Solesence, Inc.

and thank you for standing by. Welcome to the Celesence 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 Celesence and Laura Riffner, Chief Financial Officer of Celesence. 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 Security 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 order or supply agreements, Demands for an 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 Security and Exchange Commission. Accept as required by federal security 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 have the conference over to Kevin Cureton, President and Chief Executive Officer. Please go ahead, sir.

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 NT10Q, 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 Solescence 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 strategies, 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.

Thank you, Kevin. Before walking through our second quarter financial performance, I want to address our recent form, NT-10Q filing, and provide full clarity on our accounting evaluation. During our quarter in 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. 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 for 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 in 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. 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 RFI that decreased net income by approximately $938,000 and the ERP 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 17th, our shift in on-hand orders for 2026, which includes order shifts as well as those we expect to shift 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.