Q2 2026 Solesence Inc Earnings Call

August 19, 2026

Speaker #1: Momentarily. Good day, and thank you for standing by. Welcome to the Solesence second quarter 2026 conference call. Today's call is being recorded. On today's call, we have Kevin Cureton, President and Chief Executive Officer of Solesence, and Laura Riffner, Chief Financial Officer of Solesence.

Operator: Good day, and thank you for standing by. Welcome to the Solesence Q2 2026 conference call. Today's call is being recorded. On today's call, we have Kevin Cureton, President and Chief Executive Officer of Solesence, and Laura Riffner, Chief Financial Officer of Solesence. During this call, management will make statements that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This conference may contain certain statements that reflect the company's current beliefs and a number of important factors that could cause actual results for future periods to differ materially from those stated on this call.

Speaker #1: During this call, management will make statements that include forward-looking statements within the meaning of the federal securities laws, which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

Speaker #1: This conference may contain certain statements that reflect the company's current beliefs and a number of important factors that could cause actual results for future periods to differ materially from those stated on this call.

Speaker #1: These important factors include, without limitation, a decision of a customer to cancel purchase orders or supply agreements; demands for and acceptance of the company's personal care ingredients, advanced materials, and formulated products; changes in development and distribution relationships; the impact of competitive products and technology; possible disruption in commercial activities occasioned by public health issues, terrorist activities, and armed conflict; and other risks indicated in the company's filings with the Securities and Exchange Commission.

Operator: These important factors include, without limitation, a decision of a customer to cancel purchase order or supply agreements, demands for and acceptance of the company's personal care ingredients, advanced materials, and formulated products, changes in development and distribution relationships, the impact of competitive products and technology, possible disruption in commercial activities occasioned by public health issues, terrorist activities, and armed conflict, and other risks indicated in the company's filings with the Securities and Exchange Commission. Except as required by federal security laws, the company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties, or other contingencies. I will now hand the conference over to Kevin Cureton, President and Chief Executive Officer. Please go ahead, sir.

Speaker #1: Except as required by federal securities laws, the company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties, or other contingencies.

Speaker #1: I'll now hand the conference over to Kevin Cureton, President and Chief Executive Officer. Please go ahead, sir.

Speaker #2: Thank you, Lisa. And thank you to our investors, brand partners, and teammates who join us today for your continued support. We have an important issue to discuss today.

Kevin Cureton: Thank you, Lisa. Thank you to our investors, brand partners, and teammates who join us today for your continued support. We have an important issue to discuss today, the NT 10-Q, the impact on this past quarter's results, and how we move forward. Laura will take us through much of the first part of this discussion. As you prepare to hear Laura's remarks, however, please keep three things in mind. First, the highest priority for Laura and for me is ensuring that Solesence operates with uncompromising integrity across every aspect of our business, from our manufacturing floors to our financial reporting. This is to ensure that all our stakeholders, shareholders, teammates, brand partners, and supply partners can have faith in the results we report. We fully appreciate the seriousness of this accounting matter, and we are addressing it accordingly.

Speaker #2: The NT10Q, the impact on this past quarter’s results, and how we move forward. Laura will take us through much of the first part of this discussion.

Speaker #2: As you prepare to hear Laura’s remarks, however, please keep three things in mind. First, the highest priority for Laura and for me is ensuring that Solésence operates with uncompromising integrity across every aspect of our business.

Speaker #2: From our manufacturing floors to our financial reporting, this is to ensure that all our stakeholders—shareholders, teammates, brand partners, and supply partners—can have faith in the results we report.

Speaker #2: We fully appreciate the seriousness of this accounting matter, and we are addressing it accordingly. While solving the legacy costing matter is never easy, addressing it head-on and retooling our internal controls is precisely what it takes to mature into the world-class enterprise we plan to be.

Kevin Cureton: While solving a legacy costing matter is never easy, addressing it head-on and retooling our internal controls is precisely what it takes to mature into the world-class enterprise we plan to be. Therefore, Laura and I have been laser-focused on ensuring we take the necessary steps to ensure our financial foundation is reliable and rigorous. The second point I wanted to make is that we expect our business strategy, our growth prospects, and our plans for growing the company's enterprise value will remain unchanged and unaffected by this matter. With that, I will turn over the call to Laura.

Speaker #2: Therefore, Laura and I have been laser-focused on ensuring we take the necessary steps to ensure our financial foundation is reliable and rigorous. And that's the second point I wanted to make.

Speaker #2: The third point is that we expect our business strategy, our growth prospects, and our plans for growing the company's enterprise value will remain unchanged and unaffected by this matter.

