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 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.
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|Nocopi Technologies, Inc.
Statements of Comprehensive Income
|Three Months ended
|Six Months ended
|Licenses, royalties and fees||$||169,800||$||144,900||$||307,100||$||330,400|
|Product and other sales||344,500||369,000||546,600||794,900|
|Cost of revenues|
|Licenses, royalties and fees||46,400||49,500||85,900||96,600|
|Product and other sales||154,800||184,300||281,500||357,500|
|Total cost of revenues||201,200||233,800||367,400||454,100|
|Research and development||32,500||45,800||72,000||90,300|
|Sales and marketing||76,700||74,200||141,500||157,400|
|General and administrative||506,700||117,700||784,400||263,200|
|Total operating expenses||615,900||237,700||997,900||510,900|
|Net income (loss) from operations||(302,800||)||42,400||(511,600||)||160,300|
|Other income (expenses)|
|Interest expense and bank charges||(300||)||(600||)||(700||)||(1,200||)|
|Total other income (expenses)||5,800||4,700||11,200||8,900|
|Net income (loss) before income taxes||(297,000||)||47,100||(500,400||)||169,200|
|Net income (loss)||$||(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.
|June 30||December 31|
|Accounts receivable less $12,000 allowance for doubtful accounts||1,079,000||970,800|
|Prepaid and other||59,500||160,000|
|Total current assets||3,186,500||3,400,200|
|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|
|Operating lease right of use – building||92,400||115,800|
|Liabilities and Stockholders’ Equity|
|Operating lease liability – current||49,000||47,500|
|Total current liabilities||301,900||202,700|
|Accrued expenses – non-current||–||13,000|
|Operating lease liability – non-current||43,400||68,300|
|Total other liabilities||43,400||81,300|
|Common stock, $0.01 par value
Authorized – 75,000,000 shares
Issued and outstanding – 67,495,055 shares
|Total stockholders’ equity||3,004,900||3,505,300|
|Total liabilities and stockholders’ equity||$||3,350,200||$||3,789,300|
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