Home / Top News / Nocopi Q2 Revenue Improves Modestly to $514,300 on Stronger License and Royalty Income

Nocopi Q2 Revenue Improves Modestly to $514,300 on Stronger License and Royalty Income

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  

 

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