United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
þ ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended SeptemberJune 30, 20202021
or
¨ ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from _________________ to ______________
Commission File Number: 000-20333
NOCOPI TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Maryland | 87-0406496 |
|
|
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
480 Shoemaker Road, Suite 104, King of Prussia, PA19406
(Address of principal executive offices) (Zip Code)
(610) (610) 834-9600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesþ☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | Accelerated filer |
Non-accelerated | Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐Noþ☒
Indicate the number of shares outstanding of each of the issuer’sissuer’s classes of common stock, as of the latest practicable date: 67,353,690 shares of common stock, par value $0.01, as of NovemberAugust 9, 2020.2021.
NOCOPI TECHNOLOGIES, INC.
INDEX
NOCOPI TECHNOLOGIES, INC.
INDEX
PAGE | ||
| ||
Part I. FINANCIAL INFORMATION | ||
Financial Statements | 1 | |
1 | ||
Balance Sheets at | 2 | |
3 | ||
4 | ||
5 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 15 | |
Item 4. Controls and Procedures |
| |
Part II. OTHER INFORMATION | ||
|
| |
Unregistered Sales of Equity Securities and Use of |
| |
|
| |
Exhibits | 16 | |
17 | ||
18 |
PART I – FINANCIAL INFORMATION
Statements of Operations*Comprehensive Income*
(unaudited)
|
| Three Months ended |
| Nine Months ended |
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Licenses, royalties and fees |
| $ | 153,300 |
| $ | 189,400 |
| $ | 425,000 |
| $ | 571,900 |
| $ | 144,900 | $ | 107,100 | $ | 330,400 | $ | 271,700 | |||||||||||
Product and other sales |
|
| 601,500 |
|
|
| 448,100 |
|
|
| 1,477,400 |
|
|
| 991,100 |
| 369,000 | 520,200 | 794,900 | 875,900 | ||||||||||||
|
|
| 754,800 |
|
|
| 637,500 |
|
|
| 1,902,400 |
|
|
| 1,563,000 |
| ||||||||||||||||
Total revenues | 513,900 | 627,300 | 1,125,300 | 1,147,600 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Cost of revenues |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Licenses, royalties and fees |
| 61,900 |
| 41,400 |
| 170,200 |
| 98,200 |
| 49,500 | 58,600 | 96,600 | 108,300 | |||||||||||||||||||
Product and other sales |
|
| 267,400 |
|
|
| 166,600 |
|
|
| 716,200 |
|
|
| 380,300 |
| 184,300 | 247,200 | 357,500 | 448,800 | ||||||||||||
|
|
| 329,300 |
|
|
| 208,000 |
|
|
| 886,400 |
|
|
| 478,500 |
| ||||||||||||||||
Total cost of revenues | 233,800 | 305,800 | 454,100 | 557,100 | ||||||||||||||||||||||||||||
Gross profit |
|
| 425,500 |
|
|
| 429,500 |
|
|
| 1,016,000 |
|
|
| 1,084,500 |
| 280,100 | 321,500 | 671,200 | 590,500 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Operating expenses |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Research and development |
| 40,700 |
| 45,200 |
| 123,700 |
| 122,600 |
| 45,800 | 41,900 | 90,300 | 83,000 | |||||||||||||||||||
Sales and marketing |
| 90,900 |
| 81,000 |
| 260,900 |
| 224,200 |
| 74,200 | 86,000 | 157,400 | 170,000 | |||||||||||||||||||
General and administrative |
|
| 123,800 |
|
|
| 84,200 |
|
|
| 383,500 |
|
|
| 265,200 |
| 117,700 | 120,000 | 263,200 | 259,700 | ||||||||||||
|
|
| 255,400 |
|
|
| 210,400 |
|
|
| 768,100 |
|
|
| 612,000 |
| ||||||||||||||||
Total operating expenses | 237,700 | 247,900 | 510,900 | 512,700 | ||||||||||||||||||||||||||||
Net income from operations |
|
| 170,100 |
|
|
| 219,100 |
|
|
| 247,900 |
|
|
| 472,500 |
| 42,400 | 73,600 | 160,300 | 77,800 | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Other income (expenses) |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Interest income |
| 4,200 |
| 4,600 |
| 12,300 |
| 7,200 |
| 5,300 | 4,300 | 10,100 | 8,100 | |||||||||||||||||||
Interest expense and bank charges |
|
| (1,300 | ) |
|
| (2,600 | ) |
|
| (5,900 | ) |
|
| (8,000 | ) | (600 | ) | (2,100 | ) | (1,200 | ) | (4,600 | ) | ||||||||
|
|
| 2,900 |
|
|
| 2,000 |
|
|
| 6,400 |
|
|
| (800 | ) | ||||||||||||||||
Total other income (expenses) | 4,700 | 2,200 | 8,900 | 3,500 | ||||||||||||||||||||||||||||
Net income before income taxes |
| 173,000 |
| 221,100 |
| 254,300 |
| 471,700 |
| 47,100 | 75,800 | 169,200 | 81,300 | |||||||||||||||||||
Income taxes |
|
| 9,900 |
|
|
| 14,300 |
|
|
| (32,200 | ) |
|
| 30,600 |
| 4,600 | 5,000 | 11,900 | (42,100 | ) | |||||||||||
Net income |
| $ | 163,100 |
|
| $ | 206,800 |
|
| $ | 286,500 |
|
| $ | 441,100 |
| $ | 42,500 | $ | 70,800 | $ | 157,300 | $ | 123,400 | ||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Basic and diluted net income per common share |
| $ | .00 |
| $ | .00 |
| $ | .00 |
| $ | .01 |
| $ | .00 | $ | .00 | $ | .00 | $ | .00 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Basic |
| 66,768,023 |
| 59,614,698 |
| 62,952,473 |
| 58,949,377 |
| 67,400,812 | 61,044,698 | 67,377,251 | 61,044,698 | |||||||||||||||||||
Diluted |
| 66,893,250 |
| 59,990,371 |
| 63,069,652 |
| 59,322,141 |
| 67,400,812 | 61,605,985 | 67,377,251 | 61,577,129 |
*See accompanying notes to these financial statements.
