ROMEOVILLE, Ill., Oct. 30, 2025 (GLOBE NEWSWIRE) -- Solésence, Inc. (Nasdaq: SLSN), a leader in scientifically-driven health care solutions across beauty and life science categories, today announced that the Company will report results for the third quarter of 2025 before the market opens on Tuesday, November 11, 2025, and host a conference call and webcast on the same date. Third Quarter 2025 Conference Call DetailsDate / Time: Tuesday, November 11, 2025 – 7:30 a.m. CDT, 8:30 a.m. EDT Speakers: Kevin Curet ...

Core Insights - SRK Fund I, LP achieved a return of 46.94% in the first half of 2025, significantly outperforming the S&P 500 and Russell 2000, which returned 6.20% and -1.78% respectively [2][3] - Since its inception on May 1, 2018, the fund has appreciated 1200.66%, compared to 162.30% for the S&P 500 and 55.46% for the Russell 2000 [2][3] - The fund manager emphasizes the importance of long-term performance evaluation rather than short-term results [4] Portfolio Updates - **Innovative Solutions & Support (ISSC)**: Contributed significantly to the fund's performance with a 104% revenue increase and Ebitda margins reaching 35%. The company is expanding through strategic acquisitions and has increased its manufacturing capacity [6][7] - **ImmuCell Corporation (ICCC)**: Reported record first-quarter results with gross margins expanding to 42%. The company is targeting further growth and has received investigational use authorization for its product Re-Tain, which is pending FDA approval [8][9][10] - **Soléance (SLSN)**: Experienced a 53% revenue growth in the first half of the year despite lower margins due to onboarding costs. The company resolved litigation issues and uplisted to Nasdaq, which positively impacted its stock price [11] - **Sanuwave Health, Inc. (SNWV)**: Achieved 51% revenue growth without a national sales presence. The company has now established a national sales force and is pursuing debt refinancing options [12][13] Closing Thoughts - The strong returns in the first half of the year are viewed as a recovery from the previous year's poor performance. The fund has increased its cash reserves to capitalize on future investment opportunities [14]

Leadership Changes - Solésence, Inc. has announced the promotion of Kevin Cureton to President and Chief Executive Officer, with Laura Riffner appointed as Chief Financial Officer, and Jess Jankowski transitioning to Board Advisor [1][2] - These leadership changes are part of a broader strategic transformation aimed at enhancing the company's operational efficiency and market presence [2] Company Rebranding and Growth - In the first half of 2025, Solésence rebranded from Nanophase Technologies, reflecting the success of its Beauty Science platform and reinforcing its mission to deliver joy through innovation and inclusivity [2] - The company uplisted to Nasdaq on April 8, 2025, which has increased visibility with the investment community and is expected to drive greater shareholder value [2] Strategic Vision and Future Plans - The leadership transition is seen as a pivotal moment for Solésence, with a focus on delivering high-performance skin care, sun care, and color cosmetics products to consumers worldwide [2][3] - Kevin Cureton's leadership is expected to foster continued growth and innovation, while Laura Riffner's extensive financial experience will enhance operational excellence [3] Executive Experience - Laura Riffner brings over 35 years of experience in finance management and strategic planning, having previously served as CFO at Nagase America and Paxton/Patterson, where she improved operational efficiencies and financial forecasting [3][4]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Solésence, Inc.'s unaudited consolidated condensed financial statements for Q2 2025, detailing financial position, operational results, and cash flows [Consolidated Balance Sheets (Unaudited Consolidated Condensed)](index=4&type=section&id=Consolidated%20Balance%20Sheets%20%28Unaudited%20Consolidated%20Condensed%29) Metric | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $59,956 | $50,002 | | Total current assets | $38,770 | $29,348 | | Cash | $4,108 | $1,409 | | Trade accounts receivable, net | $11,049 | $4,869 | | Inventories, net | $19,832 | $20,267 | | Total liabilities | $41,768 | $35,056 | | Total current liabilities | $22,536 | $25,773 | | Total stockholders' equity | $18,188 | $14,946 | - Total assets increased by **$9,954 thousand (19.9%)** from December 31, 2024, to June 30, 2025, driven by increases in cash and trade accounts receivable[8](index=8&type=chunk) - Total stockholders' equity increased by **$3,242 thousand (21.7%)** from December 31, 2024, to June 30, 2025[8](index=8&type=chunk) [Consolidated Statements of Operations (Unaudited Consolidated Condensed)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20%28Unaudited%20Consolidated%20Condensed%29) Metric | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :---------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenue | $20,359 | $13,046 | $34,984 | $22,914 | | Product revenue | $20,261 | $12,923 | $34,836 | $22,694 | | Gross profit | $5,877 | $3,740 | $9,259 | $7,320 | | Net income | $2,667 | $856 | $2,747 | $1,747 | | Net income per share-basic | $0.04 | $0.02 | $0.04 | $0.03 | | Net income per share-diluted | $0.04 | $0.01 | $0.04 | $0.03 | - Total revenue increased by **56.1%** for the three months ended June 30, 2025, compared to the same period in 2024, and by **52.7%** for the six months ended June 30, 2025, compared to the same period in 2024[10](index=10&type=chunk) - Net income for the three months ended June 30, 2025, was **$2,667 thousand**, a significant increase from **$856 thousand** in the prior year, partly due to **$1,234 thousand** in other income from the Employee Retention Credit[10](index=10&type=chunk)[53](index=53&type=chunk) [Consolidated Statements of Shareholders' Equity (Unaudited Consolidated Condensed)](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity%20%28Unaudited%20Consolidated%20Condensed%29) Metric | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $18,188 | $14,946 | | Common Stock Shares Outstanding | 70,481,945 | 70,103,279 | | Additional Paid-in Capital | $115,165 | $114,674 | | Accumulated Deficit | $(97,681) | $(100,428) | - The accumulated deficit decreased from **$(100,428) thousand** at December 31, 2024, to **$(97,681) thousand** at June 30, 2025, reflecting net income generated during the period[13](index=13&type=chunk) - Issuance of shares and stock option exercises contributed **$245 thousand** to additional paid-in capital and common stock for the three months ended June 30, 2025[13](index=13&type=chunk) [Consolidated Statements of Cash Flows (Unaudited Consolidated Condensed)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%20Consolidated%20Condensed%29) Cash Flow Activity | Cash Flow Activity | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(7,875) | $(4,420) | | Net cash used in investing activities | $(1,275) | $(562) | | Net cash provided by financing activities | $11,849 | $5,618 | | Total cash at period end | $4,108 | $2,358 | - Net cash used in operating activities increased to **$(7,875) thousand** for the six months ended June 30, 2025, primarily due to increased accounts receivable and decreased deferred revenue[15](index=15&type=chunk)[71](index=71&type=chunk) - Net cash provided by financing activities significantly increased to **$11,849 thousand** for the six months ended June 30, 2025, mainly due to increased use of debt, including proceeds from related party lines of credit[15](index=15&type=chunk)[71](index=71&type=chunk) [Notes to Unaudited Consolidated Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Condensed%20Financial%20Statements) [(1) Basis of Presentation](index=8&type=section&id=%281%29%20Basis%20of%20Presentation) Outlines the basis for preparing the unaudited consolidated condensed interim financial statements - The unaudited consolidated condensed interim financial statements include Solésence, Inc. and its wholly-owned subsidiary, Solésence, LLC, reflecting normal recurring adjustments[16](index=16&type=chunk) - Operating results for the interim periods are not necessarily indicative of the full year ending December 31, 2025[16](index=16&type=chunk) [(2) Description of Business](index=8&type=section&id=%282%29%20Description%20of%20Business) Describes Solésence, Inc.'s business, focusing on beauty and life-science markets and recent Nasdaq uplisting - **Solésence, Inc.