Solesence, Inc.

What they do

Through its wholly owned subsidiary Solesence, LLC, the company develops, formulates and manufactures finished skin health and beauty products infused with SPF protection and other health claims for selected brand partners. Products are sold as fully finished goods for sun care, skin care, color cosmetics and scalp applications, with patented technologies intended to differentiate customers' products. A residual set of legacy products and medical diagnostics sit in an advanced materials category that management no longer considers strategic. A smaller portion of revenue comes from selling APIs and personal care ingredients and from laboratory testing and development or licensing fees.

Revenue drivers

• Consumer Products — Finished SPF-infused skin care, sun care, color cosmetics and scalp goods sold to brand partners; represented 65% of Q2 2026 revenue (customer #1 at 58%, customer #2 at 7%).
• Personal Care Ingredients — API and ingredient sales, primarily to one large customer; was 1% of Q2 2026 revenue but 13% of first-half 2026 revenue.
• Other revenue — Laboratory testing fees plus developmental or licensing fees; $46,000 in Q2 2026 versus $98,000 in Q2 2025.
• Customer concentration — The three largest customers were 66% of Q2 2026 revenue and 62% of first-half 2026 revenue, so results track a small number of brand partners.

Recent performance

Second-quarter 2026 revenue was $15.3 million, down from $20.4 million in Q2 2025, which the company attributed to a prior-year one-time launch and initial inventory pipeline fill. Gross profit fell to $4.7 million from $6.4 million, with gross margin of 31% versus 32%. The quarter produced a net loss of $158,000 compared with net income of $3.2 million a year earlier, and SG&A rose to $3,680 (thousands) from $3,012 on higher professional service costs tied to the Refy Settlement Agreement. For the six months ended June 30, 2026, revenue was $28,290 (thousands) versus $34,984 (thousands) in 2025, with product revenue down to $28,205 (thousands) from $34,836 (thousands).

Strategy

Management describes its direction as the 'Transform and Transcend' strategy, focused on operational execution and financial discipline. Stated priorities include leveraging the company's intellectual property to enter high-growth markets, expanding co-marketing initiatives with premier brands, and targeted operational efficiency work. The company is implementing lean management practices, improving overall equipment effectiveness and throughput, and adding selected automation to gain margin leverage as volume grows, while managing rising fixed manufacturing costs required for FDA-regulated production. Research and development spending was held roughly flat at $947 (thousands) in Q2 2026 and $1,990 (thousands) for the first half.

Risks

• Customer concentration — Three customers accounted for 66% of Q2 2026 revenue, so a single customer's decision to cancel an order or supply agreement would materially affect results.
• Revenue volatility from launches — Q2 2026 revenue fell 25% year over year because the prior-year period included a one-time product launch and inventory pipeline fill that did not repeat.
• Restatement and accounting remediation — The company told the market on 2026-08-21 that previously issued financials are not reliable, following an evaluation of historical inventory costing allocation methodologies, and it filed an NT 10-Q before completing the Q2 2026 10-Q.
• Liquidity and cash generation — Cash and equivalents were $1.0 million at June 30, 2026 against total assets of $46.4 million and equity of $13.2 million, while operating cash flow was negative $8.6 million for 2025.

Outlook

Management said the second quarter was focused on operational execution and financial discipline under its Transform and Transcend strategy, and that efficiency initiatives are intended to keep the company lean, agile and structured for long-term value creation. The company points to IP-driven entry into high-growth markets and expanded co-marketing as ways to strengthen its position with premier brands. No specific revenue or earnings guidance was provided in the release, and the filing does not state a numeric outlook.