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

Rhea-AI Summary

Nocopi Technologies, Inc. (OTC Pink: NNUP) reported a modest revenue increase to $514,300 for Q2 2022, up from $513,900 in Q2 2021. This growth was driven by a 17% rise in license and royalty revenue, which reached $169,800. However, specialty ink sales declined by 7% year-over-year to $344,500. Operating expenses surged to $615,900 due to legal costs, resulting in a net loss of $297,000 compared to a profit in the prior year. Cash at the end of Q2 2022 was $1.6 million, down from $1.9 million a year earlier. The company anticipates gradual normalization in customer demand and plans for growth supported by new funding.

Positive

• License and royalty revenue increased by 17% to $169,800.
• Gross profit rose to $313,100, with a gross margin improvement to 61%.
• Expectations for normalization in demand from Asia-based printers in H2 2022.
• Anticipation of growth driven by a new over $5M capital base from private placement funding.

Negative

• Q2'22 specialty ink sales declined by 7% to $344,500.
• Net loss of $297,000, contrasting with a profit of $42,500 in Q2 2021.
• Operating expenses increased significantly to $615,900, primarily due to legal costs.

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

 

FAQ

What were the Q2 2022 revenue results for Nocopi Technologies (NNUP)?

Nocopi Technologies reported Q2 2022 revenue of $514,300, a slight increase from $513,900 in Q2 2021.

How did Nocopi's license and royalty revenue perform in Q2 2022?

License and royalty revenue grew by 17% to $169,800 in Q2 2022, compared to $144,900 in the same period last year.

What was Nocopi's net loss in Q2 2022?

Nocopi reported a net loss of $297,000 in Q2 2022, compared to a net income of $42,500 in Q2 2021.

What challenges did Nocopi face in Q2 2022?

Nocopi faced challenges from global supply chain issues and rising operational expenses, particularly legal costs.

What is the cash position of Nocopi at the end of Q2 2022?

Nocopi's cash position decreased to $1.6 million at the end of Q2 2022, down from $1.9 million a year earlier.