** is a science-driven company focused on beauty- and life-science markets, with skin health and medical diagnostics comprising the majority of its business[18](index=18&type=chunk) - The company offers engineered materials, formulation development, and commercial manufacturing, utilizing proprietary Active Stress Defense™ Technology for personal care products, including sunscreens and prestige skin care/cosmetics[18](index=18&type=chunk)[20](index=20&type=chunk) - **Solésence's** securities were uplisted to **Nasdaq** under the symbol **SLSN** on **April 8, 2025**, expanding its reach within foreign markets[21](index=21&type=chunk) [(3) Revenues and Other Income](index=9&type=section&id=%283%29%20Revenues%20and%20Other%20Income) Details revenue recognition policies, contract balances, and other income sources - Revenue from goods is recognized when control is transferred to customers, typically at the shipping point[24](index=24&type=chunk) Contract Balance | Contract Balance | December 31, 2023 (in thousands) | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :----------------- | :------------------------------- | :------------------------------- | :--------------------------- | | Accounts Receivable | $3,467 | $4,869 | $11,049 | | Contract Liabilities | $2,353 | $5,571 | $2,169 | - Other revenue, primarily from laboratory tests, technology license fees, and paid development projects, decreased for both the three and six months ended June 30, 2025, compared to 2024[29](index=29&type=chunk) [(4) Earnings per Share](index=10&type=section&id=%284%29%20Earnings%20per%20Share) Provides calculations for basic and diluted earnings per common share Metric | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (in thousands) | $2,667 | $856 | $2,747 | $1,747 | | Weighted average basic shares outstanding | 70,200,039 | 56,674,170 | 70,151,928 | 54,675,011 | | Basic earnings per common share | $0.04 | $0.02 | $0.04 | $0.03 | | Diluted earnings per common share | $0.04 | $0.01 | $0.04 | $0.03 | - The weighted average number of basic common shares outstanding increased significantly year-over-year, reflecting share issuances and stock option exercises[13](index=13&type=chunk)[31](index=31&type=chunk) [(5) Financial Instruments](index=12&type=section&id=%285%29%20Financial%20Instruments) Discusses the fair value of financial instruments, including cash, receivables, and debt - The carrying values of cash, accounts receivable (net), accounts payable, and accrued expenses are considered reasonable estimates of their fair value due to their short-term nature[34](index=34&type=chunk) - The fair value of short-term and long-term debt approximates its carrying value based on comparisons to similar debt offerings[34](index=34&type=chunk) [(6) Related Party Notes and Lines of Credit](index=12&type=section&id=%286%29%20Related%20Party%20Notes%20and%20Lines%20of%20Credit) Details related party debt facilities, borrowing capacities, and outstanding balances Lender | Lender | Rate at June 30, 2025 | Total Borrowing Capacity (June 30, 2025, in thousands) | Outstanding Borrowed Balance (June 30, 2025, in thousands) | Outstanding Borrowed Balance (Dec 31, 2024, in thousands) | | :-------------------- | :-------------------- | :------------------------------------------------------- | :--------------------------------------------------------- | :--------------------------------------------------------- | | Beachcorp, LLC (A/R) | 8.25% | $12,000 | $6,099 | $0 | | Beachcorp, LLC (Inv) | 8.25% | $10,000 | $9,500 | $4,000 | | Strandler, LLC (Term) | 8.25% | $1,000 | $1,000 | $1,000 | - The A/R Revolver Facility with Beachcorp, LLC was expanded from **$8,000** to **$12,000** and its maturity extended to **April 30, 2027**, on May 27, 2025[36](index=36&type=chunk) - Related party interest expense for the three months ended June 30, 2025, was **$282 thousand**, up from **$181 thousand** in the prior year[39](index=39&type=chunk) [(7) Inventories, net](index=13&type=section&id=%287%29%20Inventories%2C%20net) Presents a breakdown of inventory components and changes over the period Inventory Component | Inventory Component | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------ | :----------------------------- | :------------------------------- | | Raw materials | $15,093 | $17,396 | | Finished goods | $7,179 | $4,858 | | Inventory reserve | $(2,440) | $(1,987) | | Total Inventories, net | $19,832 | $20,267 | - Net inventories decreased slightly from **$20,267 thousand** at December 31, 2024, to **$19,832 thousand** at June 30, 2025, with a notable increase in finished goods and a decrease in raw materials[40](index=40&type=chunk) [(8) Capital