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Home > Press > Nanophase Announces Third Quarter Results and Strong Cash Position

Abstract:
Nanophase Technologies (Nasdaq: NANX), a leader in nanomaterials and advanced nanoengineered products, announced that for the quarter ending September 30, 2008, the Company reported total revenue of $2.1 million, compared to $2.6 million for the quarter ended September 30, 2007. Nanophase reported a net loss of $2.8 million, (including $1.6 million in severance charges, of which $600,000 was non-cash equity compensation), or $0.13 per share, for the quarter compared to a net loss of $1.0 million, or $0.05 per share, for the third quarter of 2007.

Nanophase Announces Third Quarter Results and Strong Cash Position

ROMEOVILLE, IL | Posted on November 6th, 2008

For the first nine months of 2008, Nanophase revenues were $8.1 million, compared with $9.6 million, for the same period in 2007. The net loss was $4.6 million, (including the $1.6 million in severance charges), or $0.22 per share, compared to a net loss of $2.4 million, or $0.12 per share, for the same period in 2007. Acting CEO Jess Jankowski noted, "Gross margin for the quarter is down from 21% to 14%, mainly due to reduced sales volume. For the nine-month period, gross margins were up 1%, but down only $320,000 due to a more favorable product and margin mix in 2008. Nanophase ended the quarter with approximately $15 million in cash and investments.

Markets and Outlook

"We expect fourth quarter revenue to be roughly flat when compared to the third quarter and expect full-year 2008 revenues to be roughly $10 million." Our outlook for 2009 is for lower revenue than in 2008 by roughly $2 million. We expect sales to start to rebound by late 2009 as new programs and customers ramp up."

Jankowski added: "We are seeing the impact of the current economic situation on several of our customers. Although we expect these conditions to have a negative impact on the fourth quarter and our 2009 revenue picture, we feel that Nanophase has a strong balance sheet and a good competitive position that will serve us well going forward. We are focused on building a pipeline of new business by leveraging our significant technology and applications development know-how, by continuing to develop deeper knowledge of the markets we're in, and expanding our reach into several new applications." Jankowski noted, "We are close to completion in building a new leadership team and putting the pieces in place to leverage our capabilities to our best advantage. Another recent positive change has been the addition of Bill Turner to our sales team. Bill is a senior account manager with 17 years of varied chemical industry experience. Our newly established leadership team is intently focused on using these advantages to create value. We remain optimistic about the long term prospects for the Company."

Nanophase has scheduled its quarterly conference call for November 6th at 4:00 PM CST, 5:00 PM EST, which will be hosted by Jess Jankowski, Acting CEO, VP & CFO. The call may be accessed through the Company's website, www.nanophase.com, by clicking on the link under Investor Relations and Calendar of Events. If you are unable to attend, a replay will be available through November 13, 2008 by dialing 706-645-9291 and entering code 69940474, or by logging onto the Company's website and following the above directions.

####

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. The Company owns or licenses 18 United States and 53 foreign patents and patent applications. Information about Nanophase may be found in the Company’s public filings or on its website.

All numbers in this release are approximate; refer to the financials accompanying the release for details. Earnings per share are stated as fully diluted. 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 risk 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 10K filed March 14, 2008, 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.

                      NANOPHASE TECHNOLOGIES CORPORATION

                                BALANCE SHEETS

                                 (Unaudited)


                                              September 30,      December 31,
                   ASSETS                         2008              2007


    Current assets:
      Cash and cash equivalents                   $609,529          $563,075
      Investments                                8,360,040        16,145,844
      Trade accounts receivable, less
       allowance for doubtful accounts of
        $13,000 on September 30, 2008 and
         December 31, 2007, respectively         1,194,829         1,403,206
      Other receivable, net                            392               -
      Inventories, net                           1,406,695         1,085,364
      Prepaid expenses and other current assets    371,725           298,464
        Total current assets                    11,943,210        19,495,953

    Investments                                  6,000,000               -
    Equipment and leasehold improvements, net    6,891,418         7,409,666
    Other assets, net                              593,576           781,266
                                               $25,428,204       $27,686,885

       LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities:
      Current portion of capital lease
       obligations                                  31,357            43,110
      Current portion of deferred other revenue    106,062           127,273
      Accounts payable                             615,965           238,295
      Accrued expenses                           1,618,878         1,584,656
      Accrued severance                            770,088               -
        Total current liabilities                3,142,350         1,993,334

