Nanophase Q3

    September 30, 2000, the company achieved total revenue of approximately $3.1 million compared to total revenue of approximately
    $1.0 million for the same period in 1999, representing a year-to-year revenue increase of 202%.

    "We continue to be encouraged by the first nine months' progress toward our 2000 goal of tripling revenue from 1999," stated Joseph
    Cross, Nanophase's president and CEO. "We are especially pleased with reaching a positive gross margin which is a combination of
    increased revenues and our aggressive efforts to reduce manufacturing and supply chain costs while balancing product mix. It also
    represents fulfilling a commitment to shareholders that the Nanophase team takes very seriously.

    "Across the entire business, third quarter results were highly positive with continuing improvements in manufacturing cost, a successful
    initial phase relocation to our new 37,000 square foot facility, and further developments in both our new nanocrystalline technologies
    and specific application formulations for lead customers in target markets. Our growth and increased level of business development
    activity continues to demonstrate the value and increasing acceptance of our technology, as well as the strength of the entire
    Nanophase team that has been assembled over the past 12-18 months."

        During the third quarter, the company:

        -- Completed the initial phase of relocating personnel to its Romeoville
           facility and reconfiguring the Burr Ridge site into a nanopowders
           facility to ready the capacity and capability to support 2001 customer
           needs.  Additional personnel will be relocated to Romeoville during the
           fourth quarter.

        -- Continued improving manufacturing cost by approximately 14% compared to
           the second quarter 2000 and by 22.8% year-to-date toward its goal of
           reaching 30% on multiple products by year-end.

        -- Negotiated a significant capital loan with BASF Corporation to fund
           dedicated capital equipment required for additional processing and
           volume increases through June 2004.

        -- Continued to add to its intellectual property estate as the European
           Patent Office agreed to allow Nanophase's European Patent Application
           entitled "Method and Apparatus For Making Nanostructured Materials".
           Patents based on this invention have now been issued in Germany, France
           and Great Britain, in addition to the previous patents issued for the
           company's technology in the US, Australia, and Japan.  Nanophase
           currently owns or licenses 26 patents covering the company's methods,
           systems and nanocrystalline materials.  The company has additional
           patent applications and trademarks pending.

    Cross noted that the company continues to remain focused on developing new Nano processes and applications to increase the
    penetration of existing and developing markets, tripling revenue from 1999 during 2000, aggressively reducing manufacturing cost, and
    positioning business for 2001 and beyond.

    "Because most of our customers view the nanotechnology value to their products or processes as a proprietary, competitive advantage
    and will not readily allow Nanophase to comment on particular applications, it is difficult to communicate nanotechnology applications.
    However, we continue to make significant progress in developing vertical and horizontal markets and specific nanoapplications,"
    explained Cross. "Much like our announced success in thermal spray materials based on nanocrystalline technology for Naval
    applications that is now being explored for multiple commercial applications, we are having success advancing nanocrystalline solutions
    in several markets.

    "Our major tactical focus for the fourth quarter of 2000 and into the first quarter of 2001 will be to complete the reconfiguration of the
    Burr Ridge site, begin pilot manufacturing on one of our new nanocrystalline production processes (Audrey), continue development of
    the second nanocrystalline materials process (Mira), and position new business for 2001. We also expect to complete the remaining
    phase of the planned manufacturing cost reductions for 2000 by early November to achieve the 30% reduction goal and launch a new
    2001 initiative for another 30% manufacturing cost reduction on major products, which we expect to have complete by mid-2001.

    "Considering the year and the final quarter of 2000, we remain quite comfortable with our annual revenue goal of $4.2 million. Leading
    into the final quarter, third quarter sales were well above our original projection of a 10% increase to second quarter, finishing at 22.6%
    growth due to an unexpected increase in demand for sunscreen products to fill a customer's sales and distribution pipeline. We were
    able to manage this demand and increase output with manufacturing overtime, and some increased cost, to meet accelerated
    schedules and still obtain a positive gross margin."

    "As a direct result, during the fourth quarter, the company will be focusing on rebuilding inventories to contractual levels sufficient to
    meet customer forecast demand entering 2001. Since we had over twice the anticipated sequential quarterly growth expected during
    the third quarter, we anticipate that fourth quarter revenue will be approximately equal to third quarter.

    "Viewing 2001, we expect to increase revenue in-line with our stated strategy of multiple revenue year-to-year growth toward the goals
    previously released. We have several business development opportunities to finalize during the fourth quarter of 2000, and through the
    first quarter of 2001, that we anticipate will positively impact total revenue for 2001. We expect to be in a position to provide further
    guidance on a 2001 revenue forecast by January 2001."

    Nanophase Technologies Corporation provides engineered solutions utilizing nanocrystalline materials for a variety of industrial product
    applications. Using proprietary technology to produce nanocrystalline materials, the company creates products with unique performance
    attributes. The company's global customer base includes Fortune 500 companies. Nanophase trades on the Nasdaq NMS under the
    symbol "NANX." Visit the company's web site at www.nanophase.com .

