Operator: Good day, and thank you for standing by. Welcome to the Solesence's 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. During this call, management will make statements that include forward-looking statements within the meaning of the federal securities law, 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. 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. 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. I'll now hand the conference over to Kevin Cureton, President and Chief Executive Officer. Please go ahead, sir.

Kevin Cureton: 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, 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. 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. And that's the second point I wanted to make. 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. With that, I'll turn over the call to Laura.

Laura Riffner: 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. 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. 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. 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 and Transcend strategy in the second quarter, building on our foundational work to drive operational efficiency. 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. While Q2 2026 revenue from this product was lower than Q2 2025, we continue to see gains in both reorders and forecasts for this product line. 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 and Transcend goals, and we are pleased to see that momentum has continued in the second quarter. 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. 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 August 17, our shipped and 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. 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. 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. 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.

Kevin Cureton: Thank you, Laura. As I mentioned earlier, we want to make sure it's 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 second half in Solesence history with $64.9 million in shipped and on-hand orders. With that, Lisa, we are ready for questions.

Operator: [Operator Instructions] And our first question for the day will be coming from the line of James Liberman.

James Liberman: I just got a little bit of a disconnect, but I think I heard you. So it's Jim Lieberman, I'm happy to ask away. 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. 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're looking at, what kind of scope? I have some follow-on questions to that. But if you could start in on that area, I'd like it.

Kevin Cureton: All right, thank you, Jim, and it's good to hear from you. Yes, 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's about a $3 billion addressable market for what we do. Obviously, there's 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. So I think we're off to a good start. As is the case within our industry, that's still early to say when that will develop into revenue, but we're off to a good start with that new technology.

Operator: [Operator Instructions] The next question will be coming from the line of Wayne Rowan.

Wayne Rowan: 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 allow me that. Are we getting less trouble with inventory control and a better handle on production efficiency, 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 study a little, not study, 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, and if so, give yourself a pat on the back and tell Laura to behave herself.

Kevin Cureton: 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. To comment on, we've got our three different questions here. One was related to sales growth, which I'll comment about. And then I think we can throw it back to Laura, who did comment a bit about production efficiency and inventory control. So if we start with sales growth, as Laura mentioned during her remarks, that we can project now confidently that on a year-over-year basis we will grow versus 2026 (sic) [ 2025 ] . 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 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.

Laura Riffner: 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. 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. We have implemented Kaizen events to take a look at the organization from the production and manufacturing standpoint to ensure 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. 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.

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

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? Oh, okay. So 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're in a very good place there also.

Kevin Cureton: Just to echo on what Laura has said about production efficiency in particular, within our 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. So when we are referencing the gross profit numbers that we achieved in Q2 2026 this past quarter versus last year's on lower revenue, that's a reinforcement of the fact that the labor efficiency that Laura mentioned is coming through. So, operational excellence is a key element for us, and we are still focused on delivering that through this year and on a continuing basis.

Operator: [Operator Instructions] Our next question will be coming from the line of James Liberman with American Trust Investment Securities with a follow-up question. Please go ahead.

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

Kevin Cureton: Yes, thanks, Jim. So there are a couple of points of differentiation. So we have launched two different products to be specific. There are 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'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 we were -- 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. And 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 don't enter these markets without having some novelty relative to the patent protection that we can deliver. This scalp treatment technology utilizes our Whisper 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 erythematous irritation and helping with keratolytic effects on the scalp and other areas. And so we're excited about what that technology might deliver and that product line will deliver in the future.

James Liberman: That's great to hear. Do you see this as being a larger market than the current market you're in?

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've got a nice total addressable market, which is greater than $50 billion. So our addressable market is good, but there's a -- this 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.

James Liberman: 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?

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 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. And so we're pretty confident in what this technology will deliver 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 Chromolume technology that 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. 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. 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. We still see an exciting growth path for what we do.

James Liberman: I'm looking forward to the very strong second half of the year. Appreciate it.

Operator: [Operator Instructions] Our next question is coming from the line of Stefano Bolis. Please go ahead.

Stefano Bolis: Kevin and Laura, 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: 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.

Stefano Bolis: And 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.

Kevin Cureton: 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 without their permission to talk about the developments that we have, we're not permitted to say much more than what Laura has just said. But we do value our relationship with REFY.

Operator: And 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. Please go ahead.

Kevin Cureton: Thank you, Lisa, and 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 and Transcend initiatives, we recently uploaded a strategic vision document to our investor relations website, 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. Again, thank you for your continued support, and we look forward to updating you in the next quarter.

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