Stock](index=14&type=section&id=%288%29%20Capital%20Stock) Outlines the company's capital stock structure, including authorized and issued shares - As of June 30, 2025, the company had **24,088** authorized but unissued shares of preferred stock[42](index=42&type=chunk) - On June 20, 2024, **15,000 shares** of Series X Preferred Stock were converted into **15,000,000 shares** of Common Stock[43](index=43&type=chunk) [(9) Significant Customers](index=14&type=section&id=%289%29%20Significant%20Customers) Identifies major customers and their revenue contribution, highlighting customer concentration risks Customer | Customer | Product Category | % of Total Revenue (3 months ended June 30, 2025) | % of Total Revenue (3 months ended June 30, 2024) | % of Total Revenue (6 months ended June 30, 2025) | % of Total Revenue (6 months ended June 30, 2024) | | :--------- | :--------------- | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | :------------------------------------------------ | | 1 | Consumer Products | 33% | 33% | 23% | 34% | | 2 | Consumer Products | 27% | 0% | 19% | 0% | | 3 | Personal Care Ingredients | 13% | 13% | 12% | 14% | | Total | | 73% | 46% | 54% | 48% | - The top three customers accounted for **73%** of total revenue for the three months ended June 30, 2025, indicating significant customer concentration[45](index=45&type=chunk) - Exclusive supply agreements with **BASF Corporation** include contingencies that could result in the sale of production equipment to **BASF** if performance requirements are not met, potentially leading to a significant loss of revenue[45](index=45&type=chunk)[46](index=46&type=chunk) [(10) Business Segmentation and Geographical Distribution](index=14&type=section&id=%2810%29%20Business%20Segmentation%20and%20Geographical%20Distribution) Describes the company's single business segment and geographical revenue distribution - The Company operates as a single business segment, with performance assessed based on net income and gross profit[47](index=47&type=chunk)[48](index=48&type=chunk) Product Category | Product Category | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :----------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Consumer Products | $17,544 | $11,200 | $30,426 | $19,304 | | Personal Care Ingredients | $2,687 | $1,745 | $4,061 | $3,121 | | Advanced Materials | $128 | $101 | $497 | $489 | | Total Sales | $20,359 | $13,046 | $34,984 | $22,914 | - Revenue from international sources significantly increased to **$2,519 thousand** for the three months ended June 30, 2025, from **$478 thousand** in the prior year, with a substantial portion from the United Kingdom[49](index=49&type=chunk) [(11) Contingencies](index=16&type=section&id=%2811%29%20Contingencies) Details significant contingent events, including the Employee Retention Credit and related reserve - In June 2025, the Company received a payment of **$1,729 thousand** from the U.S. Department of the Treasury under the Employee Retention Credit (ERC) program, along with **$272 thousand** in related interest[51](index=51&type=chunk) - The Company recognized **$1,234 thousand** of the ERC as other income and **$194 thousand** in interest income, creating a **$572 thousand** reserve for the discrepancy, which is included in accrued expenses as a contingent liability[53](index=53&type=chunk)[54](index=54&type=chunk) [Item 2. 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's discussion of Solésence, Inc.'s Q2 2025 financial performance, condition, liquidity, and future outlook [Overview](index=18&type=section&id=Overview) Provides an overview of the company's rebranding, Nasdaq uplisting, and strategic focus on skin health solutions - **Nanophase Technologies Corporation** rebranded as **Solésence, Inc.