-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 Nd16sYx7+ALSk0aOjAJMJklD2iepkSSlEtRpzD1XAWNesQpTbFK8uWpBc2GmFAZR
 U2jFKiEn2CsQ5TUBDY4f/w==

<SEC-DOCUMENT>0000950137-07-001496.txt : 20070205
<SEC-HEADER>0000950137-07-001496.hdr.sgml : 20070205
<ACCEPTANCE-DATETIME>20070205172703
ACCESSION NUMBER:		0000950137-07-001496
CONFORMED SUBMISSION TYPE:	S-3
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20070205
DATE AS OF CHANGE:		20070205

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NANOPHASE TECHNOLOGIES CORPORATION
		CENTRAL INDEX KEY:			0000883107
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS PRIMARY METAL PRODUCTS [3390]
		IRS NUMBER:				363687863
		STATE OF INCORPORATION:			IL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-140461
		FILM NUMBER:		07581625

	BUSINESS ADDRESS:	
		STREET 1:		453 COMMERCE ST
		CITY:			BURR RIDGE
		STATE:			IL
		ZIP:			60521
		BUSINESS PHONE:		6303231200

	MAIL ADDRESS:	
		STREET 1:		453 COMMERCE STREET
		CITY:			BURR RIDGE
		STATE:			IL
		ZIP:			60521
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3
<SEQUENCE>1
<FILENAME>c11797sv3.htm
<DESCRIPTION>REGISTRATION STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>sv3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>As
filed with the Securities and Exchange Commission on February&nbsp;5, 2007</B>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Registration No.&nbsp;333-_______</B>
</DIV>


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, DC 20549</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 6pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 6pt"><B>FORM S-3</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 1pt"><B>REGISTRATION
STATEMENT<BR>
<i>UNDER<BR>
THE SECURITIES ACT OF 1933</i></B>
</DIV>

<DIV align="center" style="font-size: 20pt; margin-top: 12pt"><B>NANOPHASE TECHNOLOGIES CORPORATION</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B><BR>
(State or other jurisdiction of <BR>
incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>36-3687863</B><BR>
(I.R.S. Employer Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>1319 Marquette Drive<BR>
Romeoville, Illinois 60446<BR>
(630)&nbsp;771-6700</B><BR>
(Address, including zip code, and telephone number, including area code, of registrant&#146;s principal executive offices)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>JOSEPH E. CROSS, CHIEF EXECUTIVE OFFICER<BR>
NANOPHASE TECHNOLOGIES CORPORATION<BR>
1319 Marquette Drive<BR>
Romeoville, Illinois 60446<BR>
(630)&nbsp;771-6700</B><BR>
(Name, address, including zip code, and telephone number, including area code, of agent for service)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>COPIES TO:<BR>
JOHN L. EISEL, ESQ.<BR>
GEOFFREY C. COCKRELL, ESQ.<BR>
Wildman, Harrold, Allen &#038; Dixon LLP<BR>
225 West Wacker Drive<BR>
Chicago, Illinois 60606-1229<BR>
(312)&nbsp;201-2000<BR>
(312)&nbsp;201-2555 (fax)</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Approximate date of commencement of proposed sale to the public: </B>From time to time after
the effective date of this registration statement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the only securities being registered on this Form are being offered pursuant to dividend or
interest reinvestment plans, please check the following box. <FONT face="Wingdings">&#111;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box.
<FONT face="Wingdings">&#254;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective
upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
<FONT face="Wingdings">&#111;</FONT></DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>CALCULATION OF REGISTRATION FEE</B></DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD><!-- VRule -->
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
</TR><TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="15" style="border-bottom: 3px double #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Proposed</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Maximum</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Aggregate</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Proposed Maximum</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD nowrap align="center"><B>Title of Each Class of</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Amount to be</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Offering Price</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Aggregate Offering</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Amount of</B></TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">    <TD width="1%">&nbsp;</TD>

    <TD nowrap align="center"><B>Securities to be Registered</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Registered</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Per Share</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Price</B></TD>
    <TD style="border-right: 2px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Registration Fee</B></TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD width="1%" style="border-top: 2px solid #000000">&nbsp;</TD>
                    <TD style="border-top: 2px solid #000000"><DIV style="margin-left:15px; text-indent:-15px">Common stock, $.001 par
value, and associated preferred share purchase rights</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">1,256,281</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">$6.27(1)</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>

<TD align="center" valign="bottom" style="border-top: 2px solid #000000">$7,876,881.87 (1)</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">$842.83</TD>
    <TD width="1%" style="border-top: 2px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD width="1%" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000"><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-right: 2px solid #000000; border-top: 2px solid #000000">&nbsp;</TD>
    <TD style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD align="center" valign="bottom" style="border-top: 2px solid #000000">&nbsp;</TD>
    <TD width="1%" style="border-top: 2px solid #000000">&nbsp;</TD>
</TR>
<TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="15" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) of the Securities Act of 1933 based on the average high and low prices
of the common stock as reported on the Nasdaq Global Market on January&nbsp;29, 2007.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to the shares of common stock set forth on the Calculation of Registration Fee
Table, pursuant to Rule&nbsp;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.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">







<DIV style="padding: 5px; border: 3px double #000000; font-size: 10pt; color: #FF0000">
<DIV align="left" style="font-size: 11pt; margin-top: 6pt">THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING
STOCKHOLDER 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.
</DIV>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Subject
to Completion, dated February&nbsp;5, 2007</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>PROSPECTUS</B>
</DIV>


<DIV align="center" style="font-size: 18pt; margin-top: 18pt"><B>NANOPHASE TECHNOLOGIES CORPORATION</B>
</DIV>


<DIV align="Center" style="font-size: 12pt; margin-top: 6pt"><B>1,256,281 SHARES OF COMMON STOCK</B>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus relates to resales from time to time of up to 1,256,281 shares of our common
stock. The shares of common stock were issued by Nanophase to Altana Chemie AG, a German
corporation, to whom we refer in this prospectus as the selling stockholder.
</DIV>


<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This offering is not being underwritten. We will not receive any proceeds from the sale
of these shares. The selling stockholder (which term includes its pledgees, donees, transferees or
other successors-in-interest) may offer the shares 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.
</DIV>