1 |
Balance Sheets*
|
| September 30, |
| December 31, |
| June 30, | December 31, | |||||||||
|
| 2020 |
| 2019 |
| 2021 | 2020 | |||||||||
|
| (unaudited) |
| (audited) |
| (unaudited) | (audited) | |||||||||
Assets | Assets |
| Assets | |||||||||||||
Current assets |
|
|
|
|
| |||||||||||
Cash |
| $ | 1,428,900 |
| $ | 688,000 |
| $ | 1,908,400 | $ | 1,362,800 | |||||
Accounts receivable less $5,000 allowance for doubtful accounts |
| 1,023,000 |
| 1,352,300 |
| |||||||||||
Accounts receivable less $12,000 allowance for doubtful accounts | 969,100 | 1,280,800 | ||||||||||||||
Inventory |
| 286,600 |
| 127,900 |
| 486,500 | 324,800 | |||||||||
Prepaid and other |
|
| 21,200 |
|
|
| 135,000 |
| 29,400 | 97,800 | ||||||
Total current assets |
|
| 2,759,700 |
|
|
| 2,303,200 |
| 3,393,400 | 3,066,200 | ||||||
|
|
|
|
|
| |||||||||||
Fixed assets |
|
|
|
|
| |||||||||||
Leasehold improvements |
| 27,800 |
| 24,200 |
| 58,400 | 27,800 | |||||||||
Furniture, fixtures and equipment |
|
| 163,700 |
|
|
| 252,500 |
| 164,100 | 163,700 | ||||||
|
| 191,500 |
| 276,700 |
| |||||||||||
Fixed assets, gross | 222,500 | 191,500 | ||||||||||||||
Less: accumulated depreciation and amortization |
|
| 98,100 |
|
|
| 206,600 |
| 116,400 | 104,300 | ||||||
|
|
| 93,400 |
|
|
| 70,100 |
| ||||||||
Total fixed assets | 106,100 | 87,200 | ||||||||||||||
Other assets |
|
|
|
|
| |||||||||||
Long-term receivables |
| 671,100 |
| 957,000 |
| |||||||||||
Operating lease right of use - building |
|
| 171,000 |
|
|
| 202,000 |
| ||||||||
|
|
| 842,100 |
|
|
| 1,159,000 |
| ||||||||
Long-term receivable | 371,500 | 559,500 | ||||||||||||||
Operating lease right of use – building | 138,400 | 160,300 | ||||||||||||||
Other assets | 509,900 | 719,800 | ||||||||||||||
Total assets |
| $ | 3,695,200 |
|
| $ | 3,532,300 |
| $ | 4,009,400 | $ | 3,873,200 | ||||
|
|
| ||||||||||||||
Liabilities and Stockholders' Equity | Liabilities and Stockholders' Equity |
| Liabilities and Stockholders' Equity | |||||||||||||
|
|
|
|
|
| |||||||||||
Current liabilities |
|
|
|
|
| |||||||||||
Convertible debentures |
| $ | – |
| $ | 97,900 |
| |||||||||
Accounts payable |
| 58,300 |
| 44,300 |
| $ | 67,000 | $ | 5,700 | |||||||
Accrued expenses |
| 165,500 |
| 231,600 |
| 154,600 | 178,600 | |||||||||
Income taxes |
| 22,200 |
| 52,400 |
| 10,200 | 36,300 | |||||||||
Operating lease liability, current |
|
| 43,800 |
|
|
| 41,700 |
| ||||||||
Operating lease liability – current | 46,000 | 44,500 | ||||||||||||||
Total current liabilities |
|
| 289,800 |
|
|
| 467,900 |
| 277,800 | 265,100 | ||||||
|
|
|
|
|
| |||||||||||
Other liabilities |
|
|
|
|
| |||||||||||
Accrued expenses, non-current |
| 47,000 |
| 67,000 |
| |||||||||||
Deferred income taxes |
| – |
| 47,400 |
| |||||||||||
Operating lease liability, non-current |
|
| 127,200 |
|
|
| 160,300 |
| ||||||||
|
|
| 174,200 |
|
|
| 274,700 |
| ||||||||
|
|
|
|
|
| |||||||||||
Accrued expenses – non-current | 26,000 | 39,200 | ||||||||||||||
Operating lease liability – non-current | 92,400 | 115,800 | ||||||||||||||
Total other liabilities | 118,400 | 155,000 | ||||||||||||||
Stockholders' equity |
|
|
|
|
| |||||||||||
Common stock, $0.01 par value |
|
|
|
|
| |||||||||||
Authorized – 75,000,000 shares |
|
|
|
|
| |||||||||||
Issued and outstanding |
|
|
|
|
| |||||||||||
2020 – 67,353,690 shares; 2019 – 61,044,698 shares |
| 673,500 |
| 610,400 |
| |||||||||||
Common stock, $ | par value Authorized – shares Issued and outstanding 2021 – ; 2020 – shares675,000 | 673,500 | ||||||||||||||
Paid-in capital |
| 12,575,800 |
| 12,483,900 |
| 12,577,100 | 12,575,800 | |||||||||
Accumulated deficit |
|
| (10,018,100 | ) |
|
| (10,304,600 | ) | (9,638,900 | ) | (9,796,200 | ) | ||||
Total stockholders' equity |
|
| 3,231,200 |
|
|
| 2,789,700 |
| 3,613,200 | 3,453,100 | ||||||
Total liabilities and stockholders' equity |
| $ | 3,695,200 |
|
| $ | 3,532,300 |
| $ | 4,009,400 | $ | 3,873,200 |
*See accompanying notes to these financial statements.