      Long-term debt, less current maturities
       and unamortized debt discount             1,555,359         1,512,507
      Long-term portion of capital lease
       obligations                                  11,217            31,430
      Deferred other revenue, less
       current portion                                 -              74,243
                                                 1,566,576         1,618,180

    Contingent liabilities:                            -                 -

    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;
       21,156,536 and 21,088,068 shares
       issued and outstanding on
       September 30, 2008 and December 31, 2007,
       respectively                                211,565           210,881
      Additional paid-in capital                91,414,746        90,201,131
      Accumulated deficit                      (70,907,033)      (66,336,641)
        Total stockholders’ equity              20,719,278        24,075,371
                                               $25,428,204       $27,686,885



                      NANOPHASE TECHNOLOGIES CORPORATION

                           STATEMENTS OF OPERATIONS

                                 (Unaudited)

                                Three months ended        Nine months ended
                                  September 30,            September 30,
                                2008         2007        2008         2007
    Revenue:
      Product revenue, net   $1,967,061  $2,442,890   $7,721,408   $9,252,306
      Other revenue             111,906     111,233      356,072      333,762
        Total revenue         2,078,967   2,554,123    8,077,480    9,586,068

    Operating expense:
      Cost of revenue         1,789,049   2,012,938    5,625,533    6,817,462
        Gross Profit            289,918     541,185    2,451,947    2,768,606

      Research and development
       expense                  443,241     405,650    1,298,175    1,379,819
      Selling, general and
       administrative
       expense                1,146,640   1,296,510    4,366,153    4,067,727
      Severance charges       1,578,859         -      1,578,859          -
    Loss from operations     (2,878,822) (1,160,975)  (4,791,240)  (2,678,940)
    Interest income              82,301     232,605      330,311      421,434
    Interest expense            (29,410)    (34,968)    (100,969)    (102,188)
    Other, net                   (8,651)        191       (8,494)     (68,906)
    Loss before provision
     for income taxes        (2,834,582)   (963,147)  (4,570,392)  (2,428,600)
    Provision for income
     taxes                          -           -            -            -
    Net loss                $(2,834,582)  $(963,147) $(4,570,392) $(2,428,600)


    Net loss per share
     - basic and diluted         $(0.13)     $(0.05)      $(0.22)      $(0.12)

    Weighted average number
     of common shares
     outstanding             21,150,568  20,962,150   21,129,369   19,686,578



                      NANOPHASE TECHNOLOGIES CORPORATION

                 STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE

                                 (Unaudited)

                                Three months ended       Nine months ended
                                  September 30,            September 30,
                                2008         2007        2008         2007
    Revenue:
      Product revenue, net   $1,967,061  $2,442,890   $7,721,408   $9,252,306
      Other revenue             111,906     111,233      356,072      333,762
        Total revenue         2,078,967   2,554,123    8,077,480    9,586,068

    Operating expense:
      Cost of revenue detail:
      Depreciation              252,175     281,518      730,795      839,650
      Non-Cash equity
       compensation              21,949       4,013       58,885       31,902
      Other costs of
       revenue                1,514,925   1,727,407    4,835,853    5,945,910
        Cost of revenue       1,789,049   2,012,938    5,625,533    6,817,462
          Gross profit          289,918     541,185    2,451,947    2,768,606

      Research and development
       expense detail:
      Depreciation               59,886      60,016      177,661      173,990
      Non-Cash equity
       compensation              40,031       5,316      109,344       67,282
      Other research and
       development expense      343,324     340,318    1,011,170    1,138,547
        Research and
         development expense    443,241     405,650    1,298,175    1,379,819

      Selling, general and
       administrative
       expense detail:
      Depreciation and
       amortization              25,214      21,145       73,817       59,971
      Non-Cash equity
       compensation              96,299      94,104      422,931      320,027
      Other selling, general
       and administrative
       expense                1,025,127   1,181,261    3,869,405    3,687,729
        Selling, general
         and administrative
         expense              1,146,640   1,296,510    4,366,153    4,067,727
      Severance charges       1,578,859         -      1,578,859          -
    Loss from operations     (2,878,822) (1,160,975)  (4,791,240)  (2,678,940)
    Interest income              82,301     232,605      330,311      421,434
    Interest expense            (29,410)    (34,968)    (100,969)    (102,188)
    Other, net                   (8,651)        191       (8,494)     (68,906)
    Loss before provision
     for income taxes        (2,834,582)   (963,147)  (4,570,392)  (2,428,600)
    Provision for income
     taxes                        -            -           -            -
    Net loss                $(2,834,582)  $(963,147) $(4,570,392) $(2,428,600)

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