Exhibit 99.1
Nanophase Reports Second Quarter 2009 Financial Results
Nanophase Continues to Execute New Strategy
Romeoville, IL,—August 4, 2009—Nanophase Technologies Corporation (Nasdaq: NANX), a technology leader in nanomaterials and advanced nanoengineered products, reported today financial results for its second quarter ending June 30, 2009.
Second Quarter
Revenue for second quarter 2009 was $1.6 million, compared to $2.9 million for the same period in 2008. The net loss for the quarter was $1.2 million, or $0.06 per share, compared to a net loss of $0.8 million, or $0.04 per share, for the second quarter of 2008.
Jess Jankowski, President and CEO of Nanophase, noted, “Although results were below prior year, they were in-line with expectations. The results reinforce our view that we must successfully transition Nanophase to a market-driven business model that has a diverse base of customers and revenue streams, while concurrently managing our costs to help off-set the decline in revenue.”
Looking Ahead
“The last several months have shown some solid business development and destocking of excess inventory has started to reverse, both with some of our own customers and industry wide. We believe this shift is and will be a positive one for Nanophase,” said Jankowski.
“Over the past year we have aligned around several market segments, allowing us to better leverage our activities. The quality and quantity of these opportunities continues to improve, as does our eventual ability to convert these opportunities into revenue for Nanophase. This is a direct result of us focusing on fewer markets and building a stronger understanding of the performance benefits of our products in each of those markets.
“While transition costs obscured the benefits in our first half 2009 results, we have reduced our annual expense rate by $2 million, despite increasing the number of business opportunities we have been actively pursuing. This realignment along a lean structure should become even more apparent as we continue through 2009, and is already reflected in a meaningful reduction in sales, general & administrative expenses compared with 2008.” He noted SG&A in second quarter 2009 was $1.05 million, down 31% from second quarter 2008, while first half 2009 SG&A was $2.05 million compared with $3.10 million in first half 2008. “We are spending money prudently, and expect to generate future savings due to the philosophy accompanying these changes.”
Jankowski concluded: “Our research and development efforts are well aligned with the market-driven, direct-to-the-customer model. In addition to continuing to serve the needs of our existing partners, we are intent on building applications expertise in carefully selected market segments. We are tailoring our product offerings towards customers’ identified unmet needs where there is a strong value proposition. We continue to develop ready-to-go products that should serve the customers’ needs more directly. We expect the prospects for success will be improved relative to our previous model. We believe we are doing the right things to build the business.”
Shareholders and members of the investing community are encouraged to participate in today’s conference call, where Jankowski will be discussing the company’s second quarter performance and 2009 prospects.
2nd Quarter Conference Call
Nanophase has scheduled its quarterly conference call for August 4, 2009, at 4:00 p.m. CDT (5:00 p.m. EDT), which will be hosted by Jess Jankowski, president and CEO. To participate in the call you may dial 800-344-8034, or 785-830-1990 and reference the conference identification of 7NANOPHASE. The call may also be accessed through the company’s website,www.nanophase.com, by clicking on the link under News Center and Calendar of Events. If you are unable to attend, a replay will be available through August 11, 2009, by dialing 800-723-0544, or 402-220-2656, or by logging onto the company’s website and following the above directions.
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 9001:2000 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 25, 2009. 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, 2009 | December 31, 2008 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 649,546 | $ | 723,069 | ||||
Investments | 3,664,418 | 6,908,888 | ||||||
Trade accounts receivable, less allowance for doubtful accounts of $9,000 on June 30, 2009 and December 31, 2008 | 916,389 | 1,092,125 | ||||||
Other receivable | — | 7,749 | ||||||
Inventories, net | 1,095,395 | 1,154,207 | ||||||
Prepaid expenses and other current assets | 436,346 | 482,452 | ||||||
Total current assets | 6,762,094 | 10,368,490 | ||||||
Investments | 5,340,000 | 5,340,000 | ||||||
Equipment and leasehold improvements, net | 6,073,015 | 6,651,842 | ||||||
Other assets, net | 39,872 | 39,765 | ||||||
$ | 18,214,981 | $ | 22,400,097 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of capital lease obligations | 8,089 | 22,211 | ||||||
Current portion of deferred other revenue | 10,608 | 74,243 | ||||||
Current portion of long term debt, less current maturities and debt discount | 530,702 | 1,570,346 | ||||||
Accounts payable | 424,248 | 356,853 | ||||||
Accrued expenses | 1,445,641 | 1,493,262 | ||||||
Accrued severance | 375,172 | 541,014 | ||||||