<DIV align="left" style="font-size: 9pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is traded on the Nasdaq Global Market under the symbol &#147;NANX.&#148; Any
common stock sold pursuant to this prospectus will be eligible for trading on such
securities market. On January&nbsp;29, 2007, the closing price of the common stock, as reported on the
Nasdaq Global Market, was $6.28 per share.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt">INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE &#147;RISK FACTORS&#148; BEGINNING ON PAGE 4
OF THIS PROSPECTUS.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt">NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">The date of this prospectus is <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2007.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101"><B>NOTICE RELATING TO THIS PROSPECTUS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102"><B>WHERE YOU CAN FIND MORE INFORMATION ABOUT US</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103"><B>PROSPECTUS SUMMARY</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105"><B>RISK FACTORS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>5</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106"><B>USE OF PROCEEDS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107"><B>SELLING STOCKHOLDER</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>13</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108"><B>PLAN OF DISTRIBUTION</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>14</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109"><B>DESCRIPTION OF CAPITAL STOCK</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110"><B>LEGAL MATTERS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111"><B>EXPERTS</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>19</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c11797exv5.htm">Opinion of Wildman, Harrold, Allen & Dixon LLP</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c11797exv23w1.htm">Consent of McGladrey & Pullen, LLP</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>NOTICE RELATING TO THIS PROSPECTUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not authorized any dealer, salesman or other person to give any information or to make
any representation other than those contained or incorporated by reference in this prospectus. You
must not rely upon any information or representation not contained or incorporated by reference in
this prospectus as if we had authorized it. This prospectus does not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the registered securities described
in this prospectus, nor does this prospectus constitute an offer to sell or the solicitation of an
offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction. You should not assume that the information contained in this
prospectus is correct on any date after its filing dates, even though this prospectus is delivered
or securities are sold on a later date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used in this prospectus, &#147;company,&#148; &#147;we,&#148; &#147;our&#148; and &#147;us&#148; refer to Nanophase Technologies
Corporation, except where the context otherwise requires or as otherwise indicated.
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>WHERE YOU CAN FIND MORE INFORMATION ABOUT US</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
room at Room&nbsp;1024, 450 Fifth Street, N.W., Washington, D.C. Please call the SEC at 1&#150;800&#150;732&#150;0330
for further information on the public reference room.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
the offering under this registration statement is completed or withdrawn:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Annual Report on Form&nbsp;10&#150;K for the fiscal year ended December&nbsp;31, 2005 filed March&nbsp;15, 2006,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Quarterly Report on Form 10-Q for the quarter ended March&nbsp;31, 2006 filed May&nbsp;9, 2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Quarterly Report on Form 10-Q for the quarter ended June&nbsp;30, 2006 filed August&nbsp;8, 2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Quarterly Report on Form 10-Q for the quarter ended September&nbsp;30, 2006 filed November&nbsp;7, 2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Current Reports on Form 8-K filed January&nbsp;9, 2006, January&nbsp;19, 2006, March&nbsp;9, 2006, April&nbsp;27, 2006, June&nbsp;20, 2006, July&nbsp;21,
2006, July&nbsp;27, 2006, August&nbsp;28, 2006, October&nbsp;3, 2006, October&nbsp;26, 2006, January&nbsp;12, 2007 and January&nbsp;19, 2007; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of our common stock contained in our registration statement on Form&nbsp;8&#150;A, including any amendments or
reports filed to update such information.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information incorporated by reference into this prospectus is an important part of this
prospectus. Any statement contained in an incorporated document shall be deemed to be modified or
superseded for purposes of the registration statement or this prospectus to the extent that a
statement contained herein or in any other subsequently filed incorporated documents or in an
accompanying prospectus supplement modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded, to constitute a part
of this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
Unless otherwise requested, exhibits to an incorporated document will not be provided unless the
exhibit is specifically incorporated by reference into this prospectus.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we make available free of charge through our website at http://www.nanophase.com
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
all amendments to those reports as soon as reasonably practicable after such material is
electronically filed with or furnished to the SEC. Other than the information expressly
incorporated by reference into this prospectus, information on, or accessible through, our website
is not a part of this prospectus, any prospectus supplement or the registration statement of which
this prospectus is a part.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References in this prospectus and any prospectus supplement to our common stock include the
associated preferred stock purchase rights under our 1998 Rights Agreement, as amended.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROSPECTUS SUMMARY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 4.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a nanomaterials (also referred to as nanocrystalline materials or nanoparticles)
developer and commercial manufacturer. We employ patented, patent-pending, and proprietary
technology to create nanomaterials, typically in the range of 5-100 nanometers, which may be
singular or multi-element oxides, including rare earth materials. We apply our technologies to
modify the nanoparticle and nanoparticle surface to manipulate electrical, mechanical, optical, and
other properties, while precisely controlling the particle size and other physical parameters. We
also use our technologies to create materials, not normally found naturally, that offer special
performance attributes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since 2001, we have created an integrated platform of nanomaterial technologies that are
designed to deliver an engineered nanomaterial solution for a particular target market or specific
customer application. Our technologies consist of two distinct nanoparticle or nanomaterial
manufacturing processes (physical vapor synthesis (&#147;PVS&#148;) and
NanoArc<SUP style="font-size: 85%; vertical-align: text-top">&#153;</SUP>synthesis), nanoparticle surface treatment(s) technologies, and
dispersion technologies. We have the ability to deliver various nanomaterials in commercial
quantities. Our products are available as nanoparticles, surface-treated nanoparticles, and stable
nanoparticle dispersions in aqueous or organic media, providing customers with nanomaterials in
readily usable forms. The diverse markets we currently serve include personal care, sunscreens,
abrasion-resistant applications, architectural coatings applications, environmental catalysts,
antimicrobial products, and a variety of polishing applications, including semiconductors, hard
disk drives and optics. We are also developing new markets and applications. Our customers include
multinational corporations and Fortune 500 companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We reduce the cycle time for innovation by working with certain customers to jointly develop
nanoengineered solutions for particular market needs or specific customer applications. We have
complete capability from application development and laboratory samples through pilot quantities
and volume production. We have extensive research and development facilities and application
laboratories, as well as manufacturing capacity based in two locations in the Chicago area. This
capability allows us to develop and supply nanomaterials in quantities ranging from grams to metric
tons. Our business model is based on strategic partnerships, typically with companies who currently
occupy a targeted market channel(s), and supplying nanomaterials to individual customer-specific
needs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The Offering</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Common Stock, together with associated <BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;rights, offered by the selling shareholder
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">1,256,281 shares</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Use of Proceeds
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">We will not receive any proceeds from the offering</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nasdaq Global Market Symbol
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NANX</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus contains and incorporates by reference certain &#147;forward-looking statements&#148; as
defined in Section&nbsp;21E of the Securities Exchange Act of 1934, as amended. These statements
reflect our current expectations of the future results of our operations, performance and
achievements. Forward looking statements are covered under the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. We have tried wherever possible to identify these
statements by using words such as &#147;anticipates,&#148; &#147;believes,&#148; &#147;estimates,&#148; &#147;expects,&#148; &#147;plans,&#148;
&#147;intends&#148; and similar expressions. These statements reflect our current beliefs and are based on
information now available to us. Accordingly, these statements are subject to certain risks,
uncertainties and contingencies that could cause our actual results performance
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or achievements in 2007 and beyond to
differ materially from those expressed in, or implied by, such statements. These risks,
uncertainties and factors include, without limitation: a decision by a customer to cancel a
purchase order or supply agreement in light of our dependence on a limited number of key customers;
uncertain demand for, and acceptance of, our nanocrystalline materials; our manufacturing capacity
and product mix flexibility in light of customer demand; our limited marketing experience; changes
in development and distribution relationships; the impact of competitive products and technologies;
our dependence on patents and protection of proprietary information; the resolution of litigation
in which we may become involved; and other risks set forth under the caption &#147;Risk Factors&#148; below.
You should not place undue reliance on any forward-looking statements. Except as required by
federal securities laws, we undertake no obligation to update or revise these forward-looking
statements to reflect new events or uncertainties.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>RISK FACTORS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing in our securities involves a high degree of risk. Before making an investment
decision, you should carefully consider the following risks and the risks, if any, set forth in any
prospectus supplement which accompanies this prospectus and in our periodic reports on Form&nbsp;10&#150;K
and Form&nbsp;10&#150;Q which have been or will be 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 and any prospectus supplement, or incorporated by reference
into this prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We have a limited operating history and may not be able to address difficulties encountered by
early stage companies in new and rapidly evolving markets.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have only a limited operating history. We were formed in November&nbsp;1989 and began our
commercial nanocrystalline materials operations in January&nbsp;1997. We have not yet generated
sufficient revenue from our nanocrystalline materials operations to achieve profitability. Because
of our limited operating history and the early stage of development of our rapidly evolving market,
we have limited insight into trends that may emerge and adversely 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, such as attracting and retaining customers and
responding to competitive market conditions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>We have a history of losses that may continue in the future.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have incurred net losses in each year since our inception with net losses of $5.83&nbsp;million
in 2003, $6.45&nbsp;million in 2004, $5.38&nbsp;million in 2005 and $3.6&nbsp;million in the first nine months of
2006. As of September&nbsp;30, 2006, we had an accumulated deficit of approximately $61.2&nbsp;million and
presently expect to continue to incur losses on an annual basis through at least 2007. 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 cash balances and our
ability to achieve profitability in future periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We depend on a small number of customers for a high percentage of our sales, and the loss of orders
from a significant customer could cause a decline in revenue and/or increases in the level of
losses incurred.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales to our customers are executed pursuant to purchase orders and multi-year supply
contracts; however, customers can cease doing business with us at any time with limited advance
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 affect our
ability to achieve anticipated revenues on a quarterly basis.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue from BASF Corporation (BASF), Rohm and Haas Electronic Materials CMP, Inc. (formerly
known as &#147;Rodel&#148;) and C.I. Kasei, a division of Itochu Corporation, accounted for approximately 83%
of total revenue for the year ended December&nbsp;31, 2005, and revenue from the same three customers
accounted for approximately 89% of total revenue in 2004. For the years ended December&nbsp;31, 2005 and
2004, BASF accounted for 66% and 70% of our total revenue,
respectively. BASF, a new significant customer of Nanophase in
architectural coatings and Rohm and Haas
Electronic Materials CMP (RHEM), Inc. represented a significant majority of total revenue for the nine
months ended September&nbsp;30, 2006 as described in Note 5 to the financial statements filed as part of
our Form 10-Q on November&nbsp;7, 2006. If we were to lose, or receive significantly decreased orders
from, any of these three customers, then our results of operations would be materially harmed. While
our agreements with BASF and RHEM are long-term agreements, they may be terminated
by the customer with reasonable notice and do not provide any guarantees that these customers will
continue to buy our products.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been consistently expanding both our marketing and business development efforts and
our production efficiency in order to address the issues of our dependence upon a limited amount of
customers, enhancement of gross profit and operating cash flows, and the achievement of
profitability. We currently have customers that may grow to the point where they generate
significant revenues and margins as relationships expand. Given the special nature of our products,
and the fact that markets for them are not yet fully developed, it is difficult to accurately
predict when additional large customers will materialize. Going forward, our margins, as a
percentage of revenue, will be dependent upon revenue mix, revenue volume and our ability to
continue to cut costs. The extent of the growth in revenue volume and the related gross profit that
this revenue generates, will be the main drivers in generating positive operating cash flows and,
ultimately, net income.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Any downturn in the markets served by us would harm our business.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A majority of our products are incorporated into products such as sunscreens, architectural
coatings, polishing slurries, personal care, and to a lesser extent, medical diagnostics,
abrasion-resistant coatings for flooring, and other products. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Our products often have long adoption cycles, which could make it difficult to achieve market
acceptance and makes it difficult to forecast revenues.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to their often novel characteristics and the unfamiliarity with them that exists in the
marketplace, our nanocrystalline materials often require longer adoption cycles than existing
materials technologies. Our nanomaterials have to receive appropriate attention within any
potential customer&#146;s organization, then they must be tested to prove a performance advantage over
existing materials, typically on a systems-cost basis. Once we have proven initial commercial
viability, pilot scale production runs must be completed by the customer, followed by further
testing. Once production-level commercial viability is established, then our nanomaterials can be
introduced, often to a downstream marketplace that needs to be familiarized with them. If we are
unable to convince our potential customers of the performance advantages and economic value of our
nanocrystalline materials over existing and competing materials and technologies, we will be unable
to generate significant sales. Our long adoption cycle makes it difficult to predict when sales
will occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We depend on collaborative development relationships with our customers and do not have a
substantial direct sales force or an established distribution network apart from the distribution
networks of our strategic partners. If we are unable to initiate or sustain such collaborative
relationships or if the terms of these relationships limit the distribution of our products or if
our strategic partners are unable to distribute our products efficiently, then we may be unable to
independently develop, manufacture or market our current and future nanocrystalline materials or
applications.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have established, and will continue to pursue, strategic relationships with many of our
customers and do not have a substantial direct sales force or an established distribution network
(other than distribution arrangements for research samples). 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 strategic relationships with other
customers. Our customers may not continue in these collaborative development relationships, may not
devote sufficient resources to the development or sale of our materials or may enter into strategic
development relationships with our competitors. These customers may also require a share of control
of these collaborative programs. Some of our agreements with these customers limit our ability to
license our technology to others and/or limit our ability to engage in certain product development
or marketing activities. These relationships generally can be terminated unilaterally by customers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally and except for our research quantities distribution agreement with Alfa Aesar,
these customers generally require exclusive distribution arrangements within the field of
application covered by our agreement with these customers, and the very nature of these strategic
relationships limits the distribution of our products to the distribution networks available to our strategic relationship partners. In addition, the

