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What changed in SOLESENCE, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SOLESENCE, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+107 added−122 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-31)

Top changes in SOLESENCE, INC.'s 2025 10-K

107 paragraphs added · 122 removed · 101 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

54 edited+2 added−7 removed51 unchanged
Biggest changeSee Note 13 to the accompanying Financial Statements for additional information. 6 Key Customers A limited number of key customers account for a substantial portion of our commercial revenue, and aside from our largest customer, we are seeing the composition of these key customers change with the growth we are experiencing within our consumers products line, which has grown to exceed personal care ingredients line significantly.
Biggest changeWe are seeing the composition of these key customers change with the growth we are experiencing within our consumer products line, which has grown to exceed our personal care ingredients line significantly. For 2025, total consumer products revenue amounted to $54.9M or 88% of total revenue compared to $44.4M, or 85% for 2024.
Competitive Advantage Through our Solésence consumer product line, our Active Stress Defense™ platform of proprietary technologies – which includes Kleair™ – offers unique skin health benefits through performance-related and aesthetic advantages in environmental protection skin health products, including in UVA/UVB, pollution and HEV (blue) light protection.
Competitive Advantage Through our Solésence consumer product line, our Active Stress Defense™ platform of proprietary technologies – which includes Solésence Kleair™ – offers unique skin health benefits through performance-related and aesthetic advantages in environmental protection skin health products, including UVA/UVB, pollution and HEV (blue) light protection.
Our Solésence products compete with existing solutions as well as new solutions from various sources, including other product developers and manufacturers who seek to serve skin care brands and integrated brands who also manufacture their own products in-house, and we must differentiate our value proposition in order to gain traction in this marketplace.
Solésence products compete with existing solutions as well as new solutions from various sources, including other product developers and manufacturers who seek to serve skin care brands and integrated brands who also manufacture their own products in-house, and we must differentiate our value proposition in order to gain traction in this marketplace.
Skin health, addressed through both our Solesence consumer products and our Active Pharmaceutical Ingredients (“APIs”), currently make up the great majority of our business, with additional revenue being generated from other legacy advanced materials applications. The Company was incorporated in Illinois on November 25, 1989 and became a Delaware corporation during November 1997.
Skin health, addressed through both our Consumer Products and our Active Pharmaceutical Ingredients (“APIs”), currently make up the great majority of our business, with additional revenue being generated from other legacy advanced materials applications. The Company was incorporated in Illinois on November 25, 1989, and became a Delaware corporation during November 1997.
By combining our market awareness, proprietary dispersion capabilities and formulation know-how, our Solésence products enable our brand partners to expand the range of products within skin care and color cosmetics categories that can include sun and environmental protection, and consequently fill a unique market segment which drives the growing demand for our Solésence products.
By combining our market awareness, proprietary dispersion capabilities and formulation know-how, our Solésence products enable our brand partners to expand the range of products within skin care and color cosmetics categories that can include sun and environmental protection and consequently fill a unique market segment which drives the growing demand for our consumer products.
To the extent we are successful in both adding a large number of customers through this model, and maintaining or expanding our existing partners, we believe we will be able to best manage the risks associated with customer concentration. Forward-Looking Statements We want to provide investors with more meaningful and useful information.
To the extent we are successful in adding a large number of customers through this model, and maintaining or expanding our existing partners, we believe we will be able to best manage the risks associated with customer concentration. Forward-Looking Statements We want to provide investors with more meaningful and useful information.
Personal Care Ingredients In addition to serving strategic partners in diverse markets and geographic locations, we will continue to devote significant resources to maintaining and growing our relationship with BASF Corporation (“BASF”), the largest customer in our personal care ingredients product group. This has been a successful relationship that we expect will contribute to our future growth.
Personal Care Ingredients In addition to serving strategic partners in diverse markets and geographic locations, we will continue to devote resources to maintaining and growing our relationship with BASF Corporation (“BASF”), the largest customer in our personal care ingredients product group. This has been a successful relationship that we expect will contribute to our future growth.
We are able to develop and supply engineered materials and bulk finished goods in quantities ranging from grams to metric tons. All facilities are registered under the ISO 9001, American National Standard, Quality Management System Requirements, ISO 22716 American National Standard, Environmental Management System Requirements, and ISO 14001, American National Standard, Environmental Management System Requirements.
We develop and supply engineered materials and bulk finished goods in quantities ranging from grams to metric tons. All facilities are registered under the ISO 9001, American National Standard, Quality Management System Requirements, ISO 22716 American National Standard, Environmental Management System Requirements, and ISO 14001, American National Standard, Environmental Management System Requirements.
We offer these for sale to brands who ultimately sell products to consumers in both prestige and mass markets within the beauty industry. Our Solésence consumer products have received broad acceptance in the marketplace.
We offer these consumer products for sale to brands who ultimately sell products to consumers in both prestige and mass markets within the beauty industry. Solésence consumer products have received broad acceptance in the marketplace.
Our efforts in research and development, cosmetic formulating, process engineering and advanced engineering groups are focused in three major areas: 1) application development for our products; 2) creating or obtaining additional technologies platforms that have the capability to serve multiple beauty or life science markets; and 3) continuing to improve manufacturing operations to improve process reliability and reduce costs.
Our efforts in research and development, cosmetic formulating, process engineering and advanced engineering groups are focused in three major areas: 1) application development for our products; 2) creating or obtaining additional technology platforms that have the capability to serve multiple beauty or life science markets; and 3) continuing to improve manufacturing operations to improve process reliability and reduce costs.
BASF, which describes itself as the world’s leading chemical company with annual revenue of approximately $65 billion, is a “globally leading supplier of sustainable high-performance ingredients for the personal care industry,” with recognized brands, significant revenue, and a broad sales network. BASF is primarily responsible for the business development cycle and maintains the direct customer relationships.
BASF, which describes itself as the world’s leading chemical company with annual revenue of approximately $77 billion, is a “globally leading supplier of sustainable high-performance ingredients for the personal care industry,” with recognized brands, significant revenue, and a broad sales network. BASF is primarily responsible for the business development cycle and maintains the direct customer relationships.
We have a long-term exclusive relationship with BASF, primarily to provide nano-scale zinc oxide-based products made to specific specifications to be used as ingredients in personal care cosmetics, with sunscreens and daily wear products being the dominant applications. These materials differ significantly in their specifications from those used in the consumer products line.
We have a long-term exclusive relationship with BASF, primarily to provide nano-scale zinc oxide-based products made to BASF’s specifications to be used as ingredients in personal care cosmetics, with sunscreens and daily wear products being the dominant applications. These materials differ significantly in their specifications from those used in the consumer products line.
These statements reflect management’s current beliefs and are based on information now available to it. Accordingly, these statements are subject to certain risks, uncertainties and contingencies that could cause our actual results, performance or achievements in 2025 and beyond to differ materially from those expressed in, or implied by, such statements.
These statements reflect management’s current beliefs and are based on information now available to it. Accordingly, these statements are subject to certain risks, uncertainties and contingencies that could cause our actual results, performance or achievements in 2026 and beyond to differ materially from those expressed in, or implied by, such statements.
These risks, uncertainties and factors include, without limitation: our ability to be consistently profitable despite the losses we have incurred since our incorporation; a decision by a customer to cancel a purchase order or supply agreement in light of our dependence on a limited number of key customers; the terms of our supply agreements with BASF which could trigger a requirement to sell equipment to that customer; our potential inability to obtain working capital when needed on acceptable terms or at all; our ability to obtain materials at costs we can pass through to our customers, including high purity zinc, and other items impacted by supply chain pressures; uncertain demand for, and acceptance of, our Solésence products, and our advanced materials; our manufacturing capacity and product mix flexibility in light of customer demand; our limited marketing experience, including with our suite of Solésence products; changes in development and distribution relationships; the impact of competitive products and technologies; our dependence on patents and protection of proprietary information; our ability to maintain an appropriate electronic trading venue for our securities; the impact of any potential new governmental regulations, especially any new governmental regulations focusing on the processing, handling, storage or sale of nanomaterials as it could impact our personal care ingredients business, that could be difficult to respond to or costly to comply with; business interruptions due to unexpected events or public health crises, including viral pandemics such as COVID-19; and the resolution of litigation or other legal proceedings in which we may become involved.
