SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: March 31, 2003
Commission File Number: 0-22333
Nanophase Technologies Corporation
(Exact name of registrant as specified in its charter)
| Delaware |
36-3687863 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
1319 Marquette Drive, Romeoville, Illinois 60446
(Address of principal executive offices, and zip code)
Registrant’s telephone number, including area code: (630) 771-6708
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
As of May 13, 2003, there were outstanding 15,181,491 shares of Common Stock, par value $.01, of the registrant.
NANOPHASE TECHNOLOGIES CORPORATION
QUARTER ENDED MARCH 31, 2003
2
NANOPHASE TECHNOLOGIES CORPORATION
(Unaudited)
| March 31, |
December 31, |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
356,191 |
|
$ |
445,684 |
| ||
| Investments |
|
5,883,618 |
|
|
7,062,808 |
| ||
| Trade accounts receivable, less allowance for doubtful accounts of $25,000 at March 31, 2003 and December 31, 2002 |
|
1,104,243 |
|
|
941,335 |
| ||
| Other receivable |
|
20,850 |
|
|
16,790 |
| ||
| Inventories, net |
|
724,288 |
|
|
981,834 |
| ||
| Prepaid expenses and other current assets |
|
594,373 |
|
|
747,042 |
| ||
| Total current assets |
|
8,683,563 |
|
|
10,195,493 |
| ||
| Equipment and leasehold improvements, net |
|
9,169,264 |
|
|
9,433,237 |
| ||
| Other assets, net |
|
454,748 |
|
|
384,240 |
| ||
| $ |
18,307,575 |
|
$ |
20,012,970 |
| |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term debts |
$ |
848,496 |
|
$ |
1,283,554 |
| ||
| Current portion of capital lease obligations |
|
61,368 |
|
|
62,099 |
| ||
| Accounts payable |
|
554,865 |
|
|
480,789 |
| ||
| Accrued expenses |
|
815,896 |
|
|
989,000 |
| ||
| Total current liabilities |
|
2,280,625 |
|
|
2,815,442 |
| ||
| Long-term debt, less current maturities |
|
505,732 |
|
|
309,128 |
| ||
| Long-term portion of capital lease obligations, less current maturities |
|
39,576 |
|
|
55,435 |
| ||
|
|
545,308 |
|
|
364,563 |
| |||
| 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; 15,162,227 and 15,137,877 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
|
151,622 |
|
|
151,379 |
| ||
| Additional paid-in capital |
|
56,732,103 |
|
|
56,658,080 |
| ||
| Deferred stock compensation |
|
(55,941 |
) |
|
(67,069 |
) | ||
| Accumulated deficit |
|
(41,346,142 |
) |
|
(39,909,425 |
) | ||
| Total stockholders’ equity |
|
15,481,642 |
|
|
16,832,965 |
| ||
|
|
$18,307,575 |
|
$ |
20,012,970 |
| |||
See Notes to Financial Statements.
3
NANOPHASE TECHNOLOGIES CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended |
||||||||
| 2003 |
2002 |
|||||||
| Revenue: |
||||||||
| Product revenue |
$ |
1,350,338 |
|
$ |
1,313,577 |
| ||
| Other revenue |
|
313,744 |
|
|
94,106 |
| ||
| Total revenue |
|
1,664,082 |
|
|
1,407,683 |
| ||
| Operating expense: |
||||||||
| Cost of revenue |
|
1,546,722 |
|
|
1,295,024 |
| ||
| Research and development expense |
|
461,537 |
|
|
523,685 |
| ||
| Selling, general and administrative expense |
|
1,076,709 |
|
|
1,085,215 |
| ||
| Total operating expense |
|
3,084,968 |
|
|
2,903,924 |
| ||
| Loss from operations |
|
(1,420,886 |
) |
|
(1,496,241 |
) | ||
| Interest income |
|
22,064 |
|
|
28,136 |
| ||
| Interest expense |
|
(30,395 |
) |
|
(27,490 |
) | ||
| Other, net |
|
— |
|
|
900 |
| ||
| Loss before provision for income taxes |
|
(1,429,217 |
) |
|
(1,494,695 |
) | ||
| Provision for income taxes |
|
(7,500 |
) |
|
— |
| ||
| Net loss |
$ |
(1,436,717 |
) |
$ |
(1,494,695 |
) | ||
| Net loss per share—basic and diluted |
$ |
(0.09 |
) |
$ |
(0.11 |
) | ||
| Weighted average number of commonshares outstanding |
|
15,161,686 |
|
|
13,725,801 |
| ||
See Notes to Financial Statements.
4
NANOPHASE TECHNOLOGIES CORPORATION
(Unaudited)
| Three months ended |
||||||||
| 2003 |
2002 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ |
(1,436,717 |
) |
$ |
(1,494,695 |
) | ||
| Adjustments to reconcile net loss to net cash (used in) operating activities: |
||||||||
| Depreciation and amortization |
|
359,364 |
|
|
266,315 |
| ||
| Allowance for excess inventory quantities |
|
(1,933 |
) |
|
41,072 |
| ||
| Stock compensation expense |
|
11,128 |
|
|
— |
| ||
| Changes in assets and liabilities related to operations: |
||||||||
| Trade accounts receivable |
|
(241,381 |
) |
|
(31,363 |
) | ||
| Other receivable |
|
(4,060 |
) |
|
(3,288 |
) | ||
| Inventories |
|
293,313 |
|
|
113,093 |
| ||
| Prepaid expenses and other assets |
|
157,901 |
|
|
(25,405 |
) | ||
| Accounts payable |
|
249,662 |
|
|
101,013 |
| ||
| Accrued liabilities |
|
(257,982 |
) |
|
119,619 |
| ||
| Net cash (used in) operating activities |
|
(870,705 |
) |
|
(913,639 |
) | ||
| Investing activities: |
||||||||
| Acquisition of equipment and leasehold improvements |
|
(95,311 |
) |
|
(172,828 |
) | ||
| Payment of accounts payable incurred for the purchase of equipment and leasehold improvements |
|
(200,362 |
) |
|
(833,824 |
) | ||
| Purchases of held-to-maturity investments |
|
(15,844,782 |
) |
|
(28,551,400 |
) | ||
| Maturities of held-to-maturity investments |
|
17,023,972 |
|
|
30,209,052 |
| ||
| Net cash provided by investing activities |
|
883,517 |
|
|
651,000 |
| ||
| Financing activities: |
||||||||
| Principal payment on debt obligation, including capital leases |
|
(176,571 |
) |
|
(129,749 |
) | ||
| Proceeds from sale of common stock, net, and exercise of stock options |
|
74,266 |
|
|
97,773 |
| ||
| Net cash (used in) financing activities |
|
(102,305 |
) |
|
(31,976 |
) | ||
| (Decrease) in cash and cash equivalents |
|
(89,493 |
) |
|
(294,615 |
) | ||
| Cash and cash equivalents at beginning of period |
|
445,684 |
|
|
582,579 |
| ||