profit | $5,877 | $3,740 | | Income from Operations | $1,910 | $1,047 | | **Net Income** | **$2,667** | **$856** | | **Diluted EPS** | **$0.04** | **$0.01** | [Non-GAAP Reconciliation (Adjusted EBITDA)](index=4&type=section&id=Non-GAAP%20Reconciliation%20%28Adjusted%20EBITDA%29) Q2 2025 Adjusted EBITDA significantly increased to **$3.5 million**, including **$1.2 million** from the Employee Retention Credit Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $2,667 | $856 | | Add: Interest, net | $87 | $191 | | Add: Depreciation/Amortization | $225 | $234 | | Add: Non-Cash Equity Comp. | $120 | $157 | | Add: Provision for Income Taxes | $390 | $0 | | **Adjusted EBITDA** | **$3,489** | **$1,438** | - The Q2 2025 Adjusted EBITDA calculation includes **$1,234 thousand** in other cash income from the Employee Retention Credit (ERC)[21](index=21&type=chunk) [Conference Call Information](index=1&type=section&id=Conference%20Call%20Information) A conference call on July 31, 2025, will discuss results, featuring CEO and COO, with webcast and dial-in access - The conference call is scheduled for Thursday, July 31, 2025, at 4:00 p.m. CDT / 5:00 p.m. EDT[6](index=6&type=chunk) - Participants include President and CEO Jess Jankowski and COO Kevin Cureton[6](index=6&type=chunk) - Access details, including webcast and dial-in registration links, are provided in the release[6](index=6&type=chunk)[9](index=9&type=chunk) [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) This section details Solésence's business, non-GAAP measure usage, and forward-looking statements disclaimer - Solésence defines itself as a leader in scientifically-driven health care solutions, specializing in mineral-based sun protection[11](index=11&type=chunk) - The company explains its use of non-GAAP financial measures to provide supplemental information for evaluating performance across reporting periods[10](index=10&type=chunk) - The release contains forward-looking statements subject to risks and uncertainties, as detailed in the company's Form 10-K[12](index=12&type=chunk)

Core Insights - Solésence, Inc. will report its second quarter 2025 results on July 31, 2025, after market close [1] - The company will host a conference call and webcast on the same date to discuss the results [1] Conference Call Details - The conference call is scheduled for July 31, 2025, at 4:00 p.m. CDT, 5:00 p.m. EDT [2] - Speakers will include Jess Jankowski, President & CEO, and Kevin Cureton, Chief Operating Officer [2] - Registration is required to receive the dial-in number and personalized PIN for the call [2][3] Company Overview - Solésence, Inc. is a leader in scientifically-driven health care solutions in beauty and life science categories [4] - The company focuses on innovation, inclusivity, and the science of beautiful skin, particularly in mineral-based sun protection [4] - Solésence integrates protection, prevention, and treatment technologies into daily use products, enhancing skin health solutions [4]

Core Points - Solésence, Inc. will be added to the Russell 3000® and Russell 2000® Indexes effective June 30, 2025, enhancing its visibility to institutional investors [1][3] - The Russell US indexes include the 4,000 largest US stocks ranked by market capitalization as of April 30, with membership lasting for one year [2] - Approximately $10.6 trillion in assets are benchmarked against the Russell US indexes, indicating their significance in the investment community [3] Company Overview - Solésence, Inc. specializes in scientifically-driven health care solutions in beauty and life sciences, focusing on innovative skin health products [5] - The company aims to redefine mineral-based sun protection by emphasizing transparency, effectiveness, and aesthetics [5] - Solésence integrates protection, prevention, and treatment technologies into daily use products, promoting self-care and unique product claims [5] Industry Context - FTSE Russell, the provider of the Russell indexes, is a global leader in index benchmarking, covering 98% of the investable market globally with approximately $18.1 trillion benchmarked to its indexes [6] - The Russell indexes are widely utilized by investment managers and institutional investors for index funds and as benchmarks for active investment strategies [3][6]

