SOLESENCE, INC. Annual Report - How They Did This Year

I’m writing this guide to help you understand how Solesence performed this year. My goal is to cut through the corporate jargon so you can decide if this company belongs in your portfolio.

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1. What does this company do?

Think of Solesence as the "secret sauce" behind many high-end skincare and sun care products. Based in Burr Ridge, Illinois, they partner with premium beauty brands to create advanced mineral-based UV filters and finished products like sunscreens and tinted moisturizers.

They don’t sell directly to you. Instead, they provide "turnkey" services, handling everything from the initial formula to the final packaging. They recently changed their name from "Nanophase Technologies" to "Solésence" to better reflect their focus on high-performance skin health.

2. Financial performance

The company has successfully shifted toward its "Consumer Products" division, which has grown by about 25% annually since 2018. Total revenue reached $28.4 million in 2025, up from $24.1 million in 2024. By moving from a raw material supplier to a maker of finished goods, they improved their profit margins from 12% to 18%.

Their partnership with BASF remains a foundation, providing 30% of their annual revenue through specialized mineral ingredients. To keep growing, they increased research spending to $4.1 million in 2025, focusing on "invisible" zinc oxide formulas.

3. Major wins and strategy

Their technology is top-tier. They have won nine industry awards, including three for innovation in sun care. They hold 11 U.S. patents and over 90 foreign patents protecting their "Active Stress Defense" technology, which prevents skin damage.

They use "Lean" manufacturing to work more efficiently, cutting production time by 15% over the last two years. By cross-training their 120 employees, they boosted labor productivity by 20%. This allows them to handle busy seasons without needing to buy expensive new machinery.

4. Financial health

Solesence manages its cash using a $5 million credit line, which was 40% used at the end of 2025. Because they handle everything in-house, they maintain a healthy balance of assets to cover short-term debts. They are currently working to turn inventory into cash faster, aiming to free up money to expand their manufacturing facilities.

5. Key risks

• Supply Chain: They rely on single suppliers for raw materials from China and South Korea. Trade issues or shipping delays could increase their production costs by 5–8%.
• Customer Concentration: Their top three partners provide 65% of their revenue. Losing one of these contracts would significantly hurt their earnings.
• Competition: They face pressure from massive chemical companies with larger budgets and cheaper, generic manufacturers.

6. Future outlook

Management is optimistic, with a record $12 million order backlog for the coming year. They are expanding into Australia, a major market for sun care. They plan to use their library of 950 formulas to capture more of the "clean beauty" market. Their goal is to reach consistent profit by scaling their high-margin finished goods business.

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Investor Summary: As of March 2026, there were 70.6 million shares outstanding. The value of shares held by the public was roughly $27.2 million in mid-2025. The company is not yet consistently profitable, and success depends on their ability to convert the $12 million backlog into realized revenue. Before investing, consider whether you are comfortable with the risks associated with their high customer concentration and the ongoing transition toward consistent profitability.