Speaker #2: With that, I'll turn over the call to Laura.

Speaker #3: Thank you, Kevin. Before walking through our second-quarter financial performance, I want to address our recent Form NT 10-Q filing and provide full clarity on our accounting evaluation.

Laura Riffner: Thank you, Kevin. Before walking through our Q2 financial performance, I want to address our recent Form NT 10-Q filing and provide full clarity on our accounting evaluation. During our quarter in review, we identified an issue with our historical inventory costing methodology regarding how indirect manufacturing costs were allocated to inventory. Working closely with our advisors, we have completed our evaluation and are implementing the necessary restatements to correct this inventory valuation issue. I want to be clear about what the restatement means for our shareholders. The adjustments relate to the accounting for certain costs within inventory and do not affect the underlying cash generated or used by the business, our day-to-day operations, or our ability to serve our brand partners. The adjustments relate primarily to the accounting for certain costs within inventory and the resulting recognition of those costs in the financial statements.

Speaker #3: During our quarter-end review, we identified an issue with our historical inventory costing methodology regarding how indirect manufacturing costs were allocated to inventory. Working closely with our advisors, we have completed our evaluation and are implementing the necessary restatements to correct this inventory valuation issue.

Speaker #3: I want to be clear about what the restatement means for our shareholders. The adjustments relate to the accounting for certain costs within inventory and do not affect the underlying cash generated or used by the business, our day-to-day operations, or our ability to serve our brand partners.

Speaker #3: The adjustments relate primarily to the accounting for certain costs within inventory, and the resulting recognition of those costs in the financial statements. As part of our remediation efforts, we are enhancing our inventory costing processes and related controls, including additional formalized periodic reviews of overhead cost pools, allocation methodologies, and burden rates.

Laura Riffner: As part of our remediation efforts, we are enhancing our inventory costing processes and related controls, including additional formalized periodic reviews of overhead cost pools, allocation methodologies, and burden rates. We are also strengthening the documentation and oversight of these processes to support their consistent application going forward. We will continue implementing these remediation activities. Turning to our operational execution, we continued the disciplined implementation of our Transform & Transcend strategy in Q2, building on our foundational work to drive operational efficiency. For Q2 of 2026, revenue was $15.3 million compared to $20.4 million in Q2 of 2025, which had been a quarter that benefited from a major new product launch and pipeline fill. While Q2 2026 revenue from this product was lower than in Q2 2025, we continue to see gains in both reorders and forecasts for this product line.

Speaker #3: We are also strengthening the documentation and oversight of these processes to support their consistent application going forward. We will continue implementing these remediation activities.

Speaker #3: Turning to our operational execution, we continued the disciplined implementation of our Transform and Transcend strategy in the second quarter, building on our foundational work to drive operational efficiency.

Speaker #3: For Q2 of 2026, revenue was $15.3 million compared to $20.4 million in the second quarter of 2025, which had been a quarter that benefited from a major new product launch and pipeline fill.

Speaker #3: While Q2 2026 revenue from this product was lower than in Q2 2025, we continue to see gains in both reorders and forecasts for this product line.

Speaker #3: The drop in revenue for this product line was partially offset by growth with other brand partners in the prestige beauty sector. In Q2 2026, we achieved a 31% gross margin versus a restated 32% in Q2 2025.

Laura Riffner: The drop in revenue for this product line was partially offset by growth with other brand partners in the prestige beauty sector. In Q2 2026, we achieved a 31% gross margin versus a restated 32% in Q2 2025. This gross margin performance on a 25% lower revenue level as compared to last year is a clear sign of continued improvement in labor efficiency in line with our Transform & Transcend goals, and we are pleased to see that momentum has continued in Q2. Q2 had a loss of $158,000 compared to net income of $3.2 million in the prior year. Adjusted EBITDA for Q2 was $523,000, compared to $3.7 million for Q2 of last year.

Speaker #3: This gross margin performance, on a 25% lower revenue level as compared to last year, is a clear sign of continued improvements in labor and efficiency in line with our Transform and Transcend goals, and we are pleased to see that momentum has continued in the second quarter.

Speaker #3: Second quarter had a loss of $158,000, compared to net income of $3.2 million in the prior year. Adjusted EBITDA for the second quarter was $523,000, compared to $3.7 million for the second quarter of last year.

Speaker #3: The decline in net income and adjusted EBITDA versus the prior year was related to the lower revenue as compared to 2025 and one-time events related to REFI that decreased net income by approximately $938,000, and the ERC payment we received in Q2 2025 that positively increased net income last year by $1.4 million.

