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Home > Press > Nanophase Announces Fourth Quarter and 2006 Results

Nanophase Technologies (Nasdaq: NANX), a technology leader in nanomaterials and
advanced nanoengineered products, announced fourth quarter and fiscal 2006

Nanophase Announces Fourth Quarter and 2006 Results

ROMEOVILLE, IL | Posted on February 22nd, 2007

For the quarter ending December 31, 2006, total revenue was $2.17
million compared to $1.43 million for the fourth quarter of 2005,
representing a 52% revenue increase year-over-year (YOY) and the highest
fourth quarter revenue in the Company's history. Nanophase reported a
fourth quarter 2006 net loss of $1.6 million, or $0.08 per share, compared
with a net loss for the 2005 fourth quarter of $1.4 million, or $0.07 per
share. The Company noted that fourth quarter 2006 expenses were negatively
impacted by compensation expense accruals, including noncash charges for
option accounting expenses under new accounting rules, one time expenses
for discontinuing patent applications that are no longer of value due to
advances in the Company's technologies, and increased legal and audit
expenses, amounting to $395,000 or $0.02 per share of the loss.

For the year ended December 31, 2006, Nanophase's revenue increased to
$9.0 million, compared to $6.8 million in 2005, representing total revenue
growth of 32% YOY. During 2006, gross margin on sales increased to 22% of
revenue versus 14% in 2005, for a gross margin improvement greater than
50%. For 2006, Nanophase reported a net loss of $5.2 million, or $0.28 per
share, compared with a net loss of $5.4 million, or $0.30 per share in
2005. Comparing the periods the Company noted that 2006 loss per share was
negatively impacted by compensation expense accruals and patent cost, as
described above, by $0.04 per share.

"Nanophase experienced substantial revenue growth and continued its
multi-year tradition of solid manufacturing improvement over the past
year," stated Joseph Cross, Nanophase's president and CEO. "During 2006,
the Company achieved record year-over-year revenues for each quarter and
finished with a strong second half where product sales increased 51%
compared to the same period in 2005. Entering 2007, we believe that
Nanophase is well-positioned for continuing revenue growth."

Selected highlights for the Fourth Quarter and Year End 2006:

1. Intellectual property growth: As of February 1, 2007, Nanophase owns
or licenses 18 U.S. patents and patent applications, two of which have
been issued or allowed in 2006, and 48 foreign patents and patent
applications, three of which have been issued or allowed during 2006.
Product development teams from Nanophase and its market partners have
generated eleven patent applications during 2006 focused on
nanomaterial product applications.

2. Received a $5 million strategic investment from Rohm and Haas to extend
its global partnership for the use of new nanomaterials and
nanomaterial dispersions for semiconductor polishing (CMP).

3. Received a long-term supply agreement with Roche Diagnostics to supply
nanomaterials for medical diagnostics.

4. Received a long-term supply agreement with BASF to supply patented and
patent-pending surface engineered nanoparticles for BASF's Z-Cote(R)
MAX and T-Lite(R) MAX brands.

5. Increased capacity: Based on potential market demand for dispersed
nanomaterials in coating additives and architectural coatings,
Nanophase added additional manufacturing equipment to support projected
volume growth.

6. Continued improving the Company's technology: Implemented the second
generation NAS reactor and made significant progress on the third
generation PVS reactor design, planned to be in production trials
during mid-2007.

7. Received recertification for the Company's facilities and processes to
ISO9001:2000, the internationally recognized standard of manufacturing
and quality excellence, and ISO14001:2004, the international
environmental management standard.

8. Achieved over 700,000 man-hours worked without a lost time accident.

9. Launched Nanophase's first textile application: Launched Belfasun(TM),
advertised by Cognis as the world's first sun-protective cotton
treatment, for details visit .

Nanophase plans to provide additional information during its conference
call on February 22 at 4:00 PM CST (5:00 PM EST) and encourages its
stockholders and other interested parties to attend. The call may be
accessed through Nanophase's website, , and
clicking on the line under Investor Relations and Calendar of Events. If
you are unable to attend, a replay will be available through March 1, 2007,
by dialing 706-645-9291 and entering code 8935175, or by logging onto the
Nanophase website and following the above instructions. The conference call
transcript will also be posted on the Company's website within three days
after the conference call.