2 |
Statements of Cash Flows*
(unaudited)
|
| Nine Months ended |
| Six Months ended June 30, | ||||||||||||
|
| 2020 |
|
| 2019 |
| 2021 | 2020 | ||||||||
Operating Activities |
|
|
|
|
|
| ||||||||||
Net income |
| $ | 286,500 |
|
| $ | 441,100 |
| $ | 157,300 | $ | 123,400 | ||||
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
|
|
|
|
| ||||||||
Depreciation and amortization |
|
| 15,300 |
|
|
| 2,900 |
| 12,700 | 9,100 | ||||||
Deferred income taxes |
|
| (47,400 | ) |
|
| (61,200 | ) | – | (47,400 | ) | |||||
Other assets |
|
| 316,900 |
|
|
| 69,500 |
| 209,900 | 211,500 | ||||||
Other liabilities |
|
| (51,000 | ) |
|
| 192,300 |
| (35,100 | ) | (33,900 | ) | ||||
Net income adjusted for non-cash operating activities | 344,800 | 262,700 | ||||||||||||||
|
|
| 520,300 |
|
|
| 644,600 |
| ||||||||
(Increase) decrease in assets |
|
|
|
|
|
|
|
| ||||||||
Accounts receivable |
|
| 329,300 |
|
|
| (255,500 | ) | 311,700 | 210,800 | ||||||
Inventory |
|
| (158,700 | ) |
|
| (27,500 | ) | (161,700 | ) | (149,600 | ) | ||||
Prepaid and other |
|
| 113,800 |
|
|
| (37,500 | ) | 68,400 | 39,900 | ||||||
Increase (decrease) in liabilities |
|
|
|
|
|
|
|
| ||||||||
Accounts payable and accrued expenses |
|
| (6,000 | ) |
|
| 76,400 |
| 37,300 | 26,700 | ||||||
Income taxes |
|
| (30,200 | ) |
|
| (1,100 | ) | ||||||||
|
|
| 248,200 |
|
|
| (245,200 | ) | ||||||||
Taxes on income | (26,100 | ) | 5,200 | |||||||||||||
Total increase in operating capital | 229,600 | 133,000 | ||||||||||||||
Net cash provided by operating activities |
|
| 768,500 |
|
|
| 399,400 |
| 574,400 | 395,700 | ||||||
|
|
|
|
|
|
|
|
| ||||||||
Investing Activities |
|
|
|
|
|
|
|
| ||||||||
Additions to fixed assets |
|
| (38,600 | ) |
|
| (2,200 | ) | (31,600 | ) | (31,000 | ) | ||||
Net cash used in investing activities |
|
| (38,600 | ) |
|
| (2,200 | ) | (31,600 | ) | (31,000 | ) | ||||
|
|
|
|
|
|
|
|
| ||||||||
Financing Activities |
|
|
|
|
|
|
|
| ||||||||
Exercise of warrants |
|
| 11,000 |
|
|
| – |
| 2,800 | – | ||||||
Net cash provided by financing activities |
|
| 11,000 |
|
|
| – |
| 2,800 | – | ||||||
|
|
|
|
|
|
|
|
| ||||||||
Increase in cash |
|
| 740,900 |
|
|
| 397,200 |
| 545,600 | 364,700 | ||||||
Cash at beginning of year |
|
| 688,000 |
|
|
| 400,800 |
| 1,362,800 | 688,000 | ||||||
Cash at end of period |
| $ | 1,428,900 |
|
| $ | 798,000 |
| $ | 1,908,400 | $ | 1,052,700 | ||||
|
|
|
|
|
|
|
|
| ||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities |
|
|
|
|
|
|
|
| ||||||||
Operating lease right of use – building |
| $ | – |
|
| $ | 241,100 |
| ||||||||
Operating lease liability |
| $ | – |
|
| $ | (241,100 | ) | ||||||||
Supplemental Disclosure of Non Cash Investing Activities | ||||||||||||||||
Disposal of furniture, fixtures and equipment | ||||||||||||||||
Accumulated depreciation and amortization |
| $ | 123,800 |
|
| $ | 1,800 |
| $ | 600 | $ | 500 | ||||
Furniture, fixtures and equipment |
| $ | (123,800 | ) |
| $ | (1,800 | ) | $ | (600 | ) | $ | (500 | ) | ||
Convertible debentures |
| $ | 97,900 |
|
| $ | 30,400 |
| ||||||||
Accrued expenses |
| $ | 46,100 |
|
| $ | 12,300 |
| ||||||||
Common stock |
| $ | (57,600 | ) |
| $ | (17,100 | ) | ||||||||
Paid-in capital |
| $ | (86,400 | ) |
| $ | (25,600 | ) |
*See accompanying notes to these financial statements.