These risks, uncertainties and factors include, without limitation: our ability to be consistently profitable despite the losses we have incurred since our incorporation; a decision by a customer to cancel a purchase order or supply agreement in light of our dependence on a limited number of key customers; our potential inability to obtain working capital when needed on acceptable terms or at all; our ability to obtain materials at costs we can pass through to our customers, including high purity zinc, and other items impacted by supply chain pressures, including tariffs; uncertain demand for, and acceptance of, our Solésence products, and our advanced materials; our manufacturing capacity and product mix flexibility in light of customer demand; our limited marketing experience, including with our suite of consumer products; changes in development and distribution relationships; the impact of competitive products and technologies; our dependence on patents and protection of proprietary information; our ability to maintain an appropriate electronic trading venue for our securities; the impact of any potential new governmental regulations, especially any new governmental regulations focusing on the processing, handling, storage or sale of nanomaterials as it could impact our personal care ingredients business, that could be difficult to respond to or costly to comply with; business interruptions due to unexpected events or public health crises, including viral pandemics such as COVID-19; and the resolution of litigation or other legal proceedings in which we may become involved.
Additionally, we have a number of temporary, and temporary-to-permanent employees, typically 125 to 225 on a demand-driven basis, and a number of contractors with specific industry experience that have become a part of our talent pool.
Additionally, we have a number of temporary, and temporary-to-permanent employees, typically 90 to 225 on a demand-driven basis, and a number of contractors with specific industry experience that have become a part of our talent pool.
Consumer Products During 2015 we were granted a patent on a new type of particle surface treatment (coating) — now called Original Active Stress Defense™ Technology. This has become the cornerstone of our new product development in our consumer product line, with first revenue recognized during 2017.
Consumer Products During 2015 we were granted a patent on a new type of particle surface treatment (coating) — now called Original Active Stress Defense™ Technology. This became the cornerstone of our new product development in our consumer product line, with first revenue recognized during 2017.
In early 2023, Solésence was named number 2 in the Beauty category of Fast Company’s World’s Most Innovative Companies list. This is a prestigious award that recognizes the impact we have on the industry we serve and the lives of the people who use our products.
In early 2023, Solésence was named number 2 in the Beauty category of Fast Company’s World’s Most Innovative Companies list. This prestigious award recognizes the impact we have on the industry we serve and the lives of the people who use our products.
The Company is actively taking steps to reduce the number of singularly sourced raw materials. 3 Markets and Distribution Consumer Products We partner with brands on a global basis to develop, manufacture and market products that enhance lives through healthy skin.
The Company is actively taking steps to reduce the number of singularly sourced raw materials. 3 Markets and Distribution Consumer Products We partner with beauty, health, and wellness brands on a global basis to develop, manufacture and market products that enhance lives through healthy skin.
We offer comprehensive production, from engineered materials, formulation development, and finished product development, to commercial manufacturing and packaging capabilities. Our expertise in materials engineering allows us to effectively coat and disperse materials on a nano and “non-nano” scale for use in a variety of markets in skin health, including for use in sunscreens as APIs.
We offer comprehensive production, starting with engineered materials, formulation development, and finished product development, through commercial manufacturing and packaging capabilities. Our expertise in materials engineering allows us to effectively coat and disperse materials on a nano and “non-nano” scale for use in a variety of markets in skin health, including for use in sunscreens as APIs.
As our consumer products continue to represent more of our total revenues, we expect to see a number of smaller (sub-10% of revenue) customers represent a more significant portion of our total revenue. We have experienced this in 2024 and 2023 and expect it to continue in 2025 and beyond.
As our consumer products continue to represent more of our total revenue, we expect to see a number of smaller (sub-10% of revenue) customers represent a more significant portion of our total revenue. We have experienced this in 2025 and 2024 and expect it to continue in 2026 and beyond.
Products developed and sold through our Solésence consumer product line are all produced under the requirements of current Good Manufacturing Standards (“cGMP”), as enforced by the U.S. Food and Drug Administration (“FDA”), which enables us to leverage the expertise we developed in the manufacture of personal care ingredients.
Products developed and sold through our consumer products line are all produced under the requirements of current Good Manufacturing Practice standards (“cGMP”), as enforced by the U.S. Food and Drug Administration (“FDA”), which enables us to leverage the expertise we developed in the manufacture of personal care ingredients.
We believe that our Solésence consumer products technology and our expertise in the nuances of formulating products that contain UV protection, coupled with our expanding capability to produce novel formats, will allow us to become a competitive player in this market on a sustainable basis. 5 Governmental Regulations, Including Climate Change The manufacture and use of certain products that contain Active Pharmaceutical Ingredients are subject to governmental regulations.
We believe that our Solésence consumer products technologies and our expertise in the nuances of formulating products that contain UV protection, coupled with our capability to produce novel formats, will allow us to be a competitive player in this market on a sustainable basis. 5 Governmental Regulations, Including Climate Change The manufacture and use of certain products that contain Active Pharmaceutical Ingredients are subject to governmental regulations.
Due to the enhanced efficacy and aesthetic qualities offered by our proprietary technology platform, Solésence consumer products satisfy growing consumer demands for “clean” and inclusive beauty across a range of product formats and categories. The vertically integrated nature of our Solésence consumer products helps us to develop ingredient technologies and formulas in tandem.
Due to the enhanced efficacy and aesthetic qualities offered by our proprietary technology platform, Solésence consumer products satisfy growing consumer demands across a range of product formats and categories. The vertically integrated nature of Solésence consumer products helps us to develop ingredient technologies and formulas in tandem.
Solésence, along with its wholly owned subsidiary, Solésence, LLC (our “Solésence consumer products subsidiary”), is a leading innovator in scientifically-driven health care solutions across beauty and life science categories, protecting skin from environmental aggressors and enhancing the aesthetic appeal of healthy products.
Solésence, along with its wholly owned subsidiary, Solésence, LLC (our “Solésence consumer products subsidiary”), is a leading innovator in scientifically driven health care solutions across beauty, health and wellness categories, protecting skin from environmental aggressors and enhancing the aesthetic appeal of health-enhancing products.
In July of 2023, Solésence was again awarded the Cosmopack Award for best Formulation, this time for its product Natural Glow Face Oil SPF 40+ featuring Kleair™ and Bloom™ technology, recognizing our continued innovative approach to formulation and product development.
In July of 2023, Solésence was again awarded the Cosmopack North America Award for best Formulation, this time for its product Natural Glow Face Oil SPF 40+ featuring Kleair™ and Bloom™ technology, recognizing our continued innovative approach to formulation and product innovation.
With our first Solésence consumer product revenue recognized during 2017, we had our first material amounts of consumer product revenue in 2018, and saw significant expansion in these sales through 2024. Solésence brand partners have experienced strong growth as our products have seen broad acceptance from retailers, adoption by consumers, and recognition by third-party media outlets through awards and accolades.
With our first consumer product revenue recognized during 2017, we had our first material amounts of consumer product revenue in 2018 and experienced significant expansion of these sales through 2025. Consumer products brand partners have experienced strong growth as our products have seen broad acceptance from retailers, adoption by consumers, and recognition by third-party media outlets through awards and accolades.
