<SEC-DOCUMENT>0001171843-11-003123.txt : 20111026
<SEC-HEADER>0001171843-11-003123.hdr.sgml : 20111026
<ACCEPTANCE-DATETIME>20111026161035
ACCESSION NUMBER:		0001171843-11-003123
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20111026
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20111026
DATE AS OF CHANGE:		20111026

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-22333
		FILM NUMBER:		111159171

	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>8-K
<SEQUENCE>1
<FILENAME>document.htm
<DESCRIPTION>FORM 8-K FILING DOCUMENT
<TEXT>
<!DOCTYPE html
	PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"
	"http://www.w3.org/TR/html4/loose.dtd">

<html lang="en-US">

	<head>
		<title>Form 8-K Filing</title>
	</head>

	<body>
		<p align="center"><font size="5"><b>UNITED STATES<br>
					SECURITIES AND EXCHANGE COMMISSION<br>
				</b></font></p>
		<p align="center"><font size="3"><b>Washington, D.C. 20549</b><br>
			</font></p>
		<hr noshade="1" width="150" align="center">
		<p align="center"><font size="5"><b>FORM 8-K</b><br>
			</font></p>
		<hr noshade="1" width="150" align="center">
		<p align="center"><font size="3"><b>CURRENT REPORT</b><br>
			</font></p>
		<p align="center"><font size="3"><b>Pursuant to Section&nbsp;13 or 15(d) of<br>
					The Securities Exchange Act of 1934</b><br>
			</font></p>
		<p align="center"><font size="3">Date of Report (Date of earliest event reported) <b>October 26, 2011</b>&nbsp; <br>
			</font></p>
		<hr noshade="1" width="150" align="center">
		<p align="center"><font size="5"><b>NANOPHASE TECHNOLOGIES CORPORATION </b></font><br>
			<font size="2">(Exact name of registrant as specified in its charter) </font></p>
		<!-- Registrant's State of Inc, File and IRS Number -->
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td width="33%" align="center"><br>
					<font size="2"><b>Delaware</b></font></td>
				<td width="34%" align="center"><br>
					<font size="2"><b>0-22333</b></font></td>
				<td width="33%" align="center"><br>
					<font size="2"><b>36-3687863</b></font></td>
			</tr>
			<tr valign="top">
				<td width="33%" align="center"><font size="2">(State or other jurisdiction<br>
						of incorporation) </font></td>
				<td width="34%" align="center"><font size="2">(Commission File Number) </font></td>
				<td width="33%" align="center"><font size="2">(IRS Employer Identification No.) </font></td>
			</tr>
		</table>
		<!-- Registrant's Postal Addess and Zip Code --><br>
		<br>
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td width="50%" align="center"><br>
					<font size="2"><b>1319 Marquette Drive, Romeoville, Illinois </b></font></td>
				<td width="50%" align="center"><br>
					<font size="2"><b>60446</b></font></td>
			</tr>
			<tr valign="top">
				<td width="50%" align="center"><font size="2">(Address of principal executive offices) </font></td>
				<td width="50%" align="center"><font size="2">(Zip Code) </font></td>
			</tr>
		</table>
		<p align="center"><font size="2">Registrant's telephone number, including area code: &nbsp; <b>(630) 771-6700 </b></font></p>
		<p align="center"><font size="2"><br>
			<br>
			________________________________________________________________________________<br>
			(Former name or former address, if changed since last report)</font></p>
		<!-- Simultaneous filing obligation checkboxes --><br>
		<br>
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td colspan="3"><font size="2">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</font></td>
			</tr>
			<tr valign="top">
				<td>&nbsp; &nbsp;</td>
				<td nowrap="1"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td><font size="2">Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) </font></td>
			</tr>
			<tr valign="top">
				<td>&nbsp; &nbsp;</td>
				<td nowrap="1"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td><font size="2">Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </font></td>
			</tr>
			<tr valign="top">
				<td>&nbsp; &nbsp;</td>
				<td nowrap="1"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td><font size="2">Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </font></td>
			</tr>
			<tr valign="top">
				<td>&nbsp; &nbsp;</td>
				<td nowrap="1"><font size="2">[ &nbsp;&nbsp;]</font></td>
				<td><font size="2">Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </font></td>
			</tr>
		</table>
		<hr noshade="1">

