Nanophase Reports Record Third Quarter 2020 Financial Results as Solésence Expands Beauty Footprint

Announces 20+% Growth and Record Profitability

Romeoville, Illinois, UNITED STATES


ROMEOVILLE, Ill., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (OTCQB: NANX), a leader in minerals-based and scientifically-driven health care innovations across various beauty and life science categories, protecting skin from environmental aggressors and aiding in medical diagnostics, today reported financial results for the three- and nine-month periods ended September 30, 2020.

Jess Jankowski, President and CEO, commented: “the third quarter continued our strong progress in profitably growing Nanophase. Our medical diagnostics materials for Covid-19-related applications continue to receive broad use during the global pandemic, while our fully formulated Solésence products have seen triple digit growth despite the challenges of 2020. Although our third major business segment, personal care ingredients, has experienced a sales downturn that we believe is related to the pandemic, our growth in total has been exceptional.”

Third Quarter and YTD 2020 Financial Highlights

  • Revenue for the third quarter was $3.9 million, vs. $3.1 million for the same period in 2019. Revenue for the nine-month period was $12.3 million vs. $10.1 million for the same period in 2019. 

For the nine-month period of 2020:

    • Solésence revenue was $4.4 million, up 164% from $1.7 million in 2019
    • Advanced Materials revenue was $3.7 million, up 85% from $2.0 million in 2019
    • Personal Care Ingredients revenue was $4.2 million, down 35% from $6.5 million in 2019
  • Net income for the quarter was $0.4 million in 2020, or $0.01 per share, compared to a net loss of $0.9 million, or $0.02 per share, for 2019.   Net income for the nine-month period was $0.8 million in 2020, or $0.02 per share, compared to a net loss of $2.0 million, or $0.06 per share, for 2019.

  • We note that the PPP funding we received in the second quarter of 2020 is recorded on the balance sheet as a liability and has not had any impact on our income statement to date.

  • The Company finished the quarter with approximately $1.1 million in cash and cash equivalents.

Jankowski continued, “Our gross profit and bottom line have improved nicely since the first quarter. This is a function of growing product volume, improvements in operational efficiency, and prudent cost-cutting. We expect these gains combined with a slight improvement in the personal care ingredients segment to result in the fourth quarter exceeding last year's results.”

”The growth in our Solésence business is a validation of our beauty products strategy,” offered Kevin Cureton, Chief Operating Officer. “As expected, our two largest Solésence clients have each exceeded $1 million in revenue, while we have launched products with over a dozen different beauty and personal care brands, demonstrating the broadening of our customer base.”

Jankowski added, “We are also honored to contribute to our national public health through the materials we make for use in medical diagnostics, and we are keenly aware of the suffering of our fellow citizens under current conditions. We remain committed to protecting our employees, their families, and our communities, as we work to provide essential products for the health and safety of those we serve.”

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 (“GAAP”) 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 GAAP.

About Nanophase Technologies
Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leading innovator in minerals-based and scientifically-driven health care solutions across beauty and life science categories, as well as other legacy advanced materials applications. Leveraging a platform of integrated patented and proprietary technologies, the Company creates products with unique performance, enhancing consumers health and well-being. We deliver commercial quantity and quality engineered materials both as ingredients and as part of fully formulated products in a variety of formats.

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 engineered materials, ingredients, and fully formulated products; 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 30, 2020. 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.

COMPANY CONTACT
Investor Relations
630-771-6700


NANOPHASE TECHNOLOGIES CORPORATION 
       
CONSOLIDATED BALANCE SHEETS 
(Unaudited Consolidated Condensed) 
       
       
   September 30, December 31, 
ASSETS 2020   2019  
       
Current assets:    
 Cash and cash equivalents$1,133,850  $1,193,994  
 Trade accounts receivable, less allowance for doubtful accounts of $9,000 on September 30, 2020 and on December 31, 2019 2,451,324   970,472  
 Inventories, net 3,583,944   2,553,620  
 Prepaid expenses and other current assets 599,387   266,587  
  Total current assets 7,768,505   4,984,673  
       
 Equipment and leasehold improvements, net 2,649,619   2,255,158  
 Operating lease right-of-use assets 1,916,993   2,118,883  
 Other assets, net 10,840   12,528  
   $12,345,957  $9,371,242  
       
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
 Line of credit, bank$500,000  $500,000  
 Line of credit, related party 1,541,113   223,871  
 Current portion of long-term debt, related party 500,000   500,000  
 Current portion of finance lease obligations 185,621   218,345  
 Current portion of operating lease obligations 411,421   356,949  
 Accounts payable 1,668,492   1,748,021  
 Current portion of deferred revenue 309,122   482,349  
 Accrued expenses 645,998   379,314  
  Total current liabilities 5,761,767   4,408,849  
       