In many markets, the actual or potential competitors are larger and more diversified than we are; however, we believe we focus on market segments and opportunities where our materials and related technologies are superior to those of our competitors, often due to our abilities to produce highly engineered ingredients to meet specific performance requirements, develop advanced material solutions for customers’ specific applications, and in the case of consumer products line, finished products that impart the benefits of minerals-based products with superior tactile, visual, and performance characteristics.
In many markets, the actual or potential competitors are larger and more diversified than we are; however, we believe we focus on market segments and opportunities where our materials and related technologies are superior to those of our competitors, often due to our abilities to produce highly engineered ingredients to meet specific performance requirements, develop solutions for customers’ specific applications, and in the case of consumer products line, finished products that impart benefits of these technologies with tactile, visual, and performance characteristics in line with consumer need and demand.
Both the customer products and the personal care ingredients have been positively impacted by the growing interest among consumers for mineral-based sunscreens, which management sees as a validation of the Company strategy. 4 Manufacturing Operations We currently have manufacturing capacity based in three locations in the Chicago area.
Both the consumer products and the personal care ingredients lines have been positively impacted by the growing interest among consumers for mineral-based sunscreens, which management sees as a validation of the Company strategy. 4 Manufacturing Operations We currently have manufacturing capacity based in two locations in the Chicago area.
We expect our consumer product group to enhance both our degree of control of the business development cycle, and to further enable our ability to grow rapidly.
We expect our consumer products to enhance both our degree of control of the business development cycle, and to further enable our ability to grow rapidly.
Our consumer products clients, or brand partners, are positioned in skin care, makeup/cosmetics, and sun care markets, with the majority of our partners operating in the prestige beauty segment with retail, direct-to-consumer, and/or omnichannel strategies.
Our consumer products customers (“brand partners”) are positioned in skin care, makeup/cosmetics, and sun care markets, with the majority of our partners operating in the prestige beauty segment with retail, direct-to-consumer, and/or omnichannel strategies.
These products are fully formulated solutions built around proprietary Solésence technologies, which are designed to improve skin health for all human beings, and are aligned with consumer demand for “clean” and inclusive beauty products that enhance skin health.
These products are fully formulated solutions built around proprietary Solésence technologies, which are designed to improve skin health for all human beings, and are aligned with consumer demand.
Research and Development Most of our research and development over the past few years has been directly related to the development of Solésence consumer products. We endeavor to either meet specific customer needs or to develop solutions to address unmet or emerging needs where we believe our technologies will offer a distinct performance advantage.
Research and Development Most of our research and development since 2015 has been directly related to the development of Solésence consumer products. We endeavor to either meet specific customer needs or develop solutions to address unmet or emerging needs where we believe our technologies will offer a distinct advantage.
Most recently in March 2025, Solésence won its third consecutive Cosmetics & Toiletries Allē Award and its second in the Finished Formula-Prestige category for its finished formula Au Lait Face Milk SPF 50+.
Also in 2024, Solésence won its second Cosmetics & Toiletries Allē Award in the Finished Formula-Prestige category for its market-ready product, Soft Glow SPF 50+. Most recently in March 2025, Solésence won its third consecutive Cosmetics & Toiletries Allē Award and its second in the Finished Formula-Prestige category for its finished formula Au Lait Face Milk SPF 50+.
Our common stock trades on the OTCQB marketplace under the symbol NANX. We have development and application laboratories, and manufacturing capacity in three locations in the Chicago, Illinois area. Leveraging a platform of integrated patented and proprietary technologies, we create products with unique performance to enhance end-consumers’ health and well-being.
Our common stock trades on NASDAQ under the symbol SLSN. We have development and testing laboratories, and manufacturing capability in two locations in the Chicago, Illinois area. Leveraging a platform of integrated patented and proprietary technologies, we create products with unique performance to enhance end-consumers’ health and well-being.
Investor relations information, including historic Nanophase financials and disclosures, is available at ir.solesence.com. Nanophase Technologies Corporation changed its legal name to Solesence, Inc. by amending its certificate of incorporation with the state of Delaware on March 10, 2025.
Our corporate website has transitioned to solesence.com and investor relations information, including historical Nanophase financials and disclosures, is available at ir.solesence.com. Nanophase Technologies Corporation changed its legal name to Solésence, Inc. by amending its certificate of incorporation with the State of Delaware on March 10, 2025 and by filing a certificate of correction on June 3, 2025.
In July 2022 at Cosmoprof North America, Solésence was awarded the Cosmopack Award for best Formulation for its product Multi-Cultural Magic SPF 50+ Featuring Kleair™ technology, acknowledging the Company’s technology, formulation and marketing know-how.
In July 2022 at Cosmoprof North America, Solésence was awarded the Cosmopack North America Award for best Formulation for our product, Multi-Cultural Magic SPF 50+ Featuring Solésence Kleair™, acknowledging the Company’s technology, formulation, and marketing know-how. In September 2022, Solésence was awarded the Cosmetics & Toiletries Allē Award for Most Significant Active Ingredient in Sun/Light Protection for Kleair™ technology.
In particular, revenue from our three largest customers across all business areas included our largest customer in personal care applications (BASF) and two of our consumer products customers, which constituted approximately 13%, 32%, and 7%, respectively, of our 2024 total revenue.
In particular, revenue from our three largest customers across all business areas included two of our consumer products customers and our largest customer in personal care ingredients (BASF), constituted approximately 29%, 16%, and 10%, respectively, of our 2025 total revenue.
We have a full-time, advanced degreed professional, along with a supporting staff, who spend a significant amount of time managing governmental regulation compliance and EH&S. We believe that our Company has an exemplary safety record. Employees On December 31, 2024, we had a total of 98 full-time employees, 13 of whom hold advanced degrees.
We have a full-time, advanced degreed professional, along with a supporting staff, who spend a significant amount of time managing governmental regulation compliance and EH&S. Employees On December 31, 2025, we had a total of 115 full-time employees, 15 of whom hold advanced degrees.
As of the date of this filing, we own 10 U.S. patents and 5 pending U.S. patent applications. We also own 108 foreign patents and patent applications consisting of 68 issued or allowed foreign patents and 40 pending foreign patent applications.
As of the date of this filing, we own 11 U.S. patents and 4 pending U.S. patent applications. We also own 123 foreign patents and patent applications consisting of 91 issued or allowed foreign patents and 32 pending foreign patent applications.
In 2020, Solésence consumer products revenue doubled revenue from our personal care ingredients products. We now offer a suite of three technologies under our Active Stress Defense™ platform, each of which offers a distinct market advantage in terms of performance, aesthetics, and/or “clean” positioning in UV and environmental protection.
We now offer a suite of three technology platforms under our Active Stress Defense™ family of technologies, each of which offers a distinct market advantage in terms of performance, aesthetics, and/or “clean” positioning in UV and environmental protection.
We design and market flexible formulas that allow for adoption by a range of brands with different market positions. In 2020, consumer products surpassed our personal care APIs in terms of total revenue. We believe that Solésence consumer products offer the greatest growth potential of any product line in any market in the Company’s history.
We design and market flexible formulas that allow for adoption by a range of brands with different market positions across beauty, health, and wellness. In 2020, consumer products surpassed our personal care APIs in terms of total revenue.
We continue to develop and expand our in-house formulating capability, through which we have created, and now sold, more than 250 SKUs of fully formulated finished cosmetics products in markets focused on skin health, with the majority in prestige beauty.
We believe that Solésence consumer products offer the greatest growth potential of any product line in any market in the Company’s history. 2 We continue to develop and expand our in-house formulating capability, through which we have created, and now sold, more than 950 SKUs of fully formulated finished cosmetic products in markets focused on skin health, with the majority in prestige beauty.
We believe we are well-positioned with our platform of integrated commercial materials technologies and track record of technology improvement and evolution. Our Solésence consumer products faces competition from a wide variety of offerings in the field of skin care.
We believe we are well-positioned with our platform of integrated commercial materials technologies. Solésence consumer products face competition from a wide variety of offerings in health, beauty, and wellness categories.