</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">development agreements with some of our larger customers contain provisions that require us to
license our intellectual property to these customers on disadvantaged terms and/or transfer
equipment to these customers in the event that we materially breach these agreements or fail to
satisfy certain financial covenants. For example, see &#147;Risk Factors&#151;We may need to raise additional
capital in the future.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are unable to initiate or sustain such collaborative relationships or if the terms of
these relationships materially limit our access to distribution channels for our products, then we
may be unable to independently develop, manufacture or market our current and future
nanocrystalline materials or applications.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>If commodity metal prices increased at such a rate that we are unable to recover lost margins on a
timely basis or that our products became uncompetitive in their current marketplaces, our financial
and liquidity position and results of operations would be substantially harmed.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of our significant raw materials come from commodity metal markets that may be subject to
rapid price increases. While we generally pass commodity price increases on to our customers, it is
possible that, given our limited customer base and the limited control we have over it, commodity
metal prices could increase at such a rate that could hinder our ability to recover lost margins
from our customers on a timely basis. It is also possible that such drastic cost increases could
render some of our materials uncompetitive in their current marketplaces when considered relative
to other materials on a cost benefit basis. If either of these potential results occurred, our
financial and liquidity position and results of operations would be substantially harmed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>If a catastrophe strikes either of our manufacturing facilities or if we were to lose our lease for
either facility due to non-renewal or other unforeseen events, we may be unable to manufacture our
materials to meet customers&#146; demands.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our manufacturing facilities are located in Romeoville and Burr Ridge, Illinois. These
facilities and some of our manufacturing and testing equipment would be difficult to replace in a
timely manner. Therefore, any material disruption at one of our facilities due to a natural or
man-made disaster or a loss of lease due to non-renewal or other unforeseen events could have a
material adverse effect on our ability to manufacture products to meet customers&#146; demands. While we
maintain customary property insurance, this insurance may not adequately compensate us for all
losses that we may incur and would not compensate us for any interruption in our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>If we are unable to expand our production capabilities to meet unexpected demand, we may be unable
to manage our growth and our business would suffer.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 expect to
continue to expand our current facilities or obtain additional facilities in the future in order to
respond to unexpected demand for existing materials or for new materials that we do not currently
make in quantity. Such unplanned demand, if it resulted in rapid expansion, could create a
situation where growth could become difficult to manage, which could cause us to lose potential
revenue.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Protection of our intellectual property is limited and uncertain.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our intellectual property is important to our business. We seek to protect our intellectual
property through patent, trademark, trade secret protection and confidentiality or license
agreements with our employees, customers, suppliers and others. Our means of protecting our
intellectual property rights in the United States or abroad may not be adequate and others,
including our competitors, may use our proprietary technology without our consent. We may not
receive the necessary patent protection for any applications pending with the U.S. Patent and
Trademark Office (&#147;USPTO&#148;) and any of the patents that we currently own or license may not be
sufficient to keep competitors from using our materials or processes. In addition, patents that we
currently own or license may not be held valid if subsequently challenged by others and others may
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 or preserve
our trade secrets, we may be unable to effectively compete against others offering similar
products and services.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, if we fail to operate without infringing the proprietary rights
of others or lose any license to technology that we currently have or will acquire in the future,
we may be unable to continue making the products that we currently make.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, at times, attempts may be made to challenge the prior issuance of our patents. For
example, the USPTO has granted a third-party request for re-examination with respect to one patent
relating to one of our nanoparticle manufacturing processes. On September&nbsp;7, 2005, our
representatives conducted an interview with the Examiner assigned to the re-examination at the
USPTO, resulting in the Examiner preparing an interview summary indicating that rejections of
issued claims may be formally withdrawn. However, prior to the USPTO issuing a formal notice
confirming patentability, the same third party filed a second request for re-examination of the
patent (which second request, the USPTO has since denied). Nonetheless, a second interview was
conducted, resulting in an amendment to all patent claims. Thereafter, a third request for
re-examination was filed and granted by the USPTO. We subsequently conducted a third interview with
the Examiner and responded to the third request. While we will continue to vigorously defend our
patent position, we may not be successful in maintaining the scope of the claims of this patent
during re-examination. While the Company intends to vigorously defend its patent protection against
such claims, it does not believe that these patent claims pose a risk of material harm to the
Company&#146;s business prospects or competitive positions. If the scope of the Company&#146;s claims
protected by the patent in question were ultimately reduced through the pending re-examination
proceedings before the USPTO, the Company would still continue to be able to conduct its business
as currently conducted, including the use of the technology that is the subject of the patented
claims. A reduction in the scope of the claims protected by the Company&#146;s patent in question would
limit the Company&#146;s ability to assert infringement claims and suits against other parties using the
same or sufficiently similar technology. The Company believes that while patent protection is a
valuable asset, a reduction in the scope of the claims protected by the Company&#146;s patent in
question would not materially alter the competitive environment in which the Company operates or
result in a material loss.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, litigation may be necessary to enforce our intellectual property rights, to
protect our trade secrets, to determine the validity and scope of the proprietary rights of others,
or to defend against 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, these licenses might diminish this quality and value.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Our industry is experiencing rapid changes in technology. If we are unable to keep pace with these
changes, our business will not grow.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 expect to commit substantial resources to
develop our technologies and product applications and, in the future, to expand our commercial
manufacturing capacity as volume grows. Our development efforts
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">may be rendered obsolete by the research efforts and technological advances of others and other
advanced materials may prove more advantageous than those we produce.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Our market is highly competitive, and if we are unable to compete effectively, then our business
will not grow.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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, other companies may
develop and introduce new or competitive products. Our competitors may succeed in developing or
marketing materials, technologies and better or less expensive products than 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, we will lose market share and revenue to our
competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We may need to raise additional capital in the future. 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 or we may be
required to transfer equipment to our largest customesr.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. If necessary, we may seek funding through public or private financing and
through contracts with government or other companies. Additional financing may not 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To raise additional funds in the future, we would likely sell our equity or debt securities or
enter into loan agreements. To the extent that we issue debt securities or enter into loan
agreements, 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, our stockholders
may face economic dilution and dilution of their percentage of ownership.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently have supply agreements with BASF and Rohm and Haas Electronic Materials CMP, Inc.
that contain provisions which could potentially result in a mandatory license of technology and
sale of production equipment to these customers providing capacity sufficient to meet their
production needs. The license and related sale would be &#147;triggered&#148; in the event that we breach
certain of our obligations under the respective supply agreement. With respect to the BASF supply
agreement, the license and related sale also would be triggered if one of the following occurs:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our earnings for a twelve month
period ending with our most recently
published quarterly financial
statements are less than zero and our
cash, cash equivalents and
investments are less than $2,000,000,
or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the acceleration of any debt
maturity having a principal amount of
more than $10,000,000, or we become
insolvent as defined in the supply
agreement.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a triggering event where we are required to sell to BASF our production
equipment providing capacity sufficient to meet BASF&#146;s production needs, the equipment would be
sold at 115% of the equipment&#146;s net book value. Under another of our supply agreements with BASF,
upon the our breach of certain contractual obligations to BASF, we would be required to sell BASF
certain production equipment at the greater of 30% of the original book value of such equipment and
any associated upgrades to it or 115% of the equipment&#146;s net book value.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we have sufficient cash balances to avoid the first triggering event for the
foreseeable future. If a triggering event were to occur and BASF elected to proceed with the
license and related sale mentioned above, we would lose both significant revenue and the ability to
generate significant revenue to replace that which was lost in the near term. Replacement of
necessary equipment that would be purchased and removed by BASF pursuant to this triggering event
could take six months to a year. Any additional capital outlays required to rebuild capacity would
probably be greater than the proceeds from the purchase of the assets pursuant to our agreement
with BASF. This shortfall might put us in a position where it would be difficult to secure
additional funding given what would then be an already tenuous cash position. Such an event would
