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Nanophase Reports Second Quarter 2018 Financial Results, Expects Another Record Year Driven by Solésence Growth

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ROMEOVILLE, Ill., July 25, 2018 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (OTCQB:NANX), a leader in personal care ingredients and products for protecting skin from environmental aggressors such as UV light and pollution, today reported financial results for the second quarter ended June 30, 2018.

"Demand for minerals-based full-spectrum UV protection continues to increase as a part of a growing awareness of the limitations of chemical-based alternatives.  The state of Hawaii has recently joined Australia in banning some of the more common UV absorbers used in the cosmetics and sun care markets to avoid their negative effects on marine habitats.  We believe that this, along with increasing consumer preference for mineral sunscreen products, will continue to result in additional demand for our minerals-based ingredients.  Among our offerings, we expect our zinc oxide active ingredients and formulated products to be the biggest beneficiaries of this market shift."

Jankowski continued, "Through the first major customer of our subsidiary Solésence, we had two successful launches of new finished products formulated by our team, as well as the successful launch of one intermediate ingredient, all three of which utilize our patented and proprietary Active Stress Defense Technology to protect people from the damaging effects of the Sun.  In the second quarter of 2018, this volume composed more than ten percent of our total revenue.  Further, we expect an additional product launch to come from a different customer later in the third quarter."

Second Quarter 2018 Financial Highlights

  • Revenue for the second quarter was $4.1 million in 2018 and $3.6 million in 2017. 
  • The net profit for the quarter was $88,000 in 2018, or $0.00 per share, compared to a net profit for the quarter of $22,000, or $0.00 per share, for 2017.

Six Months Ended June 30, 2018 Financial Highlights

  • Revenue for the first six months of 2018 was $7.0 million, vs. the $7.1 million reported during the same period of 2017. 
  • The net loss for the first six months of 2018 was $0.8 million, or $0.02 per share, compared to net income of $0.1 million, or $0.00 per share, for the comparable period of 2017. 
  • The Company finished the quarter with approximately $1.3 million in cash and cash equivalents.

Jankowski continued, "We are excited about our new product launches and the growth we expect to generate both in 2018 and 2019 through Solésence.  While our six-month results were negatively impacted by what we believe to have been an anomalous first quarter, we are benefitting both from positive market shifts, as well as from our exciting new technology, coupled with our developing formulation strength and long, commercially successful history, as a supplier of active ingredients to these markets."

Shareholders and members of the financial community are encouraged to participate in the upcoming conference call, where Mr. Jankowski will discuss the company's current and long-term prospects.

Second Quarter 2018 Conference Call
The Nanophase conference call, to be hosted by Jess Jankowski, the Company's President & CEO, is scheduled for July 26, 2018, 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 4768618.  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 Investor Relations, Investor News and the link in the conference call announcement release.

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 and ISO 14001 registered 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: the Company's ability to be consistently profitable despite the losses it has incurred since its incorporation; 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; the terms of the Company's supply agreements with BASF Corporation, which could trigger a requirement to transfer technology and/or sell equipment to that customer; the Company's potential inability to obtain working capital when needed on acceptable terms or at all; the Company's ability to obtain materials at costs it can pass through to its customers, including Rare Earth elements, specifically cerium oxide, as well as high purity zinc; 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 or other legal proceedings 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 for its securities; and other factors described in the Company's Form 10-K filed March 30, 2018. 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
           
       June 30,    
        2018      December 31,
ASSETS (Unaudited)     2017  
           
Current assets:      
  Cash and cash equivalents $ 1,341,361     $ 1,955,073  
  Trade accounts receivable, less allowance for doubtful accounts      
    of $5,000 on June 30, 2017 and December 31, 2016   1,428,171       1,114,607  
  Other receivable   33       95  
  Inventories, net   1,649,194       1,138,870  
  Prepaid expenses and other current assets   277,801       415,192  
    Total current assets   4,696,560       4,623,837  
           
  Equipment and leasehold improvements, net   1,639,845       1,624,359  
  Other assets, net   16,177       17,410  
      $ 6,352,582     $ 6,265,606  
           
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
  Short-term debt   500,000       300,000  
  Current portion of capital lease obligations   144,831       142,912  
  Accounts payable   1,601,419       1,037,784  
  Accrued expenses   677,310       542,810  
    Total current liabilities   2,923,560       2,023,506  
           
  Long-term portion of capital lease obligations   380,081       415,887  
  Long-term deferred rent   377,641       409,790  
  Asset retirement obligation   187,588       184,518  
    Total long-term liabilities   945,310       1,010,195  
           