We maintain, by participation, support GMP site licenses related to import of our customer products in Canada and Australia. Our operations employ a cellular, team-based manufacturing approach, where workers operate in work “cells,” under a lean manufacturing environment to continuously advance and improve production capabilities.
The Company supports our Brand Partners GMP site license activities for our consumer products in Canada and Australia. Our operations employ a cellular, team-based manufacturing approach, where workers operate in work “cells,” under a lean manufacturing environment to continuously advance and improve production capabilities.
Item 1. General Company Background On March 7, 2025, Nanophase Technologies Corporation announced its rebranding as Solesence, Inc. (“Solésence,” “Company,” “we,” “our,” or “us”), marking a new chapter in its commitment to innovation, self-expression, and inclusivity in skin health. The company’s stock will continue to trade under the NANX ticker symbol. Its corporate website transitioned to solesence.com.
Item 1. General Company Background On March 7, 2025, Nanophase Technologies Corporation announced its rebranding as Solésence, Inc. (“Solésence,” “Company,” “we,” “our,” or “us”), marking a new chapter in its commitment to skin health innovation and consumer products across beauty, health, and wellness categories.
All of the pending and owned foreign patents are counterparts to domestic filings covering our platform of nanotechnologies and surface treatments. Competition Within each of our targeted markets and product applications, we face potential competition from contract manufacturers and developers, advanced materials and chemical companies, and suppliers of traditional materials.
Competition Within each of our targeted markets and product applications, we face potential competition from contract manufacturers and developers, advanced materials and chemical companies, and suppliers of traditional materials.
Given our technological position, in addition to the historical market acceptance of our APIs for use in skin health products and sunscreens, we have seen rapidly growing sales for our suite of Solésence consumer products.
We have leveraged this to develop specialized formulation know-how with our unique ingredients, improve efficiency, and avoid potential major supply chain challenges. Given our technological position, in addition to the historical market acceptance of our APIs for use in skin health products and sunscreens, we have seen rapidly growing sales for our suite of consumer products.
Personal Care Ingredients Prior to 2020, our largest of products had been the manufacture and sale of APIs in the skin health and sun care markets, which we deliver to customers through strategic partnerships.
To-date Solésence has won 9 awards across product and ingredient innovation and service, highlighting the Company’s know-how across technology, formulation, and marketing. Personal Care Ingredients Prior to 2020, our largest product had been the manufacture and sale of APIs in the skin health and sun care markets, which we deliver to customers through strategic partnerships.
In 2023, Solésence also won the 2023 Beauty Matter NEXT Award for Best Contract Manufacturer and was a winner of the 22nd Chicago Innovation Awards.
Also in 2023, Solésence won the 2023 Beauty Matter NEXT Award for Best Contract Manufacturer and was a winner of the 22nd Chicago Innovation Awards. In 2024, Solésence won its third consecutive Cosmopack North America Award for best Formulation for its Lip Oil, SPF 40+, making Solésence the first-ever third-time winner of the Award in Cosmopack North America’s history.
We believe our innovative approach to creating these materials gives us technological and market advantages. We also leverage expertise to develop skin care, sun care, and color cosmetics products (“Solésence consumer products”) that offer unique skin health benefits.
We believe our innovative approach to creating these materials gives us technological and competitive advantages in market. In addition to APIs, we produce our finished skin care, sun care, and color cosmetics products (“Consumer Products”) through the vertical integration of patented and proprietary technologies that offer unique skin health benefits.
Instead, we sell our Solésence consumer products to brand partners as market-ready products, as customized white label products, or as custom-developed products, in each case, for sale or distribution to consumers under our customers’ brand names. 2 The extent to which we grow will be dependent upon our ability to effectively expand our capabilities during 2025.
Instead, we sell our consumer products to customers as market-ready products, as customized white label products, or as custom-developed products, in each case, for sale or distribution to consumers under our customers’ brand names. For this reason we call our consumer products customers “brand partners.” Solésence received two industry accolades.
Business Segment and Geographical Information Our operations comprise a single business segment and all of our long-lived assets are located within the United States.
Business Segment and Geographical Information Our operations comprise a single business segment and all of our long-lived assets are located within the United States. See Note 13 to the accompanying Financial Statements for additional information. 6 Key Customers A limited number of key customers account for a substantial portion of our commercial revenue.
Our total research and development expense, which includes all expenses relating to our technology and advanced engineering groups was $3.8 million, during the years ended December 31, 2024 and 2023. This represents our share of these expenses only and does not take into account amounts spent by any of our customers in support of new product development.
Our total research and development expense, which includes all expenses relating to our technology and advanced engineering groups was $4.1 millions and $3.8 million during the years ended December 31, 2025 and 2024, respectively.
Our future success will depend in large part upon our ability to develop products that bring a high degree of value to our customers. Through the two-year period ended December 31, 2024, we had cumulative research and development expenses of approximately $7.6 million and $0.1 million cumulative capital expenditures on equipment and leasehold improvements.
Through the two-year period ended December 31, 2025, we had cumulative research and development expenses of approximately $7.9 million and $0.1 million cumulative capital expenditures on lab and testing equipment improvements.
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We have leveraged this to develop specialized formulation know-how with our unique ingredients, improve efficiency, and avoid potential major supply chain challenges, while also addressing ongoing sustainability efforts.
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This represents our share of these expenses only and does not take into account amounts spent by any of our customers in support of new product development. Our future success will depend in large part upon our ability to develop products that bring a high degree of value to our customers.
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As a result, we plan to continue investments in facilities and equipment as well as in human resources, in 2025 and beyond. We are prioritizing operational efficiencies, facilities expansion, and capital investment in this product line to allow for continued growth, and increased profitability.
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All of the pending and owned foreign patents are counterparts to domestic filings covering our platform of particle technologies and surface treatments. All of the Company’s patents and patent applications relate to health and wellness.
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In 2022, Solésence was granted site clearance by Australia’s Therapeutic Goods Administration (“TGA”) for the full finished product manufacture of creams, lotions, sprays, sticks and all topical sunscreen forms. TGA site clearance is legally required for brands to market Solésence-made products as primary sunscreens in Australia.
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Our initial focus continues to be on establishing a footprint with both new and existing Solésence brand partners, to enable the sale of our patented skin health products as primary sunscreens. Also in 2022, Solésence was granted a patent in Korea for the Kleair™ technology used exclusively in Solésence products. Shortly thereafter, Solésence received two industry accolades.
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In September 2022, Solésence was awarded the Cosmetics & Toiletries Allē Award for Most Significant Active Ingredient in Sun/Light Protection for Kleair™ technology, a further acknowledgment of the company’s technology know-how, as well as a recognition for the Company in the areas of innovation and impact.
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In 2024, Solésence won its third consecutive Cosmopack Award for best Formulation for its Lip Oil, SPF 40+ and its second Cosmetics & Toiletries Allē Award in the Finished Formula-Prestige category for its market-ready product, Soft Glow SPF 50+.
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For 2024, total consumer products revenue amounted to $44.4M or 85% of total revenue compared to $25.2M, or 68% for 2023.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe are not aware of having experienced any material cybersecurity incidents in 2024. We are not aware of any existent cybersecurity threats that would materially affect, or are reasonably likely to materially affect, our business strategy, results of operations or financial conditions.
Biggest changeWe are not aware of having experienced any material cybersecurity incidents in 2025. We are not aware of any existent cybersecurity threats that would materially affect, or are reasonably likely to materially affect, our business strategy, results of operations or financial conditions.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDuring December 2021, we entered into a Standard Form Industrial Lease for a new facility in Bolingbrook, Illinois, which, among other things, will end in May of 2032, with options to extend this lease at market rent for each of three concurrent five-year periods.
