Nocopi Reports 2021 Revenue of $1.95M, Operating Cash Flow of $0.51M, Net Income of $0.05M and Year-End Cash Position of $1.85M

King of Prussia, PA, March 30, 2022 – 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, 2021 (Q4 ’21 and FY 2021). Nocopi’s SEC filings are available here.

2021 Summary 

  • Total revenue declined approximately 27% to $1.95M as global supply chain disruptions, including port congestion and container shortages, affected purchases of ink by Asia-based printers, primarily in the second half of the year.
  • Revenue from licenses and royalties increased nearly 9% to $809,900 driven by a key client in the toy and entertainment sector.
  • Cash increased to $1.85M at year-end 2021 versus $1.36M at year-end 2020, driven by license and royalty-related cash flows reaching historical highs and strong receivable collections.
  • Working capital increased to $3.20M at year-end 2021 from $2.80M at year-end 2020
  • Cash flow from operations decreased 27% to $512,700 in 2021, primarily due to the decline in annual revenue and the impact of legal expenses incurred Q4’ 21.
  • Book value improved modestly to $3.51M at year-end 2021 compared to $3.45M at year-end 2020, despite a decline in revenue and profitability 

Nocopi Chairman and CEO Michael Feinstein, M.D., commented, “Nocopi achieved nearly 9% growth in our license and royalty segment in 2021 as consumer sell-through of products featuring our ink technologies began to rebound from a COVID-19 plagued year in 2020.  We are very pleased with the constant growth of royalty payments received over the last several years from an important toy and entertainment customer and have every expectation that this pace of related cash flow will continue. 

“However, ink sales to customers in Asia declined sharply in the second half of 2021, driven by a sharp increase in shipping costs, increasing raw material costs and persistent supply chain challenges that disrupted our major licensees’ printing and distribution operations. These fundamental challenges continue to impact our major licensees and make it difficult to predict when they will be able to return to more normal production activity. Despite these near term challenges, strong retail demand continues to exist for entertainment and toy products featuring our ink technologies and resulted in the year-over year improvement in royalty revenue. 

“Amidst this challenging environment, the Nocopi team continued to perform well in the areas we are able to control, such as expense management and working capital management. We were pleased to deliver profitable full year operations despite revenue headwinds, as we benefited from historically high licensing revenues. Our performance reflects the strength of our hybrid business model which balances specialty ink sales with performance-based royalty income that allows us to participate in the retail success of products developed around our specialty ink technologies. 

“While we wait for industry conditions to normalize, we continue to explore new product initiatives and develop new ink formulations in collaboration with our partners. We are excited by a range of opportunities in development that we believe can make meaningful contributions to our long term growth. These include several new products as well as a range of new geographies that our partners are planning to enter once the overall business environment stabilizes.  Our team is also considering a license agreement based on Nocopi ink technologies with a new customer based in the United States that is an established operator in the children’s toy and entertainment market. This new agreement if and when completed will further diversify and expand our set of brand name customers.

“We believe Nocopi remains well positioned to meet growing demand for our ink technologies in the years to come. We believe our existing plant and production team could support a doubling or tripling of ink production from 2020 levels. We have been successful in managing price volatility and inflation in certain commodities utilized in our formulations, by expanding our sourcing functions and by increasing our investment in certain raw materials to ensure our ability to produce and deliver customer orders promptly. Nonetheless, the price and availability of key inputs for our specialty ink technologies remain an area of risk for our company going forward. We are actively managing these factors in order to mitigate their impact on our business. 

“Nocopi remains highly focused on long term growth and cash flow. This orientation is reflected in the triple digit rise of working capital to nearly $3.2M at year end 2021, from $810,000 at the end of 2018, including the growth in cash to $1.85M from just $400,000 during the same period. We are very proud of the years of hard work it has taken to get to this point and look to build on our success in coming years. Amidst a backdrop of global political, economic and financial uncertainty, we believe maintaining a strong balance sheet with significant liquidity is the most prudent strategy for the company, as it positions us to weather future challenges while also putting us in an opportunistic position to pursue business opportunities that we identify.” 

Q4 ‘21 Results 

Q4 ’21 revenues decreased 32% to $514,100 reflecting a 41% decrease in product and other sales, principally due to lower specialty ink shipments to licensed printers that operate in the entertainment and toy product market. The licenses and royalties segment was mixed in Q4’21 as said revenue related to children’s activity books in North America exceeded $200,000 while revenue from customers outside North America declined by more than 50% reflecting more restrictive overseas operating environments and reduced levels of retail consumption patterns. Revenue from document and product authentication customers however, declined 45% to $36,100 as supply chain disruptions and the Omicron and other variants curbed their operations.  Royalty revenue in the 2021 and 2020 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 $333,400, or 65% of revenues in Q4 ’21, from $519,000, or 69% of revenues in Q4 ’20, principally due to lower Q4’21 revenue, though aided by a greater contribution from licenses and royalties which carry a higher gross margin than ink sales.

Q4’21 operating expenses increased to $454,800 from $287,900 in Q4’20, principally reflecting an approximately $190,000 increase in legal expense in Q4’21, offset in part by lower sales commissions. 

Principally reflecting lower gross profit and higher legal expenses, Nocopi’s net income declined to a loss of $109,000, in Q4’21, compared to net income of $221,900, in Q4’20. 

FY 2021 Results

Revenue declined by approximately 27% to $1,951,900 in 2021 compared to $2,658,700 in 2020, principally due to a decrease in product sales as discussed above. Product sales decreased as percentage of revenue to 58% versus 72% in 2020, and license and royalty revenue increased to 42% of 2021 revenue versus 28% in 2020.

Sales of security ink to Nocopi’s licensees in the retail receipt and document fraud market decreased by approximately $12,900 in 2021 compared to 2020 due primarily to reduced demand related to COVID-19 closures of retail outlets that commenced in 2020 and continued in 2021.  

Gross profit decreased to $1,213,800, or approximately 62% of revenues, in 2021 from $1,535,000, or approximately 58% of revenues, in 2020. The lower gross profit in 2021 compared to 2020 results primarily from lower gross revenues from product and other sales offset in part by higher licenses, royalties and fees in 2021 compared 2020 and also aided by an approximately 40% decline in the cost of certain raw materials that were temporarily eased in 2021.

Nocopi’s net income declined to $49,400 in 2021 compared to $508,400 in 2020, as sales of ink to licensed printers in the entertainment and toy products market declined by approximately $751,500 in 2021 as compared to 2020. 2021 net income was also impacted by legal expenses of approximately $190,000 in Q4’21. 

Cash flow from operations decreased 27% to $512,700 in 2021 compared to the prior year primarily due to the decline in annual revenue and the impact of legal expenses incurred Q4’ 21.  Nocopi made certain investments in plant operations at the head office beginning in mid 2019 that includes the purchase of new ink production equipment and hiring an ink production operations team member to support expected future growth as reflected by Capex spending of $31,600, $38,600 and $73,400 in 2021, 2020 and 2019, respectively.  Nocopi has no long-term debt.

Nocopi’s federal and state net operating loss carryforwards (“NOL’s) were approximately $1.17M and $2.64M, respectively, at the close of FY 2021.  

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

Nocopi Technologies, Inc. Statements of Operations Q4- 2021 (PDF)

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