Nocopi Reports Q1 Cash Position increased to $2M Despite Continued Impact of COVID-19 Lockdowns in Asia and Global Supply Chain Disruptions

Nocopi Technologies, Inc.

KING OF PRUSSIA, Pa., May 06, 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 first quarter ended March 31, 2022 (Q1 ’22). Nocopi’s SEC filings are available here.

Q1’22 Results
Q1’22 revenue declined to $339,400 as compared to Q1’21 revenue of $611,400, principally reflecting a decrease in specialty ink purchases by Asia-based printers, a trend that also impacted the second half of 2021. Demand for Nocopi’s specialty ink offerings has been sharply impacted by ongoing global supply chain challenges, including significant increases in international shipping costs, as well as pandemic-related lockdowns in Asia that have substantially curtailed printing activities for products using the Company’s inks.

Q1’22 revenue was also impacted by a decrease in revenue from licenses and royalties to $137,300, compared to $185,500 in Q1’21, reflecting both a decrease in the production and shipment of consumer products utilizing Nocopi’s proprietary inks, as well as a corresponding decrease in product sell-through driven by the continued impact of COVID-19 and major geo-political factors in tempering consumer purchasing activity.

Gross profit declined to $173,200 in Q1’22 from $391,100 in Q1’21, reflecting lower ink sales and license and royalty income. Q1’22 gross margin declined to 51% from 64% in Q1’21, principally due to a smaller contribution from higher margin license and royalty revenue in the period and as well as certain shipping and other cost increases on product revenue in Q1 ‘22.

Q1’22 operating expenses increased to $382,000 from $273,200 in Q1’21, reflecting an approximate $120,000 increase in legal expenses, partially offset by ongoing expense management and lower commission expense.

Reflecting these factors, Nocopi reported a net loss of $203,400, or $0.00 per share, in Q1’22, compared to net income $114,800, or $0.00 per share, in Q1’21.

Net cash from operations decreased to $170,200 in Q1’22, compared to $365,400 in Q1’21 reflecting the revenue decrease and increase in legal expense. Cash collections remained strong during Q1’22 as evidenced by an approximately $80,000 increase in working capital and an increase of approximately $280,000 in cash on the balance sheet compared to the same period in 2021.

Cash at quarter end increased to $2.0M in Q1’22, compared to $1.7M in Q1’21 and $1.8m at year-end 2021.

Nocopi Chairman and CEO Michael Feinstein, M.D., commented, “Despite ongoing progress in building on our major customer relationships, Nocopi’s business continued to be negatively impacted in Q1’22 by global supply chain costs and challenges and our customers’ COVID-19-related production delays. Fortunately, we do expect a normalization of business conditions later in 2022 and thereafter and believe our customers are well positioned to capitalize on this rebound, both through new product introductions as well as geographic expansion. These customer growth initiatives had largely been put on hold in 2020 as the global pandemic came into view.

“Fortunately, Nocopi has built a strong financial base, with $2 million in cash and no long-term debt, to support us through unprecedented global business challenges. While near-term visibility for customer demand remains challenging, we remain highly enthusiastic regarding our company’s longer-term prospects, as the world returns to more normalized post-pandemic consumer and business patterns. We believe this process is already underway. However, as we await industry conditions to normalize, our management team stays focused on the factors we can control, including ongoing cost management and business development efforts aiming to drive the next leg of growth for our unique 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
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
	March 31
	2022				2021
Revenues
Licenses, royalties and fees	$	137,300			$	185,500
Product and other sales		202,100				425,900
		339,400				611,400
Cost of revenues
Licenses, royalties and fees		39,500				47,100
Product and other sales		126,700				173,200
		166,200				220,300
Gross profit		173,200				391,100
Operating expenses
Research and development		39,500				44,500
Sales and marketing		64,800				83,200
General and administrative		277,700				145,500
		382,000				273,200
Net income (loss) from operations		(208,800	)			117,900
Other income (expenses)
Interest income		5,800				4,800
Interest expense and bank charges		(400	)			(600	)
		5,400				4,200
Net income (loss) before income taxes		(203,400	)			122,100
Income taxes		–				7,300
Net income (loss)	$	(203,400	)		$	114,800
Basic and diluted net income (loss) per common share	$	(.00	)		$	.00
Weighted average common shares outstanding
Basic		67,495,055				67,353,690
Diluted		67,495,055				67,477,603

Nocopi Technologies, Inc.
Balance Sheets
(unaudited)

	March 31				December 31
	2022				2021
	(unaudited)				(audited)
Assets
Current assets
Cash	$	2,016,900			$	1,846,700
Accounts receivable less $12,000 allowance for doubtful accounts		799,100				970,800
Inventory		511,100				422,700
Prepaid and other		80,900				160,000
Total current assets		3,408,000				3,400,200
Fixed assets
Leasehold improvements		58,400				58,400
Furniture, fixtures and equipment		164,100				164,100
		222,500				222,500
Less: accumulated depreciation and amortization		142,700				134,200
		79,800				88,300
Other assets
Long-term receivables		92,300				185,000
Operating lease right of use – building		104,200				115,800
		196,500				300,800
Total assets	$	3,684,300			$	3,789,300
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	99,300			$	3,700
Accrued expenses		172,400				151,500
Operating lease liability – current		48,300				47,500
Total current liabilities		320,000				202,700
Other liabilities
Accrued expenses, non-current		6,500				13,000
Operating lease liability – non-current		55,900				68,300
		62,400				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		(9,950,200	)			(9,746,800	)
Total stockholders' equity		3,301,900				3,505,300
Total liabilities and stockholders' equity	$	3,684,300			$	3,789,300

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

	Three Months ended
	March 31
	2022				2021
Operating Activities
Net income (loss)	$	(203,400	)		$	114,800
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		8,500				6,100
Other assets		104,300				105,100
Other liabilities		(18,100	)			(17,500	)
		(108,700	)			208,500
(Increase) decrease in assets
Accounts receivable		171,700				113,200
Inventory		(88,400	)			(59,900	)
Prepaid and other		79,100				34,200
Increase in liabilities
Accounts payable and accrued expenses		116,500				62,100
Income taxes		—				7,300
		278,900				156,900
Net cash provided by operating activities		170,200				365,400
Increase in cash		170,200				365,400
Cash at beginning of year		1,846,700				1,362,800
Cash at end of period	$	2,016,900			$	1,728,200