** on **March 7, 2025**, and its stock uplisted to **Nasdaq** under the symbol **SLSN** on **April 8, 2025**[55](index=55&type=chunk)[56](index=56&type=chunk) - The company's primary strategic focus is on skin health solutions, particularly consumer products, leveraging integrated patented and proprietary technologies for engineered materials, formulation, and manufacturing[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [Results of Operations](index=18&type=section&id=Results%20of%20Operations) Analyzes Solésence, Inc.'s revenue, cost of revenue, and operating expenses for the reporting periods Metric | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :---------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total revenue | $20,359 | $13,046 | $34,984 | $22,914 | | Product revenue | $20,261 | $12,923 | $34,836 | $22,694 | | Cost of revenue | $14,482 | $9,306 | $25,725 | $15,594 | | Research and development expense | $955 | $864 | $1,973 | $1,776 | | Selling, general and administrative expense | $3,012 | $1,829 | $5,120 | $3,388 | | Other income, net | $1,234 | $0 | $1,234 | $0 | - Total revenue increased by **56.1%** and **52.7%** for the three and six months ended June 30, 2025, respectively, primarily driven by higher sales in consumer products and personal care ingredients[60](index=60&type=chunk)[62](index=62&type=chunk) - Cost of revenue increased due to higher volume, manufacturing operating inefficiencies, and facilities improvements, impacting gross margin percentage despite efforts to pass through costs[64](index=64&type=chunk)[65](index=65&type=chunk) - Selling, general and administrative expense increased due to higher allowance for credit loss, legal costs, NASDAQ uplisting costs, and increased employee-related costs[68](index=68&type=chunk) [Inflation](index=20&type=section&id=Inflation) Discusses the impact of inflation on operational costs and the company's mitigation strategies - Inflation has had an incremental impact on operational costs, with supplier price increases and wage/benefit inflation posing potential material effects if not passed through to customers[70](index=70&type=chunk) - The company is actively increasing pricing where possible and adjusting pricing to market conditions and contract limitations[70](index=70&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) Examines the company's cash flows, liquidity position, and future capital requirements Cash Flow Metric | Cash Flow Metric | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Cash (used in) provided by operating activities | $(7,875) | $(4,420) | | Net cash used in investing activities | $(1,275) | $(562) | | Net cash provided by financing activities | $11,849 | $5,618 | | Total cash at period end | $4,108 | $2,358 | - Net cash used in operating activities increased due to higher accounts receivable and decreased accounts payable and deferred revenue[71](index=71&type=chunk) - Future capital requirements for 2025 are estimated between **$1 million** and **$3 million** for capital equipment, to be funded by operating profit, existing loans, and potential new debt financing[72](index=72&type=chunk) [Additional Consideration](index=21&type=section&id=Additional%20Consideration) Highlights federal and state net operating loss carryforwards and their potential impact - The company has federal net operating loss carryforwards of approximately **$42 million** as of December 31, 2024, with **$36 million** expiring between 2025 and 2037, and **$6.8 million** generated after January 1, 2018, which do not expire[73](index=73&type=chunk) - Illinois net loss deduction carryforwards totaled approximately **$18.2 million** as of December 31, 2024, expiring between 2030 and 2043[73](index=73&type=chunk) [Off-Balance Sheet Arrangements](index=21&type=section&id=Off-Balance%20Sheet%20Arrangements) Confirms the absence of special-purpose or off-balance sheet entities - The company has not created, nor is it party to, any special-purpose or off-balance sheet entities for capital raising, debt, or business operations[74](index=74&type=chunk) [Safe Harbor Provision](index=22&type=section&id=Safe%20Harbor%20Provision) Warns about forward-looking statements and associated risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[75](index=75&type=chunk) - Key risks include consistent profitability, customer dependence, terms of supply agreements (e.g., BASF), ability to obtain working capital, material costs, uncertain demand, manufacturing capacity, marketing experience, competitive products, patent protection, regulatory changes, business interruptions, and litigation[75](index=75&type=chunk) [Item 3. 