Laura Riffner: The decline in net income and adjusted EBITDA versus the prior year was related to the lower revenue as compared to 2025, and one-time events related to Refy that decreased net income by approximately $938,000, and the ERC payment we received in Q2 2025 that positively increased net income last year by $1.4 million. Looking forward, we can now confidently expect to outperform 2025 on a full year revenue basis. Underpinning our confidence is that as of 17 August, our shift in on-hand orders for 2026, which includes orders shipped as well as those we expect to ship this year, totaled $64.9 million, up from $60 million in the same period in 2025.

Speaker #3: Looking forward, we can now confidently expect to outperform 2025 on a full-year revenue basis. Underpinning our confidence is that, as of August 17th, our shift in on-hand orders for 2026—which includes order shift as well as those we expect to shift this year—totaled $64.9 million.

Speaker #3: Up from $60 million in the same period in 2025. We also expect the third quarter to show sequential improvement in both revenue and profitability, and we project that the second half of 2026 will generate approximately $35 million in revenue, marking the strongest second-half performance in the company's history.

Laura Riffner: We also expect the Q3 to show sequential improvement in both revenue and profitability, and we project that the H2 of 2026 will generate approximately $35 million in revenue, marking the strongest H2 performance in the company's history. Overall, while we are disappointed that this issue with our legacy accounting methodology existed, we are fully committed to addressing it and are prepared to do so while maintaining the consistent progress in our first and foundational pillar of Transform & Transcend operational excellence. While much work remains, we are confident in our ability to continue the positive momentum of Q2. I will now turn it back to Kevin.

Speaker #3: Overall, while we are disappointed that this issue with our legacy accounting methodology existed, we are fully committed to addressing it and are prepared to do so while maintaining the consistent progress in our first and foundational pillar of Transform and Transcend: operational excellence.

Speaker #3: While much work remains, we are confident in our ability to continue the positive momentum of Q2. I'll now turn it back to Kevin.

Speaker #2: Thank you, Laura. As I mentioned earlier, we want to make sure it's absolutely clear that we take these inventory evaluation changes seriously and, like you, are frustrated and disappointed by issues like this that result from how this business was grown and managed in the past.

Kevin Cureton: Thank you, Laura. As I mentioned earlier, we want to make sure it is absolutely clear that we take these inventory valuation changes seriously, and like you, are frustrated and disappointed by issues like this that result from how this business was grown and managed in the past. However, it should not be overlooked that as we exit Q2 and enter Q3, Solesence has gained momentum to achieve double-digit growth, a consistent part of our history. We have also implemented the tools and processes to deliver sustainable profitability commensurate with our expectations as a technology-driven company and those of our investors. More importantly, this accounting matter does not change the commercial reality of our business. Our operational momentum is accelerating, our brand partners are growing, and we are entering the strongest H2 in Solesence history with $64.9 million in shipped and on-hand orders.

Speaker #2: However, it should not be overlooked that as we execute to and enter Q3, Solésence has gained momentum to achieve double-digit growth, a consistent part of our history.

Speaker #2: We have also implemented the tools and processes to deliver sustainable profitability commensurate with our expectations as a technology-driven company, and those of our investors.

Speaker #2: More importantly, this accounting matter does not change the commercial reality of our business. Our operational momentum is accelerating, our brand partners are growing, and we are entering the strongest second half in Solésence history, with $64.9 million in shipped and on-hand orders.

Speaker #2: With that, Lisa, we are ready for questions.

Kevin Cureton: With that, Lisa, we are ready for questions.

Speaker #1: Thank you. As a reminder, if you would like to ask a question, please press *11 on your telephone. You will then hear an automated message advising your hand is raised.

Operator: Thank you. As a reminder, if you would like to ask a question, please press *11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, please press *11 again. One moment while we compile the Q&A roster. We also ask that you limit yourself to one question. One moment. Our first question for the day will be coming from the line of James Lieberman.

Speaker #1: If you would like to remove yourself from the queue, please press star 11 again. One moment while we compile the Q&A roster. We also ask that you limit yourself to one question.

Speaker #1: One moment. Our first question for today will be from the line of James Lieberman.

Speaker #4: Yes, thank you. I just have a little bit of a disconnect, but I think I heard you. So, Jim Lieberman, I'm happy to ask away.

