Nocopi Q2 Revenue Improves Modestly to $514,300 on Stronger License and Royalty Income
08/12/2022 - 02:50 PM
KING OF PRUSSIA, Pa., Aug. 12, 2022 (GLOBE NEWSWIRE) -- Nocopi Technologies, Inc. (OTC Pink: NNUP), a developer of specialty reactive inks used in entertainment, toy and educational products as well as in document and product authentication technologies to combat fraud, today announced results for its second quarter ended June 30, 2022 (Q2 ’22). Nocopi’s SEC filings are available here .
Q2’22 Results Q2’22 revenue increased to $514,300 as compared to Q2’21 revenue of $513,900 , principally reflecting an increase in license and royalty revenue offset by a decrease in specialty ink purchases by Asia-based printers. Demand for Nocopi’s specialty ink offerings continues to be impacted by global supply chain challenges, including significant increases in international shipping costs, congestion at Chinese ports, as well as pandemic-related lockdowns in Asia that have substantially curtailed printing activities for products using the Company’s inks in the past year.
Q2’22 revenue from licenses and royalties grew 17% to $169,800 compared to $144,900 in Q2’21 and rose 24% sequentially over Q1’22, reflecting the measured restart of consumer spending in North America which has had seen both acceleration and modest pauses in the last two years as a result of COVID-19 and major geo-political factors.
Q2’22 revenue from ink sales declined 7% to $344,500 compared to the year-ago period but grew 70% sequentially as supply chains have slowly begun to normalize. Specialty ink sales are a precursor to future license and royalty revenue from customers who incorporate Nocopi ink technologies in their retail-oriented products such as children’s activity books.
Gross profit increased to $313,100 in Q2’22 from $280,100 in Q2’21, reflecting an increase in license and royalty income. Q2’22 gross margin increased to 61% from 55% in Q2’21, principally due to a greater contribution from higher margin license and royalty revenue in the period.
Q2’22 operating expenses increased to $615,900 from $237,700 in Q2’21, principally reflecting approximately $370,000 in legal and shareholder meeting expenses in the current period. Legal expenses incurred over the nine months ended June 30, 2022 are not expected to recur to that extent and should retrace back to the annual pace incurred in years prior to 2021. In addition, expenses to prepare for and host annual stockholder meetings going forward should be meaningfully lower than that incurred in advance of the stockholder meeting in 2022.
Reflecting these factors, Nocopi reported a net loss of $297,000 , or $0.00 per share, in Q2’22, compared to net income $42,500 , or $0.00 per share, in Q2’21.
Nocopi reported net cash used in operations of $253,300 for the six month period ending June 30, 2022, compared to net cash provided by operations of $574,400 for the six month period ending June 30, 2021, reflecting an increase in legal and shareholder meeting expenses in the first six months of 2022. Cash collections from routine operations remained strong during Q2’22 though working capital declined by approximately $250,000 compared to Q2’21 primarily due to legal and shareholder meeting expenses.
Cash at quarter end decreased to $1.6M in Q2’22, compared to $1.9M in Q2’21 and $1.8M at year-end 2021.
Nocopi Chairman and CEO Michael Feinstein, M.D., commented, “We are pleased with the improving pace of customer purchases, activity and inquires that we are starting to see from Asia-based printers who have been wrestling with global supply chain costs and challenges. We expect a gradual normalization of business conditions for our customers in the second half of 2022 and believe Nocopi is well positioned to benefit from expected ramping demand. We believe our core business is regaining momentum and should also benefit as our licensee customer plans for geographic expansion come to fruition in the coming quarters.”
“We are also excited by the opportunities that Nocopi can pursue upon the closing of the private placement funding we announced last week. We expect our enhanced capital base, which will total over $5M in net cash, will support a range of business development and other initiatives to drive our next leg of growth. The funding also demonstrates important support from strategic investors who are committed to supporting our long-term success.”
“The path of growth in the next few months may be uneven as consumer discretionary spending is tempered by inflation, though we eagerly await the start of the holiday season this fall which typically delivers stronger consumer sales than the first half of the calendar year.”
“Nocopi has persevered through the unique challenges of the last two years, and we are now well positioned to build our business both organically and via complementary tuck-in acquisitions. We will continue to leverage our unique ink technologies and industry expertise to expand our product portfolio, to build additional marquee customer relationships around the globe and to enter complementary new markets. Our strategic plan remains focused on growth, financial discipline, cash generation, and the prudent allocation of our capital to achieve the greatest long-term value for our stockholders.”