3 |
Statements of Stockholders’ Equity*
For the Periods December 31, 20192020 through SeptemberJune 30, 20202021 and December 31, 20182019 through SeptemberJune 30, 20192020
(unaudited)
|
| Common stock |
|
| Paid-in |
|
| Accumulated |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||
Balance – December 31, 2019 |
|
| 61,044,698 |
|
| $ | 610,400 |
|
| $ | 12,483,900 |
|
| $ | (10,304,600 | ) |
| $ | 2,789,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 52,600 |
|
|
| 52,600 |
|
Balance – March 31, 2020 |
|
| 61,044,698 |
|
|
| 610,400 |
|
|
| 12,483,900 |
|
|
| (10,252,000 | ) |
|
| 2,842,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 70,800 |
|
|
| 70,800 |
|
Balance – June 30, 2020 |
|
| 61,044,698 |
|
|
| 610,400 |
|
|
| 12,483,900 |
|
|
| (10,181,200 | ) |
|
| 2,913,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debentures and interest |
|
| 5,758,992 |
|
|
| 57,600 |
|
|
| 86,400 |
|
|
|
|
|
|
| 144,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants |
|
| 550,000 |
|
|
| 5,500 |
|
|
| 5,500 |
|
|
|
|
|
|
| 11,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 163,100 |
|
|
| 163,100 |
|
Balance – September 30, 2020 |
|
| 67,353,690 |
|
| $ | 673,500 |
|
| $ | 12,575,800 |
|
| $ | (10,018,100 | ) |
| $ | 3,231,200 |
|
Common stock | Paid-in | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance – December 31, 2020 | 67,353,690 | $ | 673,500 | $ | 12,575,800 | $ | (9,796,200 | ) | $ | 3,453,100 | ||||||||||
Net income | – | – | – | 114,800 | 114,800 | |||||||||||||||
Balance – March 31, 2021 | 67,353,690 | 673,500 | 12,575,800 | (9,681,400 | ) | 3,567,900 | ||||||||||||||
Exercise of warrants | 141,365 | 1,500 | 1,300 | 2,800 | ||||||||||||||||
Net income | – | – | – | 42,500 | 42,500 | |||||||||||||||
Balance – June 30, 2021 | 67,495,055 | $ | 675,000 | $ | 12,577,100 | $ | (9,638,900 | ) | $ | 3,613,200 |
|
| Common stock |
|
| Paid-in |
|
| Accumulated |
|
|
|
| ||||||||
|
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Total |
| |||||
Balance – December 31, 2018 |
|
| 58,616,716 |
|
| $ | 586,200 |
|
| $ | 12,440,000 |
|
| $ | (11,059,500 | ) |
| $ | 1,966,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 85,400 |
|
|
| 85,400 |
|
Balance – March 31, 2019 |
|
| 58,616,716 |
|
|
| 586,200 |
|
|
| 12,440,000 |
|
|
| (10,974,100 | ) |
|
| 2,052,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 148,900 |
|
|
| 148,900 |
|
Balance – June 30, 2019 |
|
| 58,616,716 |
|
|
| 586,200 |
|
|
| 12,440,000 |
|
|
| (10,825,200 | ) |
|
| 2,201,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debentures and interest |
|
| 1,707,982 |
|
|
| 17,100 |
|
|
| 25,600 |
|
|
|
|
|
|
| 42,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 206,800 |
|
|
| 206,800 |
|
Balance – September 30, 2019 |
|
| 60,324,698 |
|
| $ | 603,300 |
|
| $ | 12,465,600 |
|
| $ | (10,618,400 | ) |
| $ | 2,450,500 |
|
Common stock | Paid-in | Accumulated | ||||||||||||||||||
Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
Balance December 31, 2019 | 61,044,698 | $ | 610,400 | $ | 12,483,900 | $ | (10,304,600 | ) | $ | 2,789,700 | ||||||||||
Net income | – | – | – | 52,600 | 52,600 | |||||||||||||||
Balance March 31, 2020 | 61,044,698 | 610,400 | 12,483,900 | (10,252,000 | ) | 2,842,300 | ||||||||||||||
Net income | – | – | – | 70,800 | 70,800 | |||||||||||||||
Balance June 30, 2020 | 61,044,698 | $ | 610,400 | $ | 12,483,900 | $ | (10,181,200 | ) | $ | 2,913,100 |
* See accompanying notes to these financial statements.
4 |
4
NOCOPI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Financial Statements
The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (our “Company”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the summary ofNote 2 Significant Accounting Policies included in the Notes to Financial Statements included in our Company's 2019Company’s Annual Report on Form 10-K.10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on March 30, 2021, as amended on April 30, 2021 (the “2020 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although our Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 20192020 Annual Report on Form10-K should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and ninesix months ended SeptemberJune 30, 20202021 may not be necessarily indicative of the operating results expected for the full year.
In March 2020,A novel strain of coronavirus, COVID-19, that was first identified in Wuhan, China in December 2019 has surfaced in many countries around the world including the United States. Many countries continue to experience reoccurrences of COVID-19 to the current date. The World Health Organization has declared the outbreak ofCOVID-19 to constitute a novel coronavirus (COVID-19) asglobal pandemic. Certain state and local governments reacted by placing significant restrictions on businesses including a pandemic which continues to spread throughout the United States. On March 19, 2020 the Governor of Pennsylvania declared a health emergency and issued an order to close all nonessential businesses until further notice. The mandated closure of nonessential businesses in Pennsylvania remains in effectof non-essential businesses that was announced on March 20, 2020. While many Pennsylvania businesses have been allowed to reopen, often at limited capacity and with certain restrictions, as of the current date, and is expectedthere can be no assurances that future closures will be avoided. A requirement to continueclose our Company for the foreseeable futurea considerable period of time could result in the portion of the state in which we conduct our business operations. While certain businesses in Pennsylvania have been granted permission to resume operations, they may be subject to significant restrictions on their operations by both state and local government mandates. Our operations are deemed to be essential and thus we remain open. However, disruptions to our business operations due to COVID-19 with a resultantnegative impact on our Company’s financial condition and results of operations could continueoperations. Additionally, as our Company imports certain raw materials from China, if an extended disruption of the supply of these raw materials were to occur, such as the vessel delays resulting from the congestion experienced in certain Chinese ports due to a resultCOVID-19 outbreak in the second quarter of quarantines of employees2021, our ability to produce products for sale to our customers could be negatively impacted. Further, restrictions on our customers and supplierslicensees in areas affected by the outbreak, availability of raw materials required to manufacture our products, disruption of supply chains that provide our raw materials, price increases of raw materials and supplies used in our production processes, facility closures of domestic and international customers who purchase and use our products, and travel and logistics restrictions affecting our inbound and outbound shipments in connection with the COVID-19 outbreak. While we expect this global COVID-19 pandemic to continue to negatively impactcould adversely affect our results of operations cash flow and financial position,condition. We cannot predict the scope or magnitude of the negative effect that may result from the impact of the COVID-19 pandemic on the Company’s financial condition and results of operations. Our Company’s results of operations were negatively affected in 2020 in part as a result of a significant increase in the cost of raw materials utilized by our Company in the manufacture of certain of its products as a result of price increases related to the impact of the ongoing COVID-19 pandemic on the availability and supply of these raw materials. While prices of these raw materials have declined at the present time, there can be no assurances that raw material prices will remain at current levels or decrease to pre-COVID-19 pandemic levels in future periods. As the COVID-19 pandemic continues to spread both in its original form and in the recently identified variants of COVID-19 along with the potential re-imposition of COVID-19 restrictions currently being considered by federal, state and local governments and presently implemented in certain states, any future financial impact cannot be reasonably estimated at this time.
