Nocopi Reports 2019 Net Income of $755,000, or $0.01 Per Share, Reflecting Strong Demand for Specialty Reactive Inks for Toys and Educational Products

KING OF PRUSSIA, Pa., March 31, 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 document and product authentication technologies to combat fraud, today announced results for its fourth quarter and year ended December 31, 2019.

Income Statement	Q4'19		Q3'19		Q2'19		Q1'19		Q4'18
Revenue	$974,400		$637,500		$516,100		$409,400		$481,200
Net Income	$313,800		$206,800		$148,900		$85,400		$111,000
Weighted Ave. Shares	61M		60M		59M		59M		59M
Balance Sheet	Q4'19		Q3'19		Q2'19		Q1'19		Q4'18
Cash	$688,000		$798,000		$506,500		$544,000		$400,800
Total Current Assets	$2,303,200		$1,874,600		$1,562,400		$1,369,600		$1,156,900
Working Capital	$1,835,300		$1,454,600		$1,132,800		$893,500		$810,500
Book Value	$2,789,700		$2,450,500		$2,201,000		$2,052,100		$1,966,700
Book Value Per Share	$0.046		$0.041		$0.037		$0.035		$0.033

Q4 Results
Q4’19 revenue rose 102% to $974,400 reflecting a 208% increase in product and other sales, principally specialty inks, to $752,500, offset by a 6% decline in licenses, royalties and fees to $221,900. The decrease in licenses, royalties and fees principally reflected a $100,000 reduction in guaranteed licensing revenue related to a four-year license extension with Nocopi’s largest customer, the present value of which was recorded as revenue of $1,521,700 in Q2’18. Pursuant to the license extension, Nocopi is entitled to receive minimum quarterly cash payments of $100,000 over the next four years, starting in Q3’19. Because these payments have already been recorded as revenue, they will not be reflected in the company’s income statement.

The increase in Q4’19 product and other sales was due primarily to higher ink shipments for existing licensees in the entertainment and toy product market, as well as a modest increase in sales of security inks used for cash register receipts within the document fraud market.

Gross profit increased to $611,200 in Q4’19, or approximately 63% of revenues, from $327,800 in Q4’18, or approximately 68% of revenues. The gross margin decrease principally reflects higher product and other sales, as a percentage of revenue, which typically carry lower gross profit margins, compared to licenses, royalties and fees. Q4’19 gross margin from licenses, royalties and fees was approximately 68% versus 87% in Q4’18, principally due to lower revenues and an increase in direct costs allocated to Q4’19 revenues. Q4’19 gross margin from product and other sales increased to 61% versus 50% in Q4’18, principally reflecting production efficiencies achieved on higher volume.

Q4’19 sales and marketing expenses increased to $105,700 versus $74,100 in Q4’18, principally due to higher commissions on higher revenues. General and administrative expenses increased to $128,700 in Q4’19 from $91,800 in Q4’18, due primarily to higher employment and public company expenses.

Net income improved to $313,800 in Q4’19 vs. Q4’18 net income of $111,000, principally reflecting higher revenue and gross profit.

2019 Results
Nocopi reported 2019 revenue of $2,537,400 compared to $3,341,700 in 2018, which included revenue of $1,521,700 reflecting the present value of guaranteed minimum royalty payments under a four-year license extension with the Company’s largest licensee. Excluding the year-ago benefit from the license extension, Nocopi’s 2019 revenue would have increased 39% over adjusted 2018 revenue of $1,820,000.

Nocopi Chairman and CEO Michael Feinstein commented, “With $688,000 in cash and working capital of $1.8 million, Nocopi exited 2019 on an extremely sound financial footing to navigate business disruptions being caused by the Coronavirus pandemic and its potential impact on the production and distribution of customer products utilizing our proprietary inks and technologies. The majority of our revenue is derived from products that are printed abroad, principally in China, using inks that we ship from the U.S. As a result of this supply chain, our business activity may be affected if our licensees and their printers experience extended disruptions. Though we did experience a six- or seven-week disruption during the first quarter of 2020, printing activity and demand for our inks has already rebounded to normal levels.

“Given the unique attributes of our proprietary inks and technology, we are confident that our market opportunity will return to a pattern of growth as the Coronavirus situation subsides. During 2019 we expanded our ink production capacity by roughly 100% at our headquarters facility outside Philadelphia, putting us in a solid position to support growing demand.”

Dr. Feinstein added, “The unique attributes of Nocopi reactive inks have applications across a broad range of consumer products and product security and document authentication solutions, and we continue to develop and test new technologies and use cases. We have rebuilt the business over the past few years, putting Nocopi on a solid financial foundation. While we do anticipate revenue challenges over the next few quarters as a result of the virus impact, we are confident in the financial strength of our major customers and the proven demand for our products which we expect, if effected, will return as the pandemic subsides.”