Total current liabilities | 2,794,460 | 4,057,929 | ||||||
Long-term portion of capital lease obligations | 5,081 | 9,219 | ||||||
5,081 | 9,219 | |||||||
Contingent liabilities: | — | — | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding | — | — | ||||||
Common stock, $.01 par value, 30,000,000 shares authorized; 21,204,162 and 21,188,912 shares issued and outstanding on June 30, 2009 and December 31, 2008, respectively | 212,042 | 211,889 | ||||||
Additional paid-in capital | 92,027,075 | 91,597,529 | ||||||
Accumulated deficit | (76,823,677 | ) | (73,476,469 | ) | ||||
Total stockholders’ equity | 15,415,440 | 18,332,949 | ||||||
$ | 18,214,981 | $ | 22,400,097 | |||||
NANOPHASE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2009 | As Adjusted 2008 | 2009 | As Adjusted 2008 | |||||||||||||
Revenue: | ||||||||||||||||
Product revenue, net | $ | 1,500,733 | $ | 2,811,626 | $ | 2,797,546 | $ | 5,754,347 | ||||||||
Other revenue | 109,930 | 132,780 | 218,275 | 244,167 | ||||||||||||
Total revenue | 1,610,663 | 2,944,406 | 3,015,821 | 5,998,514 | ||||||||||||
Operating expense: | ||||||||||||||||
Cost of revenue | 1,430,363 | 1,836,276 | 2,745,287 | 3,836,484 | ||||||||||||
Gross Profit | 180,300 | 1,108,130 | 270,534 | 2,162,030 | ||||||||||||
Research and development expense | 381,075 | 416,239 | 785,119 | 854,934 | ||||||||||||
Selling, general and administrative expense | 1,051,343 | 1,529,643 | 2,051,510 | 3,104,387 | ||||||||||||
Severance charges | — | — | 794,069 | |||||||||||||
Loss from operations | (1,252,118 | ) | (837,752 | ) | (3,360,164 | ) | (1,797,291 | ) | ||||||||
Interest income | 24,291 | 80,788 | 58,294 | 248,010 | ||||||||||||
Interest expense | (12,379 | ) | (33,142 | ) | (33,286 | ) | (71,559 | ) | ||||||||
Other, net | 1,652 | (2,074 | ) | (12,052 | ) | 157 | ||||||||||
Loss before provision for income taxes | (1,238,554 | ) | (792,180 | ) | (3,347,208 | ) | (1,620,683 | ) | ||||||||
Provision for income taxes | — | — | — | — | ||||||||||||
Net loss | $ | (1,238,554 | ) | $ | (792,180 | ) | $ | (3,347,208 | ) | $ | (1,620,683 | ) | ||||
Net loss per share—basic and diluted | $ | (0.06 | ) | $ | (0.04 | ) | $ | (0.16 | ) | $ | (0.08 | ) | ||||
Weighted average number of common shares outstanding | 21,204,162 | 21,130,697 | 21,200,791 | 21,118,652 | ||||||||||||
NANOPHASE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS—EXPANDED SCHEDULE
(Unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
2009 | As Adjusted 2008 | 2009 | As Adjusted 2008 | |||||||||||||
Revenue: | ||||||||||||||||
Product revenue, net | $ | 1,500,733 | $ | 2,811,626 | $ | 2,797,546 | $ | 5,754,347 | ||||||||
Other revenue | 109,930 | 132,780 | 218,275 | 244,167 | ||||||||||||
Total revenue | 1,610,663 | 2,944,406 | 3,015,821 | 5,998,514 | ||||||||||||
Operating expense: | ||||||||||||||||
Cost of revenue detail: | ||||||||||||||||
Depreciation | 226,692 | 240,575 | 486,068 | 478,620 | ||||||||||||
Non-Cash equity compensation | 18,073 | 20,165 | 26,416 | 36,936 | ||||||||||||
Other costs of revenue | 1,185,598 | 1,575,536 | 2,232,803 | 3,320,928 | ||||||||||||
Cost of revenue | 1,430,363 | 1,836,276 | 2,745,287 | 3,836,484 | ||||||||||||
Gross profit | 180,300 | 1,108,130 | 270,534 | 2,162,030 | ||||||||||||
Research and development expense detail: | ||||||||||||||||
Depreciation | 57,227 | 59,318 | 114,270 | 117,775 | ||||||||||||
Non-Cash equity compensation | 25,748 | 38,281 | 48,022 | 69,313 | ||||||||||||
Other research and development expense | 298,100 | 318,640 | 622,827 | 667,846 | ||||||||||||
Research and development expense | 381,075 | 416,239 | 785,119 | 854,934 | ||||||||||||
Selling, general and administrative expense detail: | ||||||||||||||||
Depreciation and amortization | 19,385 | 15,154 | 39,727 | 29,705 | ||||||||||||
Non-Cash equity compensation | 81,664 | 173,682 | 156,433 | 326,342 | ||||||||||||
Trademark abandonment charge | — | — | — | 37,214 | ||||||||||||
Other selling, general and administrative expense | 950,294 | 1,340,807 | 1,855,350 | 2,711,126 | ||||||||||||
Selling, general and administrative expense | 1,051,343 | 1,529,643 | 2,051,510 | 3,104,387 | ||||||||||||
Severance charges | — | — | 794,069 | — | ||||||||||||
Loss from operations | (1,252,118 | ) | (837,752 | ) | (3,360,164 | ) | (1,797,291 | ) | ||||||||
Interest income | 24,291 | 80,788 | 58,294 | 248,010 | ||||||||||||
Interest expense | (12,379 | ) | (33,142 | ) | (33,286 | ) | (71,559 | ) | ||||||||
Other, net | 1,652 | (2,074 | ) | (12,052 | ) | 157 | ||||||||||
Loss before provision for income taxes | (1,238,554 | ) | (792,180 | ) | (3,347,208 | ) | (1,620,683 | ) | ||||||||
Provision for income taxes | — | — | — | — | ||||||||||||
Net loss | $ | (1,238,554 | ) | $ | (792,180 | ) | $ | (3,347,208 | ) | $ | (1,620,683 | ) | ||||
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures): | ||||||||||||||||
Addback Interest, net | (11,912 | ) | (47,646 | ) | (25,008 | ) | (176,451 | ) | ||||||||
Addback Depreciation/Amortization | 303,304 | 315,047 | 640,065 | 626,100 | ||||||||||||
Addback Severance Charge | — | — | 794,069 | — | ||||||||||||
Addback Non-Cash Equity Compensation | 125,485 | 232,128 | 230,871 | 432,591 | ||||||||||||
Adjusted EBITDA | $ | (821,677 | ) | $ | (292,651 | ) | $ | (1,707,211 | ) | $ | (738,443 | ) | ||||