Biggest changeDuring December 2021, we entered into a Standard Form Industrial Lease for a new facility in Bolingbrook, Illinois, amended May 12, 2025 which, among other things, will end in May of 2032, with options to extend this lease at market rent for each of three concurrent five-year periods. 8 With the addition of the Bolingbrook space in 2021, we believe that our leased facilities will provide sufficient capacity to fulfill current known customer demand as well as allow for the creation of substantial additional space to enable expansion of key production processes.
The Bolingbrook facility is registered with the FDA for OTC drug manufacturing and packaging, site is registered under ISO 9001, ISO 22716 and ISO 14001, and we believe that the particle coating processes used for our ingredients and fully formulated sunscreens and cosmetic products for personal care are in compliance with the cGMP requirements of the FDA.
The Bolingbrook facility is registered with the FDA for OTC drug manufacturing and packaging, with the site registered under ISO 9001, ISO 22716 and ISO 14001, and we believe that the particle coating processes used for our ingredients and fully formulated sunscreens and cosmetic products for personal care are in compliance with the cGMP requirements of the FDA.
We believe we will be able to expand certain operations, and consolidate others, to support additional growth in an economically efficient manner. We believe that our capital expenditures made in 2024, and projected for 2025, will support currently anticipated demand from existing and expected customers through 2025 and into 2026.
We believe we will be able to expand certain operations, and consolidate others, to support additional growth in an economically efficient manner. We believe that our capital expenditures made in 2025, and projected for 2026, will support currently anticipated demand from existing and expected customers through 2026 and into 2027.
The Bolingbrook facility houses our warehousing operations, sunscreen lotions manufacturing, dispersion manufacturing, filling and assembly of our Solésence ® products and additional quality control spaces.
The Bolingbrook facility houses our warehousing operations, sunscreen lotions manufacturing, dispersion manufacturing, filling and assembly of our consumer products and additional quality control spaces.
The Bolingbrook site is registered with the FDA for API manufacturing, manufacturing, and packaging. 8 We lease our Romeoville, Burr Ridge and Bolingbrook facilities. The Romeoville lease term was extended to January 31, 2028, in August 2024. The Burr Ridge lease term was extended to September of 2025.
The Bolingbrook site is registered with the FDA for API manufacturing, manufacturing, and packaging. We lease our Romeoville and Bolingbrook facilities. The Romeoville lease term was extended to January 31, 2028, in August 2024.
Item 2. Properties We operate three facilities in the Chicago suburbs - a 36,000 square-foot production, research and headquarters facility in Romeoville, Illinois, a 20,000 square-foot production facility in Burr Ridge, Illinois and a 261,000 square-foot production and warehouse facility in Bolingbrook, Illinois.
Item 2. Properties As of the end of 2025 we operate two facilities in the Chicago suburbs - a 36,000 square-foot production, research and headquarters facility in Romeoville, Illinois and a 261,000 square-foot production and warehouse facility in Bolingbrook, Illinois. In late 2025 we consolidated our manufacturing operations in Burr Ridge, Illinois into our production facility in Bolingbrook.
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Our manufacturing operations in Burr Ridge are registered under ISO 9001, and we believe that our manufacturing operations are within the cGMP requirements of the FDA for products that require such compliance. This facility is also registered under ISO 14001 which is the international standard for environmental management. The Burr Ridge site is registered with the FDA for API manufacturing.
Removed
With the addition of the Bolingbrook space in 2021, we believe that our leased facilities will provide sufficient capacity to fulfill current known customer demand as well as allow for the creation of substantial additional space to enable expansion of key production processes.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Legal Proceedings As previously disclosed, in August 2022, BASF Corporation (“BASF”) filed a complaint against the Company (the “New Jersey Complaint”) in the Superior Court of New Jersey (“SCNJ”) alleging that the Company breached the Zinc Oxide Supply Agreement dated as of September 16, 1999 between the Company and BASF, as assignee, as amended through January 1, 2019 (the “Agreement”).
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Item 3. Legal Proceedings As previously disclosed, on October 31, 2025, we entered into a Confidential Settlement Agreement and Release (the “Settlement Agreement”) with Solarium Brands, LLC and A-Frame Brands, LLC (collectively, “Solarium”).
Removed
The New Jersey Complaint specifically alleged that the Company had breached the exclusivity provision of the Agreement by selling zinc oxide to entities other than BASF, including sales to the Company’s subsidiary Solésence, LLC (“Solésence”), in markets designated as being in the field of use (the “Field”) under the Agreement.
Added
Pursuant to the Settlement Agreement, we and Solarium agreed to settle and compromise disputes arising from certain consumer personal care products that we previously manufactured for and sold to Solarium.
Removed
In February 2023, the Company answered the New Jersey Complaint, denying all wrongdoing and filed counterclaims, including a request for a declaration that contrary to BASF’s views, the exclusivity provision of the Agreement does not apply to all products containing zinc oxide for uses in the Field nor does the exclusivity provision prohibit the Company’s sales through Solésence of products containing zinc oxide as an ingredient.
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As part of the Settlement Agreement, Solarium agreed to pay us a one-time settlement payment of $675,000 on or before January 15, 2026, which payment was made in December 2025 Item 4. Mine Safety Disclosures Not applicable. 9 PART II
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Following certain discovery, rulings on several motions, and the parties’ extensive negotiations, the Company and BASF entered into a Settlement Agreement and General Release on April 10, 2024 (the “Settlement Agreement”), providing for settlement of the New Jersey Complaint and resolution of the parties’ disputes.
Removed
Under the Settlement Agreement, the Company and BASF agreed to enter into the Amendment (defined below) in exchange for (i) a mutual release of all claims related to the New Jersey Complaint and any claims based on similar facts or legal theories (collectively, the “Claims”), (ii) the filing of a Stipulation of Dismissal with the SCNJ voluntarily dismissing the New Jersey Complaint with prejudice, (iii) mutual covenants by the Company and BASF not to sue the other party for the Claims, (iv) the Company and BASF entering into the Modified Product MOU (defined below), (v) mutual indemnification as to certain claims arising out of the making, use, purchase, sale, or development of products in connection with the Modified Product MOU, and (vi) provisions regarding confidentiality of settlement terms and other customary settlement terms.
Removed
The Stipulation of Dismissal was filed with the SCNJ on April 11, 2024, thereby concluding the New Jersey Complaint.
Removed
In connection with the Settlement Agreement, the Company and BASF entered into Amendment No. 5 (the “Amendment”) to the Agreement, and a Binding Memorandum of Understanding regarding the Company using its commercially reasonable efforts to develop a modified zinc oxide product for BASF’s exclusive purchase under the Agreement (the “Modified Product MOU”).
Removed
The Amendment includes provisions (a) amending the exclusivity section of the Agreement to provide that (i) BASF has the exclusive right to use zinc oxide materials that the Company develops, makes, or sells to BASF as an ingredient for uses in the Field, and (ii) the Company or its affiliates, including Solésence, can supply and sell both certain finished products containing zinc oxide for use in the Field to customers anywhere in the world and certain zinc oxide dispersions that the Company developed or develops for a particular customer, and (b) amending the provisions of the Agreement concerning order forecasting and procedures, operational planning, inventory and capacity requirements, and periodic facility shutdown arrangements, to more effective serve each party’s business needs with respect to all product that BASF purchases from the Company under the Agreement.
Removed
Item 4. Mine Safety Disclosures Not applicable. 9 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth, for the periods indicated, the range of high and low sale prices for our common stock on the OTCQB marketplace: High Low Fiscal year ended December 31, 2024: First Quarter $ 0.98 $ 0.43 Second Quarter 1.71 0.70 Third Quarter 1.65 1.33 Fourth Quarter 2.88 1.30 Fiscal year ended December 31, 2023: First Quarter $ 1.79 $ 1.08 Second Quarter 1.45 0.50 Third Quarter 1.40 0.88 Fourth Quarter 1.00 0.55 On March 28, 2025, the last reported sale price of our common stock was $2.09 per share, and there were 120 holders of record of our common stock.
