NOCOPI TECHNOLOGIES INC/MD/ Files Q2 2024 10-Q

TL;DR

NOCOPI TECHNOLOGIES INC/MD/ dropped its Q2 10-Q. Check financials.

AI Summary

NOCOPI TECHNOLOGIES INC/MD/ filed its 10-Q for the period ending June 30, 2024. The company, operating in the Games, Toys & Children's Vehicles sector, reported financial results for the second quarter and the first half of 2024. Specific financial figures and operational details are contained within the filing.

Why It Matters

This filing provides investors and analysts with the latest financial performance and operational status of NOCOPI TECHNOLOGIES INC/MD/, crucial for understanding its current market position and future prospects.

Risk Assessment

Risk Level: medium — As a 10-Q filing, it contains detailed financial information that could reveal significant performance changes or risks for NOCOPI TECHNOLOGIES INC/MD/.

Key Numbers

• 20240630 — Period End Date (Indicates the end of the reporting quarter)
• 20240814 — Filing Date (Date the 10-Q was officially submitted to the SEC)

Key Players & Entities

• NOCOPI TECHNOLOGIES INC/MD/ (company) — Filer of the 10-Q
• 20240630 (date) — End of reporting period
• 20240814 (date) — Filing date
• KING OF PRUSSIA, PA (location) — Business and mailing address

FAQ

Key Financial Figures

• $0 — 1,178 shares of common stock, par value $0.01, as of August 9, 2024. NOCOPI TECHN
• $138,400 — d state taxable income of approximately $138,400 and $88,400, respectively. State income
• $88,400 — le income of approximately $138,400 and $88,400, respectively. State income taxes in th

Filing Documents

• nnup_10q-063024.htm (10-Q) — 452KB
• ex31x1.htm (EX-31.1) — 10KB
• ex31x2.htm (EX-31.2) — 10KB
• ex32x1.htm (EX-32.1) — 4KB
• 0001079973-24-001232.txt ( ) — 2796KB
• nnup-20240630.xsd (EX-101.SCH) — 22KB
• nnup-20240630_cal.xml (EX-101.CAL) — 41KB
• nnup-20240630_def.xml (EX-101.DEF) — 58KB
• nnup-20240630_lab.xml (EX-101.LAB) — 228KB
• nnup-20240630_pre.xml (EX-101.PRE) — 182KB
• nnup_10q-063024_htm.xml (XML) — 284KB

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION

. Financial Statements

Item 1 . Financial Statements 1 1 Balance Sheets at June 30, 2024 and December 31, 202 3 2 3 4

