Nanophase Reports Continued Cash Flow Improvement During Third Quarter of 2012

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| Source: Nanophase Technologies Corporation

ROMEOVILLE, Ill., Oct. 31, 2012 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (OTCQB:NANX), a technology leader in nanomaterials and advanced nanoengineered products, today reported revenue of $2.1 million for the third quarter and revenue of $7.3 million for the nine month period ended September 30, 2012.

Nanophase CEO and President Jess Jankowski commented, "Our year is shaping up well. As we've said previously, 2012 will be better balanced than 2011, in terms of quarterly revenue distribution, and we still expect 2012 to exceed 2011 in total revenue. Additionally, we expect to continue reporting progress year over year in terms of the bottom line. Things fell into place nicely in the third quarter and we expect the fourth quarter to significantly exceed last year's. We continue to reduce our operating cost while expanding our capabilities and pipeline opportunities. I'm looking forward to sharing more during our call tomorrow."

Third Quarter 2012 Financial Highlights

  • Revenue for the third quarter was $2.1 million compared to revenue of $2.2 million for the comparable 2011 quarter. Gross margin was 25% for the third quarter 2012, vs. 16% during the third quarter 2011.
     
  • The net loss for the quarter was $0.7 million, or a loss of $0.02 per share, compared to a net loss $1.0 million, or $0.05 per share, for the comparable 2011 quarter.
     
  • The Company finished the quarter with approximately $4.6 million in cash and cash equivalents on the balance sheet; the company has no debt.

Nine months ended September 30, 2012 Financial Highlights

  • Revenue for the first nine months of 2012 was $7.3 million, compared to $8.0 million in the first nine months of 2011. Gross margin was 27% and 28% for the first nine months of 2012 and 2011, respectively.
     
  • The net loss for the nine month period ended September 30, 2012 was $1.8 million, or a loss of $0.08 per share, compared to a net loss of $2.1 million, or $0.10 per share, for the comparable 2011 period.

Third Quarter 2012 Conference Call

The Nanophase conference call, to be hosted by Jess Jankowski, the Company's CEO and President, is scheduled for November 1, 2012, at 10:00 a.m. CDT, 11:00 a.m. EDT. The conference call dial-in number for U.S. callers is 877-312-8776 and for international callers is 408-774-4007. The conference ID is 33482624. Please dial in to the conference at least five minutes before the call is scheduled to begin.

The call may also be accessed through the company's website, at www.nanophase.com, by clicking on the link under News Center and Calendar of Events to listen to a webcast of the event.

Use of Non-GAAP Financial Information

Nanophase believes that the presentation of results excluding certain items, such as 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 9001:2008 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; the impact of any potential new government regulations that could be difficult to respond to or too costly to comply with while remaining financially viable; the ability of the Company to maintain an appropriate electronic trading venue; and other factors described in the Company's Form 10-K filed March 29, 2012. 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
     


ASSETS
September 30,
2012
(Unaudited)

December 31,
2011
     
Current assets:    
Cash and cash equivalents  $ 4,565,558  $ 2,693,623
Investments  30,000  30,000
Trade accounts receivable, less allowance for doubtful accounts of $6,000 on September 30, 2012 and December 31, 2011  869,660  878,600
Other receivable  --   13,712
Inventories, net  1,291,989  1,338,210
Prepaid expenses and other current assets  268,346  391,466
Total current assets  7,025,553  5,345,611
     
Equipment and leasehold improvements, net  3,218,327  3,713,082
Other assets, net  30,453  32,318
   $ 10,274,333  $ 9,091,011
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Current portion of capital lease obligations  $ 33,961  $ --
Deferred other revenue  67,998  --
Accounts payable  605,474  319,706
Accrued expenses  561,235  383,425
Accrued discount liabilities  34,888  116,103
Total current liabilities  1,303,556  819,234
     
Long-term portion of capital lease obligations  71,602  -- 
Long-term deferred rent  636,122  647,404
Asset retirement obligation  152,554  148,515
Total long-term liabilities  860,278  795,919
     
     
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; 28,458,162 and 21,208,162 shares issued and outstanding on September 30, 2012 and December 31, 2011, respectively  284,582  212,082
Additional paid-in capital  95,444,015  93,070,979
Accumulated deficit  (87,618,098)  (85,807,203)
Total stockholders' equity  8,110,499  7,475,858
   $ 10,274,333  $ 9,091,011
         