Biggest changeThe following table sets forth, for the periods indicated, the range of high and low sale prices for our common stock on the NASDAQ stock exchange or the OTCQB marketplace (where our common stock was traded prior to April 2025): High Low Fiscal year ended December 31, 2025: First Quarter $ 3.00 $ 2.05 Second Quarter 5.21 1.68 Third Quarter 4.48 2.54 Fourth Quarter 4.36 1.64 Fiscal year ended December 31, 2024: First Quarter $ 0.98 $ 0.43 Second Quarter 1.71 0.70 Third Quarter 1.65 1.33 Fourth Quarter 2.88 1.30 On March 30, 2026, the last reported sale price of our common stock was $0.90 per share, and there were 120 holders of record of our common stock.
We have never declared or paid any cash dividends on our common stock and do not currently anticipate paying any cash dividends or other distributions on our common stock in the foreseeable future. We intend instead to retain any future earnings for reinvestment in our business.
We have never declared or paid any cash dividends on our common stock and do not currently anticipate paying any cash dividends or other distributions on our common stock in the foreseeable future. We intend to retain any future earnings for reinvestment in our business.
Our Business Loan Agreements with Beachcorp, LLC (“Beachcorp”), Strandler, LLC (“Strandler”), and Libertyville Bank and Trust Company (“Libertyville”), dated as of November 19, 2018, January 28, 2022, and December 21, 2021 respectively, require us to obtain the written consent of the lender prior to paying any cash dividends on our common stock. Item 6. [Reserved]
Our Business Loan Agreements with Beachcorp, LLC (“Beachcorp”), Strandler, LLC (“Strandler”), and Libertyville Bank and Trust Company (“Libertyville”), respectively, require us to obtain the written consent of the lender prior to paying any cash dividends on our common stock. Item 6. [Reserved]
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information; Holders; Dividends Our common stock is traded under the symbol “NANX” on the OTCQB marketplace, operated by OTC Markets Group.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information; Holders; Dividends Our common stock is traded under the symbol SLSN on the NASDAQ stock exchange.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeLiquidity and Capital Resources Cash, cash proceeds and use of cash for 2024 and 2023 were: For the year ended December 31, 2024 2023 Total cash $ 1,409,000 $ 1,722,000 Cash provided by (used in) operating activities 1,971,000 (2,006,000 ) Net cash used in investing activities (4,558,000 ) (1,051,000 ) Net cash provided by financing activities 2,274,000 2,593,000 The $3,977,000 year-over-year increase in cash provided by operating activities for the year ended December 31, 2024 was mainly due to the Company earning $4,235,000 in net income in 2024 compared to $4,390,000 in net loss in 2023.
Biggest changeLiquidity and Capital Resources Cash, cash proceeds and use of cash for 2025 and 2024 were: For the year ended December 31, 2025 2024 Total cash $ 1,288,000 $ 1,409,000 Cash (used in) provided by operating activities (8,567,000 ) 1,971,000 Net cash used in investing activities (2,143,000 ) (4,558,000 ) Net cash provided by financing activities 10,589,000 2,274,000 The approximate $10,538,000 year-over-year increase in cash used in operating activities for the year ended December 31, 2025 was mainly due to the Company earning $1,790,000 in net income in 2025 compared to $4,235, payments made to reduce accounts payable and accrued expenses, and performance of deferred revenue obligations.
Additionally, we continue to sell products in legacy markets including medical diagnostics, architectural coatings, industrial coating applications, abrasion-resistant additives, and plastics additives applications— all of which currently fall into the advanced materials product category. 10 Critical Accounting Estimates Management also monitors the value of inventory for the effects of aging, obsolescence, and seasonality.
Additionally, we continue to sell products in legacy markets including medical diagnostics, architectural coatings, industrial coating applications, abrasion-resistant additives, and plastics additives applications— all of which currently fall into the advanced materials product category. 10 Critical Accounting Estimates Management monitors the value of inventory for the effects of aging, obsolescence, and seasonality.
See the “Forward Looking Statements” section in Part 1, Item 1, of this Form 10-K. Overview Solésence is a health-oriented, science-driven company, focused on various skin health and beauty markets.
See the “Forward Looking Statements” section in Part 1, Item 1, of this Form 10-K. Overview Solésence is a health-oriented, science-driven company, focused on various skin health, beauty and wellness markets.
Our actual future capital requirements in 2025 and beyond will depend on many factors, including customer acceptance of our current and potential consumer products, APIs sold as ingredients in to the skin health markets, medical diagnostics ingredients, and other engineered materials, applications, and products, continued progress in research and development activities and product testing programs, the magnitude of these activities and programs, and the costs necessary to increase and expand our manufacturing capabilities and to market and sell these products and ingredients.
Our actual future capital requirements in 2026 and beyond will depend on many factors, including customer acceptance of our current and potential consumer products, APIs sold as ingredients in to the skin health markets, medical diagnostics ingredients, and other engineered materials, applications, and products, continued progress in research and development activities and product testing programs, the magnitude of these activities and programs, and the costs necessary to increase and expand our manufacturing capabilities and to market and sell these products and ingredients.
We expect to continue to focus on reducing controllable variable product manufacturing costs, with potential variability related to the commodity metals markets and cost and wage inflation but may or may not realize gross margin percentage growth through 2025 and beyond, dependent upon the factors discussed above.
We expect to continue to focus on reducing controllable variable product manufacturing costs, with potential variability related to the commodity metals markets and cost and wage inflation but may or may not realize gross margin percentage growth through 2026 and beyond, dependent upon the factors discussed above.
We expect supplier price increases and wage and benefit inflation, both of which represent a significant component of our costs of operations, may have a material effect on our operations and financial position in 2025 and beyond. We will apply our best efforts to pass through cost increases to our customers.
We expect supplier price increases and wage and benefit inflation, both of which represent a significant component of our costs of operations, may have a material effect on our operations and financial position in 2026 and beyond. We will apply our best efforts to pass through cost increases to our customers.
While we have seen costs continue to increase on an inflationary basis as we enter 2025, it is our belief that we will be able to offset much of this cost as we gain greater production efficiencies and seek to increase our pricing where possible.
While we have seen costs continue to increase on an inflationary basis as we enter 2026, it is our belief that we will be able to offset much of this cost as we gain greater production efficiencies and seek to increase our pricing where possible.
On January 28, 2022, to support the working capital demands created by the commercial growth of the Company and its wholly owned subsidiary, Solésence, LLC, the Company entered into (i) an Amended and Restated Business Loan Agreement (the “A&R Loan Agreement”), which amends and restates the Master Agreement, (ii) a Business Loan Agreement (the “New Term Loan Agreement”) with Strandler, LLC, (iii) a Business Loan Agreement (the “New Revolving Loan Agreement” and together with the A&R Loan Agreement and the New Term Loan Agreement, the “Loan Agreements”) with Beachcorp, LLC, and (iv) three promissory notes in order to evidence the loans pursuant to the Loan Agreements (the “Notes”).
On January 28, 2022, to support the working capital demands created by the commercial growth of the Company and its wholly owned subsidiary, Solésence, LLC, the Company entered into (i) an Amended and Restated Business Loan Agreement (the “A&R Loan Agreement”), with Beachcorp, LLC, (ii) a Business Loan Agreement (the “New Term Loan Agreement”) with Strandler, LLC, (iii) a Business Loan Agreement (the “New Revolving Loan Agreement” and together with the A&R Loan Agreement and the New Term Loan Agreement, the “Loan Agreements”) with Beachcorp, LLC, and (iv) three promissory notes in order to evidence the loans pursuant to the Loan Agreements (the “Notes”).
