Specialty Reactive Ink Developer Nocopi Technologies Q1 Revenue Rose 27% to $0.5M, Net Income Decreased to $52,600 and Cash Rose $0.5M to $1.2M

KING OF PRUSSIA, Pa., May 14, 2020 (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, 2020 (Q1’20). Nocopi will soon publish a current Investor Presentation on the company website that may be viewed here, https://nocopi.com/investors-financial/

Q1 Highlights

Revenue rose 27% to $520,300, driven by 62% increase in product sales
Gross profit decreased 8% to $269,000 on increased product and shipping costs
Net income decreased to $52,600 from $85,400 in Q1’19, largely due to higher operating expenses
Net cash from operating activities rose to $524,900 from $143,200 in Q1’19
Cash Increased $0.5M to $1.2M
Book value rose over $0.7M to $2.8M in the last year

Q1’20 Results
Q1’20 revenue rose 27% to $520,300 reflecting a 62% increase in product and other sales, principally due to higher specialty ink shipments for licensees in the entertainment and toy product market, offset by a 14% decline in licenses, royalties and fees. Sales of security inks within the document fraud market remained relatively stable year over year.

Gross profit decreased to $269,000 or 52% of revenues in Q1’20 from $293,900 or 72% of revenues in Q1 ’19, reflecting lower gross margins in both revenue segments as well as an increase in product and other sales, as a percentage of revenue, as this segment carries lower profit margins than licenses, royalties and fees.

Gross margin in Q1 ’20 was also pressured by higher costs related to Nocopi’s production facility expansion in 2019, higher raw material costs and increased shipping expense largely due to the business impact of the COVID-19 pandemic.

Q1 ’20 sales and marketing expenses increased to $84,000 versus $68,900 in Q1 ’19, principally due to commissions on higher revenues. General and administrative expenses increased to $139,700 in Q1 ’20 from $94,100 in Q1 ’19, due to higher salary expenses, professional fees, patent acquisition expenses and public company expenses as Nocopi works to expand its investment community visibility.

Reflecting lower gross profit, higher operating expenses and $47,400 of accrued Pennsylvania income taxes that are not payable, Nocopi’s net income declined to $52,600 in Q1’20 vs. $85,400 in Q1’19. Net cash from operating activities increased to $524,900 in Q1’20 from $143,200 in Q1’19, principally due to significantly higher accounts receivable collections in the recent period.

Nocopi Chairman and CEO Michael Feinstein commented, “Nocopi delivered a solid performance in the first quarter, typically our softest quarter each year, despite increasing business challenges posed by the onset of the Coronavirus pandemic. We did experience a roughly six-week period of disruption in our business during the first quarter, as China-based printing operations were suspended. Fortunately, these operations came back online very quickly after their shutdown with solid purchase orders for our specialty inks, and orders remain strong at the current time.

“While production demand is encouraging, we do not yet have sufficient data on sales trends for products utilizing our ink technologies. Such sales are a key driver in per-unit royalties earned by Nocopi on products featuring our technologies. Travel and social restrictions across the US and our other markets have substantially curtailed walk-in traffic at retail outlets where Nocopi ink-powered products are sold. Our licensees however, have robust online distribution channels that have remained active, helping to offset the impact of retail store closures. Ultimately, we believe Nocopi products on both the toy and security products side continue to offer tremendous value, and we are confident these proprietary solutions will prove resilient despite current health and economic challenges.

“Nocopi is on solid financial footing, having ended the first quarter with $1.2M in cash and just $100K in convertible notes payable. Our cash growth reflects strong Q1 receivables collections, enabling us to reduce our accounts receivable to under $900K from $1.35M at year-end 2019. This financial base offers us flexibility to act opportunistically or to be patient and exercise caution as economic conditions warrant over the coming quarters. While we may face some revenue challenges and business development delays, as a result of the virus impact, we are confident in the financial strength of our major customers as well as the proven demand for, and attractive price points of, products featuring our reactive 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
William Jones, David Collins or Chris Eddy
Catalyst IR
212-924-9800 or nnup@catalyst-ir.com