           
Stockholders' equity:      
  Preferred stock, $.01 par value, 24,088 shares authorized and      
    no shares issued and outstanding      
  Common stock, $.01 par value, 42,000,000 shares authorized; 33,847,793      
    and 33,847,793 shares issued and outstanding on June 30, 2018 and      
    December 31, 2017, respectively   338,478       338,478  
  Additional paid-in capital   98,650,524       98,562,750  
  Accumulated deficit   (96,505,290 )     (95,669,323 )
    Total stockholders' equity   2,483,712       3,231,905  
      $ 6,352,582     $ 6,265,606  
           


NANOPHASE TECHNOLOGIES CORPORATION
                         
STATEMENTS OF OPERATIONS
                         
(Unaudited)
                         
            Three months ended   Six months ended
            June 30,   June 30,
              2018     2017       2018       2017  
Revenue:                    
  Product revenue, net     $ 4,043,201   $ 3,534,799     $ 6,910,133     $ 7,001,264  
  Other revenue       73,359     47,190       104,193       66,328  
    Net revenue       4,116,560     3,581,989       7,014,326       7,067,592  
                         
Operating expense:                  
  Cost of revenue       2,711,741     2,381,072       5,199,890       4,662,405  
    Gross profit       1,404,819     1,200,917       1,814,436       2,405,187  
                         
  Research and development expense       538,476     476,055       1,096,729       859,754  
  Selling, general and administrative expense   769,521     696,669       1,533,773       1,460,506  
Income/(Loss) from operations       96,822     28,193       (816,066 )     84,927  
Interest income       -     -       -       -  
Interest expense       9,205     (6,088 )     19,900       (16,425 )
Other, net         -     -       -       -  
Income/(Loss) before provision for income taxes   87,617     22,105       (835,966 )     68,502  
Provision for income taxes       -     -       -       -  
Net income/(loss)     $ 87,617   $ 22,105     $ (835,966 )   $ 68,502  
                         
                         
Net income/(loss) per share- basic and diluted $ -   $ -     $ (0.02 )   $ -  
                         
Weighted average number of basic and diluted              
  common shares outstanding       33,847,793     31,234,330       33,847,793       31,232,223  
                         
                         
                         
NANOPHASE TECHNOLOGIES CORPORATION
                         
STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
                         
(Unaudited)
                         
            Three months ended   Six months ended
            June 30,   June 30,
              2018     2017       2018       2017  
Revenue:                    
  Product revenue, net     $ 4,043,201   $ 3,534,799     $ 6,910,133     $ 7,001,264  
  Other revenue       73,359     47,190       104,193       66,328  
    Net revenue       4,116,560     3,581,989       7,014,326       7,067,592  
                         
Operating expense:                  
  Cost of revenue detail:                  
  Depreciation       20,233     71,094       39,871       142,886  
  Non-Cash equity compensation       6,399     5,947       12,936       12,073  
  Other costs of revenue       2,685,109     2,304,031       5,147,083       4,507,446  
    Cost of revenue       2,711,741     2,381,072       5,199,890       4,662,405  
      Gross profit       1,404,819     1,200,917       1,814,436       2,405,187  
                         
  Research and development expense detail:              
  Depreciation       9,656     11,509       16,602       57,587  
  Non-Cash equity compensation       11,816     12,601       23,390       18,211  
  Other research and development expense     517,004     451,945       1,056,737       783,956  
    Research and development expense     538,476     476,055       1,096,729       859,754  
                         
  Selling, general and administrative expense detail:            
  Depreciation and amortization       2,900     4,044       8,373       8,639  
  Non-Cash equity compensation       20,430     27,590       38,882       57,274  
  Other selling, general and administrative expense   746,191     665,035       1,486,518       1,394,593  
    Selling, general and administrative expense   769,521     696,669       1,533,773       1,460,506  
Income/(Loss) from operations       96,822     28,193       (816,066 )     84,927  
Interest income       -     -       -       -  
Interest expense       9,205     (6,088 )     19,900       (16,425 )
Other, net         -     -       -       -  
Income/(Loss) before provision for income taxes   87,617     22,105       (835,966 )     68,502  
Provision for income taxes       -     -       -       -  
Net income/(loss)     $ 87,617   $ 22,105     $ (835,966 )   $ 68,502  
                         
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):          
  Addback Interest, net       9,204     6,087       19,900       16,425  
  Addback Depreciation/Amortization       34,943     86,647       64,846       181,294  
  Addback Non-Cash Equity Compensation     38,645     46,138       75,208       93,842  
                         
  Adjusted EBITDA     $ 170,409   $ 160,977     $ (676,012 )   $ 360,063  
                         

COMPANY CONTACT
Investor Relations
630-771-6705

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