<SUBMISSION>
<ACCESSION-NUMBER>0000950131-02-002327
<TYPE>S-3
<PUBLIC-DOCUMENT-COUNT>5
<FILING-DATE>20020612
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>NANOPHASE TECHNOLOGIES CORPORATION
<CIK>0000883107
<ASSIGNED-SIC>3390
<IRS-NUMBER>363687863
<STATE-OF-INCORPORATION>IL
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3
<ACT>33
<FILE-NUMBER>333-90326
<FILM-NUMBER>02677198
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>453 COMMERCE ST
<CITY>BURR RIDGE
<STATE>IL
<ZIP>60521
<PHONE>6303231200
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>453 COMMERCE STREET
<CITY>BURR RIDGE
<STATE>IL
<ZIP>60521
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-3
<SEQUENCE>1
<FILENAME>ds3.htm
<DESCRIPTION>FORM S-3
<TEXT>
<HTML><HEAD>
<TITLE>Prepared by R.R. Donnelley Financial -- Form S-3</TITLE>
</HEAD>
  <BODY BGCOLOR="WHITE">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>As filed with the Securities and Exchange Commission on June 12, 2002
</B></FONT></DIV> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Registration No. 333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="4"
NOSHADE COLOR="#000000" ALIGN="left"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5" COLOR="#000000"><B>UNITED STATES </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"
COLOR="#000000"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="3" COLOR="#000000"><B>Washington, DC 20549 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE
WIDTH="18%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5" COLOR="#000000"><B>FORM S-3 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"
COLOR="#000000"><B>REGISTRATION STATEMENT </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="3" COLOR="#000000"><B><I>Under </I></B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"
COLOR="#000000"><B><I>THE SECURITIES ACT OF 1933 </I></B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE WIDTH="18%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"
COLOR="#000000"><B>NANOPHASE TECHNOLOGIES CORPORATION </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(Exact name of registrant as specified in its charter) </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Delaware</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(State or other
jurisdiction of</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>incorporation or organization)</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>36-3687863</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(I.R.S.
Employer</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Identification No.)</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>1319 Marquette Drive </B></FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Romeoville, Illinois 60446 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(630) 771-6700 </B></FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(Address, including zip code, and telephone number, including area code, of registrant&#146;s principal executive offices) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>JOSEPH E. CROSS, CHIEF EXECUTIVE OFFICER </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>NANOPHASE TECHNOLOGIES CORPORATION
</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>1319 Marquette Drive </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Romeoville, Illinois 60446
</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(630) 771-6700 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>(Name, address, including zip code, and
telephone number, including area code, of agent for service) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE WIDTH="18%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B><I>Copies to: </I></B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>JOHN L. EISEL, ESQ. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>GEOFFREY C. COCKRELL, ESQ. </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Wildman, Harrold, Allen &amp; Dixon </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>225 West Wacker Drive </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Chicago, Illinois 60606-1229 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>(312) 201-2000 </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>(312) 201-2555 (fax) </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE WIDTH="18%"
COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Approximate date of commencement of proposed sale to the public:&nbsp;&nbsp;&nbsp;&nbsp;</B>From time to
time on and after the effective date of this registration statement. <B></B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">If the only securities being
registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.<B><I>&nbsp;&nbsp;</I></B></FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B><I> </I></B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.&nbsp;&nbsp;<FONT
FACE="WINGDINGS">&#120;</FONT> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;</FONT><FONT FACE="WINGDINGS"
SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">If this Form is a
post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering.&nbsp;&nbsp;</FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.&nbsp;&nbsp;</FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE WIDTH="18%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>CALCULATION OF REGISTRATION FEE </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="4" NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center">
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<TD VALIGN="bottom" WIDTH="52%"> <DIV><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title of Each Class of</B></FONT></DIV> <DIV><FONT
FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities to be Registered</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Amount to be</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Registered</B></FONT></DIV>
</TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Proposed&nbsp;Maximum</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>Offering&nbsp;Price&nbsp;Per&nbsp;Share</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Proposed&nbsp;Maximum</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><B>Aggregate&nbsp;Offering&nbsp;Price</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Amount of Registration&nbsp;Fee</B></FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD></TR>
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<TD VALIGN="top" WIDTH="52%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Common Stock $0.01 par value</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="15%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,370,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="15%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$5.275(1)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="15%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$7,226,750(1)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="15%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$664.86</FONT></DIV> </TD> </TR>
<TR>
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<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR NOSHADE COLOR="#000000"></TD>
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 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) of the Securities Act of 1933 based upon the average high and low
prices of the common stock as reported on the Nasdaq National Market on June 6, 2002. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In
addition to the shares of common stock set forth on the Calculation of Registration Fee Table, pursuant to Rule 416 of the Securities Act, this Registration Statement also registers such additional number of shares of common stock as may become
issuable as a result of stock splits, stock dividends or similar transactions. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE WIDTH="18%" COLOR="#000000"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR SIZE="4" NOSHADE COLOR="#000000" ALIGN="left">

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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <P></P> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS NAMED IN THIS PROSPECTUS MAY NOT SELL
THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THE PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED. </B></FONT></DIV> <P></P> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>SUBJECT TO COMPLETION, DATED JUNE 12, 2002 </B></FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>PROSPECTUS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"
COLOR="#000000"><B>1,370,000 Shares </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="5" COLOR="#000000"><B>NANOPHASE TECHNOLOGIES CORPORATION </B></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="4" COLOR="#000000"><B>Common Stock </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <HR NOSHADE WIDTH="19%" COLOR="#000000"><DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">This prospectus relates to resales of 1,370,000 shares of our common stock or interests therein issuable from time to time. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">These shares of common stock were issued by Nanophase to the following persons and entities, who we refer to in this prospectus
as the selling stockholders listed on page 13 of this prospectus. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">This offering is not being underwritten. We
will not receive any proceeds from the sale of these shares. The selling stockholders identified in this prospectus (which term as used herein includes their pledgees, donees, transferees or other successors-in-interest) may offer the shares or
interests therein from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Our common stock is traded on The Nasdaq National Market under the ticker symbol &#147;NANX.&#148; On June 6, 2002, the closing sale price of our common stock, as reported
by Nasdaq, was $5.37 per share. You are urged to obtain current market quotations for our common stock. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The
common stock offered hereby involves risks. See &#147;risk factors&#148; beginning on page 5 of this prospectus. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>THE SECURITIES OFFERED OR SOLD UNDER THIS PROSPECTUS HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The date of this prospectus is
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;, 2002. </FONT></DIV>

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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="toc"></A>TABLE OF CONTENTS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_1">FORWARD-LOOKING STATEMENTS</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_2">PROSPECTUS SUMMARY</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_3">WHERE YOU CAN FIND MORE INFORMATION</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_4">RISK FACTORS</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_5">USE OF PROCEEDS</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">13</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_6">SELLING STOCKHOLDERS </A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">13</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_7">PLAN OF DISTRIBUTION</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">14</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_8">LEGAL MATTERS</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">16</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">
<A HREF="#tx141_9">EXPERTS</A></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">16</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_1"></A>FORWARD-LOOKING STATEMENTS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">This prospectus and the documents it incorporates by
reference contain forward-looking statements. Forward-looking statements relate to future periods and include descriptions of our plans, objectives, and underlying assumptions for future operations, our market opportunities, our acquisition
opportunities, and our ability to compete. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Generally, &#147;may,&#148; &#147;will,&#148; &#147;expect,&#148;
&#147;believe,&#148; &#147;estimate,&#148; &#147;anticipate,&#148; &#147;intend,&#148; &#147;continue&#148; and similar words identify forward-looking statements. Forward-looking statements are based on our current expectations and are subject to
risks and uncertainties that can cause actual results to differ materially. For information on these risks and uncertainties, see the &#147;Risk Factors.&#148; </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">We urge you to consider these factors carefully in evaluating the forward-looking statements contained in this prospectus. Forward-looking statements are made only as of the date of this prospectus. We