Notes to Financial Statements

Notes to Financial Statements 5

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 15

Controls and Procedures

Item 4. Controls and Procedures 15

OTHER INFORMATION

Part II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 16

Risk Factors

Item 1A. Risk Factors 16

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 16

Defaults

Item 3. Defaults Upon Senior Securities 16

Mine

Item 4. Mine Safety Disclosures 16

Other

Item 5. Other Information 16

Exhibits

Item 6. Exhibits 16

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements Nocopi Technologies, Inc. (unaudited) Three Months ended June 30 Six Months ended June 30 2024 2023 2024 2023 Revenues Licenses, royalties and fees $ 89,000 $ 150,200 $ 175,500 $ 273,200 Product and other sales 370,000 449,000 681,800 918,100 Total revenues 459,000 599,200 857,300 1,191,300 Cost of revenues Licenses, royalties and fees 51,000 49,800 102,700 108,500 Product and other sales 177,700 179,200 358,700 401,000 Total cost of revenues 228,700 229,000 461,400 509,500 Gross profit 230,300 370,200 395,900 681,800 Operating expenses Research and development 42,100 35,300 83,500 80,100 Sales and marketing 75,900 61,100 144,900 147,400 General and administrative 1,254,700 223,300 2,469,500 424,500 Total operating expenses 1,372,700 319,700 2,697,900 652,000 Net income (loss) from operations ( 1,142,400 ) 50,500 ( 2,302,000 ) 29,800 Other income (expenses) Interest income 142,800 60,400 279,900 122,500 Interest expense and bank charges ( 5,800 ) ( 4,400 ) ( 11,500 ) ( 5,000 ) Total other income (expenses) 137,000 56,000 268,400 117,500 Net income (loss) before income taxes ( 1,005,400 ) 106,500 ( 2,033,600 ) 147,300 Income taxes — 27,400 — 37,900 Net income (loss) $ ( 1,005,400 ) $ 79,100 $ ( 2,033,600 ) $ 109,400 Net income (loss) per common share Basic $ ( .10 ) $ .01 $ ( .19 ) $ .01 Diluted $ ( .10 ) $ .01 $ ( .19 ) $ .01 Weighted average common shares outstanding Basic 10,501,178 9,251,178 10,501,178 9,251,178 Diluted 10,501,178 9,251,178 10,501,178 9,251,178 *See accompanying notes to these financial statements. 1 Nocopi Technologies, Inc. Balance Sheets* (unaudited) June 30 December 31 2024 2023 Assets Current assets Cash $ 4,677,800 $ 2,269,200 Accounts receivable less $ 12,000 allowance for credit losses

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 1. Financial Statements The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (the "Company"). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial and Exchange Commission on March 25, 2024 (the "2023 Annual Report"). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2023 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and six months ended June 30, 2024 may not be necessarily indicative of the operating results expected for the full year. The Company follows Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 220 in reporting comprehensive income (loss). Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss). Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss). Recently Issued Accounting Pronouncements Not Yet Adopted As of June 30,

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 3 . Cash and Cash Equivalents Cash and cash equivalents June 30 2024 December 31 2023 Cash and cash equivalents Cash and money market funds $ 4,677,800 $ 2,269,200 Cash and cash equivalents $ 4,677,800 $ 2,269,200 Note 4. Short-term Investments Schedule of short term investments June 30 December 31 2024 2023 Short-term investments U.S. Treasury Bills $ 5,823,000 $ 7,985,600 Short-term investments $ 5,823,000 $ 7,985,600 Debt securities classified as held-to-maturity are reported at amortized cost. Schedule of amortized cost and fair value of securities held to maturity Amortized Cost Fair Value U.S. Treasury Bills Due July 11, 2024 1,074,800 1,123,700 Due September 5, 2024 4,748,200 4,952,100 Total $ 5,823,000 $ 6,075,800 Total interest income recognized for U.S. Treasury Bills was $ 182,800 and $ 239,600 for the six months ended June 30, 2024 and year ended December 31, 2023, respectively. Interest receivable was $ 252,300 and $ 160,000 for the six months ended June 30, 2024 and for the year ended December 31, 2023, respectively. Note 5. Long-term Receivables As of June 30, 2024, the Company had long-term receivables of $ 1,564,600 from two of the three licensees representing the present value of fixed guaranteed royalty payments that will be payable over varying periods of two through five years that commenced in the second half of 2022 and terminate in the second quarter of 2028. The fixed guaranteed royalty payments result from amendments to license agreements with two existing licensees and a license agreement with a new licensee. The receivable represents the present value of the fixed minimum annual payments due under the license agreements, discounted at the Company's incremental borrowing rate of 4 % . The three agreements grant licenses for the use of certain patented ink technology as it exists at the time that it is granted which i