also result in the loss of many of our key staff and line employees due to economic realities. We
believe that our employees are a critical component of our success and would be difficult to
quickly replace and train. Given the occurrence of such an event, we might not be able to hire and
retrain skilled employees given the stigma relating to such an event and its impact on us. We might
elect to effectively reduce our size and staffing to a point where we could remain a going concern
in the near term.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>We depend on key personnel, and their unplanned departure could harm our business.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 key 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, or if we are unable to
implement a succession plan to prepare qualified individuals to assume key roles upon any loss of
our key personnel, 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We face potential product liability risks which could result in significant costs that exceed
our insurance coverage, damage our reputation and harm our business.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 to humans or physical
environments. 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 cosmetic,
skin-care and personal-care products, these claims may also be asserted against us. We may incur
significant costs including payment of significant damages, in defending or settling product
liability claims. We currently maintain insurance coverage in the amount of $10&nbsp;million for product
liability claims, which may prove not to be sufficient. Even if a suit is without merit and
regardless of the outcome, claims can divert management time and attention, injure our reputation
and adversely affect demand for our nanocrystalline materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We are subject to governmental regulations. The costs of compliance and liability for noncompliance
with governmental regulations could have a material adverse effect on our business, results of
operations and financial condition.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current and future laws and regulations may require us to make substantial expenditures for
preventive or remedial action. Our operations, business or assets may be materially and adversely
affected by governmental interpretation and enforcement of current or future environmental, health
and safety 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 a related event could exceed both the amount of our liability insurance and our resources
or otherwise have a material adverse effect on our business, results of operations and financial
condition.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
However, we may have to incur significant costs in defending or settling future claims of alleged
violations of governmental regulations and these regulations may 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The manufacture and use of certain products that contain our nanocrystalline materials are
subject to extensive governmental regulation, including regulations promulgated by the U.S. Food
and Drug Administration, the U.S. Environmental Protection Agency and the U.S. Occupational Safety
and Health Administration. As a result, we are required to adhere to the requirements of the
regulations of governmental authorities in the United States and other countries. These regulations
could increase our cost of doing business and may render some potential markets prohibitively
expensive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><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>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;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:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discourage potential acquisition proposals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delay or prevent a change in control; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>limit the price that investors might be willing to pay in the future for shares of our common stock.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In particular, our board of directors is authorized to issue up to 24,088 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, including up to
2,500 shares of Series&nbsp;A Junior Participating Preferred Stock issuable under the 1998 Rights
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Section&nbsp;203 of the Delaware General Corporations Law relating to business
combinations with related stockholders and the terms of our stock option plans relating to changes
of control may discourage, delay or prevent a change in control of our company. See &#147;Description
of Capital Stock.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Future sales of our common stock by existing stockholders could negatively affect the market price
of our stock and make it more difficult for us to sell stock in the future.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of our common stock in the public market, or the perception that such sales could occur,
could result in a decline in the market price of our common stock and make it more difficult for us
to complete future equity financings. A substantial number of shares of our common stock and shares
of common stock subject to outstanding warrants and options may be resold pursuant to currently
effective registration statements. In addition to the shares offered
pursuant to this prospectus, as of January&nbsp;29, 2007 there are:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>16,897,310 shares of common stock that have been issued in
registered offerings, upon the exercise of options under
our equity incentive plan or in private placements and are
freely tradable in the public markets,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>1,481,290 shares of common stock that may be issued on the
exercise of stock options outstanding and exercisable under
our equity incentive plan; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>847,918&nbsp;shares of common stock that were issued pursuant to our August&nbsp;25, 2006 private placement and subsequently will be registered for resale pursuant to the terms of the Registration
Rights Agreement executed in connection with this private placement.</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot estimate the number of shares of common stock that may actually be resold in the
public market because this will depend on the market price for our common stock, the individual
circumstances of the sellers, and other factors. If stockholders sell large portions of their
holdings in a relatively short time, for liquidity or other reasons, the market price of our common
stock could decline significantly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Bradford T. Whitmore has significant influence on all matters requiring stockholder approval
because he beneficially owns a large percentage of our common stock, and he may vote the common
stock in ways with which our other stockholders disagree.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of January&nbsp;29, 2007, Bradford T. Whitmore, together with his affiliates, Grace Brothers,
Ltd. and Grace Investments, Ltd., beneficially owned approximately 19% of the outstanding shares of
our common stock. As a result, he has significant influence on matters submitted to our
stockholders for approval, including proposals regarding:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any merger, consolidation or sale of all or substantially all of our assets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the election of members of our board of directors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any amendment to our certificate of incorporation.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ownership position of Mr.&nbsp;Whitmore could delay, deter or prevent a change of control or
adversely affect the price that investors might be willing to pay in the future for shares of our
common stock. Mr.&nbsp;Whitmore&#146;s interests may be significantly different from the interests of our
other stockholders and he may vote the common stock he beneficially owns in ways with which our
other stockholders disagree. Investors in the Company should also note that R. Janet Whitmore, one
of our directors, is the sister of Mr.&nbsp;Whitmore.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>We have been involved in litigation. If we are involved in similar litigation in the future, the
expense of defending such litigation and the potential costs of judgments against us and the costs
of maintaining insurance coverage could have a material adverse effect on our financial
performance.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been involved in three securities class action lawsuits, one of which was a
consolidation of several related lawsuits. While all of these lawsuits have been settled and
dismissed with all settlements funded by our directors and officers liability insurance, we may be
the target of additional securities lawsuits in the future. If we are involved in similar
litigation in the future, the expense of defending such litigation, the potential costs of
judgments against us, the costs of maintaining insurance coverage and the diversion of management&#146;s
attention could have a material adverse effect on our financial performance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Our stock price is volatile.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stock markets in general, and the stock prices of technology-based companies in
particular, have experienced extreme volatility that often has been unrelated to the operating
performance of any specific public company. The market price of our common stock has fluctuated in
the past and is likely to fluctuate in the future as well. Our future financial performance and
stock price may be subject to significant volatility, particularly on a quarterly basis. Shortfalls
in our revenues in any given period relative to the levels expected by investors could immediately,
significantly and adversely affect the trading price of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Dilutive Effect of Private Placements.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;8, 2003 we sold 453,001 shares of our common stock to Grace Brothers, Ltd. at a
purchase price of $4.415 per share together with a warrant to purchase a like number of shares of
common stock during the next twelve months also at a price of $4.415 per share. This warrant was
exercised on September&nbsp;2, 2004 to acquire 453,001 newly issued shares of common stock. The share
price for the common stock was determined based on the fifteen-day market closing average for our
stock ending September&nbsp;5, 2003. On September&nbsp;8, 2003 and September&nbsp;2, 2004 the closing sale price
of our common stock as reported on NASDAQ, was $5.50 and $5.49 respectively, per
share. On March&nbsp;23, 2004 we sold the 1,256,281 shares of our common stock being offered
pursuant to this prospectus to Altana at a purchase
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">price of $7.96 per share. On March&nbsp;23, 2004 the
closing sale price of our common stock, as reported on NASDAQ, was $8.26 per share. On August&nbsp;25,
2006 we sold 847,918 shares of our common stock to Rohm and Hass Electronis Materials CMP Holdings,
Inc. at a purchase price of $5.8968 per share. On August&nbsp;25, 2006 the closing price of our common
stock, as reported on NASDAQ, was $6.71 per share. Each of these issuances of stock at below the
then-current market price had a dilutive effect on existing common stockholders.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>We have never paid dividends.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholder 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 stockholder pursuant to this prospectus. The selling stockholder 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 stockholder 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;23, 2004 we completed the sale of 1,256,281 shares of our common stock in a private
placement to the selling stockholder resulting in gross proceeds of $10,000,000. To date we have
used the proceeds of this private placement for operations, including capital equipment, and
general working capital purposes.
</DIV>