James Lieberman: Yes, thank you. I just got a little bit of a disconnect, but I think I heard you. Jim Lieberman, I am happy to ask away. Thank you for your honesty and for the work you are doing preparing the company for its growth. It sounds like the $64 million number you gave going forward sounds like a really good base from which to grow. Could you give a little talk and discuss, give us some color regarding the hair and scalp products that you mentioned earlier, and how we might view that and what type of a market you are looking at, what kind of scope? I have some follow-on questions to that, but if you could start in on that area, I would like it.

Speaker #4: Thank you for your honesty and for the work you're doing preparing the company for its growth. And it sounds like the $64 million number you gave going forward sounds like a really good base from which to grow.

Speaker #4: Could you give a little talk and discuss—give us some color regarding the hair and scalp products that you mentioned earlier, and how we might view that, and what type of market you're looking at, what kind of scope?

Speaker #4: I have some follow-on questions to that, but if you could start in on that area, I'd like it.

Speaker #2: All right, thank you, Jim. And it's good to hear from you. Yeah, so the market you specifically mentioned—the scalp care segment—is a new segment for us.

Kevin Cureton: All right. Thank you, Jim. It is good to hear from you. Yeah, so the market you specifically mentioned, the scalp care segment, is a new segment for us. We launched this year, in fact, just back in July, utilizing some of our new technologies. That market is an area where we approximately believe it is about a $3 billion addressable market for what we do. Obviously, there is lots of work to still be done there. But the good feedback that we can provide is that during July, and from the launch of that product, we had one of the best volumes in terms of lead generation and new opportunity generation based upon that launch. I think we are off to a good start.

Speaker #2: We launched this year, in fact, just back in July. Utilizing some of our new technologies, that market is an area where we approximately believe it's about a $3 billion addressable market for what we do.

Speaker #2: Obviously, there's lots of work still to be done there, but the good feedback that we can provide is that during July, and from the launch of that product, we had one of the best volumes in terms of lead generation and new opportunity generation based on that launch.

Speaker #2: So, I think we're off to a good start. As is the case within our industry, it's still early to say when that will develop into revenue, but we're off to a good start with that new technology.

Kevin Cureton: As is the case within our industry, that is still early to say when that will develop into revenue, but we are off to a good start with that new technology.

Speaker #1: Thank you. And one moment for the next question. As a reminder as well, if you would like to re-queue to ask a follow-up question, please feel free to do so.

Operator: Thank you. And one moment for the next question. As a reminder as well, if you would like to re-queue to ask a follow-up question, please feel free to do so. The next question will be coming from the line of Wayne Ruhn. Please go ahead.

Speaker #1: The next question will be coming from the line of Wayne Rowan. Please go ahead.

Speaker #5: Hello?

Wayne Ruhn: Hello?

[Analyst 1]: Hello?

Speaker #2: Hello, Wayne.

Kevin Cureton: Hello, Wayne.

Speaker #5: Hi, how are you?

Wayne Ruhn: Hi, how are you?

[Analyst 1]: Hi, how are you?

Speaker #2: I'm doing well. How are you, sir?

Kevin Cureton: I'm doing well. How are you, sir?

Speaker #5: Well, I've been in the hospital for four weeks, so it could be better. I would like to know, are we going to see, at the end of the year, higher sales growth? And this is maybe a two-part question, but I hope you'll allow me that.

Wayne Ruhn: Well, I've been in the hospital for 4 weeks, so it could be better. I would like to know, are we going to see, at the end of the year, higher sales growth? This is maybe a two-part question, but I hope you allow me that. Are we getting less trouble with inventory control and a better handle on production efficiencies? Because if we are, it gives me a reason for optimism. If we're not, I'd be a little frustrated because it's been an ongoing issue for a while, and I was hoping we'd make Excuse me, the medicine makes me stutter a little. Is that less a concern than it was a year or 2 ago? Are we making progress in inventory control and production efficiency? If so, give yourself a pat on the back and tell Laura to behave herself.

[Analyst 1]: Well, I've been in the hospital for 4 weeks, so it could be better. I would like to know, are we going to see, at the end of the year, higher sales growth? This is maybe a two-part question, but I hope you allow me that. Are we getting less trouble with inventory control and a better handle on production efficiencies? Because if we are, it gives me a reason for optimism. If we're not, I'd be a little frustrated because it's been an ongoing issue for a while, and I was hoping we'd make Excuse me, the medicine makes me stutter a little. Is that less a concern than it was a year or 2 ago? Are we making progress in inventory control and production efficiency? If so, give yourself a pat on the back and tell Laura to behave herself.

Speaker #5: Are we experiencing fewer issues with inventory control and gaining a better handle on production efficiencies? Because if we are, that gives me a reason for optimism.