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Solesence, Inc.'s Q1 2025 financial statements show increased assets and liabilities, significant revenue growth, but a sharp decline in net income due to higher costs [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$57.0 million** by March 31, 2025, driven by higher receivables and inventory, with total liabilities also rising due to increased credit lines Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $35,904 | $29,348 | | Trade accounts receivable, net | $9,085 | $4,869 | | Inventories, net | $21,912 | $20,267 | | **Total Assets** | **$57,016** | **$50,002** | | **Total Current Liabilities** | $32,876 | $25,773 | | Line of credit – accounts receivable | $6,292 | $0 | | Line of credit – inventory | $5,200 | $4,000 | | **Total Liabilities** | $41,860 | $35,056 | | **Total Stockholders' Equity** | **$15,156** | **$14,946** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 saw total revenue increase by **48.2%** to **$14.6 million**, but net income sharply declined to **$80 thousand** due to higher cost of revenue and operating expenses Q1 2025 vs. Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$14,625** | **$9,868** | **+48.2%** | | Product Revenue | $14,575 | $9,772 | +49.2% | | Cost of Revenue | $11,243 | $6,288 | +78.8% | | **Gross Profit** | **$3,382** | **$3,580** | **-5.5%** | | Net Income from Operations | $256 | $1,111 | -76.9% | | **Net Income** | **$80** | **$893** | **-91.0%** | | **Net Income per Share-diluted** | **$0.00** | **$0.02** | **-100.0%** | [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity slightly increased to **$15.16 million** by March 31, 2025, primarily due to **$80 thousand** net income and **$127 thousand** stock-based compensation - For the three months ended March 31, 2025, the change in stockholders' equity was driven by net income of **$80 thousand** and stock-based compensation of **$127 thousand**[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw **$7.2 million** net cash used in operations, offset by **$7.5 million** from financing, resulting in a **$408 thousand** cash increase Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(7,221) | $(3,855) | | Net cash used in investing activities | $133 | $(85) | | Net cash provided by financing activities | $7,496 | $4,236 | | **Increase in cash** | **$408** | **$296** | | **Cash at end of period** | **$1,817** | **$2,018** | [Notes to Unaudited Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) Notes detail the company's skin health focus, revenue recognition, customer concentration, reliance on related-party debt maturing in October 2025, and revenue by product category - The company is science-driven, focusing on skin health and medical diagnostics markets, utilizing proprietary technologies like Active Stress Defense™ for ingredients and prestige products[17](index=17&type=chunk)[19](index=19&type=chunk) - The company relies on credit facilities from Beachcorp, LLC and Strandler, LLC, affiliates of a majority shareholder, with loan agreements expiring on **October 1, 2025**[37](index=37&type=chunk) - For Q1 2025, three significant customers accounted for **42%** of total revenue, a decrease from **61%** in Q1 2024, indicating reduced customer concentration[43](index=43&type=chunk)[44](index=44&type=chunk) Revenue by Product Category (in thousands) | Product Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Consumer Products | $12,882 | $8,104 | | Personal Care Ingredients | $1,373 | $1,376 | | Advanced Materials | $370 | $388 | | **Total Sales** | **$14,625** | **$9,868** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's rebranding, strategic shift to consumer products, Q1 2025 revenue growth, gross margin impact from higher costs, and reliance on debt for funding - On **March 7, 2025**, the company rebranded from Nanophase Technologies Corporation to Solesence, Inc. and uplisted to Nasdaq under ticker SLSN on **April 8, 2025**[50](index=50&type=chunk) - The company's strategic focus is on consumer products, which is now the major driver of growth due to strong market demand and technological advantages[53](index=53&type=chunk) - Product revenue increased to **$14.6 million** in Q1 2025 from **$9.8 million** in Q1 2024, primarily due to higher sales in the consumer products category[57](index=57&type=chunk) - Cost of revenue increased significantly in Q1 2025 due to higher volume, manufacturing inefficiencies, and facility improvements, negatively impacting gross margin percentage[59](index=59&type=chunk) - The company's primary operational focus is on increasing manufacturing throughput and reducing controllable variable manufacturing costs to improve margins as revenue scales[60](index=60&type=chunk) - Cash used in operations for Q1 2025 was primarily due to increased accounts receivable and inventory, with funding needs met through debt and expected capital spending between **$2 million** and **$4 million** for 2025[67](index=67&type=chunk)[68](index=68&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Solesence, Inc. is not required to provide these disclosures - Disclosure is not required for a smaller reporting company[72](index=72&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the company's disclosure controls and procedures, concluding they were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective[73](index=73&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[74](index=74&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[77](index=77&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Solesence, Inc. is not required to provide this information - Not required for a smaller reporting company[78](index=78&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[79](index=79&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[80](index=80&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[81](index=81&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[82](index=82&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) The report includes certifications from the Chief Executive Officer and Principal Financial Officer, as well as XBRL data files for the financial statements - Exhibits filed include CEO and PFO certifications (Exhibits 31.1, 31.2, 32) and XBRL formatted financial statements (Exhibit 101)[85](index=85&type=chunk)