Our Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since our Company has no items of other comprehensive income, comprehensive income is equal to net income.
Note 2. Stock Based Compensation
Our Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At SeptemberJune 30, 2020,2021, our Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at SeptemberJune 30, 2020.2021.
Note 3. Line of Credit
In November 2018, our Company negotiated a $150,000$150,000 revolving line of credit with a bank to provide a source of working capital, if required. The line of credit is secured by all the assets of our Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The line of credit is subject to an annual review and quiet period. There have been no borrowings under the line of credit since its inception.
5 |
Note 4. Convertible Debentures
During the third quarter of 2020, the holders of all previously outstanding convertible debentures totaling approximately $97,900 that were due during the third quarter of 2020 elected to convert those debentures plus approximately $46,100 of accrued interest into 5,758,992 shares of restricted stock of our Company. At September 30, 2020, our Company had no convertible debentures outstanding. The convertible debentures bore interest at 7%. During the third quarter of 2019, the holders of approximately $30,400 of previously outstanding convertible debentures elected to convert those debentures plus approximately $12,300 of accrued interest into 1,707,982 shares of restricted stock of our Company.
5
NOCOPI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 4. Stock Warrants
Our Company also granted
During the second quarter of 2021, holders of the remaining 141,365 warrants in earlier periodsthat had been outstanding exercised their options to purchase 691,365a total of shares of our Company’s common stock at $0.02$0.02 per share to the holders of the debentures.share. The warrants arewere granted in 2014 to two individuals who acquired convertible debentures from the Company in 2014. The warrants were exercisable two years after issuance and expire seven years after issuance. The fair value of the warrants was determined using the Black-Scholes pricing model. The relative fair value of the warrants was recorded as a discount to the notes payable with an offsetting credit to additional paid-in capital since our Company determined that the warrants were an equity instrument in accordance with FASB ASC 815. The debt discount related to the warrant issuances has been accreted through interest expense over the term of the notes payable. During the third quarter of 2020, holders of 550,000At June 30, 2021, our Company had 0 warrants exercised their warrants to purchase a total of 550,000 shares of our Company’s common stock.outstanding.
The following table summarizes our Company’s warrant position at SeptemberJune 30, 20202021 and December 31, 2019:2020:
|
|
|
|
|
|
|
| Weighted Average |
| |||
|
| Number |
|
| Exercise |
|
| Exercise |
| |||
|
| of Shares |
|
| Price |
|
| Price |
| |||
Outstanding warrants - |
|
|
|
|
|
|
|
|
| |||
December 31, 2019 |
|
| 691,365 |
|
| $ | 0.02 |
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding warrants - |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
|
| 141,365 |
|
| $ | 0.02 |
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining |
|
|
|
|
|
|
|
|
|
|
|
|
contractual life (years) |
|
| .77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currently exercisable warrants - |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
|
| 141,365 |
|
| $ | 0.02 |
|
| $ | 0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule of warrant outstanding | ||||||||||||
Weighted Average | ||||||||||||
Number | Exercise | Exercise | ||||||||||
of Shares | Price | Price | ||||||||||
Outstanding warrants - | ||||||||||||
December 31, 2020 | 141,365 | $0.02 | $0.02 | |||||||||
Outstanding warrants - | ||||||||||||
June 30, 2021 | 0 |
The aggregate intrinsic value of warrants outstanding and exercisable as of September 30, 2020 was approximately $22,300. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying warrants and the closing stock price of $0.1775 for our Company’s common stock on September 30, 2020.
Note 5. Other Income (Expenses)
Other income (expenses) for the three months and ninesix months ended SeptemberJune 30, 2020 and 2019 includesincluded interest on convertible debentures held by nine investors and interest earned on invested funds.seven investors.
Note 6. Income Taxes
There is no provision for federal income taxes for the three and ninesix months ended SeptemberJune 30, 20202021 and 20192020 due to the availability of net operating loss carryforwards. Our Company has established a valuation allowance for the entire amount of benefits resulting from our Company’s net operating loss carryforwards because our Company has determined that the realization of the net deferred tax asset is not assured.
The components for state income tax expense resulting from the limitation on the use of net operating losses are:
|
| Three months ended |
| Nine months ended |
| |||||||||||||||||||||||||||
Components for State Income Tax Expense | ||||||||||||||||||||||||||||||||
|
| September 30 |
| September 30 |
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Current state taxes |
| $ | 9,900 |
| $ | 21,100 |
| $ | 15,200 |
| $ | 91,800 |
| $ | 4,600 | $ | 5,000 | $ | 11,900 | $ | 5,300 | |||||||||||
Deferred state taxes |
|
| – |
|
|
| (6,800 | ) |
|
| (47,400 | ) |
|
| (61,200 | ) | – | – | – | (47,400 | ) | |||||||||||
|
| $ | 9,900 |
|
| $ | 14,300 |
|
| $ | (32,200 | ) |
| $ | 30,600 |
| ||||||||||||||||
Income tax expense (benefit) | $ | 4,600 | $ | 5,000 | $ | 11,900 | $ | (42,100 | ) |
During the first quarter of 2020, our Company reversed $47,400$47,400 of accrued Pennsylvania income taxes that are not payable.
There was no0 change in unrecognized tax benefits during the period ended SeptemberJune 30, 20202021 and there was no0 accrual for uncertain tax positions as of SeptemberJune 30, 2020.
2021.Tax years from 2017 through 20192020 remain subject to examination by U.S. federal and state jurisdictions.
