Nanophase Reports Record Third Quarter 2020 Financial Results as Solésence Expands Beauty Footprint

Announces 20+% Growth and Record Profitability

ROMEOVILLE, Ill., Nov. 03, 2020 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (OTCQB: NANX), a leader in minerals-based and scientifically-driven health care innovations across various beauty and life science categories, protecting skin from environmental aggressors and aiding in medical diagnostics, today reported financial results for the three- and nine-month periods ended September 30, 2020.

Jess Jankowski, President and CEO, commented: “the third quarter continued our strong progress in profitably growing Nanophase. Our medical diagnostics materials for Covid-19-related applications continue to receive broad use during the global pandemic, while our fully formulated Solésence products have seen triple digit growth despite the challenges of 2020. Although our third major business segment, personal care ingredients, has experienced a sales downturn that we believe is related to the pandemic, our growth in total has been exceptional.”

Third Quarter and YTD 2020 Financial Highlights

• Revenue for the third quarter was $3.9 million, vs. $3.1 million for the same period in 2019. Revenue for the nine-month period was $12.3 million vs. $10.1 million for the same period in 2019. 

For the nine-month period of 2020:

Solésence revenue was $4.4 million, up 164% from $1.7 million in 2019 Advanced Materials revenue was $3.7 million, up 85% from $2.0 million in 2019 Personal Care Ingredients revenue was $4.2 million, down 35% from $6.5 million in 2019

• Net income for the quarter was $0.4 million in 2020, or $0.01 per share, compared to a net loss of $0.9 million, or $0.02 per share, for 2019.   Net income for the nine-month period was $0.8 million in 2020, or $0.02 per share, compared to a net loss of $2.0 million, or $0.06 per share, for 2019.
  
  
• We note that the PPP funding we received in the second quarter of 2020 is recorded on the balance sheet as a liability and has not had any impact on our income statement to date.
  
  
• The Company finished the quarter with approximately $1.1 million in cash and cash equivalents.
  

Jankowski continued, “Our gross profit and bottom line have improved nicely since the first quarter. This is a function of growing product volume, improvements in operational efficiency, and prudent cost-cutting. We expect these gains combined with a slight improvement in the personal care ingredients segment to result in the fourth quarter exceeding last year's results.”

”The growth in our Solésence business is a validation of our beauty products strategy,” offered Kevin Cureton, Chief Operating Officer. “As expected, our two largest Solésence clients have each exceeded $1 million in revenue, while we have launched products with over a dozen different beauty and personal care brands, demonstrating the broadening of our customer base.”

Jankowski added, “We are also honored to contribute to our national public health through the materials we make for use in medical diagnostics, and we are keenly aware of the suffering of our fellow citizens under current conditions. We remain committed to protecting our employees, their families, and our communities, as we work to provide essential products for the health and safety of those we serve.”

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 (“GAAP”) 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 GAAP.

About Nanophase Technologies
Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leading innovator in minerals-based and scientifically-driven health care solutions across beauty and life science categories, as well as other legacy advanced materials applications. Leveraging a platform of integrated patented and proprietary technologies, the Company creates products with unique performance, enhancing consumers health and well-being. We deliver commercial quantity and quality engineered materials both as ingredients and as part of fully formulated products in a variety of formats.

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 engineered materials, ingredients, and fully formulated products; 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; 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; and other factors described in the Company’s Form 10-K filed March 30, 2020. 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.

COMPANY CONTACT
Investor Relations
630-771-6700

NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited Consolidated Condensed)
			September 30,				December 31,
ASSETS				2020				2019
Current assets:
	Cash and cash equivalents		$	1,133,850			$	1,193,994
	Trade accounts receivable, less allowance for doubtful accounts of $9,000 on September 30, 2020 and on December 31, 2019			2,451,324				970,472
	Inventories, net			3,583,944				2,553,620
	Prepaid expenses and other current assets			599,387				266,587
		Total current assets		7,768,505				4,984,673
	Equipment and leasehold improvements, net			2,649,619				2,255,158
	Operating lease right-of-use assets			1,916,993				2,118,883
	Other assets, net			10,840				12,528
			$	12,345,957			$	9,371,242
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Line of credit, bank		$	500,000			$	500,000
	Line of credit, related party			1,541,113				223,871
	Current portion of long-term debt, related party			500,000				500,000
	Current portion of finance lease obligations			185,621				218,345
	Current portion of operating lease obligations			411,421				356,949
	Accounts payable			1,668,492				1,748,021
	Current portion of deferred revenue			309,122				482,349
	Accrued expenses			645,998				379,314
		Total current liabilities		5,761,767				4,408,849
	Long-term portion of finance lease obligations			148,369				287,660
	Long-term portion of operating lease obligations			1,766,066				2,034,592
	Long-term convertible loan, related party			1,030,340				829,721
	PPP SBA Loan			951,600				-
	Long-term portion of deferred revenue			-				92,750
	Asset retirement obligations			212,247				206,221
		Total long-term liabilities		4,108,622				3,450,944
Stockholders' equity:
	Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding			-				-
	Common stock, $.01 par value, 55,000,000 shares authorized; 38,215,069 and 38,136,792 shares issued and outstanding on September 30, 2020 and December 31, 2019, respectively			381,928				381,368
	Additional paid-in capital			102,054,867				101,886,411
	Accumulated deficit			(99,961,227	)			(100,756,330	)
		Total stockholders' equity		2,475,568				1,511,449
			$	12,345,957			$	9,371,242

NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited Consolidated Condensed)
						Three months ended							Nine months ended
						September 30,							September 30,
							2020			2019				2020			2019
Revenue:
	Product revenue, net					$	3,826,918		$	3,043,036			$	11,929,496		$	9,796,944
	Other revenue						60,538			26,350				332,768			321,058
		Net revenue					3,887,456			3,069,386				12,262,264			10,118,002
Operating expense:
	Cost of revenue						2,203,105			2,506,720				7,832,125			7,839,443
		Gross profit					1,684,351			562,666				4,430,139			2,278,559
	Research and development expense						402,216			487,798				1,133,120			1,449,646
	Selling, general and administrative expense						729,779			889,659				2,133,586			2,710,710
Income/(Loss) from operations							552,356			(814,791	)			1,163,433			(1,881,797	)
Interest income							-			-				-			-
Interest expense							122,137			47,139				368,330			140,282
Other, net							-			-				-			-
Income/(Loss) before provision for income taxes							430,219			(861,930	)			795,103			(2,022,079	)
Provision for income taxes							-			-				-			-
Net income/(loss)						$	430,219		$	(861,930	)		$	795,103		$	(2,022,079	)
Net income/(loss) per basic shares						$	0.01		$	(0.02	)		$	0.02		$	(0.06	)
Weighted average number of basic common shares outstanding							38,141,741			38,136,792				38,138,453			36,077,257
Net income/(loss) per diluted share						$	0.01		$	(0.02	)		$	0.02		$	(0.06	)
Weighted average number of diluted common shares outstanding							38,432,741			38,136,792				38,228,453			36,077,257
NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
(Unaudited Consolidated Condensed)
						Three months ended							Nine months ended
						September 30,							September 30,
							2020			2019				2020			2019
Revenue:
	Product revenue, net					$	3,826,918		$	3,043,036			$	11,929,496		$	9,796,944
	Other revenue						60,538			26,350				332,768			321,058
		Net revenue					3,887,456			3,069,386				12,262,264			10,118,002
Operating expense:
	Cost of revenue detail:
	Depreciation						73,572			61,612				217,578			181,494
	Non-Cash equity compensation						19,426			13,297				38,086			33,609
	Other costs of revenue						2,110,107			2,431,811				7,576,461			7,624,340
		Cost of revenue					2,203,105			2,506,720				7,832,125			7,839,443
			Gross profit				1,684,351			562,666				4,430,139			2,278,559
	Research and development expense detail:
	Depreciation						10,579			12,250				31,755			36,699
	Non-Cash equity compensation						13,930			15,804				42,797			42,196
	Other research and development expense						377,707			459,744				1,058,568			1,370,751
		Research and development expense					402,216			487,798				1,133,120			1,449,646
	Selling, general and administrative expense detail:
	Depreciation and amortization						4,871			5,159				15,025			15,948
	Non-Cash equity compensation						14,998			34,746				66,019			103,414
	Other selling, general and administrative expense						709,910			849,754				2,052,542			2,591,348
		Selling, general and administrative expense					729,779			889,659				2,133,586			2,710,710
Income/(Loss) from operations							552,356			(814,791	)			1,163,433			(1,881,797	)
Interest income							-			-				-			-
Interest expense							122,137			47,139				368,330			140,282
Other, net							-			-
Income/(Loss) before provision for income taxes							430,219			(861,930	)			795,103			(2,022,079	)
Provision for income taxes							-			-				-			-
Net income/(loss)						$	430,219		$	(861,930	)		$	795,103		$	(2,022,079	)
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):
	Addback Interest, net						122,137			47,139				368,330			140,282
	Addback Depreciation/Amortization						89,022			79,021				264,358			234,141
	Addback Non-Cash Equity Compensation						48,354			63,847				146,902			179,219
	Adjusted EBITDA					$	689,732		$	(671,923	)		$	1,574,693		$	(1,468,437	)