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) Solésence achieved record Q1 2025 revenue, driven by new partnerships, despite temporary margin compression, with strong future order visibility and Nasdaq uplisting - Record revenue was fueled by strong sales across consumer products and large customer orders, including a new product line with a key new brand partner[2](index=2&type=chunk) - One-time start-up costs associated with a new partner launch impacted Q1 gross margins, but the company anticipates substantial margin improvement as operations scale[2](index=2&type=chunk) - The company anticipates continued sequential revenue growth, citing current shipped and open orders in excess of **$45 million**[2](index=2&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) Solésence reported record Q1 2025 revenue of **$14.6 million** (+48% YoY), but gross profit and net income declined significantly due to higher start-up costs Q1 2025 Key Financial Metrics (vs. Q1 2024) | Financial Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | **Net Revenue** | $14.6 million | $9.9 million | +48% | | **Gross Profit** | $3.3 million | $3.6 million | -8.3% | | **Gross Margin** | 23% | 36% | -13 pts | | **Net Income** | $0.0 million (breakeven) | $0.9 million | -100% | | **Adjusted EBITDA** | $0.6 million | $1.5 million | -60% | [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q1 2025 net revenue increased 48% to **$14.6 million**, but a 79.9% surge in cost of revenue reduced gross profit and led to breakeven net income Q1 2025 vs Q1 2024 Statement of Operations (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net revenue | $14,625 | $9,868 | | Gross profit | $3,313 | $3,580 | | Income from operations | $256 | $1,111 | | Net income | $80 | $893 | | Net income per share-diluted | $0.00 | $0.02 | [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets grew to **$57.0 million** as of March 31, 2025, driven by receivables and inventories, while total liabilities increased due to a new line of credit Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $35,904 | $29,348 | | **Total assets** | **$57,016** | **$50,002** | | Total current liabilities | $32,876 | $25,773 | | **Total liabilities** | **$41,860** | **$35,056** | | **Total stockholders' equity** | **$15,156** | **$14,946** | [Non-GAAP Financial Measures](index=2&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) Solésence uses non-GAAP measures like Adjusted EBITDA, which declined sharply to **$609 thousand** in Q1 2025 from **$1,505 thousand** in Q1 2024 - The company presents non-GAAP measures, believing they provide meaningful supplemental information to evaluate performance across reporting periods[10](index=10&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $80 | $893 | | **Adjusted EBITDA** | **$609** | **$1,505** | [Operational Highlights](index=1&type=section&id=First%20Quarter%202025%20Operational%20Highlights) Q1 2025 saw significant operational scaling with **95%** shipment and **120%** production volume increases, alongside expanded intellectual property with new patent allowances - Shipment volume increased by **95%** and production volume grew by **120%** year-over-year[7](index=7&type=chunk) - Intellectual property was expanded with patent allowances in Japan (Kleair™ technology), South Korea (plant-based antioxidant), and Mexico (skin health technology)[7](index=7&type=chunk) [Corporate Updates & Conference Call](index=1&type=section&id=Corporate%20Updates%20%26%20Conference%20Call) A key corporate update was the successful uplisting to Nasdaq under ticker **SLSN**, enhancing visibility, with a conference call scheduled for May 5, 2025 - The company successfully uplisted to the Nasdaq market under the new ticker symbol "**SLSN**"[6](index=6&type=chunk) - A conference call to discuss Q1 2025 financial results is scheduled for May 5, 2025, at 4:00 p.m. CDT[8](index=8&type=chunk)

