Thank you, Karen. Good morning everybody.
We're glad you're able to join us to discuss our fourth quarter 2015 financial results and business updates. Frank Cesario, our CFO, has joined me again today.
During this call, we'll be talking about some new products, an update on our existing business, our recent financing, and, of course, 2015 full year and fourth quarter results.
We entered 2015 with the prime goal of growing revenue. In the first half, we took a major hit from our largest customer, and discussed how our other new revenue was filling a good bit of that shortfall, as opposed to helping us expand our topline. Going in, I expected 2015 to be a breakout year for Nanophase, with us topping $11M in revenue, and approaching positive adjusted EBITDA for the entire year. (In this context, adjusted EBITDA is a near-proxy for positive operating cash flow.) Although sales to our largest customer were still down nearly $700K for the year, this gap was reduced to the point that other revenue filled the shortfall, then exceeded that gap. We also generated cash during two of the four quarters of 2015, demonstrating success from our continued focus on improvement in operating results. Thanks to strength on both sides, in sales and operations, we showed full year revenue growth, all of which dropped to the bottom line.
These sorts of ups and downs reinforce our need to develop new customers and new products, some in current markets, some in adjacent markets, and some in wholly new markets for Nanophase.
We'll address this further after Frank provides a short overview of our financial results. With that, I'll welcome Frank to begin his discussion.
Frank?
Thanks Jess. Good morning, this is Frank Cesario. Before I begin today’s overview of our financial results for the fourth quarter and full year 2015, please remember that all financial results are stated in approximate terms.
Revenue for the fourth quarter 2015 was $2.3 million, vs. $1.8 million in 2014, with gross margins of 30% and 16%, respectively. The net loss for the quarter was $0.3 million, or $0.01 per share, for 2015 and $0.9 million, or $0.03 per share, for 2014. On a full year basis revenue was $10.3 million in 2015 vs. $9.9 million in 2014, with margins of 30% and 28% respectively, and net losses of $1.2 million or $0.04 per share and $1.7 million or $0.06 per share, respectively. As Jess mentioned, our business generated net cash, as measured by adjusted EBITDA, during the second and third quarters of 2015.
We ended 2015 with a $1.3 million cash position and nothing drawn on our working capital credit line. Many of you are aware that we have a $1 million cash covenant related to the exclusive supply relationship with our largest customer that we disclose in more detail in our SEC filings. We have used short period vehicles, such as this credit line facility, on an as needed basis. Thanks to our improved cash flow results, we did not need to tap the line at the end of 2015.
Also, as many of you have seen, we did sell 2.6 million shares at $0.38 per share in an unregistered stock sale earlier this month. This is our second equity transaction during the past seven years, for $1 million in proceeds this year and $3 million cumulatively during that seven year period.
Jess?
Thanks Frank.
You may all have questions about our February financing, which, or course, we'll be happy to answer during the Q&A session. I wanted to share my perspective on it first, just so that you all know where your Company management is coming from. Your investment interests are very important to me. I take my responsibilities to you seriously and personally. I never forget that Nanophase has owners that finance us, and that our reason for existing is to ultimately generate a significant ROI. That ROI goal is both to reward our external investors, and also to reward our inside equity holders, holders both of open market shares and stock options. We need to all win together.
Two thousand sixteen should be a good year for Nanophase. I expect we'll move forward into our market areas, and I expect better results than in prior years. In the past, I've reviewed all of our major areas in greater detail during this call, but today we'll focus mainly on new revenue traction.
In Personal Care, which has been composed largely of our active ingredients for inorganic sunscreens, we continue to sell a significant amount of zinc oxide into the marketplace. Late last year, we talked about a new patented coating that we refer to as "C3". We believe C3 will both enhance the aesthetics of a sunscreen, from skin feel, to reducing that small amount of whitening, while also addressing a hot-button topic in the industry by aiding in photostability and in free radical "quenching". In addition to adding to a formulation's full spectrum UV protection, our C3-coated materials bring the added benefits of allowing other ingredients to perform better, by remaining stable and reducing free radical formation. We have demonstrated value from C3 in our first titanium dioxide dispersion sunscreen product, which we understand has been sampled to a large number of potential customers nationally and internationally, and for which we recently received our first commercial purchase order. We've also successfully applied C3 to zinc oxide, and plan to develop additional new products that we believe will provide a competitive advantage.
We added a full-time formulator to our team last fall in order to further this product development, and act with a speed and depth in this market that we haven't had in the past. And we're continuing to build our Personal Care product development capabilities to allow us to capitalize on our new technology.
I believe C3 is the single most exciting thing that Nanophase has developed during the past several years. We understand this market better than any other, having sold into it for the better portion of two decades. And we see a competitive advantage that we believe can generate real value to all parties.
That said, C3 isn't solely for personal care. We view it as a coating platform that should be applicable across many product areas. Although Personal Care will be our initial focus, we look forward to continuing to exploit this competitive advantage in the broader marketplace.
On the Energy front, we've developed and sold solutions, specifically in the Solar Control area. This refers to several applications involved with improving energy conservation (think of the window films used on vehicles and buildings).
We also developed an additive for batteries that is designed to replace high cost material, at a lower cost, and, potentially, a higher level of performance. The decrease in commodity prices during 2015 has reduced the incentive to drive near term action on the part of our target customer base in the batteries market, but our technology remains viable, and we expect commodity prices to continue to fluctuate over time, potentially in a way that will stimulate this market.
We've also seen an increase in our coatings business between 2014 and 2015, which can be attributed to some new product sales coming on line after extended downstream product development cycles. Although I don't view this area as a major growth-driver for Nanophase over the next few years, Coatings generates significant sales at good margins, and we continue to support these customers.
Overall, our plan is to grow revenue during 2016. We believe that we'll be successful in doing that, and look to expand upon the progress that we've reported here today.
Although most of our investors either listen to the webcast, or review the transcript after the live call, we'd like to invite those participating in today's call to ask any questions you may have, or to share your comments.
Karen, would you please begin the Q&A session?
Thank you Karen.
In terms of the direction of the Company, the quality of our pipeline, and the potential commercial value of our technology, I am a strong believer in what we can achieve at Nanophase. We're positioned well going in to 2016, and I'm expecting a good year.
Thanks again for joining us today everybody.