do not intend, and undertake no obligation, to update these forward-looking statements. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">As used in this
prospectus, &#147;Company,&#148; &#147;Nanophase,&#148; &#147;we,&#148; &#147;us&#148; and &#147;our&#148; refer to Nanophase Technologies Corporation and its affiliates. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3 </FONT></DIV>


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 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_2"></A>PROSPECTUS SUMMARY </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The following summary is qualified in its entirety by reference to,
and should be read in conjunction with, the more detailed information appearing elsewhere in this prospectus or incorporated by reference herein. Investors should also carefully consider the information set forth under &#147;Risk Factors&#148;
beginning on page 5. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We are in the business of commercializing the emerging technology of nanocyrstalline
materials, i.e. materials with a particle size less than 100 billionth of a meter. Nanocrystalline materials often exhibit unusual, and many times valuable, behavior in applications compared to normal materials. Nanocrystalline technology allows
engineering of materials at the smallest, or most fundamental manufactured, level, yet allowing increased material performance. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">We have two core patented and proprietary technologies to engineer nanomaterials for applications: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The manufacture of nanocrystalline powders such as metals, oxides, carbides and nitrides in commercial volume and quality at two ISO 9001 certified facilities
to USP (United States Pharmocopia as promulgated by the US Food and Drug Administration) and cGMP standards (current good manufacturing practices as promulgated by the US Food and Drug Administration); </FONT></DIV> </TD></TR></TABLE> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The capability to coat, or partially coat, each individual nanoparticle with various materials and then attach specific chemical properties to allow
nanomaterials to be dispersed in a wide range of media. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We apply our technologies to engineer
nanocrystalline material solutions for both processes and end products. Our technologies are capable of modifying the electrical, chemical, and optical properties of materials, compared to normal materials, as well as the three dimensional
structural spacing of materials in a matrix. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">While markets continue to emerge for nanotechnology, and are
forecasted to do so for the next 10-20 years, our current markets include healthcare, ceramics, catalysts, various coatings, and electronic applications. In many of these applications, our nanomaterials display unique performance attributes. We
pursue new vertical market applications through a consultative, solution-based approach focusing on lead customers in targeted markets. As we develop application solutions, we market these solutions, and derivations thereof, to similar applications
in horizontal markets. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We are engaged in ongoing research and application development for and with companies on a
global basis, which have enhanced our intellectual property. We license technology to other companies, license technology from companies, and create technology in joint arrangements with companies. In some instances, we patent applications for
nanocrystalline materials in various industries. We are developing additional nanotechnology processes, complementary technologies, and continually improving our core technologies, including manufacturing operations. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TR>
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Common Stock offered by Selling</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Stockholders</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,370,000 shares</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Use of Proceeds</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We will not receive any proceeds from the sale of shares in this offering.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Nasdaq National Market symbol</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="48%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#147;NANX&#148;</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_3"></A>WHERE YOU CAN FIND MORE INFORMATION ABOUT US </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We file annual, quarterly and special
reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC&#146;s web site at http://www.sec.gov. You may also read and copy any document we file at the SEC&#146;s public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1&#150;800&#150;732&#150;0330 for further information on the public reference rooms. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The SEC allows us to &#147;incorporate by reference&#148; the information we file with them, which means that we can disclose important information to you by referring you
to these documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the
documents listed below (and any amendments thereto) and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the offering of our common stock under this registration statement is
completed or withdrawn: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Annual Report on Form 10&#150;K for the fiscal year ended December 31, 2001; and </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Quarterly Report on Form 10&#150;Q for the period ended March 31, 2002; and </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The description of our common stock contained in our registration statement on Form 8&#150;A, including any amendments or reports filed to update such
information. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To obtain a copy of these filings at no cost, you may telephone us at
630-771-6700 or write us at Investor Relations Department, Nanophase Technologies Corporation, 1319 Marquette Drive, Romeoville, Illinois 60446. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_4"></A>RISK FACTORS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">This offering involves a high degree of risk. Before making an investment
decision, you should carefully consider the following risks and the risks set forth in the supplement which accompanies this prospectus and in our periodic reports on Form 10&#150;K and Form 10&#150;Q which have been filed with the SEC and are
incorporated by reference into this prospectus. The trading price of our common stock could decline due to any of these risks, and you could lose all or part of your investment. You also should refer to the other information appearing elsewhere in
this prospectus, or incorporated by reference into this prospectus. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We have a limited operating history and
face difficulties encountered by early stage companies in new and rapidly evolving markets. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We have only a
limited operating history. We were formed in November 1989 and began our commercial nanocrystalline materials operations in January 1997. We have not yet generated a significant amount of revenue from our nanocrystalline materials operations. For
this reason, it is </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">difficult to evaluate our business and prospects. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in this stage of development, particularly companies engaged in new and rapidly evolving markets in an emerging science and technology, such as nanocrystalline materials. In order
to overcome these risks, we must be able to, among other things: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">establish and increase awareness of nanoengineered products and strengthen our customer loyalty; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">attract and retain customers at a reasonable cost; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">manage rapidly changing and expanding operations in the face of technological changes; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">maintain our current strategic relationships and develop new ones; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">implement and successfully execute our business, research and development and marketing strategies; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">provide superior customer service; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">respond effectively to competitive pressures and developments; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">continue to develop and enhance our technology and systems; and </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">attract, retain and motivate qualified personnel at a reasonable cost. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Because of our limited operating history and the early stage of development of our market, we have limited insight into trends that may emerge and affect our business and
cannot be certain that our business strategy will be successful or that it will successfully address these risks. In addition, our efforts to address any of these risks may distract personnel or divert resources from other more important
initiatives. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We have a history of losses that may continue in the future. </I></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We have incurred net losses in each year since our inception with net losses of $5.12 million in 1999, $4.52 million in 2000 and $5.74
million in 2001. As of March 31, 2002, we had an accumulated deficit of approximately $36.25 million and presently expect to continue to incur losses on an annual basis through at least the end of 2003. We believe that our business depends, among
other things, on our ability to significantly increase revenue. If revenue fails to grow at anticipated rates or if operating expenses increase without a commensurate increase in revenue, or if we fail to adjust operating expense levels accordingly,
then the imbalance between revenue and operating expenses will negatively impact our business, revenue, results of operations and financial condition. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>The unpredictability of quarterly revenue may negatively affect the trading price of our common stock. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Our future quarterly and annual operating results are subject to fluctuations due to a wide variety of factors, including: </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">the difficulty of accurately forecasting the existence, timing and size of new business; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">potential declines in average selling prices of our products; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">our failure to introduce new products and to implement technologies on a timely basis; </FONT></DIV> </TD></TR></TABLE> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">6 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">market acceptance of our products and of nanotechnology generally; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">the failure to anticipate changing customer product requirements; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">fluctuations in manufacturing capabilities; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">disruption in raw material supplies; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">failure to deliver products on a timely basis; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">disruption in the U.S. economy or the U.S. environment; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">the timing of, and our ability to respond to, significant orders; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">increased expenses associated with new product introductions or process changes; and </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">the ability of customers to make payments. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">As a result of these and other factors, including, without limitation, our limited operating history and the emerging nature of the markets in which we compete, we may be unable to accurately forecast
our revenue or maintain a steady stream of revenues from quarter to quarter. If revenue for a quarter falls below expectations and we are not able to quickly reduce our spending in response to such a decrease, then the operating results for that