Part I [Business Overview](index=5&type=section&id=Item%201.%20General) Solesence, Inc. is a science-driven skin health company strategically focused on its high-growth Consumer Products segment, leveraging patented technologies for innovative skincare solutions - On March 7, 2025, Nanophase Technologies Corporation rebranded as Solesence, Inc. to reflect its commitment to innovation in skin health. The stock ticker remains NANX[19](index=19&type=chunk) - The company's strategic focus has shifted to its Solesence consumer products, which are viewed as the primary driver for future growth, surpassing personal care ingredients in revenue[22](index=22&type=chunk)[24](index=24&type=chunk) - The company's Active Stress Defense™ technology platform, including Kleair™, is a key competitive advantage, enabling unique skin health products that protect against UVA/UVB, pollution, and blue light[37](index=37&type=chunk) - Solesence has received numerous industry awards for its innovative formulations, including multiple Cosmopack and Cosmetics & Toiletries Allē Awards between 2022 and 2025, highlighting its technological and formulation expertise[28](index=28&type=chunk) Revenue by Product Category (2023-2024) | Product Category | 2024 Revenue | 2023 Revenue | | :--- | :--- | :--- | | Consumer Products | $44.4M (85% of total) | $25.2M (68% of total) | | Personal Care Ingredients | $6.8M | $9.3M | | Advanced Materials | $1.1M | $2.8M | Top Customer Revenue Concentration (2024) | Customer Type | % of 2024 Total Revenue | | :--- | :--- | | Consumer Products Customer 1 | 32% | | Personal Care Ingredients (BASF) | 13% | | Consumer Products Customer 2 | 7% | [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, the company is not required to provide specific risk factor disclosures - Disclosure of Risk Factors is not required for a smaller reporting company[63](index=63&type=chunk) [Cybersecurity](index=14&type=section&id=Item%201C.%20Cybersecurity) The company employs a comprehensive cybersecurity strategy managed by an IT consultant with Board oversight, reporting no material incidents in 2024 - The company's cybersecurity strategy involves using antivirus software, VPNs, email security, and maintaining up-to-date software patches[66](index=66&type=chunk)[73](index=73&type=chunk) - Oversight is managed by an IT consultant who reports to senior management, with the Board of Directors having ultimate responsibility[67](index=67&type=chunk)[68](index=68&type=chunk) - The company is not aware of any material cybersecurity incidents in 2024 or any threats reasonably likely to materially affect its business[66](index=66&type=chunk) [Properties](index=14&type=section&id=Item%202.%20Properties) Solesence operates three ISO-certified and FDA cGMP-compliant leased facilities in the Chicago suburbs, providing sufficient capacity for anticipated growth through 2026 - The company leases three facilities in the Chicago area: Romeoville (HQ, R&D, manufacturing), Burr Ridge (manufacturing), and Bolingbrook (warehousing, manufacturing, assembly)[69](index=69&type=chunk) - All facilities are registered under ISO 9001, ISO 22716, and ISO 14001, and are compliant with FDA cGMP regulations for API and OTC drug manufacturing[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The Bolingbrook lease extends to May 2032, while the Romeoville lease runs to January 2028. Management believes current facilities are sufficient for growth anticipated through 2025-2026[75](index=75&type=chunk)[76](index=76&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) A legal dispute with BASF Corporation regarding an exclusivity agreement was settled in April 2024, clarifying terms to allow Solesence to sell finished zinc oxide products - A legal dispute with BASF Corporation, initiated in August 2022 regarding an alleged breach of an exclusivity agreement, was settled on April 10, 2024[77](index=77&type=chunk)[78](index=78&type=chunk) - The settlement involved amending the supply agreement to clarify that Solesence can supply and sell finished products containing zinc oxide to customers globally, resolving the core of the dispute[79](index=79&type=chunk) Part II [Market for Common Equity and Related Matters](index=17&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on OTCQB, with no cash dividends paid or anticipated due to reinvestment plans and loan restrictions Common Stock Price Range (Fiscal Year 2024) | Quarter | High | Low | | :--- | :--- | :--- | | First | $0.98 | $0.43 | | Second | $1.71 | $0.70 | | Third | $1.65 | $1.33 | | Fourth | $2.88 | $1.30 | - The company has never declared or paid cash dividends and intends to retain future earnings for reinvestment. Loan agreements with lenders also restrict dividend payments without prior consent[83](index=83&type=chunk) [Management's Discussion and Analysis (MD&A)](index=17&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Solesence achieved a significant financial turnaround in 2024, with revenue growth, net profit, improved margins, and positive operating cash flow, driven by consumer product sales [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Total revenue increased 40% to $52.3 million in 2024, driven by consumer products, leading to a net income