NANX Nanophase Technologies Corp (QB)

Nanophase Technologies Corporation (OTCQB:NANX), a technology leader in nanomaterials and advanced nanoengineered products, today reported financial results for the second quarter ended June 30, 2017. 

“We have now reported net income in three of the past five quarters,” commented Nanophase CEO and President Jess Jankowski.  “As we advised a year ago when we first broke through the net income barrier, this is only one of several steps toward accomplishing our larger goals.  Still, it is a degree of validation that our strategy is starting to pay off.  We have also achieved these financial milestones while continuing to invest in developing our fully formulated skin care portfolio and solar control business.”

Six Months Ended June 30, 2017 Financial Highlights

• Revenue for the first six months of 2017 was $7.1 million, vs. the $5.9 million reported during the same period of 2016.   
• The net income for the first six months of 2017 was $0.1 million, or $0.00 per share, compared to a net loss of $0.1 million, or $0.00 per share, for the comparable period of 2016.   
• The Company finished the quarter with approximately $1.1 million in cash and cash equivalents; the Company had no debt. 

Second Quarter 2017 Financial Highlights

• Revenue for the second quarter was $3.6 million in 2017 and $3.7 million in 2016.   
• The net profit for the quarter was $20,000 in 2017, or $0.00 per share, compared to a net profit for the quarter of $0.5 million, or $0.01 per share, for 2016. 

Jankowski continued, “We are in the process of building new revenue streams in personal care and solar control.  We are also actively seeking to develop corporate relationships to sell and promote our products in areas and situations that, while profitable, don’t represent our best opportunities for rapid growth.  These allow us to focus investment in product- and business-development in strategic growth areas that we believe will create the highest return.  The deal that we announced last month with Eminess Technologies, Inc. is an example of such a relationship, where both of us hope to maximize our strategic leverage in the markets for polishing materials.  Revenue from that relationship will begin during Q3 2017.” 

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 2017 Conference Call The Nanophase conference call, to be hosted by Jess Jankowski, the Company’s President & CEO, is scheduled for July 27, 2017, 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 38470835.  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 9001:2008 and ISO 14001 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. 

Forward-Looking StatementsThis 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 29, 2017. 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,
				2017			December 31,
ASSETS			(Unaudited)					2016
Current assets:
	Cash and cash equivalents		$	1,149,763			$	1,779,027
	Trade accounts receivable, less allowance for doubtful accounts of $5,000 on June 30, 2017 and December 31, 2016			2,198,947				434,226
	Other receivable			301				96
	Inventories, net			762,993				771,975
	Prepaid expenses and other current assets			406,725				441,634
		Total current assets		4,518,729				3,426,958
	Equipment and leasehold improvements, net			1,386,688				1,395,441
	Other assets, net			18,660				19,893
			$	5,924,077			$	4,842,292
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Current portion of capital lease obligations			57,396				107,021
	Accounts payable			1,004,267				669,025
	Accrued expenses			982,818				521,302
		Total current liabilities		2,044,481				1,297,348
	Long-term portion of capital lease obligations			304,986				109,448
	Long-term deferred rent			437,820				465,850
	Asset retirement obligation			181,448				178,378
		Total long-term liabilities		924,254				753,676
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; 31,234,330 and 31,229,996 shares issued and outstanding on June 30, 2017 and December 31, 2016, respectively			312,343				312,300
	Additional paid-in capital			97,454,853				97,359,324
	Accumulated deficit			(94,811,854	)			(94,880,356	)
		Total stockholders' equity		2,955,342				2,791,268
			$	5,924,077			$	4,842,292

 

NANOPHASE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
						Three months ended								Six months ended
						June 30,								June 30,
							2017				2016				2017				2016
Revenue:
	Product revenue, net					$	3,534,799			$	3,677,876			$	7,001,264			$	5,867,099
	Other revenue						47,190				5,200				66,328				27,081
		Net revenue					3,581,989				3,683,076				7,067,592				5,894,180
Operating expense:
	Cost of revenue						2,381,072				2,170,568				4,662,405				3,925,204
		Gross profit					1,200,917				1,512,508				2,405,187				1,968,976
	Research and development expense						476,055				371,828				859,754				673,426
	Selling, general and administrative expense						696,669				674,740				1,460,506				1,435,961
Income/(Loss) from operations							28,193				465,940				84,927				(140,411	)
Interest income							-				-				-				-
Interest expense							(6,088	)			(3,872	)			(16,425	)			(8,130	)
Other, net							-				544				-				551
Income/(Loss) before provision for income taxes							22,105				462,612				68,502				(147,990	)
Provision for income taxes							-				-				-				-
Net income/(loss)						$	22,105			$	462,612			$	68,502			$	(147,990	)
Net income/(loss) per share- basic and diluted						$	-			$	0.01			$	-			$	-
Weighted average number of basic and diluted common shares outstanding							31,234,330				31,185,496				31,232,223				30,599,782
NANOPHASE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
(Unaudited)
						Three months ended								Six months ended
						June 30,								June 30,
							2017				2016				2017				2016
Revenue:
	Product revenue, net					$	3,534,799			$	3,677,876			$	7,001,264			$	5,867,099
	Other revenue						47,190				5,200				66,328				27,081
		Net revenue					3,581,989				3,683,076				7,067,592				5,894,180
Operating expense:
	Cost of revenue detail:
	Depreciation						71,094				139,710				142,886				282,633
	Non-Cash equity compensation						5,947				5,523				12,073				11,516
	Other costs of revenue						2,304,031				2,025,335				4,507,446				3,631,055
		Cost of revenue					2,381,072				2,170,568				4,662,405				3,925,204
			Gross profit				1,200,917				1,512,508				2,405,187				1,968,976
	Research and development expense detail:
	Depreciation						11,509				29,031				29,769				57,587
	Non-Cash equity compensation						12,601				8,880				24,495				18,211
	Other research and development expense						451,945				333,917				805,490				597,628
		Research and development expense					476,055				371,828				859,754				673,426
	Selling, general and administrative expense detail:
	Depreciation and amortization						4,044				10,326				8,639				20,535
	Non-Cash equity compensation						27,590				26,562				57,274				57,859
	Other selling, general and administrative expense						665,035				637,852				1,394,593				1,357,567
		Selling, general and administrative expense					696,669				674,740				1,460,506				1,435,961
Income/(Loss) from operations							28,193				465,940				84,927				(140,411	)
Interest income							-				-				-				-
Interest expense							(6,088	)			(3,872	)			(16,425	)			(8,130	)
Other, net							-				544				-				551
Income/(Loss) before provision for income taxes							22,105				462,612				68,502				(147,990	)
Provision for income taxes							-				-				-				-
Net income/(loss)						$	22,105			$	462,612			$	68,502			$	(147,990	)
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):
	Addback Interest, net						6,088				3,872				16,425				8,130
	Addback Depreciation/Amortization						86,647				179,067				181,294				360,755
	Addback Non-Cash Equity Compensation						46,138				40,965				93,842				87,586
	Adjusted EBITDA					$	160,978			$	686,516			$	360,063			$	308,481

COMPANY CONTACT
Investor Relations
630-771-6705