UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): April 29, 2020
NANOPHASE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-22333 | 36-3687863 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 1319 Marquette Drive, Romeoville, Illinois 60446 |
| (Address of Principal Executive Offices) (Zip Code) |
(630) 771-6700
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock | NANX | OTCQB |
Item 2.02. Results of Operations and Financial Condition.
On April 29, 2020, the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NANOPHASE TECHNOLOGIES CORPORATION | ||
| Date: April 29, 2020 | By: | /s/ Jess Jankowski |
| Jess Jankowski | ||
| Chief Executive Officer | ||
EXHIBIT 99.1
Nanophase Reports First Quarter 2020 Financial Results
Announces 8% Growth for Quarter, Outsized Formulated Product Sales
ROMEOVILLE, Ill., April 29, 2020 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (OTCQB: NANX), a leader in minerals-based personal care ingredients and formulated products for protecting skin from environmental aggressors, such as UV light and pollution, today reported financial results for the first quarter period ended March 31, 2020.
“Even with the struggles brought on by Covid-19 and the related quarantine, there are reasons for optimism for Nanophase and Solésence,” commented Jess Jankowski, President and CEO. “We continue to operate as an essential service, and have more than doubled our capacity for producing materials for medical diagnostic applications by reconfiguring our manufacturing floor, and intensely focusing our engineering efforts. We expect this capacity to help us deliver on expanded demand during the second quarter.”
“In terms of revenue mix, our Personal Care Ingredients business was down slightly year-over-year, due to a reduction in demand, part of which we believe was due to the global reaction to Covid-19. Our Advanced Materials business was down by about 30% for the same period, which was due to a combination of timing, and the discontinuation of unprofitable products,” Jankowski continued. “The quarter’s brightest spot was in our Solésence business, which increased by 70% year-over-year, up to $1.5M in first quarter revenue, compared to $1.9M and $1.4M for the full years 2019 and 2018, respectively.”
First Quarter 2020 Financial Highlights
Jankowski continued, “We are continuing to see benefits from the operational and strategic changes we’ve made to our organization to reduce costs and increase efficiency. Our efforts to improve our cost position will continue during 2020, while meeting the demand for medical diagnostic ingredients, and driving growth in our core personal care businesses. While it’s too early to tell, we believe that our new Solésence products will continue to gain market traction in 2020. Aside from any immediate changes driven by Covid-19, we have seen no indication that our primary market drivers will diminish in the longer term.”
“In terms of our expectations for the next several months, we understand our demand through July fairly well. We are expecting overall volume similar to last year in the second quarter, despite Personal Care Ingredients volume being lower. On the upside, we expect stronger Advanced Materials revenue driven by increased demand for medical diagnostic materials, and we expect first half 2020 revenue for our Solésence products to exceed $2.5M.”
“Of primary concern is protecting our employees, their families, and our community during this disruption,” added Jankowski, “so we are taking necessary precautions, while continuing to manufacture products and ingredients within sectors that are part of our nation’s critical infrastructure. We are both honored and proud to be able to contribute to our national public health, economic security, and safety through the materials we make for use in medical diagnostics.”
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 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 minerals-based personal care ingredients and formulated products for protecting skin from environmental aggressors, such as UV light and pollution, as well as providing solutions for industrial product applications. Using a platform of patented and proprietary integrated technologies, the Company creates products with unique performance attributes from two ISO 9001 and ISO 14001 registered facilities. Nanophase delivers 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 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; 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.