of $4.2 million and improved gross margin Consolidated Statement of Operations Summary (in thousands) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $52,347 | $37,297 | +40.3% | | Gross Profit | $16,188 | $7,825 | +106.9% | | Net Income (Loss) from Operations | $5,132 | $(3,546) | N/A | | Net Income (Loss) | $4,235 | $(4,390) | N/A | | Diluted EPS | $0.07 | $(0.09) | N/A | - The increase in product revenue to **$51.9 million** in 2024 from **$36.6 million** in 2023 was due to a significant increase in revenue from consumer products, partially offset by decreases in personal care ingredients and advanced materials[88](index=88&type=chunk) - Selling, general and administrative (SG&A) expenses decreased to **$7.2 million** in 2024 from **$7.5 million** in 2023, largely due to a decrease in legal costs[93](index=93&type=chunk) - An inventory reserve of **$1,987,000** was applied in 2024 for materials nearing expiration, soon-to-be obsolete products, and raw materials no longer in regular use[86](index=86&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity significantly improved in 2024 with positive operating cash flow and a $6 million preferred stock issuance, enabling debt reduction and capital expenditures Cash Flow Summary (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash from Operating Activities | $1,971 | $(2,006) | | Cash used in Investing Activities | $(4,558) | $(1,051) | | Cash from Financing Activities | $2,274 | $2,593 | - In March 2024, the company issued **15,000 shares of Series X Preferred Stock** to Strandler, LLC for **$6 million**. These shares were subsequently converted into **15,000,000 shares of common stock** in June 2024 after a shareholder vote to increase authorized shares[102](index=102&type=chunk)[106](index=106&type=chunk)[285](index=285&type=chunk) - The maturity date on related-party debt facilities with Beachcorp, LLC and Strandler, LLC was extended to October 1, 2025. Subsequent to year-end, the lender committed to refinancing the debt with a new maturity date after April 1, 2026[107](index=107&type=chunk)[108](index=108&type=chunk)[301](index=301&type=chunk) - The company has federal net operating loss (NOL) carryforwards of approximately **$42 million** as of December 31, 2024, which can be used to offset future taxable income[112](index=112&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[117](index=117&type=chunk) - Based on an assessment using the COSO framework, management believes the company maintained effective internal control over financial reporting as of December 31, 2024[120](index=120&type=chunk)[121](index=121&type=chunk) - The annual report does not include an attestation report from the company's registered public accounting firm regarding internal controls, as permitted for smaller reporting companies[123](index=123&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=26&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's Board of Directors and executive team oversee corporate governance through established committees, a Code of Ethics, and an Insider Trading Policy Board of Directors | Name | Position | Director Since | | :--- | :--- | :--- | | R. Janet Whitmore | Chair of the Board | 2003 | | Laura M. Beres | Director | 2020 | | Mark E. Miller | Director | 2023 | | Jess A. Jankowski | President, CEO, CFO, Director | 2009 | - The executive officers are Jess A. Jankowski (President, CEO, CFO) and Kevin Cureton (COO)[133](index=133&type=chunk)[145](index=145&type=chunk) - The Board has determined that directors Laura M. Beres and Mark E. Miller are independent. The company qualifies as a "controlled company" due to the majority ownership of Bradford T. Whitmore[187](index=187&type=chunk) [Executive Compensation](index=29&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for named officers includes salary, bonuses, and equity awards, with outside directors receiving cash retainers and stock options 2024 & 2023 Named Executive Officer Compensation | Name and Position | Year | Salary ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Jess Jankowski, CEO | 2024 | 357,072 | 39,738 | 423,779 | | | 2023 | 341,409 | 5,521 | 374,849 | | Kevin Cureton, COO | 2024 | 309,256 | 39,738 | 370,293 | | | 2023 | 294,492 | 5,521 | 322,687 | - Performance milestones were achieved in 2024, and related bonuses will be paid. Milestones were not achieved in 2023, and no bonuses were paid for that year[162](index=162&type=chunk) 2024 Outside Director Compensation | Name | Fees Paid in Cash ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | R. Janet Whitmore | 24,000 | 21,193 | 45,193 | | Laura M. Beres | 18,000 | 15,895 | 33,895 | | Mark E. Miller | 18,000 | 15,895 | 33,895 | [Security Ownership](index=34&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Bradford T. Whitmore is the principal stockholder, owning approximately 71.08% of common shares, while executive officers and directors collectively own 