About Nocopi Technologies ( www.nocopi.com ) Nocopi develops and markets specialty reactive inks for unique, mess-free applications in the entertainment, toy and educational product markets. Nocopi also develops and markets document and product authentication technologies designed to combat fraudulent document reproduction, product counterfeiting and/or unauthorized product diversion. Nocopi derives revenue from technology licensing agreements as well as from the sale of its proprietary inks and other products to licensees and/or their licensed printers. Nocopi’s products and systems include trade secrets as well as patented technologies.
Safe Harbor for Forward-Looking Statements This release may contain projections and other "forward-looking statements" relating to Nocopi’s business, that are often identified by the use of "believes," "expects" or similar expressions. Forward-looking statements involve a number of estimates, assumptions, risks and uncertainties that may cause actual results to differ materially from those anticipated. Forward-looking statements may address uncertainties regarding customer preferences or demand for products incorporating Nocopi technology that underlie the company’s revenue expectations, the company’s ability to develop new products and new product applications, the financial condition of customers and the timeliness of their payments, the impact of fluctuations in currencies, global trade and shipping markets, etc. Actual results could differ from those projected due to numerous factors and uncertainties, and Nocopi can give no assurance that such statements will prove to be correct nor that Nocopi’s actual results of operations, financial condition and performance will not differ materially from those reflected or implied by its forward-looking statements. Investors should refer to the risk factors outlined in Nocopi’s Form 10-K, 10-Q and other SEC reports available at www.sec.gov/edgar . Forward-looking statements are made as of the date of this news release; Nocopi assumes no obligation to update these statements.
Twitter – Investors: @NNUP_IR
Investor & Media Contacts Chris Eddy or David Collins Catalyst IR 212-924-9800 or nnup@catalyst-ir.com
Nocopi Technologies, Inc. Statements of Comprehensive Income (unaudited) Three Months ended June 30 Six Months ended June 30 2022 2021 2022 2021 Revenues Licenses, royalties and fees $ 169,800 $ 144,900 $ 307,100 $ 330,400 Product and other sales 344,500 369,000 546,600 794,900 Total revenues 514,300 513,900 853,700 1,125,300 Cost of revenues Licenses, royalties and fees 46,400 49,500 85,900 96,600 Product and other sales 154,800 184,300 281,500 357,500 Total cost of revenues 201,200 233,800 367,400 454,100 Gross profit 313,100 280,100 486,300 671,200 Operating expenses Research and development 32,500 45,800 72,000 90,300 Sales and marketing 76,700 74,200 141,500 157,400 General and administrative 506,700 117,700 784,400 263,200 Total operating expenses 615,900 237,700 997,900 510,900 Net income (loss) from operations (302,800 ) 42,400 (511,600 ) 160,300 Other income (expenses) Interest income 6,100 5,300 11,900 10,100 Interest expense and bank charges (300 ) (600 ) (700 ) (1,200 ) Total other income (expenses) 5,800 4,700 11,200 8,900 Net income (loss) before income taxes (297,000 ) 47,100 (500,400 ) 169,200 Income taxes – 4,600 – 11,900 Net income (loss) $ (297,000 ) $ 42,500 $ (500,400 ) $ 157,300 Basic and diluted net income (loss) per common share $ (.00 ) $ .00 $ (.01 ) $ .00 Basic and diluted weighted average common shares outstanding 67,495,055 67,400,812 67,495,055 67,377,251
Nocopi Technologies, Inc. Balance Sheets (unaudited) June 30 December 31 2022 2021 Assets Current assets Cash $ 1,593,400 $ 1,846,700 Accounts receivable less $12,000 allowance for doubtful accounts 1,079,000 970,800 Inventory 454,600 422,700 Prepaid and other 59,500 160,000 Total current assets 3,186,500 3,400,200 Fixed assets Leasehold improvements 58,400 58,400 Furniture, fixtures and equipment 164,100 164,100 Fixed assets, gross 222,500 222,500 Less: accumulated depreciation and amortization 151,200 134,200 Total fixed assets 71,300 88,300 Other assets Long-term receivable – 185,000 Operating lease right of use – building 92,400 115,800 Other assets 92,400 300,800 Total assets $ 3,350,200 $ 3,789,300 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 54,400 $ 3,700 Accrued expenses 198,500 151,500 Operating lease liability – current 49,000 47,500 Total current liabilities 301,900 202,700 Other liabilities Accrued expenses – non-current – 13,000 Operating lease liability – non-current 43,400 68,300 Total other liabilities 43,400 81,300 Stockholders' equity Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding – 67,495,055 shares 675,000 675,000 Paid-in capital 12,577,100 12,577,100 Accumulated deficit (10,247,200 ) (9,746,800 ) Total stockholders' equity 3,004,900 3,505,300 Total liabilities and stockholders' equity $ 3,350,200 $ 3,789,300