6 |
6
NOCOPI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 7. Earnings per Share
In accordance with FASB ASC 260, Earnings per Share, basic earnings per common share is computed using net earnings divided by the weighted average number of common shares outstanding for the periods presented. The computation of diluted earnings per common share involves the assumption that outstanding common shares are increased by shares issuable upon exercise of those warrants for which the market price exceeds the exercise price. The number of shares issuable upon the exercise of such warrants is decreased by shares that could have been purchased by our Company with related proceeds. As all of the previously outstanding warrants were exercised during the three months ended June 30, 2021, basic and diluted earnings per share for the three and six months ended June 30, 2021 are equal in each period since there are no incremental common shares in either period. For the three and ninesix months ended SeptemberJune 30, 2020, the number of incremental common shares resulting from the assumed conversion of warrants was 125,227 and 117,179, , respectively. For the three and nine months ended September 30, 2019, the number of incremental common shares resulting from the assumed conversion of warrants was 375,673 and 372,764, respectively.
Note 8. Major Customer and Geographic Information
Our Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of ourthe Company’s total revenues were:
Company's Revenues As Percentage Of Revenue | ||||||||||||||||||||||||||||||||
|
| Three Months ended September 30 |
|
| Nine Months ended September 30 |
| Three Months ended June 30, | Six Months ended June 30, | ||||||||||||||||||||||||
|
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
Customer A |
|
| 74 | % |
|
| 65 | % |
|
| 65 | % |
| 47 | % | 38 | % | 72 | % | 54 | % | 59 | % | |||||||||
Customer B |
| 3 | % |
| – |
|
| 10 | % |
| 6 | % | 32 | % | 8 | % | 14 | % | 14 | % | ||||||||||||
Customer C |
| 10 | % |
| 14 | % |
| 12 | % |
| 21 | % | 17 | % | 8 | % | 18 | % | 13 | % |
Our Company’s non-affiliate customers whose individual balances amounted to more than 10% of our Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were:
|
| September 30 |
|
| December 31 |
| ||||||||||
Schedule of Non-affiliated Customers with Accounts Receivable More Than 10% | June 30, | December 31, | ||||||||||||||
|
| 2020 |
|
| 2019 |
| 2021 | 2020 | ||||||||
Customer A |
| 28 | % |
|
| 26 | % | 15 | % | 25 | % | |||||
Customer B | 12 | % | – | |||||||||||||
Customer C |
| 66 | % |
|
| 67 | % | 70 | % | 65 | % |
Our Company performs ongoing credit evaluations of its customers and generally does not require collateral. Our Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on our Company’s business operations and financial condition.
Our Company’s revenues by geographic region are as follows:
Company's Revenue by Geographic Region | ||||||||||||||||||||||||||||||||
|
| Three Months ended September 30 |
| Nine Months ended September 30 |
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||||||||||||
|
| 2020 |
| 2019 |
| 2020 |
| 2019 |
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
North America |
| $ | 155,700 |
| $ | 190,600 |
| $ | 446,100 |
| $ | 633,000 |
| $ | 141,200 | $ | 107,000 | $ | 310,900 | $ | 290,400 | |||||||||||
South America |
| 700 |
| – |
| 2,100 |
| – |
| 2,600 | 0 | 4,100 | 1,400 | |||||||||||||||||||
Europe |
| – |
| – |
| – |
| 100 |
| |||||||||||||||||||||||
Asia |
| 583,400 |
| 418,300 |
| 1,424,000 |
| 901,300 |
| 362,100 | 505,100 | 775,600 | 840,600 | |||||||||||||||||||
Australia |
|
| 15,000 |
|
| 28,600 |
|
| 30,200 |
|
| 28,600 |
| 8,000 | 15,200 | 34,700 | 15,200 | |||||||||||||||
|
| $ | 754,800 |
| $ | 637,500 |
| $ | 1,902,400 |
| $ | 1,563,000 |
| $ | 513,900 | $ | 627,300 | $ | 1,125,300 | $ | 1,147,600 |
7 |
7
NOCOPI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 9. Leases
Our Company conducts its operations in leased facilities under a non-cancelable operating lease expiring in 2024.
Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, our Company has capitalized the present value of the minimum lease payments commencing January 1, 2019, using an estimated incremental borrowing rate of 6.5%6%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.
As of January 1, 2019 the operating lease right-of-use asset and operating lease liability amounted to $241,100$241,100 with no cumulative-effect adjustment to the opening balance of accumulated deficit.
There are no other material operating leases. Our Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.
Total lease expense under operating leases for the three and ninesix months ended SeptemberJune 30, 20202021 was $13,300$13,400 and $40,000,$26,700, respectively. Total lease expense under operating leases for the three and ninesix months ended SeptemberJune 30, 20192020 was $13,300$13,400 and $40,000,$26,700, respectively.
Maturities of lease liabilities are as follows:
Maturities of Lease Liabilities | |||||||||||
|
|
|
|
| Operating Leases |
| Operating Leases | ||||
Year ending December 31 |
|
|
|
|
|
|
| ||||
2020 |
|
|
|
| $ | 13,000 |
| ||||
2021 |
|
|
|
|
| 53,100 |
| $ | 26,800 | ||
2022 |
|
|
|
|
| 54,600 |
| 54,600 | |||
2023 |
|
|
|
|
| 56,200 |
| 56,200 | |||
2024 |
|
|
|
|
| 18,900 |
| 18,900 | |||
Total lease payments |
|
|
|
|
| 195,800 |
| 156,500 | |||
Less imputed interest |
|
|
|
|
| (24,800 | ) | (18,100 | ) | ||
Total |
|
|
|
| $ | 171,000 |
| $ | 138,400 |
8 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
This reportReport on Form 10-Q contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:
· |
| The ongoing impact of the COVID-19 coronavirus pandemic on our business operations, revenues, employees, suppliers and customers |
· | Expected operating results, such as revenue growth and earnings | |
· | Anticipated levels of capital expenditures for fiscal year | |
· | Current or future volatility in market conditions | |
· | Our belief that we have sufficient liquidity to fund our business operations during the next twelve months | |
· | Strategy for customer retention, growth, product development, market position, financial results and reserves | |
· | Strategy for risk management |
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
· |
| The extent to which the COVID-19 pandemic may impact our future financial and operational performance will be dependent on many factors that we may not be able to predict because they continue to change and evolve depending on both national and local |
· | The extent to which we are successful in gaining new long-term relationships with customers or retaining significant existing customers and the level of service failures that could lead customers to use competitors' services. | |
· | Our ability to improve our current credit rating with our vendors and the impact on our raw materials and other costs and competitive position of doing so. | |
· | The impact of losing our intellectual property protections or the loss in value of our intellectual property. | |
· | Changes in customer demand. | |
· | The adequacy of our cash flow and earnings and other conditions which may affect our ability to timely service our debt obligations. | |
· | Such other factors as discussed throughout Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in this | |
Any forward-looking statement made by us in this reportReport is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
9 |
The following discussion and analysis should be read in conjunction with our condensed financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, filed with the Securities and Exchange Commission on March 30, 2020,2021, as amended on April 29, 2020.30, 2021.