Speaker #5: And if we're not, I'd be a little frustrated because it's been an ongoing issue for a while, and I was hoping we'd make—excuse me, the medicine makes me stutter a little.

Speaker #5: I'm not steady—stutter. Is that less of a concern than it was a year or two ago? Are we making progress in inventory control and production efficiency?

Speaker #5: And if so, give yourself a pat on the back and tell Laura to behave herself.

Kevin Cureton: All right, Wayne. Thank you for your question. First of all, we wish you the best in your recovery. Certainly wish all the best to you in your health and in the future. To comment on what we've got are three different questions here. One was related to sales growth, which I'll comment about. I think we can throw it back to Laura, who did comment a bit about production efficiency and inventory control. If we start with sales growth, as Laura mentioned during her remarks, we can project now confidently that on a year-over-year basis, we will grow versus 2026. So we will set, on a revenue basis, a record for growth this year. We're excited about the momentum that we see in the business.

Speaker #2: All right, Wayne. So, thank you for your question. First of all, we wish you the best in your recovery, and certainly wish all the best to you and your health in the future.

Speaker #2: To comment on what we've got, there are three different questions here. One was related to sales growth, which I'll comment about. Then I think we can throw it back to Laura, who did comment a bit about production efficiency.

Speaker #2: And inventory control. So, if we start with sales growth, as Laura mentioned during her remarks, we can now project confidently that, on a year-over-year basis, we will grow versus 2026.

Speaker #2: So, we will set, on a revenue basis, a record for growth this year. We're excited about the momentum that we see in the business. As you may recall, we made some changes to our commercial leadership back at the beginning of the year, and we're excited about what that means as we continue to expand our business both domestically and now, as we start to work on globalization of the business as well.

Kevin Cureton: As you may recall, we made some changes to our commercial leadership back at the beginning of the year, and we're excited about what that does mean as we continue to expand our business, both domestically and now as we start to work on globalization of the business as well. With that being said, I'll turn it over to Laura, to comment about our production efficiency and inventory control.

Speaker #2: With that being said, I'll turn it over to Laura to comment about our production efficiency and inventory control.

Speaker #6: Hi, Wayne. I'd like to reiterate Kevin's expression that we wish you well in your recovery. Regarding your questions—on production efficiency, that has been a very significant focus for the organization since I've been here.

Laura Riffner: Hi, Wayne. I'd like to reiterate Kevin's expression that we wish you well in your recovery. Regarding your questions, with production efficiency, that has been a very significant focus for the organization since I've been here. Certainly over the last 9 to 10 months, I've seen improvements, or the organization has seen improvements in efficiency related to things like cost efficiency in production, related to OEE in production. We have implemented Kaizen events to take a look at the organization from the production and manufacturing standpoint to look at our processes and put into place improvements where it makes sense. So to get to, I think, the point of your question of is there reason to have optimism, my answer is yes.

Speaker #6: And certainly, over the last nine to ten months, I've seen improvements, or the organization has seen improvements, in efficiency related to things like cost efficiency in production, related to OEE in production.

Speaker #6: We have implemented Kaizen events to take a look at the organization from the production and manufacturing standpoint, to ensure we examine our processes and put in place improvements where it makes sense.

Speaker #6: So, to get to—I think—the point of your question, of is there reason to have optimism, my answer is yes. I think there is a lot of reason to have optimism with our production efficiency.

Laura Riffner: I think there is a lot of reason to have optimism with our production efficiency, where we started this year, the advancements we've made, and where I see that we're going.

Speaker #6: Where we started this year, the advancements we've made, and where I see that we're going.

Speaker #2: Great. I think Wayne also wanted to chat about inventory control as well. Laura, do you want to provide any color on that?

Kevin Cureton: Great. I think Wayne also wanted to chat about inventory control as well. Laura, you want to provide any color on that?

Speaker #6: Of course, Wayne. There are certainly a lot of different aspects to inventory control that we could talk about. I guess I might make an assumption that you are referring to the costing methodology issue that has come to light.

Laura Riffner: Of course. Wayne, there's certainly a lot of different aspects to inventory control that we could talk about. I guess I might make an assumption that you are referring to the costing methodology issue that has come to light.

Kevin Cureton: He's got, he mentioned.

Laura Riffner: Oh, okay. Assuming, Wayne, that is the situation, it was an issue in our costing methodology that we identified. The moment it was identified, it got raised to the appropriate levels within the organization, was taken quite seriously, and considerable and appropriate efforts were taken to resolve and remediate the situation. I feel very confident moving forward. We are in a very good place there also.