4.84% - Bradford T. Whitmore is the majority beneficial owner, holding approximately **71.08%** of the company's common stock as of March 28, 2025[183](index=183&type=chunk)[186](index=186&type=chunk) - All current executive officers and directors as a group beneficially own **3,441,304 shares**, representing **4.84%** of the outstanding common stock[183](index=183&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2024) | Category | Securities to be issued upon exercise | Weighted-average exercise price ($) | Securities available for future issuance | | :--- | :--- | :--- | :--- | | Plans Approved by Shareholders | 3,212,000 | $1.47 | 63,000 | [Related Transactions and Director Independence](index=35&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company maintains significant financial relationships with its majority shareholder and affiliates, while the Board has independent directors and qualifies as a "controlled company" - The company has engaged in a series of debt and equity transactions with entities affiliated with its majority shareholder, Bradford T. Whitmore, including Beachcorp, LLC and Strandler, LLC[185](index=185&type=chunk)[98](index=98&type=chunk) - Bradford T. Whitmore is the brother of R. Janet Whitmore, the Chair of the Board of Directors[185](index=185&type=chunk) - The Board has identified Laura M. Beres and Mark E. Miller as independent directors[187](index=187&type=chunk) [Principal Accounting Fees and Services](index=36&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) RSM US LLP billed approximately $296,000 in 2024 for audit and audit-related services, all pre-approved by the Audit and Finance Committee Accountant Fees (RSM US LLP) | Fee Type | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Audit Fees | $270,000 | $263,000 | | Audit-Related Fees | $26,000 | $26,000 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | **Total** | **$296,000** | **$289,000** | - All audit and non-audit services provided by the principal accountant are pre-approved by the Audit and Finance Committee[192](index=192&type=chunk)[193](index=193&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=37&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section includes consolidated financial statements, the independent auditor's report, and a comprehensive index of all exhibits filed with the Form 10-K - This part includes the consolidated financial statements and the report of the independent registered public accounting firm, RSM US LLP[197](index=197&type=chunk)[202](index=202&type=chunk) - An extensive exhibit index lists all filed documents, including governance documents, material contracts, debt agreements, and executive compensation plans[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=39&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) RSM US LLP issued an unqualified opinion on the consolidated financial statements, identifying inventory reserve valuation as a critical audit matter - RSM US LLP expressed an unqualified opinion, stating the financial statements are presented fairly in accordance with U.S. GAAP[205](index=205&type=chunk) - The valuation of the inventory excess and obsolete reserve was identified as a Critical Audit Matter (CAM) because it involved significant and subjective management judgments[209](index=209&type=chunk)[212](index=212&type=chunk) [Consolidated Financial Statements](index=41&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements reflect significant financial improvement in 2024, with increased assets and stockholders' equity, and a shift from net loss to net income Key Balance Sheet Data (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $29,348 | $16,302 | | Total Assets | $50,002 | $32,881 | | Total Current Liabilities | $25,773 | $15,589 | | Total Liabilities | $35,056 | $30,979 | | Total Stockholders' Equity | $14,946 | $1,902 | Key Income Statement Data (in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenue | $52,347 | $37,297 | | Gross Profit | $16,188 | $7,825 | | Net Income (Loss) | $4,235 | $(4,390) | [Notes to Consolidated Financial Statements](index=45&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the strategic shift to consumer products, related-party transactions, inventory changes, and subsequent events like rebranding and debt refinancing - The company's strategic focus is on its Solesence consumer products line, which has become the majority of the business and the primary driver of growth[226](index=226&type=chunk) Revenue by Product Category (in thousands) | Product Category | 2024 | 2023 | | :--- | :--- | :--- | | Consumer Products | $44,373 | $25,211 | | Personal Care Ingredients | $6,827 | $9,277 | | Advanced Materials | $1,147 | $2,809 | | **Total** | **$52,347** | **$37,297** | Inventories, net (in thousands) | Component | 2024 | 2023 | | :--- | :--- | :--- | | Raw materials | $17,396 | $8,524 | | Finished goods | $4,858 | $2,184 | | Inventory reserve | $(1,987) | $(677) | | **Total** | **$20,267** | **$10,031** | - In March 2024, the company issued **$6 million** in Series X Preferred Stock to Strandler, LLC, an affiliate of the majority shareholder. This was converted to **15 million shares of common stock** in June 2024[280](index=280&type=chunk)[285](index=285&type=chunk) - Subsequent to year-end, in March 2025, the company rebranded from Nanophase Technologies Corporation to Solesence, Inc. and secured a commitment to refinance its related-party debt maturing in October 2025[300](index=300&type=chunk)[301](index=301&type=chunk)