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) The following table summarizes the future minimum payments due under the three license agreements as of June 30, 2024: Schedule of future minimum payments Year Ending December 31: 2024 $ 321,000 2025 570,000 2026 570,000 2027 557,500 2028 260,000 Total $ 2,278,500 The Company has evaluated the collectability of the long-term receivables and believes them to be fully collectible as of June 30, 2024. However, there can be no assurance that the receivables will not be impaired in the future due to changes in the licensees' financial condition or other factors. The long-term receivables are recorded at its present value as of June 30, 2024, and will be amortized over the term of the license agreements using the effective interest method. The unamortized balance of the long-term receivables as of June 30, 2024 is $ 1,564,600 . Note 6. Line of Credit In November 2018, the Company negotiated a $ 150,000 revolving line of credit with a bank to provide a source of working capital, if required. The line of credit is secured by all the assets of the Company and bears interest at the bank's prime rate for a period of one year and its prime rate plus 1.5% thereafter. The line of credit is subject to an annual review and quiet period. There were no borrowings under the line of credit since its inception and the line of credit was terminated on July 13, 2023 . Note 7. Stockholders' Equity On September 11, 2023 the Company entered into a stock purchase agreement in connection with a private placement for total gross proceeds of $ 5 .0 million. The stock purchase agreement provided for the issuance of an aggregate of 1,250,000 shares of the Company's common stock to an investor at a purchase price of $ 4.00 per share. In addition, as consideration for general advisory services until the third anniversary, the Company agreed to issue an aggregate total of 65,790 shares of common stock with a total fair mark

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 9. Earnings (Loss) per Share In accordance with FASB ASC 260, Earnings per Share , basic earnings (loss) per common share is computed using net earnings (loss) divided by the weighted average number of common shares outstanding for the periods presented. Diluted earnings (loss) per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Since the Company did not have any common stock equivalents outstanding as of June 30, 2024 and June 30, 2023, basic and diluted earnings (loss) per share were the same. Note 10. Major Customer and Geographic Informatio n The Company's revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company's total revenues were: Schedule of revenues as percentage of revenue Three Months ended June 30 Six Months ended June 30 2024 2023 2024 2023 Customer A 69 % 67 % 69 % 69 % Customer B 14 % 20 % 15 % 16 % The Company's non-affiliate customers whose individual balances amounted to more than 10% of the Company's net accounts receivable, expressed as a percentage of net accounts receivable, were: Schedule of non-affiliated customers with accounts receivable June 30 December 31 2024 2023 Customer A — — Customer B 81 % 82 % The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on the Company's business operations and financial condition. The Company's revenues by geographic region are as follows: Schedule of revenue by geographic region Three Months ended June 30 Six Months ended June 30 2024 2023 2024 2023 North America $ 87,300 $ 145,800 $ 165,000 $ 273,600 South America 600 — 600 — Asia 357,3

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 11. Leases The Company conducts its operations in leased facilities under a non-cancelable operating lease, which was originally set to expire in April 2024. The lease has been extended for 13 months for a new term that began on May 1, 2024 and will expire on May 31, 2025. Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, the Company has capitalized the present value of the minimum lease payments commencing May 1, 2024, using an estimated incremental borrowing rate of 6.5 % . The minimum lease payments do not include common area annual expenses which are considered to be non-lease components. As of May 1, 2024 the operating lease right-of-use asset and operating lease liability amounted to $ 83,046 with no cumulative-effect adjustment to the opening balance of accumulated deficit. There are no other material operating leases. The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. Total lease expense under operating leases for the three and six months ended June 30, 2024 was $ 17,600 and $ 31,000 , respectively. Total lease expense under operating leases for the three and six months ended June 30, 2023 was $ 13,300 and $ 26,700 , respectively. Maturities of current lease liabilities as of June 30, 2024 are as follows: Schedule of maturities of lease liabilities Operating Leases Period ending December 31 2024 39,600 2025 33,000 Total lease payments 72,600 Less imputed interest ( 2,000 ) Total $ 70,600 9

Management's Discussion and Analysis

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Information This Report on Form 10-Q contains, and our officers and representatives may from time to time make, "forward-looking

Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan,"

Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding: Expected operating results, such as revenue, expenses and capital expenditures Current or future volatility in market conditions Our belief that we have sufficient liquidity to fund our business operations during the next twelve months Strategy for customer retention, growth, product development, market position, and risk management Forward-looking and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: The extent to which we are successful in gaining new long-term relationships with customers or retaining significant existing customers and the level of service failures that could lead customers to use competitors' services. Strategic actions, including business acquisitions and our success in integrating acquired businesses. Our ability to improve our current credit rating

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