<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SELLING STOCKHOLDER</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All shares of our common stock covered by this prospectus were issued directly by us to the
selling stockholder in a private placement completed on March&nbsp;23, 2004 pursuant to an exemption
from registration contained in Regulation&nbsp;D promulgated under Section&nbsp;4(2) of the Securities Act.
We granted registration rights to the selling stockholder with respect to the resale of shares of
our common stock issued to the selling stockholder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the registration rights granted to the selling stockholder, 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Simultaneous to this transaction, we executed a joint development agreement with Altana
in order to explore new product applications in fields that are mutually beneficial to both
companies. Pursuant to the agreement, we and Altana have granted each other, subject to limited
exceptions, exclusive rights for the development and purchase of nanomaterials for use in paints,
coatings, inks, polymers and plastics, varnishes and similar applications.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to the beneficial
ownership of shares of our common stock by the selling stockholder as of January&nbsp;29, 2007 and the
number of shares which may be offered pursuant to this prospectus for the account of the selling
stockholder 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
stockholder has the right to
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">acquire beneficial interest within 60&nbsp;days after January&nbsp;29, 2007,
through the exercise or conversion of any stock option, warrant, preferred stock or other right.
Except for the joint development agreement described above or as described in the footnotes to the
table, to the best of our knowledge, the selling stockholder has not had any position, office or
other material relationship with our Company or any of our affiliates.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Class</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares Which</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially Owned</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>May Be Sold in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned After the</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned After</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Selling Stockholder</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Prior to Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>This Offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Offering(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>the Offering(1)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Altana Chemie AG</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,256,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,256,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Assumes that the 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.</TD>
</TR>

</TABLE>


<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PLAN OF DISTRIBUTION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The shares covered by this prospectus may be offered and sold from time to time by the
selling stockholder. The term &#147;selling stockholder&#148; includes donees, pledgees, transferees or other
successors-in-interest selling shares received after the date of this prospectus from the selling
stockholder as a gift, pledge, partnership distribution or other transfer. The selling stockholder
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 stockholder. 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any or all of the shares offered by the selling stockholder may be offered for sale and
sold by, or on behalf of, the selling stockholder from time to time in varying amounts, including
in block transactions, on the NASDAQ Global 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 stockholder directly to one or more
purchasers, through 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 stockholder 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 stockholder, 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 commission 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, us. At the time a particular offer of
shares is made by the selling stockholder, 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 stockholder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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
stockholder in compliance with other applicable state securities laws and regulations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholder 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. If the selling stockholder is an &#147;underwriter&#148; within the
meaning of Section&nbsp;2(11) of the Securities Act, it will be subject to the prospectus delivery
requirements of the Securities Act. The selling stockholder has acknowledged that
it understands its obligations to comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulations, particularly Regulation&nbsp;M. Compensation paid to any
NASD member firm in connection with any distribution
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of the securities covered by this prospectus
will not exceed 7% of the maximum proceeds of such sale.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will make copies of this prospectus (as it may be supplemented or amended from time to
time) available to the selling stockholder for the purpose of satisfying the prospectus delivery
requirements of the Securities Act. The selling stockholder 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;144 rather than pursuant to this prospects.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent required, the shares of our common stock to be sold, the name of the
selling stockholder, 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 any accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this prospectus.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed with the selling stockholder to keep the registration statement of which
this prospectus constitutes a part effective until the earlier of (1)&nbsp;the date all of the shares
covered by this prospectus have been sold and (2)&nbsp;the date on which all of the shares covered by
this prospectus may be sold without restriction or limitation.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>DESCRIPTION OF CAPITAL STOCK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus describes the general terms of our capital stock. For a more detailed
description of these securities, you should read the applicable provisions of Delaware law and our
certificate of incorporation and bylaws. When we offer to sell a particular series of these
securities, we will describe the specific terms of the series in a supplement to this prospectus.
Accordingly, for a description of the terms of any series of securities, you must refer to both the
prospectus supplement relating to that series and the description of the securities described in
this prospectus. To the extent the information contained in the prospectus supplement differs from
this summary description, you should rely on the information in the prospectus supplement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our certificate of incorporation, the total number of shares of all classes of
stock that we have authority to issue is 30,024,088 consisting of 30,000,000 shares of common
stock, par value $0.01 per share, and 24,088 shares of preferred stock, par value $0.01 per share.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Common Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of January&nbsp;29, 2007 we had 19,001,509 shares of common stock outstanding. The holders
of our common stock are entitled to one vote for each share on all matters voted on by
stockholders. The holders of our common stock do not have cumulative voting rights, which means
that holders of more than one-half of the shares voting for the election of directors can elect all
of the directors then being elected. Subject to the preferences of any of our outstanding preferred
stock from time to time outstanding, the holders of our common stock are entitled to a proportional
distribution of any dividends that may be declared by the board of directors. In the event of a
liquidation or dissolution of Nanophase, the holders of our common stock are entitled to share
equally in all assets remaining after payment of liabilities and any payments due to holders of any
outstanding shares of our preferred stock from time to time outstanding. The outstanding shares of
our common stock are, and the shares offered by this prospectus, when issued, will be, fully paid
and nonassessable. The rights, preferences and privileges of holders of our common stock are
subject to, and may be adversely affected by, the rights of the holders of shares of any of our
outstanding preferred stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Preferred Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has the authority to issue up to 24,088 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, including up to 2,500 shares of Series&nbsp;A Junior Participating
Preferred Stock issuable under our shareholder rights plan discussed below. No shares of preferred
stock are presently outstanding, and no shares are expected to be issued except in connection with
the shareholder rights plan referred to below. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of our common stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Shareholder Rights Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;1998, we declared a dividend of one preferred stock purchase right for each
outstanding share of our common stock on November&nbsp;10, 1998. Each right entitles the holder, upon
the occurrence of certain specified events, to purchase from us one ten-thousandth of a share of
our Series&nbsp;A Junior Participating Preferred Stock at a purchase price of $25 per one-ten thousandth
of a share. The rights further provide that each right will entitle the holder, upon the occurrence
of certain specified events (and without the necessity of purchasing the one ten-thousandth of a
share of our Series&nbsp;A Junior Participating Preferred Stock), to purchase from us, common stock
having a value of twice the purchase price and, upon the occurrence of certain other specified
events, to purchase from another entity into which we are merged or which acquires 50% or more of
our assets or earnings power, common stock of such other entity having a value of twice the
purchase price. The rights are not presently exercisable. The rights generally become exercisable
if a person or group acquires 35% or more of our common stock or commences a tender offer that
could result in such person or group owning 35% or more of our common stock. In general, the rights
may be redeemed by us at a price of $0.01 per right. The rights expire on October&nbsp;28, 2008.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Anti-takeover Provisions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a corporation organized under the laws of the State of Delaware, we are subject to
Section&nbsp;203 of the DGCL, which restricts our ability to enter into business combinations with an
interested stockholder or a stockholder owning 15% or more of our outstanding voting stock, or that
stockholder&#146;s affiliates or associates, for a period of three years. These restrictions do not
apply if:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prior to becoming an interested stockholder, our board of directors
approves either the business combination or the transaction in
which the stockholder becomes an interested stockholder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>upon consummation of the transaction in which the stockholder
becomes an interested stockholder, the interested stockholder owns
at least 85% of our voting stock outstanding at the time the
transaction commenced, subject to exceptions; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>on or after the date a stockholder becomes an interested
stockholder, the business combination is both approved by our board
of directors and authorized at an annual or special meeting of our
stockholders by the affirmative vote of at least two-thirds of the
outstanding voting stock not owned by the interested stockholder.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some provisions of our certificate of incorporation and bylaws could also have
anti-takeover effects. These provisions, which are described below:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>permit the board of directors to increase its own size and fill the resulting vacancies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide for a board comprised of three classes of directors with
each class serving a staggered three-year term;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>authorize the issuance of preferred stock in one or more series; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prohibit stockholder action by written consent.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These provisions are intended to enhance the likelihood of continuity and stability in
the composition of the policies formulated by the board of directors. In addition, these provisions
are intended to ensure that the board of directors will have sufficient time to act in what it
believes to be in the best interests of Nanophase and its stockholders. These provisions also are
designed to reduce our vulnerability to an unsolicited proposal for a takeover of Nanophase that
does not contemplate the acquisition of all of our outstanding shares or an unsolicited proposal
for the restructuring or sale of all or part of Nanophase. The provisions are also intended to
discourage some tactics that may be used in proxy fights.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Classified Board of Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The certificate of incorporation provides for the board of directors to be divided into
three classes of directors, with each class as nearly equal in number as possible, serving
staggered three-year terms. As a result, approximately one-third of the board of directors will be
elected each year. The classified board provision will help to assure the continuity and stability
of the board of directors and the business strategies and policies of Nanophase as determined by
the board of directors. The classified board provision could have the effect of discouraging a
third party from making a tender offer or attempting to obtain control of Nanophase. In addition,
the classified board provision could delay stockholders who do not agree with the policies of the
board of directors from removing a majority of the board of directors for two years.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>No Stockholder Action by Written Consent; Special Meetings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The certificate of incorporation provides that stockholder action can only be taken at an
annual or special meeting of stockholders and prohibits stockholder action by written consent in
lieu of a meeting. The certificate of incorporation also provides that special meetings of
stockholders may be called only by the board of directors, its chairman, or our president or
secretary. Stockholders are not permitted to call a special meeting of stockholders or to require
that the board of directors call a special meeting.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Number of Directors; Removal; Filling Vacancies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The certificate of incorporation provides that the board of directors will consist of
between five and nine members, the exact number to be fixed by resolution adopted by affirmative
vote of a majority of the board of directors. The board of directors currently consists of seven
directors. Further, the certificate of incorporation authorizes the board of directors to fill
newly created directorships. Accordingly, this provision could prevent a stockholder from obtaining
majority representation on the board of directors by permitting the board of directors to enlarge
the size of the board and fill the new directorships with its own nominees. A director so elected