quarter and the price of our Securities would be harmed. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We depend on a small number of customers for a high
percentage of our sales, and the loss of a significant customer could cause a decline in revenue and/or increases in the level of losses incurred. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Sales to our customers are executed pursuant to purchase orders and annual supply contracts; however, customers can cease doing business with us at any time without notice. We expect a significant
portion of our future sales to remain concentrated within a limited number of strategic customers. We may not be able to retain our strategic customers, such customers may cancel or reschedule orders, or in the event of canceled orders, such orders
may not be replaced by other sales or by sales that are on as favorable terms. In addition, sales to any particular customer may fluctuate significantly from quarter to quarter, which could harm our business. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Sales to two customers accounted for approximately 85% of total revenue for the year ended December 31, 2001, and sales to the same two
customers accounted for approximately 79% of total revenue in 2000. For the years ended December 31, 2001 and 2000, a single customer accounted for 76% and 69% of our total revenue, respectively. If we were to lose one or both of these customers,
then results of operations would be materially harmed. Additional details may be found in the attached Form 10-K.<B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><I>Any downturn in the markets served by us would harm our business. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">A majority of our
products are incorporated into products such as sunscreens, abrasion-resistant coatings for flooring, personal care and catalytic converters. These markets have from time to time experienced cyclical, depressed business conditions, often in
connection with, or in anticipation of, a decline in general economic conditions. These industry downturns have resulted in reduced product demand and declining average selling prices. Our business would be harmed by any future downturns in the
markets that we serve. </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We depend on collaborative development relationships with our customers.
</I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We have established, and will continue to pursue, collaborative relationships with many of our customers.
Through these relationships, we seek to develop new applications for our nanocrystalline materials and share development and manufacturing resources. We also seek to coordinate the development, manufacture and marketing of our nanocrystalline
products. Future success will depend, in part, on our continued relationships with these customers and our ability to enter into similar collaborative relationships with other customers. We can make no assurance that our customers will continue in
these collaborative development relationships or that they will not enter into collaborative development relationships with our competitors. Additionally, these customers may require a share of control of these collaborative programs. These
customers may also try to limit our ability to license our technology to others or limit our ability to engage in certain product development or marketing activities. These relationships can usually be terminated unilaterally by customers. If we are
unable to initiate or sustain such collaborative relationships, then we may be unable to independently develop, manufacture or market our current and future nanocrystalline materials or applications. If we fail to initiate or sustain these
collaborative relationships on favorable terms, our business, results of operations and financial condition would be materially harmed. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><I>We have limited manufacturing capacity and experience. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Our success will depend,
in part, on our ability to manufacture nanocrystalline materials in significant quantities, with consistent quality and in an efficient and timely manner. We have limited experience in high-volume manufacturing and have incurred significant start-up
costs as we began to manufacture substantial quantities of nanocrystalline materials. As production increases, we will need to increase the efficiency of our manufacturing operations significantly to reach production goals. In addition, we may need
to continue to expand its current facilities or obtain additional facilities in the future. We can make no assurance that we will be able to make the transition to high-volume production successfully. Any material disruption in our operations could
have a material adverse effect on our business, results of operations and financial condition. While we maintain customary property and business interruption insurance, this insurance may not adequately compensate us for all losses that we may
incur. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Protection of our intellectual property is limited and uncertain. </I></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Our intellectual property is important to our business. We seek to protect our intellectual property through patent, trademark and
copyright law, trade secret protection and confidentiality or license agreements with our employees, customers, suppliers and others. We can make no assurance that our means of protecting our intellectual property rights in the United States or
abroad will be adequate or that others, including our competitors, will not use our proprietary technology without our consent. We can also make no assurance that we will receive the necessary patent protection for any applications pending with the
U.S. Patent and Trademark Office or that any of the patents that we currently own or license will be sufficient to keep competitors from using our materials or processes. In addition, we can make no assurance that any patents that we currently own
or license will be held valid if subsequently challenged by others or that others will not claim rights in the patents and other proprietary technology that we own or license. Additionally, others may have already developed or may subsequently
develop similar products or technologies without violating any of our proprietary rights. If we fail to obtain patent protection, preserve our trade secrets or operate without infringing the proprietary rights of others, or lose any license to
technology that we currently have or will acquire in the future, our business, results of operations and financial condition will be materially harmed. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Furthermore, litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determinate the validity and scope of the proprietary rights of others, or to
defend against </FONT></DIV> <P></P>
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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could harm our business,
operating results and financial condition. In addition, if others assert that our technology infringes their intellectual property rights, resolving the dispute could divert our management team and financial resources. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In the future, we may license certain of our intellectual property, such as trademarks or copyrighted material, to third parties. While we
would attempt to ensure that any licensees maintain the quality and value of our brand, we can make no assurance that we will refrain from actions that might diminish this quality and value. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Recently, many patents have been granted in the United States involving business methods relating to e-commerce. We may be subject to claims that one or more of the
business methods used by us infringe upon patents held by others. The defense of any claims of infringement made against us by third parties could involve significant legal costs and require our management to divert time and other resources from our
business operations. Either of these consequences of an infringement claim could have a material adverse effect on our operating results. If we are unsuccessful in defending any claims of infringement, we may be forced to obtain licenses or pay
royalties to continue to use our technology. We may not be able to obtain any necessary licenses on commercially reasonable terms or at all. If we fail to obtain necessary licenses or other rights, or if these licenses are costly, our operating
results may suffer either from reductions in revenue through our inability to serve clients or from increases in costs to license third-party technology. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Our industry is experiencing rapid changes in technology. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">Rapid changes have occurred, and are likely to continue to occur, in the development of advanced materials and processes. Our success will depend, in large part, upon our ability to keep pace with advanced materials technologies,
industry standards and market trends and to develop and introduce new and improved products on a timely basis. We will likely commit substantial resources to expand our commercial manufacturing capacity and to develop our technologies and product
applications. We can make no assurance that our development efforts will not be rendered obsolete by the research efforts and technological advances of others or that other advanced materials will not prove more advantageous than those we produce.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We have limited marketing experience. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We have limited experience marketing and selling our products. To market our nanocrystalline materials directly, we will have to continue to develop a marketing and sales
force that can effectively demonstrate the advantages of our nanocrystalline product applications compared to competitive products containing conventional or other advanced materials. We can make no assurance that we will be successful in our
marketing efforts. If we are unsuccessful in our marketing efforts, our business will suffer. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We rely on
distribution agreements with third parties. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We currently have arrangements for distribution of many of our
nanocrystalline materials and expects to enter into additional distribution agreements for the marketing of our materials. Our future success will depend in part on our continued relationships with distributors, our ability to enter into other
similar distribution arrangements on favorable terms, the continuing interest of our distributors in current and potential product applications and the distributors&#146; success in marketing. We can make no assurance that we will be able to enter
into or maintain marketing and distribution arrangements with third parties on financially acceptable terms. If we are unable to establish or maintain these arrangements, our business will suffer. </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>Our market is highly competitive, and if we are unable to compete effectively,
then our business will not grow. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The advanced materials industry is new, rapidly evolving and intensely
competitive, and we expect competition to intensify in the future. The market for materials having the characteristics and potential uses of our nanocrystalline materials is the subject of intensive research and development efforts by both
governmental entities and private enterprises around the world. We believe that the level of competition will increase further as more product applications with significant commercial potential are developed. The nanocrystalline product applications
that we are developing will compete directly with products incorporating both conventional and advanced materials and technologies. While we are not currently aware of the existence of commercially available competitive products with the same
attributes as those we offer, we can make no assurance that other companies will not develop and introduce new or competitive products. We can also make no assurance that our competitors will not succeed in developing or marketing materials,
technologies and better or less expensive products that the ones we offer. In addition, many of our potential competitors have substantially greater financial and technical resources, and greater manufacturing and marketing capabilities than we do.