Background Overview
Nocopi Technologies, Inc. develops and markets specialty reactive inks for applications in the large educational and toy products market. We also develop and market technologies for document and product authentication, which we believe can reduce losses caused by fraudulent document reproduction or by product counterfeiting and/or diversion. We derive our revenues primarily from licensing our technologies on an exclusive or non-exclusive basis to licensees who incorporate our technologies into their product offering and from selling products incorporating our technologies to the licensees or to their licensed printers.
Unless the context otherwise requires, all references to the “Company,” “we,” “our” or “us” and other similar terms means Nocopi Technologies, Inc., a Maryland corporation.
Effects of COVID-19
To serve our customers while also providing for the safety of our employees and service providers, we have adapted various steps to protect our employees. Any employee who is uncomfortable coming into our facilities may choose not to come in. We have a large enough facility to enable all of our employees to social distance and we follow Centers for Disease Control and Prevention (CDC) guidelines. Our production employees work with chemicals and they have always used masks, respirators, etc., even before COVID-19. As a result, we continue to maintain the same level of productivity and effectiveness as prior to the COVID-19 pandemic.
The impact of COVID-19 on our Company’sCompany had little impact on the financial results during the thirdsecond quarter and first ninesix months of 2020 resulted primarily from a significant increase in2021 as the priceshortage of raw materials used in certain of our Company’s products caused by shortages of these ingredientsexperienced throughout 2020 as a resultconsequence of the COVID-19 pandemic along with a mix ofand the resultant price increases have been at least temporarily eased, though still higher than pre-pandemic levels, so our Company’s gross margins on those products purchased by our licensees’ third party printers toward certain products with formulations that require ingredients whose prices have increasedreturned to similar levels as a resultwere experienced before the inception of COVID-19.the COVID-19 pandemic. We expectcannot accurately predict the availability and pricing of these higher raw material prices to negatively affectmaterials in subsequent quarters untildue to ongoing uncertainties related to COVID-19 particularly in light of the shortages are alleviated. We expectrecently identified variants of the fourth quarter to see a similar impact from COVID-19 virus and the various operational adjustments we made.potential re-imposition of restrictions currently being considered by federal, state and local governments and in certain states presently implemented. The full extent of the impact to ourthe Company due to the impact of the COVID-19 pandemic for our fourththird quarter and beyond cannot be currently determined. The extent to which the COVID-19 pandemic may impact our future financial and operational performance will be dependent on many factors that we may not be able to predict because they continue to change and evolve depending on both national and local circumstancescircumstances. These factors include, among themothers, the following: government restrictions affecting our employees, customers and suppliers, changes in our revenues due to lower customer demand as a result of the pandemic and a potential inability to obtain raw materials due to lower availability. We continue to monitor the impact of COVID-19 along with the recently identified variants of COVID-19 on our business but we cannot accurately predict the extent to which it will adversely affect our future results of operations, financial condition or cash flows.
To date, we have not suffered a drop off in total customer orders and total earned royalties in the entertainment and toy products market as a result of COVID-19, but we continue to experience a negative impact on revenues in our smaller anti-counterfeiting and anti-diversion products market due to closures of certain printing facilities that utilize these technologies and we anticipate that these closures may continue for a period of time. We continue to retain revenues at historical levels in the entertainment and toy products market through the current date despite the downturns in the overall economy. While the products of our licensees in the larger entertainment and toy products market are sold by both large and smaller retailers, some of whom remain open, and are also available for purchase online, we believe that revenues may not continue to be achieved at levels experienced to the current date due to the negative economic conditions that are expected to continue over the balance of the year and beyond as a result of COVID-19 and the recently identified variants of COVID-19. A slowdown in overall consumer spending may affect the sales of products marketed by our licensees. Our major licensees in the entertainment and toy products market are large, well-known businesses in this market with whom we believe our long-term relationship will not be adversely affected by the current COVID-19 pandemic.
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Results of Operations
Our Company’s revenues are derived from (a) royalties paid by licensees of our technologies, (b) fees for the provision of technical services to licensees and (c) from the direct sale of (i) products incorporating our technologies, such as inks, security paper and pressure sensitive labels, and (ii) equipment used to support the application of our technologies, such as ink-jet printing systems. Royalties consist of guaranteed minimum royalties payable by our licensees in certain cases and additional royalties which typically vary with the licensee’s sales or production of products incorporating the licensed technology. Service fees and sales revenues vary directly with the number of units of service or product provided.
Our Company recognizes revenue on its lines of business as follows:
a. |
| License fees for the use of our technology and royalties with guaranteed minimum amounts are recognized at a point in time when the term begins; |
b. | Product sales are recognized at the time of the transfer of goods to customers at an amount that our Company expects to be entitled to in exchange for these goods, which is at the time of shipment; and | |
c. | Fees for technical services are recognized at the time of the transfer of services to customers at an amount that our Company expects to be entitled to in exchange for the services, which is when the service has been rendered. |
We believe that, as fixed cost reductions beyond those we have achieved in recent years may not be achievable, our operating results are substantially dependent on revenue levels. Because revenues derived from licenses and royalties carry a much higher gross profit margin than other revenues, operating results are also substantially affected by changes in revenue mix.