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 [e-mail]

Nocopi Technologies, Inc.
Statements of Operations
(unaudited)

		Three Months ended December 31,								Year ended December 31,
		2019				2018				2019				2018
Revenues
Present value of guaranteed royalty payments over 4 years from amended/expanded licensing agreement with a major customer (a)		$	n/a			$	n/a			$	n/a			$		1,521,700
Licenses, royalties and fees			221,900				236,800				793,800					720,800
Total licenses, royalties and fees			221,900				236,800				793,800					2,242,500
Product and other sales			752,500				244,400				1,743,600					1,099,200
			974,400				481,200				2,537,400					3,341,700
Cost of revenues
Licenses, royalties and fees			41,400				35,100				98,200					84,300
Product and other sales			166,600				137,900				380,300					323,500
			363,200				153,400				841,700					561,200
Gross profit			611,200				327,800				1,695,700					2,780,500
Operating expenses
Research and development			43,000				41,900				165,600					153,200
Sales and marketing			105,700				74,100				329,900					387,300
General and administrative			128,700				91,800				393,900					369,400
			277,400				207,800				889,400					900,900
Net income from operations			333,800				120,000				806,300					1,870,600
Interest and bank charges			1,700				(2,500	)			900					(9,400	)
Net income before income taxes			335,500				117,500				807,200					1,861,200
Income taxes			21,700				6,500				52,300					205,800
Net income		$	313,800			$	111,000			$	754,900			$		1,655,400
Basic and diluted net income per common share		$	0.01			$	0.00			$	0.01			$		0.03
Weighted average common shares outstanding
Basic			59,614,698				58,616,716				58,949,377					58,616,716
Diluted			59,990,371				59,012,626				59,322,141					58,980,420
(a) License extension was executed in Q2'18 and commenced in July 2019. Nocopi is entitled to quarterly cash payments of $100,000 over four years, starting in Q3'19.

Nocopi Technologies, Inc.
Balance Sheets

		December 31,				December 31,
		2019				2018
		(unaudited)				(audited)
Assets
Current assets
Cash		$	688,000			$	400,800
Accounts receivable less $5,000 allowance for doubtful accounts			1,352,300				579,000
Inventory			127,900				133,500
Prepaid and other			135,000				43,600
Total current assets			2,303,200				1,156,900
Fixed assets
Leasehold improvements			24,200				19,700
Furniture, fixtures and equipment			252,500				185,400
			276,700				205,100
Less: accumulated depreciation and amortization			206,600				197,600
			70,100				7,500
Other assets    Long-term receivables			957,000				1,352,200
Operating lease right of use – building			202,000				–
			1,159,000				1,352,200
Total assets		$	3,532,300			$	2,516,600
Liabilities and Stockholders' Equity
Current liabilities
Convertible debentures		$	97,900			$	128,300
Accounts payable			44,300				16,500
Accrued expenses			231,600				163,000
Income taxes			52,400				38,600
Operating lease liability, current			41,700				–
Total current liabilities			467,900				346,400
Other liabilities
Accrued expenses, non-current			67,000				94,700
Deferred income taxes			47,400				108,800
Operating lease liability, non-current			160,300				–
			274,700				203,500
Stockholders' equity
Common stock, $0.01 par value
Authorized – 75,000,000 shares
Issued and outstanding 2019 – 60,324,698 shares; 2018 – 58,616,716 shares			610,400				586,200
Paid-in capital			12,483,900				12,440,000
Accumulated deficit			(10,304,600	)			(11,059,500	)
Total stockholders' equity			2,789,700				1,966,700
Total liabilities and stockholders' equity		$	3,532,300			$	2,516,600

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

		Year ended December 31,
		2019				2018
Operating Activities
Net income		$	754,900			$	1,655,400
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Depreciation and amortization			10,800				7,100
Deferred income taxes			(61,400	)			108,800
Issuance of common stock for services			25,400				--
Non-current assets and liabilities   - net			367,500				--
Cumulative effect of accounting change			--				96,100
			1,097,200				1,867,400
Change in in assets
Accounts receivable			(773,300	)			(286,900	)
Inventory			5,600				(22,900	)
Prepaid and other			(91,400	)			(8,300	)
Change in liabilities
Accounts payable and accrued expenses			108,700				(190,100	)
Income taxes			13,800				38,600
Deferred revenue			--				(99,400	)
			(736,600	)			(569,000	)
Net cash provided by (used in) operating activities			360,600				1,298,400
Investment Activities
Additions to fixed assets			73,400				500
Long-term receivables			--				1,352,200
			73,400				1,352,700
Financing Activities
Non-current commission							94,700
							94,700
Increase (decrease) in cash			287,200				40,400
Cash at beginning of year			400,800				360,400
Cash at end of period		$	688,000			$	400,800
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Operating lease right of use – building		$	241,100			$	–
Operating lease liability		$	(241,100	)		$	–
Accumulated depreciation and amortization		$	1,800			$	–
Furniture, fixtures and equipment		$	(1,800	)		$	–
Convertible debentures		$	30,400			$	–
Accrued expenses		$	12,300			$	–
Common stock		$	(17,100	)		$	–
Paid-in capital		$	(25,600	)		$	–