Speaker #6: Oh, okay. So, assuming, Wayne, that is the situation—this was an issue in our costing methodology that we identified. The moment it was identified, it was raised to the appropriate levels within the organization and was taken quite seriously.

Speaker #6: And considerable and appropriate efforts were taken to resolve and remediate the situation. I feel very confident moving forward. We're in a very good place there also.

Speaker #2: Yeah, just to echo what Laura has said about production efficiency in particular—in our remarks, she also recognized the improvement, on a relative basis, that we are seeing in gross profit performance.

Kevin Cureton: Yeah. Just to echo on what Laura has said about production efficiency in particular. Within her remarks, she also recognized the improvement on a relative basis that we are seeing in gross profit performance. As everyone realizes with a manufacturing business like ours, scale does also have a factor in that. When we are referencing the gross profit numbers that we achieved in 2026 this past quarter versus last year on lower revenue, that is a reinforcement of the fact that the labor efficiency that Laura mentioned is coming through. Operational excellence is a key element for us, and we are still focused on delivering that through this year and on a continuing basis.

Speaker #2: As everyone realizes, with a manufacturing business like ours, scale does have a factor in that. So, when we were referencing what we achieved in 2026 this past quarter versus last year, on lower revenue, that's a reinforcement of the fact that the labor efficiency that Laura mentioned is coming through.

Speaker #2: Operational excellence is a key element for us, and we are still focused on delivering that through this year and on a continuing basis.

Speaker #1: Thank you. If you would like to ask a question, please press star one-one on your telephone. One moment for the next question, please. Our next question will be coming from the line of James Lieberman with American Truce Investment Securities, with a follow-up question.

Operator: Thank you. If you would like to ask a question, please press star one one on your telephone. One moment for the next question, please. Our next question will be coming from the line of James Lieberman with American Troops Investment Securities with a follow-up question. Please go ahead.

Speaker #1: Please go ahead.

Speaker #4: Yes, thank you. Could you talk a little bit more about how your scope products and new products you're introducing are differentiated from some of the many other products that are out there?

James Lieberman: Yes. Thank you. Could you talk a little bit more about how your scalp products and new products you are introducing are differentiated from some of the many other products that are out there?

Speaker #2: Yeah. Thanks, Jim. So, there are a couple of points of differentiation. We have launched two different products, to be specific, or two different product groups.

Kevin Cureton: Yeah. Thanks, Jim. There are a couple of points of differentiation. We have launched two different products to be specific or two different product groups. One is in scalp protection, and that product is the first of its kind that is a combination of a dry shampoo and an SPF product. As people may know that one of the areas that The Skin Cancer Foundation has cited as an increasing area of concern for melanoma is the scalp. And oftentimes, it can be more deadly because it is harder to diagnose. It is not an area that we are typically looking at or examining. So it is an area of importance, and I can tell you that with the launch of that product, we received a lot of good feedback of how folks felt like it was well-aligned with a need in the marketplace. The other scalp product is a treatment product.

Speaker #2: One is in scalp protection, and that product is the first of its kind—a combination of a dry shampoo and an SPF product.

Speaker #2: As people may know, one of the areas that the Skin Cancer Foundation has cited as an increasing area of concern for melanoma is the scalp.

Kevin Cureton: As people may know that one of the areas that The Skin Cancer Foundation has cited as an increasing area of concern for melanoma is the scalp. And oftentimes, it can be more deadly because it is harder to diagnose. It is not an area that we are typically looking at or examining. So it is an area of importance, and I can tell you that with the launch of that product, we received a lot of good feedback of how folks felt like it was well-aligned with a need in the marketplace. The other scalp product is a treatment product.

Speaker #2: And oftentimes, it can be more deadly because it's harder to diagnose; it's not an area that we're typically looking at or examining. So, it's an area of importance, and I can tell you that with the launch of that product, we received a lot of good feedback about how folks felt like it was well aligned with a need in the marketplace.

Speaker #2: The other scalp product is a treatment product. And as you may also know, those products are growing, and in fact, it is the fastest—or one of the top two or three fastest-growing—product categories in the market right now.

Kevin Cureton: As you also may know, those products are growing, and in fact, it is the fastest or one of the top two or three fastest growing product categories in the market right now. What we do, as you also may know, Jim, is that we typically do not enter these markets without having some novelty relative to the patent protection that we can deliver. This scalp treatment technology utilizes our WHSPR technology, which is a delivery system for allantoin, which really allows us to deliver at higher levels for a proven ingredient for addressing and soothing erythema, irritation, and helping with keratolytic effects on scalp and other areas. We are excited about what that technology might deliver, and that product line will deliver in the future.