Nocopi Technologies, Inc.
Statements of Operations
(unaudited)

	Three Months ended March 31
	2020			2019
Revenues
Licenses, royalties and fees	$	164,600		$	190,500
Product and other sales		355,700			218,900
		520,300			409,400

Cost of revenues
Licenses, royalties and fees		49,700			25,200
Product and other sales		201,600			90,300
		251,300			115,500
Gross profit		269,000			293,900

Operating expenses
Research and development		41,100			38,000
Sales and marketing		84,000			68,900
General and administrative		139,700			94,100
		264,800			201,000
Net income from operations		4,200			92,900

Other income (expenses)
Interest income		3,800			1,100
Interest expense and bank charges		(2,500	)		(2,700	)
		1,300			(1,600	)
Net income before income taxes		5,500			91,300
Income taxes		(47,100	)		5,900
Net income	$	52,600		$	85,400

Basic and diluted net income per common share	$	.00		$	.00

Weighted average common shares outstanding
Basic		61,044,698			58,616,716
Diluted		61,530,910			59,001,489


Nocopi Technologies, Inc.
Balance Sheets

	March 31			December 31
	2020			2019
	(unaudited)			(audited)
*Assets*
Current assets
Cash	$	1,205,400		$	688,000
Accounts receivable less $5,000 allowance for doubtful accounts		894,700			1,352,300
Inventory		187,300			127,900
Prepaid and other		92,100			135,000
Total current assets		2,379,500			2,303,200

Fixed assets
Leasehold improvements		27,800			24,200
Furniture, fixtures and equipment		256,400			252,500
		284,200			276,700
Less: accumulated depreciation and amortization		211,000			206,600
		73,200			70,100
Other assets
Long-term receivables		861,300			957,000
Operating lease right of use – building		191,800			202,000
		1,053,100			1,159,000
Total assets	$	3,505,800		$	3,532,300

*Liabilities and Stockholders' Equity*
Current liabilities
Convertible debentures	$	97,900		$	97,900
Accounts payable		19,100			44,300
Accrued expenses		241,700			231,600
Income taxes		52,700			52,400
Operating lease liability – current		42,400			41,700
Total current liabilities		453,800			467,900

Other liabilities
Accrued expenses, non-current		60,300			67,000
Deferred income taxes		–			47,400
Operating lease liability – non-current		149,400			160,300
		209,700			274,700

Stockholders' equity
Common stock, $0.01 par value
Authorized – 75,000,000 shares
Issued and outstanding – 61,044,698 shares		610,400			610,400
Paid-in capital		12,483,900			12,483,900
Accumulated deficit		(10,252,000	)		(10,304,600	)
Total stockholders' equity		2,842,300			2,789,700
Total liabilities and stockholders' equity	$	3,505,800		$	3,532,300


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

	Three Months ended March 31
	2020			2019
Operating Activities
Net income	$	52,600		$	85,400
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		4,400			1,400
Deferred income taxes		(47,400	)		(54,400	)
Other assets		105,900			(134,300	)
Other liabilities		(16,900	)		224,600
		98,600			122,700

(Increase) decrease in assets
Accounts receivable		457,600			(63,800	)
Inventory		(59,400	)		(12,600	)
Prepaid and other		42,900			6,900
Increase (decrease) in liabilities
Accounts payable and accrued expenses		(15,100	)		29,700
Income taxes		300			60,300
		426,300			20,500
Net cash provided by operating activities		524,900			143,200

Investment Activities
Additions to fixed assets		(7,500	)		–
Net cash used in investing activities		(7,500	)		–

Increase in cash		517,400			143,200
Cash at beginning of year		688,000			400,800
Cash at end of period	$	1,205,400		$	544,000

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Operating lease right of use – building	$	–		$	241,100
Operating lease liability	$	–		$	(241,100	)

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Specialty Reactive Ink Developer Nocopi Technologies Q1 Revenue Rose 27% to $0.5M, Net Income Decreased to $52,600 and Cash Rose $0.5M to $1.2M

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