Monday May 11, 8:20 am Eastern Time
Company Press Release
SOURCE: Nanophase Technology Corporation
Nanophase Announces First Quarter 1998 Results
Also Announces New Marketing and Manufacturing Ventures
BURR RIDGE, Ill., May 11 /PRNewswire/ -- Nanophase Technologies Corporation (Nasdaq: NANX - news), a leader in
developing and marketing advanced materials using nanocrystalline compounds, today announced first quarter 1998 results.
For the quarter ended March 31, 1998, total revenue was $703,534, up 64% compared with total revenue of $429,464 for
the same period in 1997. First quarter 1998 revenue from product sales was a record $636,734, and revenue from on-going
development projects was $66,800. The Company reported a net loss for the period of $887,400, or $0.07 per share
(basic), compared with a pro forma net loss in first quarter 1997 of approximately $1.2 million, or $0.17 per share. The
Company's per share income in the first quarter of 1998 is based on 12.3 million weighted average shares outstanding. Per
share amounts for 1997 are pro forma because of the Company's recapitalization in connection with its initial public offering
consummated in December 1997.
Robert Cross, president and chief executive officer, said that product sales to customers in the electronics and structural
ceramics industries accounted for the majority of the product revenue generated during the quarter. He also noted that the
cost of revenue as a percentage of revenue declined sharply year-over-year.
Sales, general, and administrative expense increased compared with first quarter 1997. Cross explained: ''Our operating
expenses reflected aggressive investment in activities we anticipate will drive long-term growth. We broadened our marketing
efforts and expanded our sales force with the goal of introducing our capabilities to more potential customers. Our goal is to
develop and manufacture advanced materials that help companies create products with significant improvements in
performance. We are expanding our ability to find these opportunities.''
The Company increased its research and development efforts during the first quarter of 1998 to support its development
projects, but R&D costs as a percentage of revenue declined significantly in first quarter 1998 compared with the prior year's
quarter. Cross noted that Nanophase continues to expand the number of development relationships it has with leading
international and domestic corporations. The goal of these developmental collaborations, said Cross, is to engineer solutions
and eventually transition to a volume manufacturing relationship with customers.
''In the first quarter, we made promising progress on building manufacturing revenues,'' said Cross. ''We have sufficient
capacity to handle more manufacturing, and we have the capital to finance expansion when manufacturing volumes justify it.
''Our goal is to aggressively grow the pipeline of developmental projects, because these relationships are expected to
generate future manufacturing contracts. We are working with many international and domestic companies to develop
advanced materials with revolutionary performance characteristics. We will continue to invest in growth, which gives us the
best chance to establish high visibility in emerging markets for advanced materials.''
Nanophase also today announced new marketing and manufacturing ventures with two of its customers: Superconductive
Components, Inc., Columbus, Ohio (Nasdaq: SCCI - news) and Minco Acquisition Corporation, Midway, Tenn.
(''Minco'').
SCCI is a manufacturer of advanced materials and products for the production of thin films used in the manufacture of
advanced electronic devices. In a new marketing arrangement with Nanophase, SCCI is developing and will market
products for the vapor deposition of Nanophase's nanocrystalline electrically functional particles for electronics applications.
In a separate development arrangement between the two companies, SCCI has agreed to utilize its in-place manufacturing
capabilities to produce net-shaped electronic and structural ceramics based on Nanophase's proprietary manufacturing
processes, including large-area ceramic substrates for electronic platforms. Cross said, ''The new marketing relationship with
SCCI is expected to give us much faster access to substantial electronics applications that apply materials through vapor
deposition. With SCCI's in- place manufacturing infrastructure, we also gain a substantial increase in through-put capabilities
for our important net-shaping programs.''
Nanophase's other new collaborator, Minco, is a leading manufacturer of premium-grade fused minerals primarily for
industrial thermal devices and for investment casting. Nanophase and Minco are collaborating in the production and
marketing of high-performance products based on the incorporation of NTC's nanocrystalline materials for the industrial
thermal device market, and for use in precision net-shape investment casting. The companies will also collaborate in the
development of a new generation of silica-based insulating materials for use in advanced semiconductor manufacture. Cross
said, ''This collaboration should enable us to quickly deliver our advanced materials into Minco's existing markets. In
addition, by use of Minco's feedstocks and Nanophase's processing capabilities, the collaboration offers potential for the
development of a new generation of high-performance insulating materials for electronics markets.''
Nanophase Technologies Corporation develops and markets engineered advanced materials for a variety of product
applications in the electronics, structural ceramics, cosmetics, and industrial catalysts industries. Using proprietary technology
to alter materials at the molecular level, the company creates products with unique performance attributes. The company's
global customer base includes a number of Fortune 500 companies. Nanophase trades on the Nasdaq NMS under the
symbol ''NANX.'' Visit the Company's Web site at www.nanophase.com.
Statements contained in this news release that are not historical facts are forward looking statements that are made pursuant
to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect the
Company's current beliefs, and a number of important factors could cause actual results for future periods to differ materially
from those expressed in this news release. These important factors include, without limitation: demand for, and acceptance
of, the Company's nanocrystalline materials; changes in development and distribution relationships; the impact of competitive
products and technologies; and other risks indicated in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, as filed with the Securities and Exchange Commission. Nanophase undertakes no obligation to update
or revise these forward-looking statements to reflect new events or uncertainties.
Nanophase Technologies Corporation
Condensed Statements of Operations
(Unaudited)
Three months ended March 31,
1998 1997
Revenue:
Product revenue $636,734 $195,136
Other revenue 66,800 234,328
Total revenue 703,534 429,464
Operating expense:
Cost of revenue 968,712 1,102,877
Research and development
expense 189,214 161,198
Selling, general and
administrative expense 683,299 425,497
Total operating expense 1,841,225 1,689,572
Loss from operations (1,137,691) (1,260,108)
Interest income 406,291 21,917
Loss before provision for
income taxes (731,400) (1,238,191)
Provision for income taxes (156,000) --
Net loss $(887,400) $(1,238,191)
Net loss per share $(0.07) $(15.96)
Weighted average number of
common shares outstanding 12,277,467 77,586
Pro forma net loss per share N/A (0.17)
Pro forma weighted average number
of common shares outstanding N/A 7,485,940
Nanophase Technologies Corporation
Condensed Balance Sheets
(Unaudited)
December 31,
1998 1997
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $725,113 $3,988,368
Investments 29,750,756 26,884,852
Trade accounts receivable,
less allowance for
doubtful accounts of
$19,276 as of March 31, 1998
and December 31, 1997 816,903 1,641,489
Inventories 944,038 957,303
Prepaid expenses and other
current assets 164,002 112,138
Total current assets 32,400,812 33,584,150
Equipment and leasehold
improvements, net 2,508,232 2,399,893
Other assets, net 200,221 212,526
$35,109,265 $36,196,569
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $505,637 $930,397
Accrued expenses 839,694 614,838
Total current liabilities 1,345,331 1,545,235
Stockholders' equity:
Preferred stock, $.01 par value,
24,088 shares authorized and
no shares issued and outstanding -- --
Common stock, $.01 par value,
25,000,000 shares authorized
and 12,277,467 shares issued
and outstanding 122,775 122,775
Additional paid-in capital 48,273,230 48,273,230
Accumulated deficit (14,632,071) (13,744,671)
Total stockholders' equity 33,763,934 34,651,334
$35,109,265 $36,196,569
SOURCE: Nanophase Technology Corporation
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