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Nanophase Reports Fourth Quarter and Full-Year Financial Results

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Nanophase Technologies Corporation has reported financial results for the fourth quarter and full-year periods ended December 31, 2011.

The Company also announced its intention to begin the trading of its common stock on the OTCQB marketplace as of market open on March 20, 2012.

“We had an excellent year,” said Nanophase CEO and President Jess Jankowski. “Our business strategy is working and the new applications are building our revenue base while we continue to service our existing customers. Last year was not an easy one - broad financial risks and concerns remain high and, as we have discussed throughout the year, one of our raw materials experienced severe supply and cost pressure. We also experienced tightly contained inventories and significantly reduced product development within our customer base. Despite these challenges, we are pleased to report increased revenue and an improved bottom line for the year.

Q4 Financial Results

Fourth Quarter 2011

• Revenue for the quarter was $1.7 million, compared to $2.0 million in the fourth quarter of 2010.

• The net loss for the quarter was $1.3 million, or a loss of $0.06 per share, compared to a net loss of $1.2 million, or $0.06 per share, for the comparable 2010 quarter.

• The Company reported approximately $2.7 million in cash and cash equivalents on its balance sheet; the Company has no debt.

Twelve months ended December 31, 2011

• Revenue for the year was $9.7 million, a 2% increase over the comparable 2010 revenue total of $9.5 million.

• Gross margin for the year was $2.3 million, or 24 percent of revenue, compared to $2.5 million, or 27 percent for 2010.

• The net loss for the year was $3.4 million, or a loss of $0.16 per share, a 16 percent improvement compared to the net loss of $4.1 million, or $0.19 per share, for 2010.

Mr. Jankowski continued, “I am pleased with our direction and activities. We are adding products and adjusting our marketing strategy at a rate I haven’t seen before. We experienced considerably less seasonality in 2011 than in prior years, and we are focused on new product areas that provide large potential upside, shorter testing cycles and are largely non-seasonal. The process of moving from exclusive relationships with certain customers to non-exclusive relationships with those same customers was highly successful - we have maintained sales volume and added new revenue streams. This was at the core of the strategy we initiated three years ago. We have also enjoyed two consecutive years of increased revenue.”

There has been recent improvement in the supply constriction which caused a cost explosion for rare earth materials, a classification that includes the cerium oxide used in the Company’s polishing applications.

A portion of the 2011 increase has tapered off as new sources are beginning to come on line. While the market for the Company’s polishing product is currently affected by the cost and availability of raw materials, it should be noted that this is only one component of Nanophase’s business and it remains a profitable one.

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.