    The words "expect", "anticipates, "plans", "forecasts" and similar expressions are intended to identify forward looking statements.
    Statements contained in this news release that are not historical facts are forward looking statements that are made pursuant to the
    Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect the Company's current beliefs,
    and a number of important factors could cause actual results for future periods to differ materially from those expressed in this news
    release. These important factors include, without limitation: a decision of the customer to cancel a purchase order or supply agreement;
    demand for, and acceptance of, the Company's nanocrystalline materials; changes in development and distribution relationships; the
    impact of competitive products and technologies; and other risks indicated in the Company's current Annual Report on Form 10-K, as
    filed with the Securities and Exchange Commission. Nanophase undertakes no obligation to update or revise these forward-looking
    statements to reflect new events or uncertainties.

    For Additional Information on Nanophase Technologies by fax at no cost, Dial 1-800-PRO-INFO, Code NANX

                            NANOPHASE TECHNOLOGIES CORPORATION

                                      BALANCE SHEETS

                                                     September 30,   December 31,
        ASSETS                                           2000           1999
                                                      (Unaudited)
        Current assets:
         Cash and cash equivalents                      $412,643       $624,509
         Investments                                  18,213,349     21,216,168
         Trade accounts receivable,
          less allowance for doubtful accounts of
          $81,450 at September 30, 2000 and
          $120,000 at December 31, 1999                1,256,231        401,826
         Other receivable, net                           362,984        247,841
         Inventories, net                                951,739        766,778
         Prepaid expenses and other current assets        62,662         90,358
          Total current assets                        21,259,608     23,347,480
         Equipment and leasehold improvements, net     2,470,422      2,152,413
         Other assets, net                               197,210        177,646
                                                     $23,927,240    $25,677,539

        LIABILITIES AND STOCKHOLDERS' EQUITY

        Current liabilities:
         Accounts payable                               $897,320       $615,818
         Accrued expenses                                993,305        900,398
          Total current liabilities                    1,890,625      1,516,216

        Contingent liabilities:                                -              -

        Stockholders' equity:
         Preferred stock, $.01 par value,
          24,088 shares authorized and no shares
          issued and outstanding                               -              -
         Common stock, $.01 par value,
         25,000,000 shares authorized and
         13,561,821 shares issued and outstanding
         at September 30, 2000 and 12,764,058 shares
         issued and outstanding at
         December 31, 1999                               135,618        127,641
         Additional paid-in capital                   49,799,184     48,529,300
         Accumulated deficit                         (27,898,187)   (24,495,618)
          Total stockholders' equity                  22,036,615     24,161,323
                                                     $23,927,240    $25,677,539

                            NANOPHASE TECHNOLOGIES CORPORATION
                                 STATEMENTS OF OPERATIONS
                                       (Unaudited)

                                  Three months ended          Nine months ended
                                     September 30,               September 30,
                                  2000          1999         2000          1999
        Revenue:
        Product revenue     $1,251,932      $315,197   $2,739,939      $862,499
        Other revenue          103,019        50,000      339,269       156,917
        Total revenue        1,354,951       365,197    3,079,208     1,019,416

        Operating expense:
        Cost of revenue      1,351,974       597,098    3,475,960     2,058,982
        Research and
         development expense   388,861       344,287    1,431,474     1,129,009
        Selling, general and
         administrative
         expense               638,582       995,949    2,466,307     3,138,154
        Total operating
         expense             2,379,417     1,937,334    7,373,741     6,326,145
        Loss from
         operations         (1,024,466)   (1,572,137)  (4,294,533)   (5,306,729)
        Interest income        309,225       285,125      891,964       861,782
        Loss before
         provision for
         income taxes         (715,241)   (1,287,012)  (3,402,569)   (4,444,947)
        Provision for
         income taxes                -             -            -             -
        Net loss             $(715,241)  $(1,287,012) $(3,402,569)  $(4,444,947)


        Net loss per share     $(0.05)       $(0.10)      $(0.26)       $(0.35)

        Weighted average
         number of common
         shares
         outstanding        13,512,850    12,746,805   13,325,075    12,666,280


    SOURCE Nanophase Technologies Corporation

    CONTACT:          Joseph Cross, President, CEO, 630-734-4722, Dan Bilicki, VP,
                      Sales & Mktg., 630-734-4751, or Marianne Steimle, Investor Relations Mgr.,
                      630-734-4776, all of Nanophase Technologies Corporation; General Info., Tad
                      Gage, 312-640-6745, Analysts, Lisa Fortuna, 312-640-6779, or Media, Tim Grace,
                      312-274-2240, all of The Financial Relations Board

    URL:              www.nanophase.com
    www.prnewswire.com

    (C) 2000 PR Newswire. All rights reserved.

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