ROMEOVILLE, Ill., Oct. 26, 2010 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (Nasdaq:NANX), a technology leader in nanomaterials and advanced nanoengineered products, today reported much improved financial results for the third quarter and nine-month period, ended September 30, 2010.
  • Nine-month 2010 revenue up 57 percent
  • Nine-month gross margin as a percentage of revenue increased 93 percent
  • Nine-month net loss decreased 32 percent

Nanophase CEO and President Jess Jankowski commented, "In an improving business environment and with the realignment of our marketing strategy, Nanophase has shown a significant improvement in sales over the past nine months. We continue to work closely with BASF, whose established presence and reputation for quality products within the personal care markets has made them a significant customer of our nano zinc oxide products for blocking UV rays in sunscreens and skincare products. Our strong relationship with BASF and other long-time customers in parallel with our customer direct strategy should generate revenue growth exceeding that of 2009 by 40 to 50 percent."   

Third Quarter 2010
  • Revenue was $2.1 million, an increase of 21 percent, when compared to revenue of $1.7 million for the third quarter of 2009.  
  • Gross margin for the quarter was $0.5 million, or 23 percent of revenue, compared to a gross margin of $0.5 million, or 27 percent of revenue, for the third quarter of 2009.  
  • The net loss for the quarter was $1.6 million, or a loss of $0.07 per share, when compared to a net loss of $0.9 million, or $0.04 per share, for the third quarter of 2009. The 2010 net loss includes the one-time charge of $0.7 million for the termination of an exclusive supply agreement. Net loss excluding the one-time charge would be consistent with third quarter 2009.  
  • The balance sheet is strong with approximately $6.7 million in cash and cash equivalents. The Company has no debt.

Nine months ended September 30, 2010
  • Revenue was $7.4 million, an increase of 57 percent, when compared to revenue of $4.7 million for the same period of 2009.  
  • Gross margin was $2.2 million, or 29 percent of revenue, a significant increase from a gross margin of $0.7 million, or 15 percent of revenue, for the same period of 2009.  
  • The net loss was $2.9 million, or a loss of $0.13 per share, when compared to a net loss of $4.2 million, or $0.20 per share, for the same period of 2009.

During the third quarter, Nanophase terminated a supplier exclusivity agreement with a long-term customer and signed a new, more traditional five-year supply agreement which will provide both companies more options and opportunities in their markets. With the termination of the former agreement, Nanophase recorded a $700,000 charge of which half was paid in cash and the other half in the form of product purchase credits.

Jankowski continued, "Our fourth quarter revenue is historically more difficult to predict as customers can make last minute inventory adjustments. With that said, we do project 2010 revenue growth of 40 to 50 percent higher than 2009 revenue – a strong growth platform expected to flow into 2011." 

Shareholders and members of the financial community are encouraged to participate in tomorrow morning's conference call, where Mr. Jankowski will discuss highlights of the quarter and the company's exciting short and long-term prospects.

Third Quarter 2010 Conference Call 

Nanophase has scheduled its quarterly conference call for October 27, 2010, at 10:00 a.m. CDT (11:00 a.m. EDT). The call will be hosted by Jess Jankowski, president and CEO. To participate in the conference call, dial 877.312.8776, or 408.774.4007 for our international callers; the conference call identification is 17924296. A webcast of the call may be accessed at the company's website, at www.nanophase.com, by clicking on the link under News Center and Calendar of Events.

Use of Non-GAAP Financial Information

Nanophase believes that the presentation of results excluding certain items, such as severance charges and non-cash equity compensation charges, provides meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. The Company uses these non-GAAP measures for internal planning and reporting purposes. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or net income per share prepared in accordance with generally accepted accounting principles.

About Nanophase Technologies

Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leader in nanomaterials technologies and provides nanoengineered solutions for multiple industrial product applications. Using a platform of patented and proprietary integrated nanomaterial technologies, the Company creates products with unique performance attributes from two ISO 9001:2000 and ISO 14001 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. 

Forward-Looking Statements

This press release contains words such as "expects," "shall," "will," "believes," and similar expressions that are intended to identify forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements in this announcement are made based on the Company's current beliefs, known events and circumstances at the time of publication, and as such, are subject in the future to unforeseen risks and uncertainties that could cause the Company's results of operations, performance and achievements to differ materially from current expectations expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, without limitation, the following: a decision by a customer to cancel a purchase order or supply agreement in light of the Company's dependence on a limited number of key customers; uncertain demand for, and acceptance of, the Company's nanocrystalline materials; the Company's manufacturing capacity and product mix flexibility in light of customer demand; the Company's limited marketing experience; changes in development and distribution relationships; the impact of competitive products and technologies; the Company's dependence on patents and protection of proprietary information; the resolution of litigation in which the Company may become involved; and other factors described in the Company's Form 10-K filed March 30, 2010. In addition, the Company's forward-looking statements could be affected by general industry and market conditions and growth rates. 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 contingen cies.

