Strengths:

Diversified Market Segments: Nanophase has a very diversified

market segment. Its major chemical products, nano-engineered
elements are used in a variety of industries. These segments range
from energy storage, personal care, textile to protective coatings and
polishing.
Proprietary Technologies: The company owns or licenses 18 US
patents and patent applications, and 48 foreign patents and patent
applications. Most of the intellectual property will be safe with the
company for a long time period. The company also created two
manufacturing processes, PVS Plasma Vapor Synthesis and NanoArc
Synthesis. These processes allow company to control nanomaterial
properties, which help in increasing efficiency, productivity and
customazition.
Customer direct business model: Nanophase interacts with
customers directly rather than through intermediaries, demonstrating
the benefits of Nanophases solutions in their products. Reduce cost
and reduce the time to launch products to the market. The company
has been focused towards providing customized products to these
customers.
R&D investments: Nanophase has had good R&D investments over
the years. Company invested $1.7 million and $1.6 million in 2013 and
2012 respectively. This shows companys focus on R&D.
Flexible workforce: Companys manufacturing operations employ a
team-based manufacturing approach. 100% of the workforce is crosstrained to allow it to be employed broadly across the manufacturing
processes. This leads to continuous improvements in the operations
process.
Weaknesses:
Small customer base: NanoPhases customer base is only limited to
85 organizations. Three of its largest customers accounted for 72%, 6%
and 5% of its revenue in 2013. Another trend to be seen here is that
the customers have varying demands over each quarter, which is a big
challenge in terms of steady growth.
Big dependence on collaborative relationships: A major part of
nanophases research and sales is dependent on collaborative
relationships with the customer base and educational
institutions/research facilities. This comes out as a blessing in disguise,
since the company is neither self-dependent nor self-sufficient.
Weak financial standing: Companys financial standing is not really
healthy. Company has averaged at about $10 million in revenues since
2010. The company has been incurring losses since its inception: at
about an average of $2.4 million since 2011. As a result, company

decided to delist from NASDAQ in 2012 and began trading in OTCQB

marketplace.
Small Employee Base: The Company has a small employee base of
43 full-time personnel, only 8 of whom hold advanced degrees. There
are no collective bargaining agreements in place.
Management Inefficiency: We believe that Nanophases current
situation has a lot to do with management inefficiency. Looking at the
timeline of the companys operations, there hasnt a great
improvement in profitability, customer base or any considerate
financial improvement. A big reason here is the imbalance between
managerial expertise and nanotechnology insight.