For more information regarding the New Business Loan Agreement, see Note 3 to our Financial Statements referred to in Part II, Item 8 of this Annual Report on Form 10-K.
For more information regarding the New Business Loan Agreements, see Note 3 to our Financial Statements referred to in Part II, Item 8 of this Annual Report on Form 10-K.
In Company-wide operations, we believe inflation has not had a material effect on our operations or financial position for 2024, although we have seen increases in our costs.
In Company-wide operations, we believe inflation has not had a material effect on our operations or financial position for 2025, although we have seen increases in our costs.
Certain assumptions are necessary to assess the impact of risks and uncertainties on the financial information, such as cash flow projections, availability of capital if needed to support the ongoing operations of the business, and our expected compliance with contractual commitments. Any changes in those plans or assumptions could have a material impact on our liquidity and financial condition.
Certain assumptions are necessary to assess the risk and uncertainty of financial information, such as cash flow projections, availability of capital if needed to support the ongoing operations of the business, and our expected compliance with contractual commitments. Any changes in those plans or assumptions could have a material impact on our liquidity and financial condition.
Similarly, substantial success in business development projects may cause the actual 2025 capital investment to exceed the top of this range. We have federal net operating loss carryforwards for tax purposes of approximately $42 million on December 31, 2024 Because the Company may experience “ownership changes” within the meaning of the U.S.
Similarly, substantial success in business development projects may cause the actual 2026 capital investment to exceed the top of this range. We have federal net operating loss carryforwards for tax purposes of approximately $36.9 million on December 31, 2025. Because the Company may experience “ownership changes” within the meaning of the U.S.
Research and development expense, which includes all expenses relating to the technology and advanced engineering groups, primarily consists of costs associated with the development or acquisition of new finished product formulations for skin care, new product applications for our skin care ingredients, advancement of our medical diagnostics ingredient knowledge, and the cost of enhancing our manufacturing processes.
Research and development expense, which includes all expenses relating to the technology and advanced engineering groups, primarily consists of costs associated with the development or acquisition of new finished product formulations for skin care, new product applications for our skin care ingredients, and the cost of enhancing our manufacturing processes.
Given changes to the IRC, net operating loss carryforwards generated after January 1, 2018 do not expire, therefore, $6.8 million in net operating losses generated since January 1, 2018 do not expire. We have Illinois net loss deduction carryforwards for tax purposes of approximately $18.2 million on December 31, 2024.
Given changes to the IRC, net operating loss carryforwards generated after January 1, 2018 do not expire, therefore, $6.2 million in net operating losses generated since January 1, 2018 do not expire. We have Illinois net loss deduction carryforwards for tax purposes of approximately $20 million on December 31, 2025.
In the application of this policy in 2024, management deemed a portion of inventory will likely experience such an impairment and elected to apply a $1,987,000 inventory reserve in anticipation.
In the application of this policy in 2025 and 2024, management deemed a portion of inventory will likely experience such an impairment and elected to apply a $2,721,000 and $1,987,000, respectively, inventory reserve in anticipation.
The maximum borrowing amount under the A/R Revolver Facility increases from $6,000,000 to $8,000,000, with a borrowing base consisting of qualified accounts receivable of the Company. The maximum borrowing amount under the Inventory Facility is $4,000,000, with a borrowing base consisting of up to 50% of the value of qualified inventory of the Company.
The maximum borrowing amount under the A/R Revolver Facility increased from $6,000,000 to $8,000,000, with a borrowing base consisting of qualified accounts receivable of the Company. The maximum borrowing amount under the Inventory Facility was $4,000,000, with a borrowing base consisting of up to 50% of the value of qualified inventory of the Company.
Depending on the success of certain projects, we expect that capital spending relating to currently known capital needs for 2025 will be between $6 million and $8 million, to be funded by profit from operations, our existing loans and lines of credit, and possible new financing.
Depending on the success of certain projects, we expect that capital spending relating to currently known capital needs for 2026 will be between $1 million and $3 million, to be funded by profit from operations, our existing loans and lines of credit, and possible new financing.
Results of Operations Years Ended December 31, 2024 and 2023 Total revenue increased to $52,347,000 in 2024, compared to $37,297,000 in 2023. A substantial majority of our revenue for each year is from our largest customers, in particular, sales to our largest customer in skin care and sunscreen applications, finished skin health products marketed through our consumer products.
Results of Operations Years Ended December 31, 2025 and 2024 Total revenue increased to $62,064 in 2025, compared to $52,347 in 2024. A substantial majority of our revenue for each year is from our largest customers, in particular, sales to our largest customer in skin care and sunscreen applications and finished skin health products marketed through our consumer products.
Cash capital expenditures amounted to approximately $4,558,000 and $1,051,000 for the years ended December 31, 2024 and 2023, respectively. We did not dispose of or sell any assets during 2024 or 2023. The Company maintains a credit agreement with Libertyville to support our obligations under our leased manufacturing and warehouse space in Bolingbrook, Illinois.
Cash capital expenditures amounted to approximately $2,525,000 and $4,558,000 for the years ended December 31, 2025 and 2024, respectively. We did not dispose of or sell any assets during 2025 or 2024. The Company maintains a credit agreement with Libertyville Bank & Trust to support our obligations under our leased manufacturing and warehouse space in Bolingbrook, Illinois.
Internal Revenue Code (“IRC”) in connection with any future equity offerings, future utilization of this carryforward may be subject to certain limitations as defined by the IRC. If not utilized, $36 million of this loss carryforward will expire between 2025 and 2037.
Internal Revenue Code (“IRC”) in connection with any future equity offerings, future utilization of this carryforward may be subject to certain limitations as defined by the IRC. If not utilized, $30.7 million of this loss carryforward will expire between 2026 and 2038.
Due to the provisions of Illinois Public Act 102-0669 signed November 16, 2021, Illinois net loss deductions expire between 2030 and 2043.
Due to the provisions of Illinois Public Act 102-0669 signed November 16, 2021, Illinois net loss deductions expire between 2029 and 2039.
We expect to continue new materials development and dispersion technologies for personal care applications and for our formulated Solésence products during 2025 and beyond, as part of our business model.
We expect to continue new materials development and dispersion technologies for personal care applications and for our formulated consumer products during 2026 and beyond, as part of our business model.
Janet Whitmore, a director of the Company and the chair of the Company’s board of directors. 12 The Loan Agreements changed the terms of both the Company’s asset-based revolving loan facility (the “A/R Revolver Facility”) and the secured advance (the “Term Loan”, which was assigned from Beachcorp, LLC to Strandler, LLC) under the Master Agreement and provide a new asset-based revolving loan facility based on inventory (the “Inventory Facility”).
The Loan Agreements changed the terms of both the Company’s asset-based revolving loan facility (the “A/R Revolver Facility”) and the secured advance (the “Term Loan”, which was assigned from Beachcorp, LLC to Strandler, LLC) under the Master Agreement and provide a new asset-based revolving loan facility based on inventory (the “Inventory Facility”).
Product revenue, the primary component of our total revenue, increased to $51,890,000 in 2024, compared to $36,641,000 in 2023. This increase was due to an increase in revenue from our consumer products partially offset by decreased personal care ingredients and advanced materials products.
Product revenue, the primary component of our total revenue, increased to $61,794 in 2025, compared to $51,890 in 2024. This increase was due to an increase in revenue from our consumer products partially offset by decreased personal care ingredients and advanced materials products.
Our efforts in research and development, cosmetic formulating, process engineering and advanced engineering groups are focused in three major areas: 1) application development for our products; 2) creating or obtaining additional core materials technologies and/or materials that have the capability to serve multiple skin health-related markets; and 3) continuing to improve our core technologies to improve manufacturing operations and reduce costs. 11 Research and development expense remained the same in 2024, totaling $3,837,000, the same as in 2023.