by the board of directors holds office until the next election of the class for which the director
has been chosen and until his or her successor is elected and qualified. The certificate of
incorporation also provides that directors may be removed only for cause and only by the
affirmative vote of holders of a majority of the total voting power of all outstanding securities.
The effect of these provisions is to preclude a stockholder from removing incumbent directors
without cause and simultaneously gaining control of the board of directors by filling the vacancies
created by the removal with its own nominees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transfer Agent and Registrar</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Transfer Agent and Registrar for our common stock is LaSalle Bank National
Association.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NASDAQ Global Market Listing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock is listed on the Nasdaq Global Market under the symbol &#147;NANX.&#148;
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>LEGAL MATTERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wildman, Harrold, Allen &#038; Dixon LLP, Chicago, Illinois is giving an opinion of the validity of
the issuance of the securities offered in this prospectus.
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXPERTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
balance sheets of Nanophase Technologies Corporation as of
December&nbsp;31, 2005 and 2004, and the related statements of operations,
stockholders&#146; equity, and
cash flows for each of the years in the three-year period ended
December&nbsp;31, 2005 appearing in Nanophase Technologies Corporation&#146;s Annual Report (Form 10-K) for the year
ended December&nbsp;31, 2005, have been audited by McGladrey &#038;
Pullen, LLP, an independent registered public accounting firm, 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.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INFORMATION NOT REQUIRED IN PROSPECTUS</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;14. Other Expenses of Issuance and Distribution</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">SEC Registration Fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">842.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounting Fees and Expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Legal Fees and Expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,000.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Miscellaneous</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,842.83</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All fees and expenses other than the SEC registration fee are estimated. The expenses listed
above will be paid by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;15. Indemnification of Officers and Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Section&nbsp;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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into indemnification agreements with each director providing for
indemnification to the fullest extent permitted by Delaware law and maintain directors and officers
liability insurance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;16. List of Exhibits</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Exhibits
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen stock certificate representing Common Stock, incorporated by
reference to Exhibit&nbsp;4.1 to the Company&#146;s Registration Statement on Form
S-1 (File No.&nbsp;333-36937) (the &#147;IPO S-1&#148;).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Warrants, incorporated by reference to Exhibit&nbsp;4.2 to the IPO S-1.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rights Agreement dated as of October&nbsp;28, 1998 by and between the
Company and LaSalle National Bank, incorporated by reference to Exhibit&nbsp;1
to the Company&#146;s Registration Statement on Form&nbsp;8-A, filed October&nbsp;28,
1998.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Designation of Series&nbsp;A Junior Participating Preferred
Stock incorporated by reference to Exhibit&nbsp;4.4 to the Company&#146;s Annual
Report on Form&nbsp;10-K for the year ended December&nbsp;31, 1998 (the &#147;1998
10-K&#148;).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amendment to Rights Agreement dated August&nbsp;1, 2001 between the
Company and LaSalle National Association, as Rights Agent, incorporated by
reference to Exhibit&nbsp;4.5 to the Company&#146;s Quarterly Report on Form&nbsp;10-Q
for the quarter ended June&nbsp;30, 2001.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2001 Nanophase Technologies Corporation Equity Compensation Plan,
incorporated by reference to Exhibit&nbsp;4.3 to the Company&#146;s Registration
Statement on Form&nbsp;S-8 (File No.&nbsp;333-74170) filed October&nbsp;29, 2001.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Second Amendment to Rights Agreement dated May&nbsp;24, 2002 between the
Company and LaSalle National Association, as Rights Agent, incorporated by
reference to Exhibit&nbsp;4.7 to the Company&#146;s Registration Statement on Form
S-3 (File No.&nbsp;333-90326) filed June&nbsp;12, 2002.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Third Amendment to Rights Agreement dated September&nbsp;5, 2003 between
the Company and LaSalle National Association, as Rights Agent,
incorporated by reference to Exhibit&nbsp;99.1 to the Company&#146;s Form&nbsp;8-K filed
September&nbsp;10, 2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Subscription Agreement dated September&nbsp;8, 2003 between the Company
and Grace Brothers, Ltd., incorporated by reference to Exhibit&nbsp;99.2 to the
Company&#146;s Current Report on Form&nbsp;8-K filed September&nbsp;10, 2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.10
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stock Purchase Agreement dated March&nbsp;23, 2004 between the Company and
Altana Chemie AG, incorporated by reference to Exhibit&nbsp;4.10 to the
Company&#146;s Annual Report on Form&nbsp;10-K, filed March&nbsp;30, 2004, for the year
ended December&nbsp;31, 2003 (the &#147;2003 10-K&#148;).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.11
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Registration Rights Agreement dated March&nbsp;23, 2004 between the
Company and Altana Chemie AG, incorporated by reference to Exhibit&nbsp;4.11 to
the 2003 10-K.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.12
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2004 Nanophase Technologies Corporation 2004 Equity Compensation Plan,
(&#147;2004 Equity Plan&#148;) incorporated by reference to Exhibit&nbsp;4 to the
Company&#146;s Registration Statement on Form&nbsp;S-8 (File No.&nbsp;333-119466).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.13
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Stock Option Agreement under the 2004 Equity Plan, incorporated by
reference to Exhibit&nbsp;4.13 to the Company&#146;s Annual Report on Form&nbsp;10-K
filed March&nbsp;15, 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.14
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Restricted Share Grant Agreement under the 2004 Equity Plan, ,
incorporated by reference to Exhibit&nbsp;4.14 to the Company&#146;s Annual Report
on Form&nbsp;10-K filed March&nbsp;15, 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.15
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Performance Share Grant Agreement under the 2004 Equity Plan,
incorporated by reference to Exhibit&nbsp;4.15 to the Company&#146;s Annual Report
on Form&nbsp;10-K filed March&nbsp;15, 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.16
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2005 Nanophase Technologies Corporation Equity Compensation Plan,
incorporated by reference to Exhibit&nbsp;4 to the Company&#146;s Non-Employee
Director Restricted Stock Plan, incorporated by reference to Exhibit&nbsp;A to
the Company&#146;s Definitive Proxy Statement on Form&nbsp;DEF14A filed May&nbsp;17,
2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.17
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">First Amendment to the Nanophase Technologies Corporation 2005
Non-Employee Director Restricted Stock Plan, incorporated by reference to
Exhibit&nbsp;99.1 to the Company&#146;s Current Report on Form&nbsp;8-K filed January&nbsp;9,
2006.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Wildman, Harrold, Allen &#038; Dixon LLP</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of McGladrey &#038; Pullen, LLP</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Wildman, Harrold, Allen &#038; Dixon LLP (included in Exhibit&nbsp;5)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">24
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Power of Attorney (included on signature page)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Financial Statement Schedule
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;17. Undertakings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Registrant hereby undertakes:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(1)&nbsp;To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement: (i)&nbsp;To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii)&nbsp;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 &#147;Calculation of Registration Fee&#148; table in the
effective registration statement; (iii)&nbsp;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-
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->II-2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(2)&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
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">(3)&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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Registrant undertakes that: (1)&nbsp;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&nbsp;430A and contained in the form of prospectus
filed by the Registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;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)&nbsp;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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 February&nbsp;5,
2007.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">NANOPHASE TECHNOLOGIES CORPORATION <BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ JOSEPH E. CROSS
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Joseph E. Cross,&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">President and Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 February&nbsp;5, 2007.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Title</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JOSEPH E. CROSS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Joseph E. Cross
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="bottom"><DIV style="margin-left:0px; text-indent:-0px">/s/ JESS JANKOWSKI
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer, Vice
President and Corporate Controller
(Principal Accounting and
Financial Officer)</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Jess Jankowski
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ DONALD PERKINS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Donald Perkins
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JAMES HENDERSON
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
James Henderson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JAMES MCCLUNG
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
James McClung
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JERRY PEARLMAN
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Jerry Pearlman
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Title</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
<TR valign="bottom"><!-- Blank Space -->
<TD align="center" valign="BOTTOM"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/
RICHARD SIEGAL
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Richard Siegel
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ R. JANET WHITMORE
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
R. Janet Whitmore
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->II-5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>EXHIBIT INDEX</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Opinion of Wildman, Harrold, Allen &#038; Dixon LLP</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">23.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consent of McGladrey &#038; Pullen, LLP</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">23.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Consent of Wildman, Harrold, Allen &#038; Dixon LLP (included in Exhibit&nbsp;5)</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->II-6<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>2
<FILENAME>c11797exv5.htm
<DESCRIPTION>OPINION OF WILDMAN, HARROLD, ALLEN & DIXON LLP
<TEXT>
<HTML>
<HEAD>
<TITLE>exv5</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;5</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Wildman, Harrold, Allen &#038; Dixon LLP Letterhead
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Nanophase Technologies Corporation<BR>
1319 Marquette Drive<BR>
Romeoville, Illinois 60446

