10-K: Solesence Inc. Reports Strong Revenue Growth in 2024, Driven by Consumer Products

Solesence Inc. (formerly Nanophase Technologies Corporation) reports a significant increase in revenue for 2024, primarily driven by its consumer products segment, and announces a rebranding initiative.

Summary

• Solesence Inc., formerly Nanophase Technologies Corporation, announced its rebranding on March 7, 2025, to reflect its focus on innovation and inclusivity in skin health.
• The company's stock will continue to trade under the ticker symbol NANX.
• Total revenue increased to $52.3 million in 2024, compared to $37.3 million in 2023.
• Consumer products revenue increased to $44.4 million in 2024, representing 85% of total revenue, compared to $25.2 million in 2023 (68%).
• The company reported net income of $4.2 million in 2024, a significant turnaround from a net loss of $4.4 million in 2023.
• Research and development expenses remained consistent at $3.8 million in both 2024 and 2023.
• The company is focused on expanding its manufacturing capabilities and optimizing facilities to support future growth.
• The company has federal net operating loss carryforwards of approximately $42 million as of December 31, 2024.
• The company is committed to environmental health and safety and complies with governmental regulations.
• The company had 98 full-time employees as of December 31, 2024, along with a variable number of temporary employees and contractors.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong revenue growth and a return to profitability. The rebranding initiative and focus on expanding manufacturing capabilities further contribute to a positive sentiment.

Positives

• Significant revenue growth driven by the consumer products segment.
• Turnaround to net income of $4.2 million in 2024 from a net loss in 2023.
• Strong demand for Solsence consumer products.
• Commitment from related party debt holder to refinance debt with a new maturity date after April 1, 2026.
• Focus on operational efficiencies, facilities expansion, and capital investment.
• Compliance with cGMP requirements of the FDA and similar regulations.
• The company has federal net operating loss carryforwards of approximately $42 million as of December 31, 2024.

Negatives

• The company's loan agreements with Strandler, LLC and Beachcorp, LLC currently are set to expire on October 1, 2025, which could become an operating risk if we are not able to refinance or extend the maturity dates.
• The company relies on a limited number of key customers, with a significant portion of revenue concentrated among them.
• The company is subject to the pricing and availability of certain raw materials, including high purity zinc.
• The company may face challenges in passing through cost increases to customers due to contractual limitations or market conditions.

Risks

• Dependence on a limited number of key customers.
• Potential inability to obtain working capital when needed on acceptable terms.
• Uncertain demand for and acceptance of Solsence products and advanced materials.
• Impact of competitive products and technologies.
• Dependence on patents and protection of proprietary information.
• Impact of potential new governmental regulations, especially those focusing on nanomaterials.
• Business interruptions due to unexpected events or public health crises.
• The company's loan agreements with Strandler, LLC and Beachcorp, LLC currently are set to expire on October 1, 2025, which could become an operating risk if we are not able to refinance or extend the maturity dates.

Future Outlook

The company plans to continue investments in facilities and equipment as well as in human resources, in 2025 and beyond, and expects to continue to focus on reducing controllable variable product manufacturing costs.

Management Comments

• Management believes that this growth is happening now due to a confluence of our technology and market conditions that favor the types of products we produce.
• We continue to see unprecedented demand for these products.
• Coupled with our expanded and growing expertise in these areas, we believe we are well positioned to enjoy growth into the future.

Industry Context

The company's focus on mineral-based sunscreens aligns with the growing consumer interest in this area, and the complexities of sunscreen regulation present a barrier for brands with integrated manufacturing in other skin care and cosmetics areas.

Comparison to Industry Standards

• The document does not contain specific comparisons to industry standards or benchmarks.
• The document mentions BASF, a leading chemical company, as a key customer, but does not provide a direct comparison of Solesence's performance against BASF or other competitors.

Legal Proceedings

• In April 2024, the Company and BASF entered into a Settlement Agreement and General Release, providing for settlement of the New Jersey Complaint and resolution of the parties disputes.

Related Party Transactions

• The company has engaged in a series of debt and equity transactions with Bradford T. Whitmore since January 1, 2023.
• Beachcorp, LLC and Strandler, LLC, affiliates of Bradford T. Whitmore, are substantial lenders to the Company.

Stakeholder Impact

• Shareholders: Positive impact due to improved financial performance and growth prospects.
• Employees: Potential for increased job security and growth opportunities due to company expansion.
• Customers: Continued access to innovative skin health products.
• Suppliers: Potential for increased business due to higher production volumes.

Next Steps

• Continue investments in facilities and equipment as well as in human resources, in 2025 and beyond.
• Continue to focus on reducing controllable variable product manufacturing costs.
• Management continues to spend considerable time determining how best to optimize our facilities to maximize growth over the next few years.

Key Dates

Keywords

Solesence, consumer products, skin health, revenue, nanotechnology, financial results, rebranding, Active Pharmaceutical Ingredients, APIs, OTC, NANX