Exhibit 99.1
NANOPHASE ANNOUNCES SECOND QUARTER 2004 RESULTS
Revenues Increases 18% Year-Over-Year and 19% Sequentially Quarter-To-Quarter
Romeoville, IL, July 21, 2004–Nanophase Technologies (Nasdaq: NANX), a nanomaterial technology leader, developer and commercial manufacturer, announced second quarter 2004 results. Based on the financial data accompanying this release, the Company’s results are stated approximately as follows.
For the quarter ended June 30, 2004, total revenue rose to $1.54 million compared with $1.31 million in the same quarter of 2003, or an increase of 18%. Nanophase reported a second quarter 2004 net loss of $1.45 million, or $0.08 per share (fully diluted), compared with a net loss for the first quarter of 2003 of $1.56 million, or $0.10 per share (fully diluted). The Company noted that second quarter revenues increased 19% sequentially over the first quarter of 2004.
“Nanophase had a solid second quarter, both in operations and engineering, and in its business development and sales efforts directed to revenue growth”, stated Joseph Cross, president and CEO. “During the second quarter, Nanophase’s customer for sunscreen nanomaterials increased its annual purchase order for 2004 by 13%; the Company signed a joint development agreement with Huber Engineered Materials to develop ‘nanomaterial solution’ ingredients for the personal care market; and noted the release of BYK Chemie’s initial two nano-additive products as a result of the Company’s partnership with ALTANA.” Cross noted that Nanophase had shipped initial orders of nanomaterials to BYK Chemie during the second quarter.
“Operationally, Nanophase continues to make excellent progress in six-sigma Lean Manufacturing initiatives to reduce variable manufacturing cost and develop innovative nanomaterials, such as the recently announced 20 nanometer alumina, for new target markets. Nanophase is completing a series of process improvements that are targeted to increase PVS reactor output by 20-30% in conjunction with a re-engineering program that has reduced the expected operational labor cost by 25%. The Company expects to maintain an aggressive schedule for new nanomaterial development for targeted applications and new markets throughout 2004.”
Nanophase plans its second quarter conference call for July 22 at 10:00 AM CDT, 11:00 AM EDT, accessible on www.nanophase.com by clicking on the conference call link under Investor Relations and Calendar of Events. A replay will be available through July 29, 2004, on www.nanophase.com and following the above instructions, or by dialing 706-645-9291 and entering code 8648421.
Nanophase Technologies (NANX), www.nanophase.com, 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 9001:2000 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. The Company owns or licenses 25 United States patents and patent applications and 41 foreign patents and patent applications. Information about Nanophase may be found in the Company’s public filings. Other information on our website is not incorporated by reference into, and should not be considered a part of, this press release.
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 risk and uncertainties include 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 risks described in the Company’s registration statement on Form S-3 filed June 7, 2004 and other filings with the Securities and Exchange Commission. 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
(Unaudited)
ASSETS | June 30, 2004 | December 31, 2003 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 910,739 | $ | 399,999 | ||||
Investments | 12,882,495 | 4,562,364 | ||||||
Trade accounts receivable, less allowance for doubtful accounts of $24,350 and $25,000 at June 30, 2004 and December 31, 2003, respectively | 766,151 | 1,244,490 | ||||||
Other receivable | — | 24,214 | ||||||
Inventories, net | 619,394 | 682,999 | ||||||
Prepaid expenses and other current assets | 366,334 | 659,778 | ||||||
Total current assets | 15,545,113 | 7,573,844 | ||||||
Equipment and leasehold improvements, net | 7,629,295 | 8,192,995 | ||||||
Other assets, net | 511,855 | 475,980 | ||||||
$ | 23,686,263 | $ | 16,242,819 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debts | $ | 849,802 | $ | 1,034,379 | ||||
Current portion of capital lease obligations | 21,867 | 43,609 | ||||||
Accounts payable | 649,441 | 438,304 | ||||||
Accrued expenses | 971,559 | 743,771 | ||||||
Total current liabilities | 2,492,669 | 2,260,063 | ||||||
Long-term debt, less current maturities | — | 251,843 | ||||||
Long-term portion of capital lease obligations, less current maturities | 1,505 | 11,826 | ||||||
1,505 | 263,669 | |||||||
Contingent liabilities: | — | — | ||||||
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; 17,423,814 and 15,902,674 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively | 174,238 | 159,027 | ||||||
Additional paid-in capital | 69,677,738 | 59,297,135 | ||||||
Accumulated deficit | (48,659,887 | ) | (45,737,075 | ) | ||||
Total stockholders’ equity | 21,192,089 | 13,719,087 | ||||||
$ | 23,686,263 | $ | 16,242,819 | |||||
NANOPHASE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenue: | ||||||||||||||||
Product revenue | $ | 1,287,850 | $ | 1,220,639 | $ | 2,353,988 | $ | 2,570,977 | ||||||||
Other revenue | 254,218 | 86,897 | 481,439 | 400,640 | ||||||||||||
Total revenue | 1,542,068 | 1,307,536 | 2,835,427 | 2,971,617 | ||||||||||||
Operating expense: | ||||||||||||||||
Cost of revenue | 1,428,175 | 1,234,248 | 2,641,285 | 2,780,970 | ||||||||||||
Research and development expense | 476,813 | 510,198 | 951,698 | 971,736 | ||||||||||||
Selling, general and administrative expense | 1,104,233 | 1,103,040 | 2,163,177 | 2,179,748 | ||||||||||||
Total operating expense | 3,009,221 | 2,847,486 | 5,756,160 | 5,932,454 | ||||||||||||
Loss from operations | (1,467,153 | ) | (1,539,950 | ) | (2,920,733 | ) | (2,960,837 | ) | ||||||||
Interest income | 42,125 | 19,325 | 56,786 | 41,389 | ||||||||||||
Interest expense | (19,787 | ) | (34,060 | ) | (44,626 | ) | (64,455 | ) | ||||||||
Other, net | 67 | — | 761 | — | ||||||||||||
Loss before provision for income taxes | (1,444,748 | ) | (1,554,685 | ) | (2,907,812 | ) | (2,983,903 | ) | ||||||||
Provision for income taxes | (7,500 | ) | (7,500 | ) | (15,000 | ) | (15,000 | ) | ||||||||
Net loss | $ | (1,452,248 | ) | $ | (1,562,185 | ) | $ | (2,922,812 | ) | $ | (2,998,903 | ) | ||||
Net loss per share—basic and diluted | $ | (0.08 | ) | $ | (0.10 | ) | $ | (0.17 | ) | $ | (0.20 | ) | ||||
Weighted average number of common shares outstanding | 17,377,484 | 15,204,454 | 16,793,574 | 15,183,189 | ||||||||||||