Tables follow
NANOPHASE TECHNOLOGIES CORPORATION
     
BALANCE SHEETS
     
     
     
ASSETS September 30, 2010 (Unaudited) December 31, 2009
     
     
Current assets:    
Cash and cash equivalents  $ 6,754,127  $ 3,899,393
Investments  30,000  3,594,604
Trade accounts receivable, less allowance for doubtful accounts of $9,000 on September 30, 2010 and December 31, 2009  805,375  858,706
Other receivable  29,643  477,989
Inventories, net  1,239,961  884,326
Prepaid expenses and other current assets  438,908  294,738
Total current assets  9,298,014  10,009,756
     
Equipment and leasehold improvements, net  4,922,677  5,557,832
Other assets, net  35,424  37,283
   $ 14,256,115  $ 15,604,871
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of capital lease obligations  2,940  8,470
Accounts payable  658,903  202,975
Accrued expenses  929,518  509,206
Accrued discount liability  335,582  --
Accrued severance  --   38,060
Total current liabilities  1,926,943  758,711
     
Long-term portion of capital lease obligations  --   748
Long-term deferred rent  631,053  617,642
Asset retirement obligation  139,704  134,763
   770,757  753,153
     
Contingent liabilities:  --   -- 
     
Stockholders' equity:    
Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding  --   -- 
Common stock, $.01 par value, 35,000,000 shares authorized; 21,204,162 shares issued and outstanding on September 30, 2010 and  December 31, 2009, respectively  212,042  212,042
Additional paid-in capital  92,568,785  92,246,777
Accumulated deficit  (81,222,412)  (78,365,812)
Total stockholders' equity  11,558,415  14,093,007
   $ 14,256,115  $ 15,604,871
NANOPHASE TECHNOLOGIES CORPORATION
         
STATEMENTS OF OPERATIONS
         
(Unaudited)
         
         
  Three months ended September 30, Nine months ended September 30,
  2010 2009 2010 2009
Revenue:        
Product revenue, net  $ 1,925,320  $ 1,633,653  $ 7,100,265  $ 4,431,199
Other revenue  150,894  87,828  315,921  306,103
Total revenue  2,076,214  1,721,481  7,416,186  4,737,302
         
Operating expense:        
Cost of revenue  1,602,438  1,264,058  5,258,246  4,009,345
Gross Profit  473,776  457,423  2,157,940  727,957
         
Research and development expense  388,231  433,593  1,178,306  1,218,712
Selling, general and administrative expense  973,182  913,456  3,157,824  2,964,966
Agreement termination charges  700,000  --   700,000  -- 
Severance charges  --   --   --   794,069
Loss from operations   (1,587,637)  (889,626)  (2,878,190)  (4,249,790)
Interest income  3,580  15,990  19,844  74,284
Interest expense  (515)  (2,076)  (1,768)  (35,362)
Other, net  52  --   3,514  (12,052)
Loss before provision for income taxes  (1,584,520)  (875,712)  (2,856,600)  (4,222,920)
Provision for income taxes  --   --   --   -- 
Net loss  $ (1,584,520)  $ (875,712)  $ (2,856,600)  $ (4,222,920)
         
         
Net loss per share- basic and diluted  $ (0.07)  $ (0.04)  $ (0.13)  $ (0.20)
         
Weighted average number of common shares outstanding  21,204,162  21,204,162  21,204,162  21,201,927
NANOPHASE TECHNOLOGIES CORPORATION
         
STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
         
(Unaudited)
         
  Three months ended September 30, Nine months ended September 30,
  2010 2009 2010 2009
Revenue:        
Product revenue, net  $ 1,925,320  $ 1,633,653  $ 7,100,265  $ 4,431,199
Other revenue  150,894  87,828  315,921  306,103
Total revenue  2,076,214  1,721,481  7,416,186  4,737,302
         
Operating expense:        
Cost of revenue detail:        
Depreciation  221,463  227,092  668,943  713,160
Non-Cash equity compensation  15,169  6,699  41,151  33,115
Other costs of revenue  1,365,806  1,030,267  4,548,152  3,263,070
Cost of revenue  1,602,438  1,264,058  5,258,246  4,009,345
Gross profit  473,776  457,423  2,157,940  727,957
         
Research and development expense detail:        
Depreciation  35,706  57,271  125,859  171,541
Non-Cash equity compensation  28,531  28,818  75,638  76,840
Other research and development expense  323,994  347,504  976,809  970,331
Research and development expense  388,231  433,593  1,178,306  1,218,712
         
Selling, general and administrative expense detail:        
Depreciation and amortization  24,615  19,352  74,148  59,079
Non-Cash equity compensation  75,038  72,138  244,790  228,571
Other selling, general and administrative expense  873,529  821,966  2,838,886  2,677,316
Selling, general and administrative expense  973,182  913,456  3,157,824  2,964,966
Agreement termination charges  700,000  --   700,000  -- 
Severance charges  --   --   --   794,069
Loss from operations   (1,587,637)  (889,626)  (2,878,190)  (4,249,790)
Interest income  3,580  15,990  19,844  74,284
Interest expense  (515)  (2,076)  (1,768)  (35,362)
Other, net  52  --   3,514  (12,052)
Loss before provision for income taxes  (1,584,520)  (875,712)  (2,856,600)  (4,222,920)
Provision for income taxes  --   --   --   -- 
Net loss  $ (1,584,520)  $ (875,712)  $ (2,856,600)  $ (4,222,920)
         
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):        
Addback Interest, net  (3,065)  (13,914)  (18,076)  (38,922)
Addback Depreciation/Amortization  281,784  303,715  868,950  943,780
Addback Severance Charge  --   --   --   794,069
Addback Non-Cash Equity Compensation  118,738  107,655  361,579  338,526
         
Adjusted EBITDA  $ (1,187,063)  $ (478,256)  $ (1,644,147)  $ (2,185,467)
CONTACT:  Nanophase Technologies Corporation          Investor Relations          Nancy Baldwin          630.771.6708

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