Our efforts in research and development, cosmetic formulating, process engineering and advanced engineering groups are focused in three major areas: 1) application development for our products; 2) creating or obtaining additional core materials technologies and/or materials that have the capability to serve multiple skin health-related markets; and 3) continuing to improve our core technologies to improve manufacturing operations and reduce costs. 11 Research and development expense increased to $4,090 in 2025, compared to $3,837 in 2024.
Beachcorp, LLC and Strandler, LLC are affiliates of Mr. Bradford T. Whitmore, who beneficially owns a majority of the Company’s common stock and is the brother of Ms. R.
Beachcorp, LLC and Strandler, LLC are affiliates of Mr. Bradford T. Whitmore, who beneficially owns a majority of the Company’s common stock and is the brother of Ms. R. Janet Whitmore, a director of the Company and the chair of the Company’s board of directors.
On November 13, 2023 to support working capital demands the Company entered into (i) a new Promissory Note (“Bridge Note”) with Strandler, LLC, with a maximum borrowing amount of $2,000,000, interest rate at the prime rate plus 0.75%, and set to mature on May 13, 2024, and (ii) amendments to the Loan Agreements increasing the principal amount of the Inventory Facility to $5,200,000, increased the borrowing base to 55% of eligible inventory, up from 50% and extending the maturity date under the Loan Agreement to March 31, 2025.
The A/R Revolver Facility, the Inventory Facility and the Term Loan are all secured by all the unencumbered assets of the Company and subordinated to the Company’s revolving line of credit with Libertyville Bank & Trust. 12 On November 13, 2023 to support working capital demands the Company entered into (i) a new Promissory Note (“Bridge Note”) with Strandler, LLC, with a maximum borrowing amount of $2,000,000, interest rate at the prime rate plus 0.75%, and set to mature on May 13, 2024, and (ii) amendments to the Loan Agreements increasing the principal amount of the Inventory Facility to $5,200,000, increased the borrowing base to 55% of eligible inventory, up from 50% and extending the maturity date under the Loan Agreement to March 31, 2025.
Cost of revenue increased to $36,159,000 in 2024, compared to $29,472,000 in 2023. The increase in cost of revenue was primarily driven by higher materials and direct labor costs related to the increased sales volume. Also contributing to the higher cost of revenue was increased costs associated with supply chain and maintenance activities costs due to the increased sales volume.
Cost of revenue increased to $46,001 in 2025, compared to $36,159 in 2024. The increase in cost of revenue was primarily driven by higher materials and direct labor costs related to the increased sales volume. Also contributing to the higher cost of revenue was increased costs associated with quality and maintenance activities costs due to the increased sales volume.
Current Significant Customers For the years ended December 31, Customer # Product Category 2024 2023 1 Consumer Products 32 % 17 % 2 Personal Care Ingredients 13 % 25 % 3 Consumer Products 7 % 15 % Total 52 % 57 % Cost of revenue generally includes costs associated with commercial production and customer development arrangements.
Current Significant Customers For the years ended December 31, Customer # Product Category 2025 2024 1 Consumer Products 29 % 32 % 2 Consumer Products 16 % – % 3 Personal Care Ingredients 10 % 13 % Total 55 % 45 % Cost of revenue generally includes costs associated with commercial production and customer development arrangements.
Interest expense decreased to $670,000 in 2024, compared to $838,000 in 2023, due to lower interest rates in 2024 and decreased usage of the debt facilities. The interest expense for 2024 and 2023 related to interest paid relating to our revolving lines of credit for working capital funding and term loans supporting some of our equipment.
Net interest expense increased to $931 in 2025, compared to $670 in 2024, increased usage of the debt facilities and partially offset by lower interest rates than in 2024. The interest expense for 2025 and 2024 related to interest paid relating to our revolving lines of credit for working capital funding and term loans supporting some of our equipment.
As of December 31, 2024 there was no outstanding borrowings on this line of credit. This credit agreement has a maturity of December 22, 2025.
As of December 31, 2025 there was no outstanding borrowings on this line of credit. This credit agreement has a maturity of December 22, 2026, and the Company plans on renewing on a yearly basis.
This expense growth will be dependent upon the success we have in developing new products, which adds significantly to outside testing fees to both enhance product development and comply with regulatory requirements. Selling, general and administrative expense decreased to $7,219,000 in 2024, compared to $7,534,000 in 2023. The net decrease was largely attributed to a decrease in legal costs.
This expense change will be dependent upon the success we have in developing new products, which adds significantly to outside testing fees to both enhance product development and comply with regulatory requirements. Selling, general and administrative expense increased to $10,401 in 2025, compared to $7,219 in 2024.
Whitmore (“Beachcorp”), and (iii) a Second Amendment to Business Loan Agreement with Beachcorp (the “Revolving Loan Agreement Amendment” and together with the Term Loan Agreement Amendment and the A&R Term Loan Agreement Amendment, the “Loan Agreement Amendments”). The Loan Agreement Amendments extend the maturity date under each respective loan agreement from March 31, 2025 to October 1, 2025.
Whitmore (“Beachcorp”), and (iii) a Second Amendment to Business Loan Agreement with Beachcorp (the “Revolving Loan Agreement Amendment” and together with the Term Loan Agreement Amendment and the A&R Term Loan Agreement Amendment, the “Loan Agreement Amendments”).
In 2024 labor costs were higher than 2023 which were offset by lower legal and consulting costs in 2024 compared to 2023. We expect expenses for research and development to increase slightly in 2025 depending on growth in our Solésence line of products, and related technologies.
In 2025 labor costs were higher than 2024 and legal and consulting costs were also higher in 2025 compared to 2024. We expect expenses for research and development to remain about the same or decrease slightly in 2026 depending on growth in our consumer products, and related technologies.
We expect 2025 expenses in this area to be slightly higher due to expanding parts of our administrative functions, including related staffing additions. The extent to which this increase occurs will be dependent upon growth.
The net increase was largely attributed to an increase in legal costs and labor. We expect 2026 expenses in this area to be slightly lower due to controlling our administrative functions costs, including related staffing. The extent to which this occurs will be dependent upon growth.
On December 31, 2023, the balance on the Term Loan was $1,000,000, the balance on the Bridge Load was $2,000,000, the balance on the A/R Revolver Facility was $2,810,000, and the balance on the Inventory Facility was $5,000,000.
On December 31, 2025, the balance on the Term Loan was $1,000,000, the balance on the A/R Revolver Facility was $4,767,397, the balance on the Inventory Facility was $9,500,000. On December 31, 2024, the balance on the Term Loan was $1,000,000, the balance on the A/R Revolver Facility was $0, and the balance on the Inventory Facility was $4,000,000.
Removed
The A/R Revolver Facility, the Inventory Facility and the Term Loan are all secured by all the unencumbered assets of the Company and subordinated to the Company’s revolving line of credit with Libertyville Bank & Trust.
Added
The Loan Agreement Amendments extend the maturity date under each respective loan agreement from March 31, 2025 to October 1, 2025. 13 On May 27, 2025, the Company entered into a Third Amendment to the A&R Loan Agreement, Business Loan Agreement, and New Term Loan Agreement extending the maturity of the loans to April 30, 2027, to expand the limit on the A&R Loan Agreement from $8,000,000 to $12,000,000 and to expand the limit on the Business Loan Agreement from $5,200,000 to $10,000,000.
Removed
As of December 31, 2024, the Company’s A/R Revolver, Inventory Facility and New Term Loan matured on October 1, 2025.
Removed
Since then, the Company’s related party debt holder for the A/R Revolver, Inventory Facility and New Term Loan has committed to refinancing the debt with a new maturity date after April 1, 2026. 13 On December 31, 2024, the balance on the Term Loan was $1,000,000, the balance on the A/R Revolver Facility was $0, the balance on the Inventory Facility was $4,000,000.

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