Specialty Ink Developer Nocopi Q1 Revenue Grows 18% to

Specialty Ink Developer Nocopi Q1 Revenue Grows 18% to

News Highlights

KING OF PRUSSIA, Pa., May 14, 2021 (News) — 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, 2021 (Q1’21). Nocopi’s SEC filings are available here.

Q1 Highlights

  • Revenue rose 18% to $611,400, driven by a 20% increase in product sales
  • Gross profit increased 45% to $391,000 due to higher revenue and gross margins across the business
  • Net income increased to $114,800 from $52,600 in Q1’20 which benefitted from $47,000 of accrued state taxes that were not payable
  • Cash increased $0.5M to $1.7M at 3/31/21 versus a year ago
  • Book value rose over $0.7M versus year-ago to $3.5M

Nocopi Chairman and CEO Michael Feinstein commented, “Nocopi started 2021 returning to double digit revenue growth in what is generally our slowest quarter. We believe this quarter should the set tone for the full year as our partners are able to resume the geographic expansion that had been sidetracked by the COVID-19 pandemic. A key international customer accelerated their pace of ink orders providing a meaningful benefit in Q1’21. “Importantly, Nocopi’s cash collections were very strong in Q1’21, enabling us to close the first quarter with $1.7M in cash and no debt. Our cash growth reflects the benefit of continued growth, receivables collections and the quarterly $100,000 minimum guaranteed royalty payment from our largest licensing customer, an item not reflected in our income statement. As our cash position continues to build, we continue to evaluate strategic options to deploy those funds in uses that deliver greatest possible long-term shareholder value. As this precious asset is hard earned, Nocopi believes the most prudent path is to remain disciplined in our operations, expense management and capital allocation decisions as we seek to identify the best possible uses.

“Looking forward, we are excited by our prospects in 2021 and beyond, as the world returns to normalized post-pandemic consumer and business patterns and the entertainment industry is able to launch and market major films and other entertainment. In particular, Nocopi expects the measured reopening of brick and mortar retail stores and merchant endpoints to be a very important contributor to our business. Consumer products based on our proprietary inks were carried in over 80,000 retail outlets across North America and this broad footprint was substantially impacted by store closures and reduced foot traffic related to the pandemic. While e-commerce sales rose substantially during the pandemic and helped offset the impact on retail stores, the reopening of businesses is expected to help drive the per-unit royalty income we earn on retail purchases of products incorporating our specialty reactive inks. Similarly, we expect the use of our technologies in security applications will return to growth as businesses return to more normalized operations and procurement activities.”

CEO Feinstein concluded, “We expect 2021 to be a promising year for Nocopi as our toy and entertainment customers continue to expand their geographic footprints while building stronger relationships with their Fortune 500 customers. At the same time recreational travel appears to be rebounding at airports, train stations and highway rest stops, ideal venues for consumer products featuring our ink technologies.”

Q1’21 Results

Q1’21 revenue rose 18% to $611,400 reflecting a 20% increase in product and other sales, principally due to specialty ink shipments for licensees in the entertainment and toy product market. Specialty ink sales growth continues to be a driver of future royalty income based on the sell-through of products incorporating our technologies. Nocopi recorded lower license revenue from security market customers in Q1’21 as this segment continues to be negatively affected by the COVID-19 pandemic and saw lower ink shipments to licensees in the retail receipt and document fraud market. The security market represented approximately 8% of Q1’21 revenue.

Gross profit increased 45% to $391,100 in Q1’21 from $269,000 in Q1’20, reflecting both revenue and gross margin improvements. Q1’21 gross margin rose to 64% from 52% in Q1’20, benefitting from moderating raw materials costs which had risen substantially at the outset of the pandemic.

Q1’21 operating expenses increased slightly to $273,200 from $264,800 in Q1’20, reflecting ongoing expense management, offset by higher professional fees but benefitting from lower sales and marketing expenses.

Reflecting revenue and gross margin improvements, Nocopi’s net income increased to $114,800, or $0.00 per diluted share, in Q1’21, compared to $52,600, or $0.00 per diluted share, in Q1’20. Q1’20 net income benefited from a non-cash item $47,000 of state income taxes not payable.

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 ContactsChris Eddy or David Collins Catalyst IR212-924-9800nnup@catalyst-ir.com

Nocopi Technologies, Inc.Statements of Comprehensive Income(unaudited)

  Three Months ended March 31 
  2021  2020 
Revenues      
Licenses, royalties and fees $185,500  $164,600 
Product and other sales  425,900   355,700 
   611,400   520,300 
         
Cost of revenues        
Licenses, royalties and fees  47,100   49,700 
Product and other sales  173,200   201,600 
   220,300   251,300 
Gross profit  391,100   269,000 
         
Operating expenses        
Research and development  44,500   41,100 
Sales and marketing  83,200   84,000 
General and administrative  145,500   139,700 
   273,200   264,800 
Net income from operations  117,900   4,200 
         
Other income (expenses)        
Interest income  4,800   3,800 
Interest expense and bank charges  (600)  (2,500)
   4,200   1,300 
Net income before income taxes  122,100   5,500 
Income taxes  7,300   (47,100)
Net income $114,800  $52,600 
         
Basic and diluted net income per common share $.00  $.00 
         
Weighted average common shares outstanding        
Basic  67,353,690   61,044,698 
Diluted  67,477,603   61,530,910 

Nocopi Technologies, Inc.Balance Sheets

  March 31  December 31 
  2021  2020 
  (unaudited)  (audited) 
Assets 
Current assets      
Cash $1,728,200  $1,362,800 
Accounts receivable less $12,000 allowance for doubtful accounts  1,167,600   1,280,800 
Inventory  384,700   324,800 
Prepaid and other  63,600   97,800 
Total current assets  3,344,100   3,066,200 
         
Fixed assets        
Leasehold improvements  27,800   27,800 
Furniture, fixtures and equipment  163,700   163,700 
   191,500   191,500 
Less: accumulated depreciation and amortization  110,400   104,300 
   81,100   87,200 
Other assets        
Long-term receivables  465,300   559,500 
Operating lease right of use – building  149,400   160,300 
   614,700   719,800 
Total assets $4,039,900  $3,873,200 
  
Liabilities and Stockholders’ Equity 
Current liabilities        
Accounts payable $52,600  $5,700 
Accrued expenses  193,800   178,600 
Income taxes  43,600   36,300 
Operating lease liability – current  45,200   44,500 
Total current liabilities  335,200   265,100 
         
Other liabilities        
Accrued expenses, non-current  32,600   39,200 
Operating lease liability – non-current  104,200   115,800 
   136,800   155,000 
         
Stockholders’ equity        
Common stock, $0.01 par value        
Authorized – 75,000,000 shares        
Issued and outstanding – 67,353,690 shares  673,500   673,500 
Paid-in capital  12,575,800   12,575,800 
Accumulated deficit  (9,681,400)  (9,796,200)
Total stockholders’ equity  3,567,900   3,453,100 
Total liabilities and stockholders’ equity $4,039,900  $3,873,200 

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