Speaker #2: What we do, as you also may know, Jim, is that we typically don't enter these markets without having some novelty relative to the patent protection that we can deliver.

Speaker #2: This scalp treatment technology utilizes our Whisper technology, which is a delivery system for allantoin that really allows us to deliver higher levels of a proven ingredient for addressing and soothing erythema, irritation, and helping with catalytic effects on the scalp and other areas.

Speaker #2: And so we're excited about what that technology might deliver, and what that product line will deliver in the future.

Speaker #4: Well, that's great to hear. Do you see this as being a larger market than the current market you're in?

James Lieberman: Well, that is great to hear. Do you see this as being a larger market than the current market you are in?

Speaker #2: No, we see it as a nice adjacency. If you look at the overall hair care market, it is a very large market, but we are really targeting a specific segment within it.

Kevin Cureton: No, we see it as a nice adjacency. If you look at the overall hair care market, it is a very large market, but we are really targeting a specific segment within it. We see it as a nice adjacency to extend our participation. We believe we have got a nice total addressable market, which is greater than $50 billion. So our addressable market is good, but it is nice to have an additional segment that is high growth for us to address, and also offer another way for us to leverage our technologies with our brand partners.

Speaker #2: We see it as a nice adjacency to extend our participation. We believe we've got a nice total addressable market, which is greater than $50 billion.

Speaker #2: So, our addressable market is good, but it's nice to have an additional segment that is high growth for us to address, and also offers another way for us to leverage our technologies with our brand partners.

Speaker #4: Thank you very much. I wondered if I might ask one other question. I think the FDA approved a non-mineral-based sunscreen platform recently. Are you seeing any changes in interest in your mineral-based sunscreen technology?

James Lieberman: Thank you very much. I wondered if I might ask one other question. I think the FDA approved a non-mineral based sunscreen platform recently. Are you seeing any changes in interest in your mineral based sunscreen technology?

Speaker #2: Great question, Jim. And we're excited for two reasons. One, we think that the introduction of this new technology—the abbreviated name, or the name everyone is using in the industry, is BEMT—is good for our marketplace.

Kevin Cureton: Great question, Jim, and we're excited for two reasons. One, we think that the introduction of this new technology, the abbreviated name or the name everyone is using in the industry is BEMT, is good for our marketplace. While it is new to the United States, it is not new to the world. It's been around for over 20 years. We're pretty confident in what this technology will deliver and what our mineral technology's place is in the market as well. It is the one technology that, as we've been introducing others, like the Chromalüm technology, that is a new adjacent technology that can enhance the performance of other sunscreen actives.

Speaker #2: While it is new to the United States, it is not new to the world. It's been around for over 20 years, so we're pretty confident in what this technology will deliver.

Speaker #2: And what our mineral technologies' place is in the market as well. It is the one technology that, as we've been introducing others, like the Chromalume technology—which is a new, adjacent technology that can enhance the performance of other sunscreen actives—we see that as a technology that can be used along with the BEMT.

Kevin Cureton: We see that as a technology that can be used along with the BEMT, and we anticipate, as we've mentioned in some of the press that we've done over the past couple of months, that we will launch products with our brand partners that are combos, utilizing the BEMT and our proprietary mineral technologies and other booster technologies along with it. We're excited about the attention this is bringing to the SPF market. We're not worried relative to its impact on our business. We still see an exciting growth path for what we do.

Speaker #2: And we anticipate, as we've mentioned in some of the press that we've done over the past couple of months, that we will launch products with our brand partners that are combos.

Speaker #2: Utilizing the BEMT and our proprietary mineral technologies, and other booster technologies along with it. So we're excited about the attention this is bringing to the SPF market, and we're not worried relative to its impact on our business.

Speaker #2: We still see an exciting growth path for what we do.

Speaker #4: Thank you very much. I'm looking forward to a very strong second half of the year. I appreciate it.

James Lieberman: Thank you very much, and I'm looking forward to the very strong H2 of the year. Appreciate it.

Speaker #2: So are we. Thank you, Jim.

Kevin Cureton: So are we. Thank you, James.

Speaker #1: Thank you. One moment for the next question, please. Our next question is coming from the line of Stefano Bolas. Please go ahead.

Operator: Thank you. One moment for the next question, please. Our next question is coming from the line of Stefano Bolas. Please go ahead.

Speaker #5: Hello, Kevin and Laura, and thanks for taking my question. Thanks, Stefano. About the settlement of the dispute with REFI, the fact that in the settlement you have this still open window for agreeing on some new formulation or product—does it mean you are still actively working with REFI to come up with a new product or a satisfactory formulation for what they need?