		<p><font size="3"><b>Item 2.02. Results of Operations and Financial Condition.</b></font></p>
		<p><font size="2">On October 26, 2011 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.</font></p>

		<p><font size="3"><b>Item 9.01. Financial Statements and Exhibits.</b></font></p>
		<p><font size="2">&nbsp; &nbsp; Exhibit 99.1.  &nbsp; &nbsp; &nbsp; Press release dated October 26, 2011</font></p>
		<hr noshade="1">
		<!-- Registrant's Signature -->
		<p align="center"><font size="3"><b>SIGNATURE</b> </font></p>
		<p><font size="2">&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. </font></p>
		<table cellpadding="0" border="0" width="100%" cellspacing="0">
			<tr valign="top">
				<td width="47%">&nbsp;</td>
				<td width="5%">&nbsp;</td>
				<td width="47%" align="center"><font size="2"><b>NANOPHASE TECHNOLOGIES CORPORATION </b></font>
					<hr noshade="1">
					<font size="2">(Registrant)<br>
						<br>
					</font></td>
			</tr>
			<tr valign="top">
				<td width="47%" align="center"><font size="2"><b>October 26, 2011</b></font>
					<hr noshade="1">
					<font size="2">(Date) </font></td>
				<td width="5%">&nbsp;</td>
				<td width="47%" align="center"><font size="2"><b>/s/ &nbsp; FRANK CESARIO        </b></font>
					<hr noshade="1">
					<font size="2">FRANK CESARIO        </font><br>
					<font size="2"><i>Chief Financial Officer</i></font></td>
			</tr>
		</table>
		<!-- Exhibit Listing -->
<hr noshade="1">
<br>
<table cellpadding="6" border="0" width="100%" cellspacing="0">
  <tr valign="top">
    <td width="20">&nbsp;</td>
    <td colspan="2"><b><font size="3">Exhibit Index</font></b></td>
  </tr>
  <tr valign="top">
    <td width="20">&nbsp;</td>
    <td width="30" align="center"><font size="2">99.1</font></td>
    <td width="300"><font size="2">Press release dated October 26, 2011</font></td>
  </tr>
</table>
<br> <br> <br> <br> <br> <br>

	</body>

</html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>newsrelease.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<html><head><title>Nanophase Reports Third Quarter Revenue of $2.2 Million</title></head><body><p align="right">EXHIBIT 99.1</p><h3 align="center">Nanophase Reports Third Quarter Revenue of $2.2 Million</h3><h4 align="center">The Company's Financial Conference Call is Scheduled for October 27 at 11:00 a.m. EDT</h4><p>ROMEOVILLE, Ill., Oct. 26, 2011 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (Nasdaq:NANX), a technology leader in nanomaterials and advanced nanoengineered products, today reported financial results for the third quarter and nine-month period ended September 30, 2011.</p><p>
	Nanophase CEO and President Jess Jankowski commented, "We are pleased to have maintained momentum in the third quarter with increases in revenue and an improved bottom line when compared to the third quarter of 2010, despite the presence of broad industry headwinds. Our growth is a direct result of increased product sales into markets with little or no seasonality.&#160;This includes polishing products for the electronics industry and scratch resistant additives used in coatings for cell phones and computers to graphics for art packaging and magazine covers. Growth in non-seasonal markets will balance and support our traditionally strong personal care and exterior coatings products, which have significant seasonality as they are mainly sold in North America," added Jankowski.</p><p>
	<strong>Third Quarter 2011</strong></p><ul>
	<li>
		Revenue for the quarter was $2.2 million, an eight percent increase over the comparable 2010 quarter.&#160;<br>
		&#160;</li>
	<li>
		Gross margin for the quarter was $0.4 million, or 16 percent of revenue, down slightly from last year's comparable quarter.<br>
		&#160;</li>
	<li>
		The net loss for the quarter was $1.0 million, or a loss of $0.05 per share, compared to a net loss of $1.6 million, or $0.07 per share, for the comparable 2010 quarter.&#160;<br>
		&#160;</li>
	<li>
		The balance sheet shows approximately $3 million in cash and cash equivalents and the Company has no debt.</li>
</ul><p>
	<strong>Nine months ended September 30, 2011</strong></p><ul>
	<li>
		Revenue for the period ended September 30, 2011, was $8.0 million, an increase of seven percent over the comparable 2010 period.<br>
		&#160;</li>
	<li>
		Gross margin for the nine-month period was $2.3 million, or 28 percent of revenue,&#160;compared to 29 percent&#160;for the same period in 2010.<br>
		&#160;</li>
	<li>
		The net loss for the nine-month period was $2.1 million, or a loss of $0.10 per share, a 27 percent improvement compared to the net loss of $2.9 million, or $0.13 per share, for the same period of 2010.</li>
</ul><p>
	Renegotiation of several of our once-exclusive agreements has given us the freedom to explore additional markets more aggressively.&#160;"We continue to introduce and demonstrate the benefits and strength of our technology and products through extensive direct customer contact and at industry conferences.&#160;We continue to listen to our customers and provide competitively priced, innovative products to specifically chosen markets with unmet needs.&#160; While the economy is sluggish and many research and development departments teams are taking a 'wait and see' attitude, we are successfully moving new customer activities forward.&#160;The movement of these projects through the testing and design phases and into customer's hands is significant to our future revenue growth and breakeven strategy."&#160;</p><p>
	The ongoing export limitations and related price increase for rare earth materials, a classification that includes the cerium oxide used in the Company's polishing applications, is an area of increased focus for management.&#160;Recognizing that it represents a risk to polishing revenue, the Company, in partnership with its customers and suppliers is managing the problem.&#160;While the market for the Company's polishing product is currently impacted by the cost and availability of raw materials, it should be noted that this is only one component of Nanophase's business and it remains a profitable one.</p><p>
	<i>Shareholders and members of the financial community are encouraged to participate in the upcoming conference call, where Mr. Jankowski will discuss the company's current and long-term prospects.</i></p><p>
	<strong>Third Quarter 2011 Conference Call&#160;</strong></p><p>
	Nanophase has scheduled its quarterly conference call for October 27, 2011, at 10:00 a.m. CDT (11:00 a.m. EDT). The call will be hosted by Jess Jankowski, president and CEO. To participate in the conference call, dial 877-312-8776 (for international callers dial 408-774-4007).&#160;The conference ID is 18679133. A webcast of the call may be accessed at the company's website, at www.nanophase.com, by clicking on the link under News Center and Calendar of Events.</p><p>
	<strong>Use of Non-GAAP Financial Information</strong></p><p>
	Nanophase believes that the presentation of results excluding certain items, such as non-cash equity compensation charges, provides meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. The Company uses these non-GAAP measures for internal planning and reporting purposes. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or net income per share prepared in accordance with generally accepted accounting principles.</p><p>
	<strong>About Nanophase Technologies</strong></p><p>
	Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leader in nanomaterials technologies and provides nanoengineered solutions for multiple industrial product applications. Using a platform of patented and proprietary integrated nanomaterial technologies, the Company creates products with unique performance attributes from two ISO 9001:2008 and ISO 14001 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media.&#160;</p><p>
	<strong>Forward-Looking Statements</strong></p><p>
	<i>This press release contains words such as "expects," "shall," "will,", "believes," and similar expressions that are intended to identify forward-looking statements</i><i> within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements in this announcement are made based on the Company's current beliefs, known events and circumstances at the time of publication, and as such, are subject in the future to unforeseen risks and uncertainties that could cause the Company's results of operations, performance and achievements to differ materially from current expectations expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, without limitation, the following: a decision by a customer to cancel a purchase order or supply agreement in light of the Company's dependence on a limited number of key customers; uncertain demand for, and acceptance of, the Company's nanocrystalline materials; the Company's manufacturing capacity and product mix flexibility in light of customer demand; the Company's limited marketing experience; changes in development and distribution relationships; the impact of competitive products and technologies; the Company's dependence on patents and protection of proprietary information; the resolution of litigation in which the Company may become involved; the ability of the Company to maintain a listing on an appropriate stock exchange; and other factors described in the Company's Form 10-K filed March 22, 2011. In addition, the Company's forward-looking statements could be affected by general industry and market conditions and growth rates. Except as required by federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingen</i><i>cies.</i></p><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>NANOPHASE TECHNOLOGIES CORPORATION</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="3" style="font: 12px Arial; text-align: center">
				<strong>BALANCE SHEETS</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>ASSETS</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>September 30, <br>
				2011 <br>
				(Unaudited)</strong></td>
			<td valign="bottom" style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>December 31,&#160;<br>
				2010</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Current assets:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Cash and cash equivalents</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;3,316,440</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;5,744,322</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Investments</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;30,000</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;30,000</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Trade accounts receivable, less allowance for doubtful accounts of&#160;$6,000 and $3,000 on September 30, 2011 and December 31, 2010, respectively</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,092,319</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;765,250</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other receivable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;91,120</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;14,260</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Inventories, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,685,023</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,825,882</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Prepaid expenses and other current assets</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;420,209</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;346,926</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Total current assets</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;6,635,111</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;8,726,640</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Equipment and leasehold improvements, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,963,091</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;4,721,672</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other assets, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;32,941</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;34,799</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;10,631,143</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;13,483,111</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>LIABILITIES AND STOCKHOLDERS' EQUITY</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Current liabilities:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Current portion of capital lease obligations</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;--</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;748</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Accounts payable</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;549,952</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;918,527</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Accrued expenses</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;459,269</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,047,509</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Accrued discount liabilities</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;171,560</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;296,235</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Total current liabilities</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,180,781</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;2,263,019</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Long-term deferred rent</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;644,434</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;635,523</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Asset retirement obligation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;146,692</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;141,407</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;791,126</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;776,930</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Contingent liabilities:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;--&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Stockholders' equity:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;--&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Common stock, $.01 par value, 35,000,000 shares authorized; 21,208,162 and 21,204,162 shares issued and outstanding on September 30, 2011 and December 31, 2010, respectively</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;212,082</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;212,042</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Additional paid-in capital</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;92,984,042</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;92,674,786</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Accumulated deficit</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;(84,536,888)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;(82,443,666)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Total stockholders' equity</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;8,659,236</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;10,443,162</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;10,631,143</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;13,483,111</td>
		</tr>

</table><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="5" style="font: 12px Arial; text-align: center">
				<strong>NANOPHASE TECHNOLOGIES CORPORATION</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="5" style="font: 12px Arial; text-align: center">
				<strong>STATEMENTS OF OPERATIONS</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="5" style="font: 12px Arial; text-align: center">
				<strong>(Unaudited)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td colspan="2" style="font: 12px Arial; text-align: center">
				<strong>Three months ended <br>
				September 30,</strong></td>
			<td colspan="2" style="font: 12px Arial; text-align: center">
				<strong>Nine months ended <br>
				September 30,</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2011</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2010</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2011</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2010</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Revenue:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Product revenue, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;2,164,697</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;1,925,320</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;7,706,487</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;7,100,265</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;78,217</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;150,894</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;245,321</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;315,921</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Total revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,242,914</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,076,214</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;7,951,808</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;7,416,186</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Operating expense:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Cost of revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,894,001</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,602,438</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;5,699,089</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;5,258,246</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Gross profit</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;348,913</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;473,776</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,252,719</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,157,940</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Research and development expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;421,597</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;388,231</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,282,618</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,178,306</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Selling, general and administrative expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;935,857</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;973,182</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,063,446</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,157,824</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Agreement termination charges</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;700,000</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;700,000</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Loss from operations&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,008,541)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,587,637)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,093,345)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,878,190)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Interest income</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;591</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,580</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,929</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;19,844</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Interest expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,965)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(515)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(3,763)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,768)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Other, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;52</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;(43)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;3,514</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Loss before provision for income taxes</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,009,915)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,584,520)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,093,222)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,856,600)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Provision for income taxes</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Net loss</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(1,009,915)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(1,584,520)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(2,093,222)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(2,856,600)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Net loss per share- basic and diluted</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(0.05)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(0.07)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(0.10)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(0.13)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Weighted average number of common shares outstanding</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;21,207,597</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;21,204,162</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;21,205,320</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;21,204,162</td>
		</tr>

</table><table cellpadding="0" cellspacing="6" style=" border-collapse: separate; border-spacing: 6px ">

		<tr>
			<td colspan="5" style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="5" style="font: 12px Arial; text-align: center">
				<strong>NANOPHASE TECHNOLOGIES CORPORATION</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="5" style="font: 12px Arial; text-align: center">
				<em><strong>STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE</strong></em></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td colspan="5" style="font: 12px Arial; text-align: center">
				<strong>(Unaudited)</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td colspan="2" style="font: 12px Arial; text-align: center">
				<strong>Three months ended <br>
				September 30,</strong></td>
			<td colspan="2" style="font: 12px Arial; text-align: center">
				<strong>Nine months ended <br>
				September 30,</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2011</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2010</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2011</strong></td>
			<td style="font: 12px Arial; text-align: center; border-bottom: solid black 1.0pt;">
				<strong>2010</strong></td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Revenue:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Product revenue, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;2,164,697</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;1,925,320</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;7,706,487</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;$&#160;7,100,265</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;78,217</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;150,894</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;245,321</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;315,921</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Total revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,242,914</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,076,214</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;7,951,808</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;7,416,186</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				<strong>Operating expense:</strong></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				<em>Cost of revenue detail:</em></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Depreciation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;223,219</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;221,463</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;668,564</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;668,943</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Non-Cash equity compensation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;8,619</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;15,169</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;31,887</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;41,151</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other costs of revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,662,163</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,365,806</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;4,998,638</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;4,548,152</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Cost of revenue</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,894,001</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,602,438</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;5,699,089</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;5,258,246</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 30.0px;">
				Gross profit</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;348,913</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;473,776</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,252,719</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;2,157,940</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				<em>Research and development expense detail:</em></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Depreciation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;36,108</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;35,706</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;108,052</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;125,859</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Non-Cash equity compensation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;22,092</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;28,531</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;70,320</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;75,638</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other research and development expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;363,397</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;323,994</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;1,104,246</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;976,809</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Research and development expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;421,597</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;388,231</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,282,618</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,178,306</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				<em>Selling, general and administrative expense detail:</em></td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Depreciation and amortization</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;22,116</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;24,615</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;68,591</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;74,148</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Non-Cash equity compensation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;19,677</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;75,038</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;149,311</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;244,790</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Other selling, general and administrative expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;894,064</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;873,529</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;2,845,544</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;2,838,886</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Selling, general and administrative expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;935,857</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;973,182</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,063,446</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,157,824</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 25.0px;">
				Agreement termination charges</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;700,000</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;700,000</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Loss from operations&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,008,541)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,587,637)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,093,345)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,878,190)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Interest income</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;591</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,580</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;3,929</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;19,844</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Interest expense</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,965)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(515)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(3,763)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,768)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Other, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;52</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;(43)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;3,514</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Loss before provision for income taxes</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,009,915)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(1,584,520)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,093,222)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(2,856,600)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Provision for income taxes</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;--&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				Net loss</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(1,009,915)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(1,584,520)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(2,093,222)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(2,856,600)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left; border-bottom: solid black 1.0pt;">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Addback Interest, net</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;1,374</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(3,065)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(166)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;(18,076)</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Addback Depreciation/Amortization</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;281,443</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;281,784</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;845,207</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap;">
				&#160;868,950</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Addback Non-Cash Equity Compensation</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;50,388</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;118,738</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;251,518</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: solid black 1.0pt;">
				&#160;361,579</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left ">
				&#160;</td>
		</tr>
		<tr>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: left  ; font: 12px Arial; vertical-align: bottom; text-align: left; padding-left: 15.0px;">
				Adjusted EBITDA</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(676,710)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(1,187,063)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(996,663)</td>
			<td style="font: 12px Arial; vertical-align: bottom; text-align: right; white-space: nowrap; border-bottom: double black 2.5pt;">
				&#160;$&#160;(1,644,147)</td>
		</tr>

</table><pre>CONTACT: Nancy Baldwin
         Investor Relations
         630-771-6708</pre></body></html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