 Long-term portion of finance lease obligations 148,369   287,660  
 Long-term portion of operating lease obligations 1,766,066   2,034,592  
 Long-term convertible loan, related party 1,030,340   829,721  
 PPP SBA Loan 951,600   -  
 Long-term portion of deferred revenue -   92,750  
 Asset retirement obligations 212,247   206,221  
  Total long-term liabilities 4,108,622   3,450,944  
       
       
Stockholders' equity:    
 Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding -   -  
 Common stock, $.01 par value, 55,000,000 shares authorized; 38,215,069 and 38,136,792 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively 381,928   381,368  
 Additional paid-in capital 102,054,867   101,886,411  
 Accumulated deficit (99,961,227)  (100,756,330) 
  Total stockholders' equity 2,475,568   1,511,449  
   $12,345,957  $9,371,242  
       



NANOPHASE TECHNOLOGIES CORPORATION 
              
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited Consolidated Condensed) 
              
      Three months ended Nine months ended 
      September 30, September 30, 
       2020  2019   2020  2019  
Revenue:           
 Product revenue, net  $3,826,918 $3,043,036  $11,929,496 $9,796,944  
 Other revenue   60,538  26,350   332,768  321,058  
  Net revenue   3,887,456  3,069,386   12,262,264  10,118,002  
              
Operating expense:          
 Cost of revenue   2,203,105  2,506,720   7,832,125  7,839,443  
  Gross profit   1,684,351  562,666   4,430,139  2,278,559  
              
 Research and development expense   402,216  487,798   1,133,120  1,449,646  
 Selling, general and administrative expense  729,779  889,659   2,133,586  2,710,710  
Income/(Loss) from operations   552,356  (814,791)  1,163,433  (1,881,797) 
Interest income   -  -   -  -  
Interest expense   122,137  47,139   368,330  140,282  
Other, net    -  -   -  -  
Income/(Loss) before provision for income taxes  430,219  (861,930)  795,103  (2,022,079) 
Provision for income taxes   -  -   -  -  
Net income/(loss)  $430,219 $(861,930) $795,103 $(2,022,079) 
              
              
Net income/(loss) per basic shares  $0.01 $(0.02) $0.02 $(0.06) 
Weighted average number of basic common shares outstanding   38,141,741  38,136,792   38,138,453  36,077,257  
Net income/(loss) per diluted share  $0.01 $(0.02) $0.02 $(0.06) 
Weighted average number of diluted common shares outstanding   38,432,741  38,136,792   38,228,453  36,077,257  
              
  
  
NANOPHASE TECHNOLOGIES CORPORATION 
              
CONSOLIDATED STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE 
(Unaudited Consolidated Condensed) 
              
      Three months ended Nine months ended 
      September 30, September 30, 
       2020  2019   2020  2019  
Revenue:           
 Product revenue, net  $3,826,918 $3,043,036  $11,929,496 $9,796,944  
 Other revenue   60,538  26,350   332,768  321,058  
  Net revenue   3,887,456  3,069,386   12,262,264  10,118,002  
              
Operating expense:          
 Cost of revenue detail:          
 Depreciation   73,572  61,612   217,578  181,494  
 Non-Cash equity compensation   19,426  13,297   38,086  33,609  
 Other costs of revenue   2,110,107  2,431,811   7,576,461  7,624,340  
  Cost of revenue   2,203,105  2,506,720   7,832,125  7,839,443  
   Gross profit   1,684,351  562,666   4,430,139  2,278,559  
              
 Research and development expense detail:         
 Depreciation   10,579  12,250   31,755  36,699  
 Non-Cash equity compensation   13,930  15,804   42,797  42,196  
 Other research and development expense   377,707  459,744   1,058,568  1,370,751  
  Research and development expense   402,216  487,798   1,133,120  1,449,646  
              
 Selling, general and administrative expense detail:        
 Depreciation and amortization   4,871  5,159   15,025  15,948  
 Non-Cash equity compensation   14,998  34,746   66,019  103,414  
 Other selling, general and administrative expense 709,910  849,754   2,052,542  2,591,348  
  Selling, general and administrative expense 729,779  889,659   2,133,586  2,710,710  
Income/(Loss) from operations   552,356  (814,791)  1,163,433  (1,881,797) 
Interest income   -  -   -  -  
Interest expense   122,137  47,139   368,330  140,282  
Other, net    -  -      
Income/(Loss) before provision for income taxes  430,219  (861,930)  795,103  (2,022,079) 
Provision for income taxes   -  -   -  -  
Net income/(loss)  $430,219 $(861,930) $795,103 $(2,022,079) 
              
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):       
 Addback Interest, net   122,137  47,139   368,330  140,282  
 Addback Depreciation/Amortization   89,022  79,021   264,358  234,141  
 Addback Non-Cash Equity Compensation   48,354  63,847   146,902  179,219  
              
 Adjusted EBITDA  $689,732 $(671,923) $1,574,693 $(1,468,437)