NANOPHASE TECHNOLOGIES CORPORATION
         
STATEMENTS OF OPERATIONS
         
  (Unaudited)    
         
  Three months ended
September 30,
Nine months ended
September 30,
  2012 2011 2012 2011
Revenue:        
Product revenue, net  $ 2,028,529  $ 2,164,697  $ 7,061,504  $ 7,706,487
Other revenue  72,435  78,217  231,591  245,321
Net revenue  2,100,964  2,242,914  7,293,095  7,951,808
         
Operating expense:        
Cost of revenue  1,571,575  1,894,001  5,349,594  5,699,089
Gross profit  529,389  348,913  1,943,501  2,252,719
         
Research and development expense  396,503  421,597  1,210,168  1,282,618
Selling, general and administrative expense  789,169  935,857  2,546,334  3,063,446
Loss from operations   (656,283)  (1,008,541)  (1,813,001)  (2,093,345)
Interest income  --   591  --   3,929
Interest expense  (2,056)  (1,965)  (5,093)  (3,763)
Other, net  --   --   7,199  (43)
Loss before provision for income taxes  (658,339)  (1,009,915)  (1,810,895)  (2,093,222)
Provision for income taxes  --   --   --   -- 
Net loss  $ (658,339)  $ (1,009,915)  $ (1,810,895)  $ (2,093,222)
         
Net loss per share- basic and diluted  $ (0.02)  $ (0.05)  $ (0.08)  $ (0.10)
         
Weighted average number of basic and diluted common shares outstanding  26,960,880  21,207,597  23,139,731  21,205,320
         
NANOPHASE TECHNOLOGIES CORPORATION
         
STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
         
  (Unaudited)      
         
  Three months ended
September 30,
Nine months ended
September 30,
  2012 2011 2012 2011
Revenue:        
Product revenue, net  $ 2,028,529  $ 2,164,697  $ 7,061,504  $ 7,706,487
Other revenue  72,435  78,217  231,591  245,321
Net revenue  2,100,964  2,242,914  7,293,095  7,951,808
         
Operating expense:        
Cost of revenue detail:        
Depreciation  186,661  223,219  585,055  668,564
Non-Cash equity compensation  7,166  8,619  24,549  31,887
Other costs of revenue  1,377,748  1,662,163  4,739,994  4,998,638
Cost of revenue  1,571,575  1,894,001  5,349,594  5,699,089
Gross profit  529,389  348,913  1,943,501  2,252,719
         
Research and development expense detail:      
Depreciation  35,684  36,108  102,034  108,052
Non-Cash equity compensation  18,628  22,092  63,167  70,320
Other research and development expense  342,191  363,397  1,044,966  1,104,246
Research and development expense  396,503  421,597  1,210,168  1,282,618
         
Selling, general and administrative expense detail:      
Depreciation and amortization  21,518  22,116  62,577  68,591
Non-Cash equity compensation  36,881  19,677  134,957  149,311
Other selling, general and administrative expense  730,770  894,064  2,348,801  2,845,544
Selling, general and administrative expense  789,169  935,857  2,546,334  3,063,446
Loss from operations   (656,283)  (1,008,541)  (1,813,001)  (2,093,345)
Interest income  --   591  --   3,929
Interest expense  (2,056)  (1,965)  (5,093)  (3,763)
Other, net  --   --   7,199  (43)
Loss before provision for income taxes  (658,339)  (1,009,915)  (1,810,895)  (2,093,222)
Provision for income taxes  --   --   --   -- 
Net loss  $ (658,339)  $ (1,009,915)  $ (1,810,895)  $ (2,093,222)
         
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):
Addback Interest, net  2,056  1,374  5,093  (166)
Addback Depreciation/Amortization  243,863  281,443  749,666  845,207
Addback Non-Cash Equity Compensation  62,675  50,388  222,673  251,518
         
Adjusted EBITDA  $ (349,745)  $ (676,710)  $ (833,463)  $ (996,663)
COMPANY CONTACT
Nancy Baldwin
Investor Relations
630-771-6708