Stefano Bolas: Hello, Kevin and Laura, and thanks for taking my question.

[Analyst 2]: Hello, Kevin and Laura, and thanks for taking my question.

Kevin Cureton: Thank you, Stefano.

Operator: Hi, Stefano.

Stefano Bolas: About the settlement with the dispute with Refy. The fact that in the settlement you have this still open window for agreeing on some new formulation or product, does it mean you are still actively working with Refy to come up with a new product or a satisfactory formulation for what is their need?

[Analyst 2]: About the settlement with the dispute with Refy. The fact that in the settlement you have this still open window for agreeing on some new formulation or product, does it mean you are still actively working with Refy to come up with a new product or a satisfactory formulation for what is their need?

Laura Riffner: Hi, Stefano. Yes. The agreement does give us an opportunity to work together on a possible development of a new SPF product. So that door is still open.

Speaker #6: Hi, Stefano. Yes, the agreement does give us an opportunity to work together on a possible development of a new SPF product, so that door is still open.

Speaker #5: And at the moment—so, at the moment, you are not having—so that was like a unique, single product. You are not providing, at the moment, to them any other product?

Stefano Bolas: At the moment, you are not adding. So that was like a unique, single product. You are not providing at the moment to them any other product?

[Analyst 2]: At the moment, you are not adding. So that was like a unique, single product. You are not providing at the moment to them any other product?

Speaker #2: Yes. So thank you, Stefano. I'll just briefly comment on that because it's consistent with our policies with other brand partners or potential brand partners, that we do not, without their permission, talk about the developments that we have.

Kevin Cureton: Yes. Thank you, Stefano Bolas. I'll just briefly comment on that because it's consistent with our policies with other brand partners or potential brand partners. Without their permission to talk about the developments that we have, we're not permitted to say much more than what Laura Riffner has just said. We do value our relationship with Refy.

Speaker #2: We're not permitted to say much more than what Laura has just said, but we do value our relationship with REFI.

Speaker #5: Okay. Thanks a lot.

Stefano Bolas: Okay. Thanks a lot.

[Analyst 2]: Okay. Thanks a lot.

Speaker #2: Thank you.

Kevin Cureton: Thank you.

Speaker #1: Thank you. There are no more questions in the queue. At this time, I would like to turn the call back over to Kevin for closing remarks.

Operator: Thank you. There are no more questions in the queue. At this time, I would like to turn the call back over to Kevin Cureton for closing remarks. Please go ahead.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Lisa. And thank you all for joining us today. While this accounting issue remains an important matter, our core strengths are unchanged, as you've just heard through the discussion.

Kevin Cureton: Thank you, Lisa. Thank all of you for joining us today. While this accounting issue remains an important matter, our core strengths are unchanged, as you've just heard through the discussion. Solesence continues to operate as a market leader in a high-growth business, providing a product line with one of the highest growth rates in the category. When paired with our proven operational improvements, these strong fundamentals demonstrate that our underlying momentum continues to build as we execute on the work ahead. To help our stakeholders better understand our long-term trajectory as we continue to advance our Transform & Transcend initiatives, we recently uploaded a strategic vision document to our investor relations website, which we encourage you all to review.

Speaker #2: Solesence continues to operate as a market leader in a high-growth business, providing a product line with one of the highest growth rates in the category.

Speaker #2: When paired with our proven operational improvements, these strong fundamentals demonstrate that our underlying momentum continues to build as we execute on the work ahead.

Speaker #2: To help our stakeholders better understand our long-term trajectory as we continue to advance our Transform and Transcend initiatives, we recently uploaded a strategic vision document to our investor relations website.

Speaker #2: Which we encourage you all to review. Looking ahead to the second half of the year, we expect continued progress in our strategy as we demonstrate that Solesence is on the right path to growing our company's enterprise value at a rate significantly greater than the market and creating long-term value through combining financial and operational excellence with world-leading innovation in skin health.

Kevin Cureton: Looking ahead to the H2 of the year, we expect continued progress in our strategy as we demonstrate that Solesence is on the right path to growing our company's enterprise value at a rate significantly greater than the market and creating long-term value through combining financial and operational excellence with world-leading innovation in skin health. Again, thank you for your continued support, and we look forward to updating you in the next quarter.

Speaker #2: Again, thank you for your continued support, and we look forward to updating you in the next quarter.

Operator: This concludes today's programming. Thank you so much for joining. You may now disconnect.