Solésence Fourth Quarter and Full-Year 2024 Financial Results [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Solésence achieved record Q4 and full-year 2024 revenue, with significant profitability improvements, turning a net loss into net income Full-Year 2024 vs. 2023 Financial Performance | Metric | Full Year 2024 | Full Year 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $52.3 million | $37.3 million | +40% | | **Gross Profit** | $16.2 million | $7.8 million | +107% | | **Gross Margin** | 31% | 21% | +10 p.p. | | **Net Income/(Loss)** | $4.2 million | ($4.4 million) | N/A | Fourth Quarter 2024 vs. 2023 Financial Performance | Metric | Q4 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $12.6 million | $8.0 million | +57.5% | | **Gross Profit** | $2.8 million | $0.5 million | +460% | | **Gross Margin** | 22% | 6% | +16 p.p. | | **Net Loss** | ($0.6 million) | ($2.1 million) | +71.7% | [Operational & Strategic Highlights](index=1&type=section&id=Operational%20%26%20Strategic%20Highlights) Solésence executed key strategic initiatives, including rebranding, capacity expansion, new SKU launches, and plans a 2025 NASDAQ uplisting - The company plans to pursue an uplisting to the NASDAQ market in **2025** and is beginning the search for a dedicated Chief Financial Officer[4](index=4&type=chunk) - Initiated expansion of batch-making capabilities, increasing capacity to support over **$200 million** in annual revenue from the consumer products line[16](index=16&type=chunk) - The company rebranded as Solésence, Inc. to reflect its consumer products strategy and launched a new investor relations website[7](index=7&type=chunk) - Operational achievements include producing **double the unit volume** in Q4 2024 compared to Q4 2023 and launching over **two dozen new SKUs**[16](index=16&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=FINANCIAL%20RESULTS%20AND%20NON-GAAP%20INFORMATION) Consolidated financial statements detail significant asset growth and a turnaround from net loss to net income in 2024, driven by revenue and margin improvements [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets grew to **$50.0 million** by December 31, 2024, driven by inventories and receivables, with stockholders' equity improving to **$14.9 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash | $1,409 | $1,722 | | Inventories, net | $20,267 | $10,031 | | Total current assets | $29,348 | $16,302 | | **Total assets** | **$50,002** | **$32,881** | | Total current liabilities | $25,773 | $21,589 | | **Total liabilities** | **$35,056** | **$30,979** | | **Total stockholders' equity** | **$14,946** | **$1,902** | [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Full-year 2024 net revenue increased **40%** to **$52.3 million**, resulting in **$4.2 million** net income and **$0.07** diluted EPS, reversing a prior-year net loss Consolidated Statement of Operations - Full Year (in thousands, except per share data) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net Revenue | $52,347 | $37,297 | | Gross Profit | $16,188 | $7,825 | | Income/(Loss) from Operations | $5,132 | ($3,546) | | **Net Income/(Loss)** | **$4,235** | **($4,384)** | | **Net Income per Share-diluted** | **$0.07** | **($0.09)** | Consolidated Statement of Operations - Fourth Quarter (in thousands, except per share data) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net Revenue | $12,567 | $8,011 | | Gross Profit | $2,766 | $471 | | Income/(Loss) from Operations | ($223) | ($1,897) | | **Net Loss** | **($558)** | **($2,122)** | | **Net Loss per Share-diluted** | **($0.01)** | **($0.04)** | [Non-GAAP Reconciliation (Adjusted EBITDA)](index=6&type=section&id=Non-GAAP%20Disclosure) Adjusted EBITDA for full-year 2024 was **$6.8 million**, a significant improvement from a **$2.0 million** loss in 2023, reflecting positive underlying profitability Adjusted EBITDA Reconciliation (in thousands) | Period | Net Income/(Loss) | Adjusted EBITDA | | :--- | :--- | :--- | | **Full Year 2024** | $4,235 | $6,784 | | **Full Year 2023** | ($4,384) | ($2,029) | | **Q4 2024** | ($558) | $253 | | **Q4 2023** | ($2,122) | ($1,499) |

