Q: What is the nature of the accounting issue that led to the NT 10-Q filing, and what is the company doing to remediate it? A: Laura Ruffin (CFO) explained that the company identified an issue with its historical inventory costing methodology regarding how indirect manufacturing costs were allocated to inventory. The restatement is related to the accounting for certain costs within inventory and does not affect underlying cash, day-to-day operations, or the ability to serve brand partners. As part of remediation, the company is enhancing inventory costing processes and controls, including additional formalized periodic reviews of overhead cost pools, allocation methodologies, and burden rates, along with strengthening documentation and oversight.

Q: Can you discuss the new hair and scalp care products and the market opportunity they represent? A: Kevin Curriton (CEO) stated that the scalp care segment is a new segment for the company, launched in July 2026, representing an approximately $3 billion addressable market. The launch generated one of the best volumes in terms of lead generation and new opportunity generation. The products are differentiated by technology: one is a combination dry shampoo and SPF product, addressing the scalp as an area of increasing concern for melanoma, and the other is a treatment product utilizing the company's Whisper technology for delivering allantoin at higher levels to soothe irritation and provide keratolytic effects.

Q: How is the company's production efficiency and inventory control progressing, and is there reason for optimism? A: Laura Ruffin (CFO) confirmed significant improvements in production efficiency over the last 9-10 months, including cost efficiency and OEE improvements, with Kaizen events implemented to improve manufacturing processes. Kevin Curriton (CEO) added that the gross margin performance of 31% in Q2 2026 on 25% lower revenue compared to last year is a clear sign of continued improvement in labor efficiency, reinforcing the success of the "Transform and Transcend" operational excellence strategy.

Q: How are the new scalp products differentiated from competitors in the market? A: Kevin Curriton (CEO) highlighted two points of differentiation. The scalp protection product is the first of its kind combining a dry shampoo with SPF, addressing a growing concern for melanoma on the scalp. The scalp treatment product utilizes the company's proprietary Whisper technology, a delivery system for allantoin, which allows for higher levels of this proven ingredient to address erythema, irritation, and keratolytic effects. The company typically does not enter markets without patent protection or novelty.

Q: Is the scalp care market larger than the company's current market? A: Kevin Curriton (CEO) clarified that the company sees scalp care as a nice adjacency rather than a larger market. The company's total addressable market is greater than $50 billion, and the scalp care segment offers a high-growth additional segment to leverage its technologies with brand partners.

Q: How does the recent FDA approval of a non-mineral based sunscreen platform (BEMT) affect interest in the company's mineral-based sunscreen technology? A: Kevin Curriton (CEO) expressed excitement about the introduction of BEMT, noting it is good for the marketplace and has been used globally for over 20 years. The company sees its proprietary mineral technologies and booster technologies, like Chromalume, as complementary to BEMT. The company anticipates launching combination products with brand partners utilizing BEMT alongside its proprietary mineral technologies, and is not worried about its impact on the business, seeing an exciting growth path ahead.

Q: Regarding the settlement with Refi, does the open window for agreeing on a new formulation mean the company is still actively working with them? A: Laura Ruffin (CFO) confirmed that the agreement provides an opportunity to work together on a possible development of a new SPF product, so that door remains open. Kevin Curriton (CEO) added that due to confidentiality policies, the company cannot say much more, but values its relationship with Refi.

Q: What were the key drivers behind the decline in Q2 2026 revenue and profitability compared to Q2 2025? A: Laura Ruffin (CFO) explained that Q2 2026 revenue was $15.3 million versus $20.4 million in Q2 2025, which had benefited from a major new product launch and pipeline fill. The decline was partially offset by growth with other brand partners in the prestige beauty sector. The decline in net income and adjusted EBITDA was related to lower revenue, one-time events related to Refi that decreased net income by approximately $938,000, and an ERC payment received in Q2 2025 that positively increased net income by $1.4 million.

Q: What is the company's strategic vision and how does the accounting matter affect its long-term growth plans? A: Kevin Curriton (CEO) emphasized that the accounting matter does not change the commercial reality of the business. The company's business strategy, growth prospects, and plans for growing enterprise value remain unchanged. The company recently uploaded a strategic vision document to its Investor Relations website to help stakeholders understand its long-term trajectory as it advances its "Transform and Transcend" initiatives, expecting to grow enterprise value at a rate significantly greater than the market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .