“Nanophase’s first quarter was capped by our new strategic partnership with Altana AG for joint product development, marketing, and manufacturing of nanocomposite applications,” stated Joseph Cross, Nanophase’s president and CEO. “This is a significant relationship for the Company that should greatly reduce Nanophase’s time-to-market for nanocomposite applications (such as coatings, inks, plastics, and varnishes) and, we believe, accelerate revenue growth in these fields over the next few years. Altana and Nanophase have several initiatives underway and expect market introduction of nanocomposite products during the second half of 2004.

“The Altana partnership, coupled with BASF in sunscreens and personal care and Rohm and Haas Electronic Materials in semiconductor chemical-mechanical polishing, provides global access to significant markets that we expect to provide a solid foundation for future revenue growth and financial performance. With the recently announced $10 million investment in Nanophase by Altana, the Company exited the first quarter with over $14 million in cash. Additionally, the Company’s business development initiatives in other market areas remain vigorous. We made solid progress on multiple business development initiatives during the first quarter and are optimistic for 2004.

“Operationally, the Company continues to improve. We are in the final implementation stage of a number of process improvements that should increase PVS reactor output by 20-30% without additional capital investment. We have also recently completed a re-engineering program that has reduced reactor operational labor over 25%.”