SOLESENCE, INC. — Director's Dealing 2006

Oct 3, 2006

SEC Form 4 — Statement of Changes in Beneficial Ownership

Issuer: NANOPHASE TECHNOLOGIES CORPORATION (NANX)
CIK: 0000883107
Period of Report: 2006-10-02

Reporting Person: PEARLMAN JERRY K (Director)

Derivative Transactions

Date	Security	Exercise Price	Code	Shares	A/D	Expiration	Underlying	Ownership
2006-10-02	Deferred Common Stock	$	A	1007	Acquired		Common Stock (1007)	Direct

Holdings (Non-Derivative)

Security	Shares	Ownership
Common Stock	21948	Direct

Holdings (Derivative)

Security	Exercise Price	Expiration	Underlying	Shares	Ownership
Stock Option (right to buy)	$1.875	2009-04-26	Common Stock (10000)	10000	Direct
Stock Option (right to buy)	$7.625	2010-05-25	Common Stock (2000)	2000	Direct
Stock Option (right to buy)	$9.92	2011-06-05	Common Stock (2000)	2000	Direct
Stock Option (right to buy)	$3.78	2012-11-25	Common Stock (2000)	2000	Direct
Stock Option (right to buy)	$5.07	2013-06-26	Common Stock (2000)	2000	Direct

Footnotes

F1: Subject to certain restrictions, beginning on this date, options vest in three equal annual installments.

F2: Each share of deferred common stock represents a right to receive one share of common stock.

F3: 1,007 shares of common stock were to be granted under the Company's 2005 Non-Employee Director Restricted Stock Plan. Such shares are vested immediately but subject to certain transfer restrictions. Pursuant to such plan, the reporting person elected to defer receipt of such shares and receive instead 1,007 shares of deferred common stock which, along with the 2,747 similar shares granted previously, will be accounted for under the Company's Non-Employee Director Deferred Compensation Plan.

F4: The deferred common stock becomes payable upon the reporting person's termination of service as a director of the Company.

F5: Pursuant to such plan, the reporting person elected to defer receipt of such shares and recieve 1,007 shares of deferred common stock, amounting to a cumulative total of 3,754 shares of deferred common stock received (including those received from previous grants) to date, which will all be accounted for under the Company's Non-Employee Director Deferred Compensation Plan.