updated 5/11/2011 4:18:27 PM ET 2011-05-11T20:18:27

ROMEOVILLE, Ill., May 11, 2011 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (Nasdaq:NANX), a technology leader in nanomaterials and advanced nanoengineered products, announced today its financial results for the quarter, ended March 31, 2011.

First Quarter 2011 Highlights

  • Revenue increased by 39 percent over the first quarter of 2010.
  • Gross margin, as a percentage of revenue, increased 37 percent over the comparable quarter of 2010.
  • Net loss for the quarter improved 52 percent over the comparable quarter of 2010.
  • The introduction of NanoArc® dispersions for UV-cured scratch-resistant coatings at the European Coatings Show, the largest in the coatings industry, generated booth traffic and significant interest.

Nanophase CEO Jess Jankowski commented, "We entered 2011 with a strong first quarter, a continuation of our 2010 growth trend – and one we expect will continue through 2011 and beyond. With an improved worldwide economy, we, along with our customers and potential customers, are beginning to see an increased demand within the specialty chemicals sector. This was evidenced during this year's European Coatings show in Nuremburg, Germany, attended by over 20,000 companies from 45 countries and 800 plus exhibitors in the coatings, adhesives, sealants, production equipment and services market. This show provided a wealth of prospective customers."

Jankowski continued, "We expect a ramp-up in sales of our NanoArc® exterior coating additives in the second half of 2011 as pilot programs evolve into customer orders. The recent launch of our NanoArc® scratch-resistant coatings should generate new customers and sales this year as the pilot/testing cycles are significantly shorter.  

"Our goal is to launch additional products that would generate revenue in 2011. We believe our strategy to phase-in products throughout the year will assist in better leveling our revenue flow going forward. All in all, this should be a sound year for revenue growth and market expansion," added Jankowski.

While the company's balance sheet remains strong, the skyrocketing cost of rare-earth materials used in the manufacture of the company's polishing application products has affected the company's working capital levels. A year ago, inventory of approximately $1 million was maintained at any given time. Today, that same inventory is valued closer to $2 million. While these costs typically pass through to customers, this market dynamic is significant and must be managed carefully.

Shareholders and members of the financial community are invited to participate in tomorrow's first quarter financial results conference call. During the call, Mr. Jankowski will be discussing the company's goals and milestones for 2011.

First Quarter 2011 Conference Call 

Nanophase has scheduled its quarterly conference call for May 12, 2011, at 10:00 a.m. CDT (11:00 a.m. EDT). The call will be hosted by Jess Jankowski, president and CEO. To participate in the conference call, the dial-in number for U.S. callers is 877-312-8776 and for international callers is 408-774-4007. The conference ID is 58424579. 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, including severance charges and 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; and other factors described in the Company's Form 10-K filed March 22, 2011. 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.

   March 31,   
  2011  December 31, 
ASSETS (Unaudited) 2010
Current assets:    
Cash and cash equivalents  $ 4,024,479  $ 5,744,322
Investments  30,000  30,000
Trade accounts receivable, less allowance for doubtful accounts     
of $6,000 on March 31, 2011 and $3,000 on December 31, 2010  1,708,218  765,250
Other receivables, net  14,260  14,260
Inventories, net  1,742,690  1,825,882
Prepaid expenses and other current assets  607,570  346,926
Total current assets  8,127,217  8,726,640
Equipment and leasehold improvements, net  4,514,528  4,721,672
Other assets, net  34,185  34,799
   $ 12,675,930  $ 13,483,111
Current liabilities:    
Current portion of capital lease obligations  $ --  $ 748
Accounts payable  697,878  918,527
Accrued expenses  959,856  1,047,509
Accrued discount liabilities  256,718  296,235
Total current liabilities  1,914,452  2,263,019
Long-term deferred rent  638,494  635,523
Asset retirement obligations  143,139  141,407
   781,633  776,930
Contingent liabilities:  --   --
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;     
 21,204,162 shares issued and outstanding on March 31, 2011 and     
December 31, 2010, respectively  212,042  212,042
Additional paid-in capital  92,765,211  92,674,786
Accumulated deficit  (82,997,408)  (82,443,666)
Total stockholders' equity  9,979,845  10,443,162
   $ 12,675,930  $ 13,483,111
  Three months ended
  March 31,
  2011 2010
Product revenue  $ 2,706,433  $ 1,930,602
Other revenue  79,253  79,580
Total revenue  2,785,686  2,010,182
Operating expense:    
Cost of revenue  1,861,659  1,527,097
Gross Profit  924,027  483,085
Research and development expense  401,025  429,263
Selling, general and administrative expense  1,077,696  1,212,417
Loss from operations   (554,694)  (1,158,595)
Interest income  1,893  14,135
Interest expense  (899)  (689)
Other, net  (42)  -- 
Loss before provision for income taxes  (553,742)  (1,145,149)
Provision for income taxes  --   -- 
Net loss  $ (553,742)  $ (1,145,149)
Net loss per share-basic and diluted  $ (0.03)  $ (0.05)
Weighted average number of basic and diluted     
common shares outstanding  21,204,162  21,204,162
   Three months ended  
   March 31  
  2011 2010
Product revenue, net  $ 2,706,433  $ 1,930,602
Other revenue  79,253  79,580
Total revenue  2,785,686  2,010,182
Operating expense:    
Cost of revenue detail:    
Depreciation  222,125  224,030
Non-Cash equity compensation  10,536  10,955
Other costs of revenue  1,628,998  1,292,112
Cost of revenue  1,861,659  1,527,097
Gross profit  924,027  483,085
Research and development expense detail:    
Depreciation  36,070  56,698
Non-Cash equity compensation  21,292  19,280
Other research and development expense  343,663  353,285
Research and development expense  401,025  429,263
Selling, general and administrative expense detail:    
Depreciation and amortization  23,729  24,734
Non-Cash equity compensation  77,280  125,350
Other selling, general and administrative expense  976,687  1,062,333
Selling, general and administrative expense  1,077,696  1,212,417
Loss from operations   (554,694)  (1,158,595)
Interest income  1,893  14,135
Interest expense  (899)  (689)
Other, net  (42)  -- 
Loss before provision for income taxes  (553,742)  (1,145,149)
Provision for income taxes  --   -- 
Net loss  $ (553,742)  $ (1,145,149)
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):    
Addback Interest, net  (994)  (13,446)
Addback Depreciation/Amortization  281,924  305,462
Addback Non-Cash Equity Compensation  109,108  155,585
Adjusted EBITDA  $ (163,704)  $ (697,548)
CONTACT: Nancy Baldwin
         Investor Relations

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