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 – 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.
|Weighted Ave. Shares||61M||60M||59M||59M||59M|
|Total Current Assets||$2,303,200||$1,874,600||$1,562,400||$1,369,600||$1,156,900|
|Book Value Per Share||$0.046||$0.041||$0.037||$0.035||$0.033|
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.
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 affected, 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.
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