If we fail to improve our current and potential nanocrystalline product applications at an acceptable price, or otherwise compete with producers of conventional materials, our business, results of operations and financial condition would be
materially harmed. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We may need to raise additional capital in the future. </I></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We expect to expend significant resources on research, development and product testing, and in expanding current capacity or capability
for new business. In addition, we may incur significant costs in preparing, filing, prosecuting, maintaining and enforcing our patents and other proprietary rights. We may seek additional funding through public or private financing and through
contracts with government or other companies. We can make no assurance that additional financing will be available on acceptable terms or at all. If we are unable to obtain adequate funds, we may be required to delay, scale-back or eliminate some of
our manufacturing and marketing operations or we may need to obtain funds through arrangements on less favorable terms. If we obtain funding on unfavorable terms, we may be required to relinquish rights to some of our intellectual property.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To raise additional funds in the future, we would likely enter into loan agreements or sell our debt or equity
securities. To the extent that we enter into new loan agreements, or issue new debt securities, we may become subject to financial, operational and other covenants that we must observe. In the event that we were to breach any of these covenants,
then the amounts due under such loans or debt securities could become immediately payable by us, which could significantly harm us. To the extent that we sell additional shares of our equity securities, you may face economic dilution if the future
equity securities are sold at a lower price than your purchase price in this offering, and, to the extent that you do not participate in such future offerings, you would also face dilution of your percentage ownership of us. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We depend on key personnel. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Our success will depend, in large part, upon our ability to attract and retain highly qualified research and development, management, manufacturing, marketing and sales personnel on favorable terms.
Due to the specialized nature of our business, we may have difficulty locating, hiring and retaining qualified personnel on favorable terms. If we were to lose the services of any of our executive officers or other key personnel, or if we are unable
to attract and retain other skilled and experienced personnel on acceptable terms in the future, then our business, results of operations and financial condition would be materially harmed. In addition, we do not currently have &#147;key-man&#148;
life insurance policies covering all of our executive officers or key employees, nor do we presently have any plans to purchase such policies. </FONT></DIV> <P></P>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We face potential product liability risks. </I></FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We may be subject to product liability claims in the event that any of our nanocrystalline product applications are alleged to be
defective or cause harmful effects. Because our nanocrystalline materials are used in other companies&#146; products, to the extent our customers become subject to suits relating to their products, such as medical implants and cosmetic and skin-care
products, we can make no assurance that these claims will not also be asserted against us. We currently maintain insurance coverage in the amount of $10 million for product liability claims, which may or may not prove to be sufficient. We may incur
significant costs in defending or settling product liability claims. Even if we are able to settle these claims, we can make no assurance that any settlement would be on acceptable terms. The costs related to these claims could have a material
adverse effect on our business, results of operations and financial condition. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We are subject to governmental
regulations. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Current and future laws and regulations may require us to make substantial expenditures for
preventive or remedial action. We can make no assurance that our operations, business or assets will not be materially and adversely affected by governmental interpretation and enforcement of current or future environmental laws and regulations. In
addition, our coating operations pose a risk of accidental contamination or injury. The damages in the event of an accident or the costs to prevent or remediate an environmental event could exceed our resources or otherwise have a material adverse
effect on our business, results of operations and financial condition. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In addition, both of our facilities and
all of our operations are subject to the plant and laboratory safety requirements of various occupational safety and health laws. We believe we have complied in all material respects with regard to governmental regulations applicable to us. We can
make no assurance, however, that we will not have to incur significant costs in defending or settling future claims of alleged violations of governmental regulations or that these regulations will not materially restrict or impede our operations in
the future. In addition, our efforts to comply with or contest any regulatory actions may distract personnel or divert resources from other more important initiatives. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The manufacture and use of certain products that contain our nanocrystalline materials are subject to intense governmental regulation. As a result, we are required to
adhere to the requirements of the FDA and the regulations of similar governmental authorities in other countries. These regulations could increase our cost of doing business and may render some potential markets prohibitively expensive.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We have implemented anti-takeover provisions which could discourage or prevent a takeover, even if an
acquisition could be beneficial to our stockholders. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In October 1998, we entered into a Rights Agreement,
commonly referred to as a &#147;poison pill.&#148; The provisions of this agreement and some of the provisions of our certificate of incorporation, our bylaws and Delaware law could, together or separately: </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">discourage potential acquisition proposals; </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">delay or prevent a change in control; and </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
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<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#149;</FONT></DIV></TD>
<TD WIDTH="006" VALIGN="top"><DIV>&nbsp;</DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">limit the price that investors might be willing to pay in the future for shares of our common stock. </FONT></DIV> </TD></TR></TABLE> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">11 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In particular, our board of directors is authorized to issue up to 24,588 shares
of preferred stock (less any outstanding shares of preferred stock) with rights and privileges that might be senior to our common stock, without the consent of the holders of the common stock. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In addition, Section 203 of the Delaware General Corporations Law and the terms of our stock option plans may discourage, delay or prevent a change in control of our
company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We are currently involved in litigation. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In November 2001, a complaint was filed in the United States District Court, alleging that we and one of our officers are liable under the federal Securities Exchange
Act of 1934. The complaint asserted that defendants made supposedly fraudulent material misstatements and omissions of material fact in connection with our public disclosures concerning our dealings with one British customer. The complaint alleged
that the action should be maintained as a plaintiff class action on behalf of certain persons who purchased shares of our Common Stock from April 5, 2001 through October 24, 2001. The complaint sought relief including unquantified compensatory
damages. Defendants filed a motion to dismiss the complaint in December 2001. Rather than respond to that motion, plaintiff filed an amended complaint in March 2002. The amended complaint alleges that we and four of our officers are liable under the
federal Securities Exchange Act of 1934 based on allegations similar to those in the initial complaint, and supposed misrepresentations concerning the revenue reported under a purchase order with the British customer. The amended complaint alleges
the same putative class, and seeks the same relief, as in plaintiff&#146;s initial complaint. Defendants filed a motion to dismiss the amended complaint on April 12, 2002. Although we believe both that the allegations of the amended complaint are
without merit and that the defendants have sufficient directors and officers liability insurance to cover any liabilities ultimately arising from the claims asserted in the amended complaint, it is not feasible for us to predict at this time the
outcome of this litigation or whether the resolution could have a material adverse effect on our results of operations or financial condition. As a result, this and other litigation to which we may become subject, even if settled or resolved
favorably, could harm our business.<B></B> </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>The market price of our stock has historically been volatile.
