Nanophase Technologies (OTCMKTS:NANX), operating as Solésence, said it is restating financial statements to correct a historical inventory-costing issue while forecasting stronger second-half revenue and sequential improvement in third-quarter results.
During its second-quarter 2026 conference call, Chief Financial Officer Laura Riffner said the company identified an issue involving the methodology used to allocate indirect manufacturing costs to inventory. Solésence filed a Form NT 10-Q related to the matter and has completed its accounting evaluation with advisers, she said.
The company is implementing restatements related to inventory valuation and said it is enhancing inventory-costing processes and controls. Planned remediation steps include more formal periodic reviews of overhead cost pools, allocation methodologies and burden rates, as well as stronger documentation and oversight.
President and Chief Executive Officer Kevin Cureton said management views the matter seriously but does not expect it to alter Solésence’s commercial strategy or growth plans. “This accounting matter does not change the commercial reality of our business,” Cureton said, adding that the company’s operational momentum and brand-partner growth remain intact.
Second-Quarter Results
Revenue for the second quarter was $15.3 million, down from $20.4 million in the second quarter of 2025. Riffner said the prior-year period benefited from a major new product launch and related pipeline fill.
While revenue from that product was lower during the 2026 quarter, the company said it has continued to see gains in reorders and forecasts for the product line. The revenue decline was partially offset by growth among other prestige beauty brand partners.
Solésence reported a 31% gross margin for the quarter, compared with a restated 32% gross margin in the prior-year period. Management said maintaining a near-comparable margin despite revenue being 25% lower than a year earlier reflected continued improvement in labor efficiency under its Transform and Transcend strategy.
The company recorded a net loss of $158,000 in the second quarter, compared with net income of $3.2 million a year earlier. Adjusted EBITDA was $523,000, down from $3.7 million in the second quarter of 2025.
Riffner attributed the year-over-year declines primarily to lower revenue, as well as one-time events related to Refy that reduced net income by approximately $938,000. She also cited an employee retention credit payment received in the second quarter of 2025 that increased prior-year net income by $1.4 million.
Second-Half Outlook
Management said it now expects to exceed 2025 revenue for the full year. As of Aug. 17, the company had $64.9 million in shipped and on-hand orders for 2026, including orders already shipped and orders expected to ship during the year. That compares with $60 million at the same point in 2025.
Solésence expects third-quarter revenue and profitability to improve sequentially. It also projected about $35 million of revenue during the second half of 2026, which management said would represent the strongest second-half performance in company history.
In response to investor questions, Riffner said production efficiency has been a major organizational focus. She pointed to improvements in production cost efficiency and overall equipment effectiveness, as well as Kaizen events intended to identify manufacturing-process improvements.
“I think there is a lot of reason to have optimism with our production efficiency, where we started this year, the advancements we have made, and where I see that we are going,” Riffner said.
New Scalp-Care Products
Solésence also discussed a new scalp-care segment launched in July. Cureton said the company estimates the addressable market for its offerings in the segment at about $3 billion, while describing the broader hair-care market as a larger adjacent opportunity.
The company introduced two product groups: a scalp-protection offering that combines dry shampoo and sun protection factor, and a scalp-treatment product using its WHSPR technology to deliver allantoin. Cureton said the scalp-protection product addresses concerns around sun exposure on the scalp, while the treatment product is intended to help address irritation, erythema and keratolytic effects.
Management said the July launch generated one of its strongest volumes of leads and new opportunities, though Cureton noted it remains too early to determine when those opportunities could translate into revenue.
Regarding its relationship with Refy, Riffner said a settlement agreement leaves open the possibility that the companies could work together on development of a new SPF product. Cureton said Solésence values the relationship but declined to discuss additional development details without the brand partner’s permission.
The company also said it does not expect a recently approved non-mineral sunscreen platform, referred to during the call as BEMT, to disrupt its mineral-based sunscreen business. Cureton said Solésence anticipates opportunities to develop products combining BEMT with its proprietary mineral and booster technologies.
About Nanophase Technologies (OTCMKTS:NANX)
Nanophase Technologies, Inc (OTCMKTS: NANX) is a specialty materials company that develops and manufactures advanced nanomaterials for a wide range of industries. The company focuses on producing high-performance nano-oxides, nano-ceramics and custom nanomaterial formulations designed to enhance product durability, functionality and aesthetic appeal. Through proprietary synthesis and coating technologies, Nanophase delivers materials with controlled particle size, shape and surface chemistry to meet specific application requirements.
Nanophase’s core product portfolio includes nanometer-sized oxides such as aluminum oxide, zirconium oxide and silicon dioxide, along with composite materials that integrate multiple metal oxides.