| NANOPHASE TECHNOLOGIES CORPORATION | |||||
| CONSOLIDATED BALANCE SHEETS | |||||
| March 31, | December 31, | ||||
| 2020 | 2019 | ||||
| ASSETS | (Unaudited) | ||||
| Current assets: | |||||
| Cash | $ | 951,431 | $ | 1,193,994 | |
| Trade accounts receivable, less allowance for doubtful accounts of $9,000 | |||||
| on March 31, 2020 and December 31, 2019, respectively | 2,254,224 | 970,472 | |||
| Inventories, net | 2,384,058 | 2,553,620 | |||
| Prepaid expenses and other current assets | 258,931 | 266,587 | |||
| Total current assets | 5,848,644 | 4,984,673 | |||
| Equipment and leasehold improvements, net | 2,351,352 | 2,255,158 | |||
| Operating leases, Right of Use | 2,036,462 | 2,118,883 | |||
| Other assets, net | 11,967 | 12,528 | |||
| $ | 10,248,425 | $ | 9,371,242 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Line of credit, bank | $ | 500,000 | $ | 500,000 | |
| Line of credit, related party | 1,400,446 | 223,871 | |||
| Current portion of long-term debt, related party | 500,000 | 500,000 | |||
| Current portion of capital lease obligations | 207,117 | 218,345 | |||
| Current portion of operating lease obligations | 369,383 | 356,949 | |||
| Accounts payable | 1,712,857 | 1,748,021 | |||
| Current portion of deferred revenue | 321,015 | 482,349 | |||
| Accrued expenses | 512,371 | 379,314 | |||
| Total current liabilities | 5,523,189 | 4,408,849 | |||
| Long-term portion of capital lease obligations | 241,436 | 287,660 | |||
| Long-term portion of operating lease obligations | 1,936,077 | 2,034,592 | |||
| Long-term convertible loan, related party | 896,594 | 829,721 | |||
| Long-term portion of deferred revenue | 47,375 | 92,750 | |||
| Asset retirement obligation | 208,229 | 206,221 | |||
| Total long-term liabilities | 3,329,711 | 3,450,944 | |||
| Contingent liabilities | - | - | |||
| 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; | |||||
| 38,136,792 and 33,911,792 shares issued and outstanding on March 31, 2020 | |||||
| and December 31, 2019, respectively | 381,368 | 381,368 | |||
| Additional paid-in capital | 101,937,944 | 101,886,411 | |||
| Accumulated deficit | (100,923,787) | (100,756,330) | |||
| Total stockholders' equity | 1,395,525 | 1,511,449 | |||
| $ | 10,248,425 | $ | 9,371,242 | ||
| NANOPHASE TECHNOLOGIES CORPORATION | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
| (Unaudited) | ||||||
| Three months ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Revenue: | ||||||
| Product revenue, net | $ | 3,961,488 | $ | 3,496,733 | ||
| Other revenue | 77,909 | 258,398 | ||||
| Net revenue | 4,039,397 | 3,755,131 | ||||
| Operating expense: | ||||||
| Cost of revenue | 3,004,846 | 2,870,661 | ||||
| Gross profit | 1,034,551 | 884,470 | ||||
| Research and development expense | 372,610 | 476,527 | ||||
| Selling, general and administrative expense | 705,608 | 877,483 | ||||
| Income/(Loss) from operations | (43,667) | (469,540) | ||||
| Interest income | - | - | ||||
| Interest expense | 123,790 | 43,104 | ||||
| Other, net | - | - | ||||
| Income/(Loss) before provision for income taxes | (167,457) | (512,644) | ||||
| Provision for income taxes | - | - | ||||
| Net income/(loss) | $ | (167,457) | $ | (512,644) | ||
| Net income/(loss) per share- basic and diluted | $ | - | $ | (0.02) | ||
| Weighted average number of basic and diluted | ||||||
| common shares outstanding | 38,136,792 | 33,911,792 | ||||
| NANOPHASE TECHNOLOGIES CORPORATION | ||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE | ||||||
| (Unaudited) | ||||||
| Three months ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Revenue: | ||||||
| Product revenue, net | $ | 3,961,488 | $ | 3,496,733 | ||
| Other revenue | 77,909 | 258,398 | ||||
| Net revenue | 4,039,397 | 3,755,131 | ||||
| Operating expense: | ||||||
| Cost of revenue detail: | ||||||
| Depreciation | 71,144 | 59,486 | ||||
| Non-Cash equity compensation | 9,653 | 8,032 | ||||
| Other costs of revenue | 2,924,049 | 2,803,143 | ||||
| Cost of revenue | 3,004,846 | 2,870,661 | ||||
| Gross profit | 1,034,551 | 884,470 | ||||
| Research and development expense detail: | ||||||
| Depreciation | 10,677 | 12,005 | ||||
| Non-Cash equity compensation | 14,593 | 14,413 | ||||
| Other research and development expense | 347,340 | 450,109 | ||||
| Research and development expense | 372,610 | 476,527 | ||||
| Selling, general and administrative expense detail: | ||||||
| Depreciation and amortization | 5,120 | 5,439 | ||||
| Non-Cash equity compensation | 27,287 | 34,761 | ||||
| Other selling, general and administrative expense | 673,201 | 837,283 | ||||
| Selling, general and administrative expense | 705,608 | 877,483 | ||||
| Income/(Loss) from operations | (43,667) | (469,540) | ||||
| Interest income | - | - | ||||
| Interest expense | 123,790 | 43,104 | ||||
| Other, net | - | - | ||||
| Income/(Loss) before provision for income taxes | (167,457) | (512,644) | ||||
| Provision for income taxes | - | - | ||||
| Net income/(loss) | $ | (167,457) | $ | (512,644) | ||
| Non-GAAP Disclosure (see note regarding Non-GAAP disclosures): | ||||||
| Addback Interest, net | 123,790 | 43,104 | ||||
| Addback Depreciation/Amortization | 86,941 | 76,930 | ||||
| Addback Non-Cash Equity Compensation | 51,533 | 57,206 | ||||
| Adjusted EBITDA | $ | 94,807 | $ | (335,404) | ||
COMPANY CONTACT
Investor Relations
630-771-6700