About Nanophase
Nanophase Technologies Corporation (NANX), , 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. The Company owns or licenses 18 United States and 48 foreign patents and patent applications. Information about Nanophase may be found in the Company's public filings or on its website. 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 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 risks described in the Company's Form 10Q filed November 7, 2006 and other filings with the Securities and Exchange Commission. 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 contingencies. Based on the detailed financial statements accompanying this release, the Company's results are stated in approximate terms herein with earnings per share as fully diluted.


                                BALANCE SHEETS

                                                      As of December 31,
                                                    2006              2005
    Current assets:
       Cash and cash equivalents                  $132,387          $340,860
       Investments                               8,434,793         8,168,092
       Trade accounts receivable, less
        allowance for doubtful accounts
        of $22,000 and $24,000 on
        December 31, 2006 and 2005,
        respectively                             1,459,391         1,180,117
       Inventories, net                            923,223           801,217
       Prepaid expenses and other current
        assets                                     534,407           414,363
         Total current assets                   11,484,201        10,904,649

       Equipment and leasehold
        improvements, net                        7,608,326         6,587,787
       Other assets, net                           651,218           680,908
                                               $19,743,745       $18,173,344

    Current liabilities:
       Current portion of long-term debt       $        --          $200,254
       Current portion of capital lease
        obligations                                 32,972                --
       Current portion of deferred other
        revenue                                    127,273            56,757
       Accounts payable                            478,694           285,076
       Accrued expenses                          1,643,585         1,152,127
         Total current liabilities               2,282,524         1,694,214

       Long-term debt, less current
        maturities and unamortized debt
        discount                                 1,383,707         1,265,875
       Long-term portion of capital lease
        obligations                                 50,552                --
       Deferred other revenue, less
        current portion                            201,515           293,243
                                                 1,635,774         1,559,118

    Commitments and contingencies:                      --                --

    Stockholders' equity:
       Preferred stock, $.01 par value;
        24,088 authorized and no shares
        issued and outstanding                          --                --
       Common stock, $.01 par value;
        30,000,000 shares authorized;
        18,995,581 and 17,976,592 shares
        issued and outstanding on
        December 31, 2006 and
        December 31, 2005, respectively           189,956           179,766
       Additional paid-in capital               78,380,962        72,307,887
       Accumulated deficit                     (62,745,471)      (57,567,641)
         Total stockholders' equity             15,825,447        14,920,012
                                               $19,743,745       $18,173,344


                             STATEMENTS OF OPERATIONS

                                                 Years ended December 31,
                                             2006         2005         2004
       Product revenue                   $8,612,705   $6,444,444   $4,253,478
       Other revenue                        378,133      357,463      954,456
          Total revenue                   8,990,838    6,801,907    5,207,934

    Operating expense:
       Cost of revenue                    7,057,707    5,827,719    5,125,216
          Gross Profit                    1,933,131      974,188       82,718

       Research and development expense   2,127,862    1,934,528    1,929,348
       Selling, general and
        administrative expense            5,302,836    4,422,011    4,361,357
       Lease accounting adjustment               --      279,810           --
    Loss from operations                 (5,497,567)  (5,662,161)  (6,207,987)
    Interest income                         366,701      295,935      171,582
    Interest expense                        (52,469)     (50,273)     (74,277)
    Other, net                                5,505       32,888     (306,273)
    Loss before provision for income
     taxes                               (5,177,830)  (5,383,611)  (6,416,955)
    Provision for income taxes                   --           --      (30,000)
    Net loss                            $(5,177,830) $(5,383,611) $(6,446,955)

    Net loss per share-basic and
     diluted                                 $(0.28)      $(0.30)      $(0.37)

    Weighted average number of common
    shares outstanding                   18,344,334   17,937,932   17,266,228

For more information, please click here

Nanophase Technologies Corporation
1319 Marquette Drive
Romeoville, IL 60446
Phone: +1-630-771-6700
Fax: +1-630-771-0825

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