PART I – FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Financial statements for Q3 2024 show significant growth in assets, revenue, and profitability, driven by Solésence® product performance [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$48.0 million** by September 30, 2024, with shareholders' equity rising to **$15.2 million** Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | **Total Current Assets** | $29,761 | $16,302 | +$13,459 | | Trade accounts receivable, net | $8,732 | $3,467 | +$5,265 | | Inventories, net | $15,043 | $10,031 | +$5,012 | | **Total Assets** | **$48,047** | **$32,881** | **+$15,166** | | **Total Current Liabilities** | $23,288 | $21,589 | +$1,699 | | **Total Liabilities** | $32,878 | $30,979 | +$1,899 | | **Total Shareholders' Equity** | **$15,169** | **$1,902** | **+$13,267** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a significant profitability turnaround, achieving **$4.8 million** net income for the nine months ended September 30, 2024 Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $16,866 | $7,958 | $39,780 | $29,286 | | **Gross Profit** | $6,102 | $1,530 | $13,422 | $7,354 | | **Income (Loss) from Operations** | $3,198 | $(1,222) | $5,355 | $(1,649) | | **Net Income (Loss)** | **$3,045** | **$(1,436)** | **$4,793** | **$(2,262)** | | **Diluted EPS** | $0.04 | $(0.03) | $0.08 | $(0.05) | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$0.2 million** for the nine months ended September 30, 2024, resulting in a **$1.2 million** net cash increase Cash Flow Summary (Nine months ended Sep 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(218) | $644 | | Net cash used in investing activities | $(1,965) | $(852) | | Net cash provided by (used in) financing activities | $3,386 | $(790) | | **Increase (decrease) in cash** | **$1,203** | **$(998)** | | **Cash at end of period** | **$2,925** | **$1,188** | [Notes to Unaudited Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) Notes detail the company's skin health focus, revenue streams, debt, and customer concentration, including a **$6 million** stock issuance - The company's business is focused on beauty and life-science markets, with skin health (via Solésence® subsidiary) and medical diagnostics being the primary drivers of its growth strategy[18](index=18&type=chunk) - In March 2024, the company issued **15,000 shares** of Series X Preferred Stock to Strandler, LLC for **$6 million**. These shares were subsequently converted into **15,000,000 shares** of common stock in June 2024[46](index=46&type=chunk)[51](index=51&type=chunk) Revenue by Product Category (in thousands) | Product Category | Nine Months 2024 | Nine Months 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Solésence | $32,904 | $17,839 | +84.5% | | Personal Care Ingredients | $5,966 | $8,944 | -33.3% | | Advanced Materials | $910 | $2,503 | -63.6% | | **Total Sales** | **$39,780** | **$29,286** | **+35.8%** | - Four major customers accounted for **62%** of total revenue in the first nine months of 2024, indicating significant customer concentration. Customer 1 (Solésence®) alone represented **34%** of revenue[52](index=52&type=chunk)[53](index=53&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong financial performance to strategic reorientation towards beauty science, driven by Solésence® growth and improved gross margin - The company's strategic focus is now primarily on the beauty science market through its Solésence subsidiary, which develops and manufactures prestige skin care products. Legacy advanced materials are no longer a strategic focus[59](index=59&type=chunk)[64](index=64&type=chunk) - The increase in cost of revenue for the nine-month period was driven by higher sales volume, price inflation on materials, and manufacturing operating inefficiencies[67](index=67&type=chunk) - The company's most critical operational issue is reducing controllable variable product manufacturing costs. Management expects margins to improve as production scales and fixed costs are more efficiently absorbed[68](index=68&type=chunk) - Projected capital spending for 2024 is between **$1 million** and **$2 million**, aimed at expanding manufacturing capacity to meet growing demand[75](index=75&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Nanophase is not required to provide market risk disclosures - Disclosure is not required for a smaller reporting company[79](index=79&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective at providing reasonable assurance[81](index=81&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[82](index=82&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[84](index=84&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Nanophase is not required to provide risk factor disclosures - Not required for a smaller reporting company[84](index=84&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[85](index=85&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) The report includes required CEO and PFO certifications and financial statements formatted in XBRL - Exhibits filed include CEO and PFO certifications (31.1, 31.2, 32) and XBRL data files (101)[88](index=88&type=chunk)