</I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The volatility of our stock price poses a significant risk of losses to our stockholders. In addition, the
stock market (and in particular the securities of technology companies such as ours) could experience extreme price and volume fluctuations unrelated to our operating performance. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><I>We have never paid dividends. </I></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">We currently intend to retain earnings, if any, to support our growth strategy. We do not anticipate paying dividends on our stock in the foreseeable future. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">12 </FONT></DIV>


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<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_5"></A>USE OF PROCEEDS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The selling stockholders will receive all of the proceeds from the sale
of the common stock offered by this prospectus. We will not receive any proceeds from the sale of the shares of common stock offered by the selling stockholders pursuant to this prospectus. The selling stockholders will pay any underwriting
discounts and commissions and expenses incurred by the selling stockholder for brokerage, accounting or tax services or any other expenses incurred by the selling stockholders in disposing of the shares of common stock, except as described below. We
will bear all other costs, fees and expenses incurred in effecting the registration of the shares of common stock covered by this prospectus, including without limitation, all registration and filing fees, Nasdaq listing fees, fees and expenses of
our counsel and our accountants. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_6"></A>SELLING STOCKHOLDERS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The shares of common stock or interests therein offered pursuant
to this prospectus have been issued to the selling stockholders (or their permitted assignees) directly by us. All 1,370,000 shares of our common stock covered by this prospectus were issued to certain selling stockholders in a private placement
completed on May 29, 2002 pursuant to an exemption from registration contained in Regulation D promulgated under Section 4(2) of the Securities Act. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">On May 29, 2002, we completed the sale of 1,370,000 shares of common stock in a private placement to selected institutional and accredited investors, resulting in gross proceeds of $6,850,000. We
granted registration rights to the selling stockholders with respect to the resale of shares of our common stock issued to the selling stockholders. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">In accordance with the registration rights granted to the selling stockholders, we have filed with the Securities and Exchange Commission a registration statement on Form S-3, of which this prospectus
forms a part, with respect to the resale or other disposal of the shares of common stock offered by this prospectus. We have agreed to prepare and file amendments and supplements to the registration statement to the extent necessary to keep the
registration statement effective until the shares are no longer required to be registered for resale thereof by the selling stockholders. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">The actual number of shares of common stock covered by this prospectus, and included in the registration statement of which this prospectus is a part, includes additional shares of common stock that may be issued as a result
of stock splits, stock dividends, or similar transactions. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The following table sets forth certain information
with respect to the beneficial ownership of shares of our common stock by the selling stockholders as of June 10, 2002 and the number of shares which may be offered pursuant to this prospectus for the account of each of the selling stockholders from
time to time. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to shares, as well as any shares as to which the selling stockholders have
the right to acquire beneficial interest within 60 days after June 10, 2002, through the exercise or conversion of any stock option, warrant, preferred stock or other right. Except as described in the footnotes to the table, to the best of our
knowledge, none of the selling stockholders has had any position, office or other material relationship with our Company or any of our affiliates. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">13 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE">

<TR>
<TD VALIGN="bottom" WIDTH="40%"> <DIV><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Selling Stockholders</B></FONT></DIV> <HR SIZE="2" NOSHADE WIDTH="116" ALIGN="left" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Number&nbsp;of&nbsp;Shares Beneficially&nbsp;Owned Prior to Offering</B></FONT></DIV> <HR SIZE="2" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Maximum Number&nbsp;of Shares&nbsp;Which May&nbsp;Be&nbsp;Sold&nbsp;in This Offering</B></FONT></DIV> <HR SIZE="2" NOSHADE
COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Number of Shares Beneficially Owned&nbsp;After&nbsp;the Offering (1)</B></FONT></DIV> <HR SIZE="2" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Percentage of Class Beneficially Owned&nbsp;After the&nbsp;Offering&nbsp;(1)</B></FONT></DIV> <HR SIZE="2" NOSHADE COLOR="#000000"></TD>

<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">William R. Gurtin</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">155,250</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">20,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">135,250</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Stephen Albright Springer</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">197,200</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">50,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">147,200</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Marlin Fund, L.P.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">244,900</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">244,900</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Marlin Fund II, L.P.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">39,500</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">39,500</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Marlin Fund Offshore, Limited</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">505,600</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">505,600</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Duck Partners, L.P.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">10,000</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">10,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">0</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Bradford T. Whitmore</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3,237,543</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">200,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2,737,543</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3)</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">18.12</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="40%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Grace Brothers, Ltd.</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,948,593</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="13%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">300,000</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1,648,593</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">10.91</FONT></DIV> </TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">%</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <HR NOSHADE WIDTH="10%" COLOR="#000000" ALIGN="left">
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">*</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Less than one percent. </FONT></DIV> </TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Assumes that each selling stockholder will sell all shares of common stock offered pursuant to this prospectus, but not any other shares of common stock
beneficially owned by such stockholder. </FONT></DIV> </TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(2)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Includes 1,948,593 shares of Common Stock held by Grace Brothers, Ltd. and 1,069,750 shares of Common Stock held by Grace Investments, Ltd. Mr. Whitmore is a
general partner of Grace Brothers, Ltd. and is the sole owner of an entity which is a general partner of Grace Investments, Ltd. In such capacities, Mr. Whitmore shares voting and investment power with respect to the shares of Common Stock held by
the Grace entities. </FONT></DIV> </TD></TR></TABLE>
<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3)</FONT></DIV></TD>
<TD WIDTH="1%" VALIGN="top"><DIV><FONT SIZE="1">&nbsp;</FONT></DIV></TD>
<TD ALIGN="left" VALIGN="top"><DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Includes 1,648,593 shares of Common Stock held by Grace Brothers, Ltd. and 1,069,750 shares of Common Stock held by Grace Investments, Ltd. Mr. Whitmore is a
general partner of Grace Brothers, Ltd. and is the sole owner of an entity which is a general partner of Grace Investments, Ltd. In such capacities, Mr. Whitmore shares voting and investment power with respect to the shares of Common Stock held by
the Grace entities. </FONT></DIV> </TD></TR></TABLE> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_7"></A>PLAN OF DISTRIBUTION </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The shares covered by this prospectus may be offered and sold from
time to time by the selling stockholders. The term &#147;selling stockholders&#148; includes donees, pledgees, transferees or other successors-in-interest selling shares received after the date of this prospectus from a selling stockholder as a
gift, pledge, partnership distribution or other transfer. The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling stockholders. These discounts, concessions or commissions as to any particular underwriter, broker-dealer or
agent may be in excess of those customarily received in the types of transactions involved. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Any or all of the
shares offered by the selling stockholders may be offered for sale and sold by, or on behalf of, the selling stockholders from time to time in varying amounts, including in block transactions, on the Nasdaq Stock Market, or the over-the-counter
market, in privately negotiated transactions, or otherwise, at prices prevailing in such market or as may be negotiated at the time of the sale. The shares may be sold by the selling stockholders directly to one or more purchasers, through
</FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">14 </FONT></DIV>