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Re: Registration Statement on Form&nbsp;S-3

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladies and Gentlemen:

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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 1,256,281 of shares of Common Stock, $0.01 par value, as described in the
Registration Statement (the &#147;Shares&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Shares will be sold from time to time by the selling stockholder (the &#147;Selling
Stockholder&#148;) named in the Registration Statement, on the NASDAQ Global Market or otherwise,
directly or through underwriters, brokers or dealers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Based on the foregoing, we are of the opinion that the Shares to be sold by the Selling
Stockholder pursuant to the Registration Statement have been duly authorized by all requisite
corporate action and are validly issued, fully paid and nonassessable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our opinions expressed above are limited to the laws of the State of Delaware.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dated:
February&nbsp;5, 2007
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours, <BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/    Wildman, Harrold, Allen &#038; Dixon LLP
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Wildman, Harrold, Allen &#038; Dixon LLP&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<FILENAME>c11797exv23w1.htm
<DESCRIPTION>CONSENT OF MCGLADREY & PULLEN, LLP
<TEXT>
<HTML>
<HEAD>
<TITLE>exv23w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;23.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have issued our report, dated March&nbsp;15, 2006, on the financial statements and internal
controls over financial reporting of Nanophase Technologies Corporation as of December&nbsp;31, 2005. We
hereby consent to the use of our report in the Registration Statement on Form S-3 of Nanophase
Technologies Corporation. We also consent to the reference to our Firm under the caption &#147;Experts&#148;
in the Prospectus.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Schaumburg, Illinois<BR>
February&nbsp;5, 2007

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="90%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/&nbsp;&nbsp;</TD>

    <TD align="left" valign="top" nowrap>McGladrey &#038; Pullen, LLP</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">McGladrey &#038; Pullen, LLP</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
