Nocopi Reports 2020 Revenue of $2.7M, Operating Cash Flow of $0.7M, Net Income of $0.5M, or $0.01 per share, and Year-End Cash Position of $1.4M

King of Prussia, PA, March 30, 2021 – 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 fourth quarter and year ended December 31, 2020 (Q4 ’20 and FY 2020). Nocopi’s SEC filings are available here.

2020 Highlights

  • 2020 revenue rose 5% to $2.7M amidst COVID-19 pandemic, compared to $2.5M in 2019
  • Cash flow from operations increased 95% to $702,400 in 2020 from $360,600 in 2019, driven by increased receivables collections
  • Cash increased to $1.4M at year-end 2020, compared to $0.7M at year-end 2019
  • Working capital increased to $2.8M at year-end 2020 from $1.8M at year-end 2019
  • Book value increased to $3.5M at year-end 2020 compared to $2.8M at year-end 2019
  • Extinguished a $97,700 principal balance of convertible debt plus accrued interest of $46,100

Nocopi Chairman and CEO Michael Feinstein, M.D., commented, “Despite the challenges posed by COVID-19, Nocopi delivered a solid 2020 performance, with modest top-line growth, strong cash flow, profitability and meaningful improvements to our balance sheet and cash position. In particular, the COVID-19 pandemic negatively impacted consumer traffic at brick & mortar retailers, an important sales channel for consumer products utilizing our specialty ink technologies. The pandemic also halted the release and promotion of many family and kids-oriented feature films and entertainment franchises, limiting the visibility and demand for kids products based on these brands. While online channels helped to replace traditional retail sales, our partners experienced decreased product sell-through on which our royalty fees are based.

“During the year, Nocopi stayed focused on what we are able to control, including ongoing new ink technology R&D and new product initiatives in collaboration with our partners, along with a continued focus on expense management. Unfortunately, the pandemic did create some price volatility in certain commodities we use in our ink formulations which impacted gross margin for several months but has since returned to normalized trends.

“Looking forward we believe Nocopi is well positioned to benefit from the reopening economies and the gradual return to more normal business and consumer trends. We also expect to benefit from our partners’ planned international expansion plans in Europe and other geographies that were originally slated for 2020 but were delayed by the pandemic. The return of consumer travel and retail foot traffic, combined with the return of entertainment brand launches, are expected to advance sales in the right direction going forward and are key to our optimistic outlook.

“Importantly, Nocopi’s cash collections were strong during 2020, as we ended the year with working capital of $2.8M, an 52% increase over $1.8M in 2019, including cash of $1.4M at year-end 2020, nearly double the cash level at the close of 2019. Our balance sheet puts Nocopi in a very strong position to execute on our growth plans for the foreseeable future, and also affords us the opportunity to carefully evaluate the best potential uses of any surplus cash.”

FY 2020 Results
In 2020, Nocopi grew revenue by 5% to $2,658,700 compared to $2,537,400 in 2019, as product sales increased as percentage of revenue to 72% versus 69% in 2019, and license and royalty revenue decreased to 28% of 2020 revenue versus 31% in 2019.

License and royalty revenue in 2020 compared to 2019 decreased by approximately $200,000 specifically due to lower guaranteed licensing revenue in the first six months of 2020 from one licensee in the entertainment and toy products market as a result of the adoption of ASU 214-09, Revenue from Contracts with Customers in the second quarter of 2018. If not for the adoption of ASU 214-09 for this licensee, license and royalty revenue for 2020 would have increased 19% compared to 2019.

Sales of ink to licensed printers of Nocopi licensees in the entertainment and toy products market were approximately $222,900 higher in 2020 compared to 2019. Sales of security ink to Nocopi’s licensees in the retail receipt and document fraud market decreased by approximately $30,300 in 2020 compared to 2019 due primarily to reduced demand related to COVID-19 closures of retail outlets during 2020.

Nocopi’s net income for the year declined to $508,000, or $0.01 per diluted share, compared to $754,900, or $0.01 per diluted share, in 2019, primarily due to a 34% increase in cost of goods sold. The increase was largely a result of pricing and transportation cost pressures on certain inputs necessary for specialty ink production that resulted from the pandemic. The volatility in commodity pricing has largely subsided at this time, and Nocopi expects a more normalized operating environment going forward, though it is studying alternative production methods and ingredients should they be required in the future. Net income also benefited from the reversal of $47,400 accrued state income taxes that are not payable. At December 31, 2020, Nocopi’s balance of net operating loss carryforwards was approximately $1.17M.

Cash flow from operations increased 95% to $702,400 in 2020 compared to the prior year as the company reduced accounts receivable by over $400,000 while also purchasing sufficient inventory to meet expected demand in the forthcoming year. Nocopi expanded its ink production operations and staffing to support expected future growth as reflected by Capex spending of $38,600 and $73,400 in 2020 and 2019, respectively.

During the third quarter of 2020, holders of all Nocopi’s outstanding convertible debentures due in July elected to convert the $97,900 principal amount of the debentures, plus approximately $46,100 of accrued interest, into 5,758,992 restricted shares of the Company. Following the debenture conversion, Nocopi has no remaining long-term debt.

Q4 ‘20 Results
Q4 ’20 revenues decreased 22% to $756,300 reflecting a 41% decrease in product and other sales, principally due to lower specialty ink shipments to the entertainment and toy product market, offset by a 43% increase in licenses, royalties and fees, reflecting the beginning of a rebound in consumer spending and related Nocopi royalties on children’s activity books as the year progressed. Royalty revenue in the 2020 and 2019 fourth quarter periods does not reflect quarterly guaranteed royalty payments of $100,000 received by Nocopi pursuant to a four-year license extension with a major partner that went into effect July 1, 2019. These payments are reflected in the Company’s balance sheet and statement of cash flows but are not recorded as revenue.
Gross profit decreased to $519,000, or 69% of revenues in Q4 ’20, from $611,200, or 63% of revenues in Q4 ’19, principally due to lower Q4’20 revenue, while Q4’20’s gross margin of 69% represented a sequential improvement over 56% in Q3 ’20 and 51% in Q2 ’20 due to a greater contribution from licenses and royalties in the period.

Q4’20 operating expenses increased to $287,900 from $277,400 in Q4’19, reflecting slightly higher employee compensation and an increase in other administrative expenses offset by lower sales expenses.
Principally reflecting lower gross profit, Nocopi’s net income declined to $221,900, or $0.00 per diluted share, in Q4’20, compared to $313,800, or $0.01 per diluted share, in Q4’19.
CEO Feinstein concluded, “We expect the decline in specialty ink sales in the fourth quarter to be a temporary phenomenon as certain customers work through their existing production backlogs. We are already seeing an improving product sales trend in the current March quarter as one key customer has more than doubled their amount of ink orders placed relative to the same period last year. Our outlook is further reinforced by dialogues with partners and suppliers.”

About Nocopi Technologies (
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 Forward-looking statements are made as of the date of this news release; Nocopi assumes no obligation to update these statements.

Nocopi Technologies, Inc.Balance Sheets Q4- 2020 (PDF)

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