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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">agents designated from time to time or to or through broker-dealers designated from time to time. In the event the shares are publicly offered
through broker-dealers or agents, the selling stockholders may enter into agreements with respect thereto. Such broker-dealers or agents may receive compensation in the form of discounts, concessions or commissions from the selling stockholders, and
any such broker-dealers or agents that participate in the distribution of the shares may be deemed to be underwriters within the meaning of the Securities Act, and any profit on the sale of the shares by them and any discounts and commissions might
be deemed to be underwriting discounts or commissions under the Securities Act. Any such broker-dealers and agents may engage in transactions with, and perform services for, the Company. At the time a particular offer of shares is made by the
selling stockholders, to the extent required, a prospectus supplement will be distributed which will set forth the aggregate number of shares being offered, and the terms of the offering, including the public offering price thereof, the name or
names of any broker-dealers or agents, any discounts, commissions and other items constituting compensation from, and the resulting net proceeds to, the selling stockholders. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In order to comply with the securities laws of certain states, sales of shares offered hereby to the public in such states may be made only through broker-dealers who are
registered or licensed in such states. Sales of shares offered hereby must also be made by the selling shareholders in compliance with other applicable state securities laws and regulations. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be
&#147;underwriters&#148; within the meaning of Section 2(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are &#147;underwriters&#148; within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders have acknowledged that they
understand their obligations to comply with the provisions of the Exchange Act and the rules thereunder relating to stock manipulations, particularly Regulation M. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the
Securities Act. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In addition, any shares covered by this prospectus that qualify for sale pursuant to Rule 144 of
the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">To the extent required,
the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) the date all
of the shares covered by this prospectus have been sold and (2) the date on which all of the shares covered by this prospectus may be sold without restriction or limitation. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">15 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_8"></A>LEGAL MATTERS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Wildman, Harrold, Allen &amp; Dixon, Chicago, Illinois is giving an
opinion of the validity of the issuance of the securities offered in this prospectus. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>
<A NAME="tx141_9"></A>EXPERTS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The financial statements of Nanophase Technologies Corporation as of December
31, 2000 and for the two years in the period ended December 31, 2000 appearing in Nanophase Technologies Corporation&#146;s Annual Report (Form 10-K) for the year ended December 31, 2001, have been audited by Ernst &amp; Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The financial statements of Nanophase Technologies Corporation as of December
31, 2001 appearing in Nanophase Technologies Corporation&#146;s Annual Report (Form 10-K) for the year ended December 31, 2001, have been audited by McGladrey &amp; Pullen, LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">16 </FONT></DIV>


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 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>PART II. </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>INFORMATION NOT REQUIRED IN PROSPECTUS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Item 14.&nbsp;&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and
Distribution </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TR>
<TD VALIGN="top" WIDTH="73%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">SEC Registration Fee</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="9%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;665</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="73%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Accounting Fees and Expense</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="9%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$13,000</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="73%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Legal Fees and Expenses</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="9%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$10,000</FONT></DIV> </TD> </TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="73%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Miscellaneous</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="9%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</FONT></DIV> </TD> </TR>
<TR>
<TD VALIGN="top" WIDTH="73%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Total</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="9%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">$23,665</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">All fees and expenses other than the SEC registration fee are
estimated. The expenses listed above will be paid by the Company. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Item 15.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Officers and
Directors </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Under Section 145 of the General Corporation Law of the State of Delaware (the &#147;DGCL&#148;), a
corporation may indemnify its directors, officers, employees and agents and its former directors, officers, employees and agents and those who serve, at the corporation&#146;s request, in such capacities with another enterprise, against expenses
(including attorney&#146;s fees), as well as judgments, fines and settlements in nonderivative lawsuits, actually and reasonably incurred in connection with the defense of any action, suit or proceeding in which they or any of them were or are made
parties or are threatened to be made parties by reason of their serving or having served in such capacity. The DGCL provides, however, that such person must have acted in good faith and in a manner he or she reasonably believed to be in (or not
opposed to) the best interests of the corporation and, in the case of a criminal action, such person must have had no reasonable cause to believe his or her conduct was unlawful. In addition, the DGCL does not permit indemnification in an action or
suit by or in the right of the corporation, where such person has been adjudged liable to the corporation, unless, and only to the extent that, a court determines that such person fairly and reasonably is entitled to indemnity for costs the court
deems proper in light of liability adjudication. Indemnity is mandatory to the extent a claim, issue or matter has been successfully defended. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Our certificate of incorporation provides that to the fullest extent permitted by Delaware law, it shall indemnify and advance indemnification expenses to all of its directors and officers. In
addition, the certificate of incorporation provides that to the fullest extent permitted by Delaware law, a director shall not be liable to Nanophase Technologies Corporation or its stockholders for breach of fiduciary duty as a director.
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Nanophase Technologies has entered into indemnification agreements with each director providing for
indemnification to the fullest extent permitted by Delaware law. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Item 16.&nbsp;&nbsp;&nbsp;&nbsp;List of Exhibits </B></FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B></B>(a)&nbsp;&nbsp;Exhibits </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="4%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Specimen stock certificate representing Common Stock, incorporated by reference to Exhibit 4.1 to the Company&#146;s
Registration Statement on Form S-1 (File No. 333-36937) (the &#147;IPO S-1&#148;).</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">17 </FONT></DIV>


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 <DIV ALIGN="center">
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<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Form of Warrants, incorporated by reference to Exhibit 4.2 to the IPO S-1.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.3</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Rights Agreement dated as of October 28, 1998 by and between the Company and LaSalle National Bank, incorporated by
reference to Exhibit 1 to the Company&#146;s Registration Statement on Form 8-A, filed October 28, 1998.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.4</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Certificate of Designation of Series A Junior Participating Preferred Stock incorporated by reference to Exhibit 4.4
to the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 1998 (the &#147;1998 10-K&#148;).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.5</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Amendment to Rights Agreement dated August 1, 2001 between the Company and LaSalle National Association, as Rights
Agent, incorporated by reference to Exhibit 4.5 to the Company&#146;s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.6</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2001 Nanophase Technologies Corporation Equity Compensation Plan, incorporated by reference to Exhibit 4.3 to the
Company&#146;s Registration Statement on Form S-8 (File No. 333-74170).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">4.7</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Second Amendment to Rights Agreement dated May 24, 2002 between the Company and LaSalle National Association, as
Rights Agent.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">5.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Opinion of Wildman, Harrold, Allen &amp; Dixon</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of McGladrey &amp; Pullen, LLP</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of Ernst &amp; Young, LLP</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.3</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of Wildman, Harrold, Allen &amp; Dixon (included in Exhibit 5.1)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="7%"> <DIV ALIGN="right"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">24&nbsp;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="92%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Power of Attorney (included on signature page)</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(b)&nbsp;&nbsp;Financial Statement Schedule </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">None </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>Item 17.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The undersigned Registrant hereby undertakes:
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(1)&nbsp;&nbsp;&nbsp;&nbsp;To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">18 </FONT></DIV>


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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&#147;Calculation of Registration Fee&#148; table in the effective registration
statement; (iii) To include any material information with respect to the distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs
(a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is conformed in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference in the registration statement. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">(2)&nbsp;&nbsp;&nbsp;&nbsp;That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">(3)&nbsp;&nbsp;&nbsp;&nbsp;To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at
the termination of the offering. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant&#146;s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The undersigned Registrant undertakes that: (1) for purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of the registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of the registration statement as of the time it was declared effective; and (2) for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the Registration Certificate of Incorporation, Bylaws, indemnification agreements or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or
controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final
adjudication of such issue. </FONT></DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">19 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>SIGNATURES </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Pursuant to the requirements of the Securities Act of 1933, Nanophase Technologies Corporation certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Romeoville, Illinois as of June 10, 2002. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" BORDER="0">

<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="46%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">NANOPHASE&nbsp;TECHNOLOGIES&nbsp;CORPORATION</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="46%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;J<SMALL>OSEPH</SMALL> E. C<SMALL>ROSS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR
NOSHADE COLOR="#000000" ALIGN="left"></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="46%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Joseph E. Cross,</B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>President and
Chief Executive Officer</B></FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears immediately below constitutes and appoints Joseph E. Cross or Jess Jankowski or any of them, his or her true and lawful attorney-in-fact and agent, with full power of substitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any and all additional registration statements pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, in connection with or related to the offering contemplated by this Registration Statement and its amendments, if any, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated as of June 10, 2002. </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" WIDTH="50%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Signature</B></FONT></DIV> <HR SIZE="2" NOSHADE WIDTH="54" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="50%" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Title</B></FONT></DIV> <HR SIZE="2" NOSHADE WIDTH="25" COLOR="#000000"></TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;J<SMALL>OSEPH</SMALL> E,
C<SMALL>ROSS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Joseph E. Cross</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">President and Chief Executive Officer</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;J<SMALL>ESS</SMALL>
J<SMALL>ANKOWSKI&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Jess Jankowski</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Acting Chief Financial Officer</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;D<SMALL>ONALD</SMALL>
P<SMALL>ERKINS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Donald Perkins</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Chairman of the Board</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;J<SMALL>AMES</SMALL> A. H<SMALL>ENDERSON&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR
NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">James A. Henderson</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;J<SMALL>AMES</SMALL>
M<SMALL>C</SMALL>C<SMALL>LUNG&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">James McClung</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;J<SMALL>ERRALD</SMALL>
P<SMALL>EARLMAN&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Jerrald Pearlman</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="16"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="50%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;R<SMALL>ICHARD</SMALL>
S<SMALL>IEGEL&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SMALL></FONT></DIV> <HR NOSHADE COLOR="#000000" ALIGN="left"><DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Richard Siegel</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="50%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Director</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">20 </FONT></DIV>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#CCEEFF" WIDTH="100%" ALIGN="CENTER">
<h5 align="left"><a href="#toc">Table of Contents</a></h5>

 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>EXHIBIT INDEX </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
ALIGN="center">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" ALIGN="center"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Exhibit&nbsp;No.</B></FONT></DIV> <HR SIZE="2" NOSHADE WIDTH="62" COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><B>Description</B></FONT></DIV> <HR SIZE="2" NOSHADE WIDTH="65" ALIGN="left" COLOR="#000000"></TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Specimen stock certificate representing Common Stock, incorporated by reference to Exhibit 4.1 to the Company&#146;s
Registration Statement on Form S-1 (File No. 333-36937) (the &#147;IPO S-1&#148;).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Form of Warrants, incorporated by reference to Exhibit 4.2 to the IPO S-1.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.3</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Rights Agreement dated as of October 28, 1998 by and between the Company and LaSalle National Bank, incorporated by
reference to Exhibit 1 to the Company&#146;s Registration Statement on Form 8-A, filed October 28, 1998.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.4</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Certificate of Designation of Series A Junior Participating Preferred Stock incorporated by reference to Exhibit 4.4
to the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 1998 (the &#147;1998 10-K&#148;).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.5</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Amendment to Rights Agreement dated August 1, 2001 between the Company and LaSalle National Association, as Rights
Agent, incorporated by reference to Exhibit 4.5 to the Company&#146;s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.6</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">2001 Nanophase Technologies Corporation Equity Compensation Plan, incorporated by reference to Exhibit 4.3 to the
Company&#146;s Registration Statement on Form S-8 (File No. 333-74170).</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;4.7</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Second Amendment to Rights Agreement dated May 24, 2002 between the Company and LaSalle National Association, as
Rights Agent.</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">&nbsp;&nbsp;5.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Opinion of Wildman, Harrold, Allen &amp; Dixon</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.1</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of McGladrey &amp; Pullen, LLP</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.2</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of Ernst &amp; Young, LLP</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">23.3</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Consent of Wildman, Harrold, Allen &amp; Dixon (included in Exhibit 5.1)</FONT></DIV> </TD> </TR>
<TR>
<TD HEIGHT="5"> </TD> </TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="10%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">24&nbsp;&nbsp;&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="89%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Power of Attorney (included on signature page)</FONT></DIV> </TD> </TR>
 </TABLE> </DIV> <P></P>
 <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">21 </FONT></DIV>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>3
<FILENAME>dex47.htm
<DESCRIPTION>SECOND AMENDMENT TO RIGHTS AGREEMENT
<TEXT>
<HTML><HEAD>
<TITLE>Prepared by R.R. Donnelley Financial -- Second Amendment to Rights Agreement</TITLE>
</HEAD>
  <BODY BGCOLOR="WHITE">

 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Exhibit 4.7 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>SECOND </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>AMENDMENT TO </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>TO </B></FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>RIGHTS AGREEMENT </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>THIS SECOND AMENDMENT TO RIGHTS AGREEMENT </B>(this &#147;Amendment&#148;) is made this 24</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><SUP></SUP> day of May, 2002 by Nanophase Technologies Corporation (the &#147;Company&#148;) and LaSalle National Association (as successor in interest to LaSalle National Bank), as Rights Agent (the &#147;Rights Agent&#148;) under
that certain Rights Agreement dated October 28, 1998 as amended August 1, 2001 (as amended, the &#147;Rights Agreement&#148;) between the Company and the Rights Agent. This Amendment only amends certain portions of the Rights Agreement and is
effective as 12:00 p.m. (Eastern Time), May 24, 2002. All provisions of the Rights Agreement which are not amended by this Amendment shall remain in full force and effect. <B></B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV
STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1.&nbsp;&nbsp;&nbsp;&nbsp;Section 1(a) of the Rights Agreement is hereby amended by deleting the word &#147;20%&#148; in each place that it appears in such section and
replacing it with the word &#147;25%&#148;. In addition, any corresponding reference to a term defined in such Section 1(a) shall be similarly amended. It is the intent of the Company and the Rights Agent that the 20% ownership threshold referenced
in such Section 1(a) be increased to 25%. Accordingly, any provision of the Rights Agreement inconsistent with such purpose is hereby also amended. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">2.&nbsp;&nbsp;&nbsp;&nbsp;Except as specifically set forth herein, all other terms and conditions as set forth in the Rights Agreement shall remain in full force and effect, and are not otherwise
amended, altered, modified, or revised. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="text-indent:4%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">3.&nbsp;&nbsp;&nbsp;&nbsp;This document may be executed in one or more
counterparts, each of which so executed and delivered shall be deemed an original, but all of which taken together shall constitute one and the same instrument. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000"><B>IN WITNESS WHEREOF</B>, the undersigned have executed this Amendment as of the day and year first above written. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV>
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<TD VALIGN="top" COLSPAN="3" WIDTH="43%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Nanophase Technologies Corporation</B></FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3" WIDTH="43%"> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>LaSalle National Association</B></FONT></DIV> <DIV STYLE="margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>&nbsp;&nbsp;&nbsp;&nbsp;as Rights Agent</B></FONT></DIV> </TD> </TR>
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<TD HEIGHT="16"> </TD> </TR>
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<TD VALIGN="top" WIDTH="3%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;Jess Jankowski&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></DIV> <HR NOSHADE COLOR="#000000"
ALIGN="left"></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="3%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">By:</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;Gregory Malatia&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></DIV> <HR NOSHADE
COLOR="#000000" ALIGN="left"></TD> </TR>
<TR>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Jess Jankowski,</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">Secretary&nbsp;&nbsp;</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD> <FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="43%"> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Gregory Malatia,</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">First Vice
President</FONT></DIV> </TD> </TR>
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<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>4
<FILENAME>dex51.htm
<DESCRIPTION>OPINION OF WILDMAN, HARROLD, ALLEN & DIXON
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<TITLE>Prepared by R.R. Donnelley Financial -- Opinion of Wildman, Harrold, Allen &amp; Dixon</TITLE>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Exhibit 5.1 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000">[Wildman, Harrold, Allen &amp; Dixon Letterhead] </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Nanophase Technologies Corporation
</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">1319 Marquette Drive </FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Romeoville, Illinois 60446 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Re:&nbsp;&nbsp;Registration Statement on Form S-3 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Ladies and Gentlemen:
</FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">You have requested our opinion with respect to certain matters in connection with the filing by Nanophase Technologies Corporation (the
&#147;Company&#148;) of a Registration Statement on Form S-3 (the &#147;Registration Statement&#148;) with the Securities and Exchange Commission, including a prospectus covering the offering of 1,370,000 of shares of Common Stock, $0.01 par value,
as described in the Registration Statement (the &#147;Shares&#148;). </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Shares will be sold from time to time by the selling
stockholders (the &#147;Selling Stockholders&#148;) named in the Registration Statement, on the Nasdaq National Market or otherwise, directly or through underwriters, brokers or dealers. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV>
<DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">In connection with this opinion, we have examined and relied upon the Registration Statement and related Prospectus, the Company&#146;s Amended and Restated Articles of Incorporation and
Bylaws and the originals or copies certified to our satisfaction of such records, documents, certificates, memoranda and other instruments as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We have
assumed the genuineness and authenticity of all documents submitted to us as copies thereof, and the due execution and delivery of all documents where due execution and delivery are a prerequisite to the effectiveness thereof. We have also assumed
that prior to any sale of the shares the Company will have sufficient unauthorized and unissued shares of Common Stock, the terms of offer and sale of the Shares will have been authorized by resolutions of the Company&#146;s Board of Directors and
an appropriate prospectus supplement with respect to the shares being sold will have been prepared, delivered and filed in compliance with the Securities Act of 1933, as amended, and the applicable rules thereunder. </FONT></DIV> <DIV><FONT
SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Based on the foregoing, we are of the opinion that the Shares to be sold by the Selling Stockholders pursuant to the Registration Statement have been duly
authorized by all requisite corporate action and are validly issued, fully paid and nonassessable. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Our opinions expressed above are
limited to the laws of the State of Delaware. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the heading &#147;Legal Matters&#148; in the Prospectus constituting part of the Registration Statement. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">Dated:&nbsp;&nbsp;June 10, 2002 </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:54%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Very truly yours, </FONT></DIV>
<DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV STYLE="margin-left:54%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">/s/&nbsp;&nbsp;&nbsp;&nbsp;Wildman, Harrold, Allen &amp;
Dixon&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></DIV> <HR NOSHADE WIDTH="49%" COLOR="#000000" ALIGN="right"><DIV STYLE="margin-left:54%; text-indent:-2%" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Wildman,
Harrold, Allen &amp; Dixon </FONT></DIV>
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<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>dex231.htm
<DESCRIPTION>CONSENT OF MCGLADREY & PULLEN, LLP
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<TITLE>Prepared by R.R. Donnelley Financial -- Consent of McGladrey &amp; Pullen, LLP</TITLE>
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 <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Exhibit 23.1 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>CONSENT OF MCGLADREY &amp; PULLEN, LLP, INDEPENDENT AUDITORS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We consent to the
reference to our firm under the caption &#147;Experts&#148; in the Registration Statement on Form S-3 and related Prospectus of Nanophase Technologies Corporation for the registration of 1,370,000 shares of its common stock and to the incorporation
by reference therein of our report dated January 31, 2002, except for the last paragraph of Note 18, for which the date is March 8, 2002, with respect to the financial statements and schedule of Nanophase Technologies Corporation included in its
Annual Report on Form 10-K for the year ended December 31, 2001 filed with the Securities and Exchange Commission. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD VALIGN="top" WIDTH="48%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> <BR>Chicago, Illinois</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">June 10, 2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="48%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> <BR>/s/&nbsp;&nbsp;&nbsp;&nbsp;McGladrey &amp; Pullen, LLP</FONT></DIV> <HR NOSHADE WIDTH="95%" COLOR="#000000" ALIGN="left"><DIV><FONT FACE="Times New Roman"
SIZE="2" COLOR="#000000">McGladrey &amp; Pullen, LLP</FONT></DIV> </TD> </TR>
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<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>6
<FILENAME>dex232.htm
<DESCRIPTION>CONSENT OF ERNST & YOUNG, LLP
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<TITLE>Prepared by R.R. Donnelley Financial -- Consent of Ernst &amp; Young, LLP</TITLE>
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 <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><B>Exhibit 23.2 </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000"><B>CONSENT OF ERNST &amp; YOUNG, LLP, INDEPENDENT AUDITORS </B></FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">We consent to the reference to our firm under the caption
&#147;Experts&#148; in the Registration Statement on Form S&#150;3 and related Prospectus of Nanophase Technologies Corporation for the registration of 1,370,000 shares of its common stock and to the incorporation by reference therein of our report
dated February&nbsp;2, 2001, with respect to the financial statements and schedule of Nanophase Technologies Corporation as of December 31, 2000 and for each of the two years in the period ended December 31, 2000 included in its Annual Report on
Form 10&#150;K for the year ended December 31, 2001 filed with the Securities and Exchange Commission. </FONT></DIV> <DIV><FONT SIZE="1">&nbsp;</FONT></DIV> <DIV ALIGN="center">
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<TD VALIGN="top" WIDTH="48%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Chicago, Illinois</FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">June 10, 2002</FONT></DIV> </TD>
<TD VALIGN="bottom" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="48%"> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"><U>/s/&nbsp;&nbsp;&nbsp;&nbsp;Ernst &amp; Young
LLP&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></DIV> <DIV><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Ernst &amp; Young LLP</FONT></DIV> </TD> </TR>
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