Nocopi Reports Q1 Cash Position increased to $2M Despite Continued Impact of COVID-19 Lockdowns in Asia and Global Supply Chain Disruptions

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KING OF PRUSSIA, Pa., May 06, 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 first quarter ended March 31, 2022 (Q1 ’22). Nocopi’s SEC filings are available here.

Q1’22 Results
Q1’22 revenue declined to $339,400 as compared to Q1’21 revenue of $611,400, principally reflecting a decrease in specialty ink purchases by Asia-based printers, a trend that also impacted the second half of 2021. Demand for Nocopi’s specialty ink offerings has been sharply impacted by ongoing global supply chain challenges, including significant increases in international shipping costs, as well as pandemic-related lockdowns in Asia that have substantially curtailed printing activities for products using the Company’s inks.

Q1’22 revenue was also impacted by a decrease in revenue from licenses and royalties to $137,300, compared to $185,500 in Q1’21, reflecting both a decrease in the production and shipment of consumer products utilizing Nocopi’s proprietary inks, as well as a corresponding decrease in product sell-through driven by the continued impact of COVID-19 and major geo-political factors in tempering consumer purchasing activity.

Gross profit declined to $173,200 in Q1’22 from $391,100 in Q1’21, reflecting lower ink sales and license and royalty income. Q1’22 gross margin declined to 51% from 64% in Q1’21, principally due to a smaller contribution from higher margin license and royalty revenue in the period and as well as certain shipping and other cost increases on product revenue in Q1 ‘22.

Q1’22 operating expenses increased to $382,000 from $273,200 in Q1’21, reflecting an approximate $120,000 increase in legal expenses, partially offset by ongoing expense management and lower commission expense.

Reflecting these factors, Nocopi reported a net loss of $203,400, or $0.00 per share, in Q1’22, compared to net income $114,800, or $0.00 per share, in Q1’21.

Net cash from operations decreased to $170,200 in Q1’22, compared to $365,400 in Q1’21 reflecting the revenue decrease and increase in legal expense. Cash collections remained strong during Q1’22 as evidenced by an approximately $80,000 increase in working capital and an increase of approximately $280,000 in cash on the balance sheet compared to the same period in 2021.

Cash at quarter end increased to $2.0M in Q1’22, compared to $1.7M in Q1’21 and $1.8m at year-end 2021.

Nocopi Chairman and CEO Michael Feinstein, M.D., commented, “Despite ongoing progress in building on our major customer relationships, Nocopi’s business continued to be negatively impacted in Q1’22 by global supply chain costs and challenges and our customers’ COVID-19-related production delays. Fortunately, we do expect a normalization of business conditions later in 2022 and thereafter and believe our customers are well positioned to capitalize on this rebound, both through new product introductions as well as geographic expansion. These customer growth initiatives had largely been put on hold in 2020 as the global pandemic came into view.

“Fortunately, Nocopi has built a strong financial base, with $2 million in cash and no long-term debt, to support us through unprecedented global business challenges. While near-term visibility for customer demand remains challenging, we remain highly enthusiastic regarding our company’s longer-term prospects, as the world returns to more normalized post-pandemic consumer and business patterns. We believe this process is already underway. However, as we await industry conditions to normalize, our management team stays focused on the factors we can control, including ongoing cost management and business development efforts aiming to drive the next leg of growth for our unique ink technologies.”

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 
 March 31 
 2022  2021 
Revenues     
Licenses, royalties and fees$137,300  $185,500 
Product and other sales 202,100   425,900 
  339,400   611,400 
        
Cost of revenues       
Licenses, royalties and fees 39,500   47,100 
Product and other sales 126,700   173,200 
  166,200   220,300 
Gross profit 173,200   391,100 
        
Operating expenses       
Research and development 39,500   44,500 
Sales and marketing 64,800   83,200 
General and administrative 277,700   145,500 
  382,000   273,200 
Net income (loss) from operations (208,800  117,900 
        
Other income (expenses)       
Interest income 5,800   4,800 
Interest expense and bank charges (400)  (600)
  5,400   4,200 
Net income (loss) before income taxes (203,400  122,100 
Income taxes    7,300 
Net income (loss)$(203,400) $114,800 
        
Basic and diluted net income (loss) per common share$(.00) $.00 
        
Weighted average common shares outstanding       
Basic 67,495,055   67,353,690 
Diluted 67,495,055   67,477,603 


Nocopi Technologies, Inc.
Balance Sheets
(unaudited)

 March 31  December 31 
 2022  2021 
 (unaudited)  (audited) 
Assets     
Current assets     
Cash$2,016,900  $1,846,700 
Accounts receivable less $12,000 allowance for doubtful accounts 799,100   970,800 
Inventory 511,100   422,700 
Prepaid and other 80,900   160,000 
Total current assets 3,408,000   3,400,200 
        
Fixed assets       
Leasehold improvements 58,400   58,400 
Furniture, fixtures and equipment 164,100   164,100 
  222,500   222,500 
Less: accumulated depreciation and amortization 142,700   134,200 
  79,800   88,300 
Other assets       
Long-term receivables 92,300   185,000 
Operating lease right of use – building 104,200   115,800 
  196,500   300,800 
Total assets$3,684,300  $3,789,300 
        
Liabilities and Stockholders' Equity       
Current liabilities       
Accounts payable$99,300  $3,700 
Accrued expenses 172,400   151,500 
Operating lease liability – current 48,300   47,500 
Total current liabilities 320,000   202,700 
        
Other liabilities       
Accrued expenses, non-current 6,500   13,000 
Operating lease liability – non-current 55,900   68,300 
  62,400   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 (9,950,200)  (9,746,800)
Total stockholders' equity 3,301,900   3,505,300 
Total liabilities and stockholders' equity$3,684,300  $3,789,300 


Nocopi Technologies, Inc.
Statements of Cash Flows
(unaudited)

 Three Months ended 
 March 31 
 2022  2021 
Operating Activities     
Net income (loss)$(203,400 $114,800 
Adjustments to reconcile net income (loss) to net cash provided by operating activities       
Depreciation and amortization 8,500   6,100 
Other assets 104,300   105,100 
Other liabilities (18,100)  (17,500)
  (108,700  208,500 
        
(Increase) decrease in assets       
Accounts receivable 171,700   113,200 
Inventory (88,400)  (59,900)
Prepaid and other 79,100   34,200 
Increase in liabilities       
Accounts payable and accrued expenses 116,500   62,100 
Income taxes    7,300 
  278,900   156,900 
Net cash provided by operating activities 170,200   365,400 
        
        
Increase in cash 170,200   365,400 
Cash at beginning of year 1,846,700   1,362,800 
Cash at end of period$2,016,900  $1,728,200 


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