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, Solésence, Inc. is not required to provide market risk disclosures - Disclosure is not required for a smaller reporting company[76](index=76&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Details the company's disclosure controls and internal control over financial reporting, affirming their effectiveness [Disclosure controls](index=22&type=section&id=Disclosure%20controls) Management's conclusion on the effectiveness of the company's disclosure controls and procedures - Management, including the Principal Executive Officer and Principal Financial Officer, concluded that the company's disclosure controls and procedures were effective at providing reasonable assurance as of June 30, 2025[77](index=77&type=chunk) [Internal control over financial reporting](index=22&type=section&id=Internal%20control%20over%20financial%20reporting) Management's confirmation of no material changes in internal control over financial reporting - Management confirmed no material changes in the company's internal control over financial reporting during the period covered by the report[78](index=78&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) Solésence, Inc. reported no legal proceedings during the quarter ended June 30, 2025 - There are no legal proceedings to report[80](index=80&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Solésence, Inc. is not required to provide a separate discussion of risk factors - Disclosure is not required for a smaller reporting company[81](index=81&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Solésence, Inc. reported no unregistered sales of equity securities or use of proceeds - There were no unregistered sales of equity securities and use of proceeds to report[82](index=82&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Solésence, Inc. reported no defaults upon senior securities during the quarter ended June 30, 2025 - There were no defaults upon senior securities to report[83](index=83&type=chunk) [Item 4. Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to Solésence, Inc.'s operations - Mine safety disclosures are not applicable[84](index=84&type=chunk) [Item 5. Other Information](index=23&type=section&id=Item%205.%20Other%20Information) Solésence, Inc. reported no other information requiring disclosure in this section - There is no other information to report[85](index=85&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including certifications and XBRL formatted financial statements - Exhibits include certifications from the Chief Executive Officer and Principal Financial Officer (**31.1, 31.2, 32**)[87](index=87&type=chunk) - XBRL formatted financial statements (Balance Sheets, Statements of Operations, Statements of Shareholders Equity, Statements of Cash Flows, and Notes) are included as **Exhibit 101**[87](index=87&type=chunk) SIGNATURES - The report was duly signed on **August 14, 2025**, by **Jess A. Jankowski**, President and Chief Executive Officer (also serving as principal executive officer and principal financial officer) of Solésence, Inc[89](index=89&type=chunk)[91](index=91&type=chunk)

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. reported a strong financial performance for Q2 2025, with a revenue increase of 56% year-over-year, reaching a record $20.4 million compared to $13.0 million in Q2 2024 [10] - The company emphasized its commitment to innovation and effective commercial execution, which has attracted leading brands to partner with them [2][5] - Solésence expanded its debt facilities to enhance financial flexibility, increasing borrowing capacity from $14.2 million to $23.0 million, and extending loan maturity dates [10] Financial Results - Revenue for Q2 2025 was $20.4 million, a 56% increase from $13.0 million in Q2 2024 [10] - Gross profit for the quarter was $5.9 million, up from $3.7 million in the same period last year [10] - Net income for Q2 2025 was $2.7 million, compared to $0.9 million in Q2 2024, which included an Employee Retention Credit net receipt of approximately $1.2 million [10] Operational Highlights - Shipment volume increased by 102% year-over-year, while production volume rose by 127% year-over-year [10] - The company improved its gross margin sequentially from the first quarter, maintaining a gross margin of 29% [10][5] - Solésence achieved record unit volume during its peak demand season, reflecting effective operational management [5] Strategic Initiatives - The company amended its loan agreements to support long-term growth initiatives, enhancing its financial flexibility [10] - Solésence's focus on innovation is central to its value proposition, aiming to equip partners with differentiated consumer products [2]

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)