Both the absolute amount of our Company’s revenues and the mix among the various sources of revenue are subject to substantial fluctuation. We have a relatively small number of substantial customers rather than a large number of small customers. Accordingly, changes in the revenue received from a significant customer can have a substantial effect on our Company’s total revenue, revenue mix and overall financial performance. Such changes may result from a substantial customer’s product development delays, engineering changes, changes in product marketing strategies, production requirements and the like. In addition, certain customers have, from time to time, sought to renegotiate certain provisions of their license agreements and, when our Company agrees to revise such terms, revenues from the customer may be adversely affected.
Revenues for the thirdsecond quarter of 2021 were $513,900 compared to $627,300 in the second quarter of 2020, were $754,800 compared to $637,500 in the third quartera decrease of 2019, an increase of $117,300,$113,400, or approximately 18%. Licenses, royalties and fees decreasedincreased by $36,100,$37,800, or approximately 19%35%, to $153,300$144,900 in the thirdsecond quarter of 20202021 from $189,400$107,100 in the thirdsecond quarter of 2019.2020. The decreaseincrease in licenses, royalties and fees in the thirdsecond quarter of 20202021 compared to the thirdsecond quarter of 20192020 is due primarily to lowerhigher royalties from our Company’s licensees in bothentertainment and toy products market offset in part by lower revenues from our Company’s licensees in the security markets which continue to be negatively affected by the COVID-19 pandemic and the variants of COVID-19 that have recently been identified. We cannot assure you that the marketing and product development activities of our Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for our Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions being experienced worldwide as a result of the ongoing COVID-19 pandemic that is continuing to negatively impact all worldwide economies.
Product and other sales decreased by $151,200, or approximately 29%, to $369,000 in the second quarter of 2021 from $520,200 in the second quarter of 2020. Sales of ink decreased in the second quarter of 2021 compared to the second quarter of 2020 due primarily to lower ink shipments to the third party authorized printer used by one of our Company’s major licensees in the entertainment and toy products market. In the second quarter of 2021, our Company derived revenues of approximately $461,100 from our licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $575,200 in the second quarter of 2020.
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For the first six months of 2021, revenues were $1,125,300, representing a decrease of $22,300, or approximately 2%, from revenues of $1,147,600 in the first six months of 2020. Licenses, royalties and fees increased by $58,700, or approximately 22%, to $330,400 in the first six months of 2021 from $271,700 in the first six months of 2020. The increase in licenses, royalties and fees is due primarily to higher royalties from our Company’s licensees in entertainment and toy products market offset in part by lower revenues from our Company’s licensees in the security markets.markets which continues to be negatively affected by the COVID-19 pandemic and the variants of COVID-19 that have recently been identified. We cannot assure you that the marketing and product development activities of our Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for our Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions being experienced worldwide as a result of the COVID-19 pandemic that is continuing to negatively impact all worldwide economies.economies along with recently identified variants of the COVID-19 virus.
Product and other sales increaseddecreased by $153,400,$81,000, or approximately 34%9%, to $601,500$794,900 in the third quarterfirst six months of 20202021 from $448,100$875,900 in the third quarterfirst six months of 2019.2020. Sales of ink increaseddecreased in the third quarterfirst six months of 20202021 compared to the third quarterfirst six of 20192020 due primarily to higherlower ink shipments to the third party authorized printersprinter used by twoone of our Company’s major licensees in the entertainment and toy products market offset in part by lower ink shipments to our Company’s licensees in the retail receipt and document fraud market. In the third quarter of 2020, our Company derived revenues of approximately $699,100 from our licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $555,900 in the third quarter of 2019.
For the first nine months of 2020, revenues were $1,902,400, representing an increase of $339,400, or approximately 22%, from revenues of $1,563,000 in the first nine months of 2019. The decrease in licenses, royalties and fees is due primarily to lower guaranteed licensing revenue of approximately $200,000 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. We cannot assure you that the marketing and product development activities of our Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for our Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions being experienced worldwide as a result of the COVID-19 pandemic that is continuing to negatively impact all worldwide economies.
Product and other sales increased by $486,300, or approximately 49%, to $1,477,400 in the first nine months of 2020 from $991,100 in the first nine months of 2019. Sales of ink increased in the nine months of 2020 compared to the first nine months of 2019 due primarily to higher ink shipments to the third party authorized printers used by two of our Company’s major licensees in the entertainment and toy products market offset in part by lower ink shipments to our Company’s licensees in the retail receipt and document fraud market. Our Company derived revenues of approximately $1,727,800$1,022,700 from licensees and their authorized printers in the entertainment and toy products market in the first ninesix months of 20202021 compared to revenues of approximately $1,327,900$1,028,700 in the first ninesix months of 2019.2020.
Our Company’s gross profit decreased to $425,500$280,100 in the thirdsecond quarter of 2021, or approximately 55% of revenues, from $321,500 in the second quarter of 2020, or approximately 56% of revenues, from $429,500 in the third quarter of 2019 or approximately 67%51% of revenues. Licenses, royalties and fees have historically carried a higher gross profit than product and other sales. Such other sales generally consist of supplies or other manufactured products which incorporate our Company’s technologies or equipment used to support the application of its technologies. These items (except for inks which are manufactured by our Company) are generally purchased from third-party vendors and resold to the end-user or licensee and carry a lower gross profit than licenses, royalties and fees. The lower gross profit in the thirdsecond quarter of 20202021 compared to the thirdsecond quarter of 20192020 results primarily from lower grossrevenues from product and other sales offset in part by higher revenues from licenses, royalties and fees offset in part by higher product and other sales in the thirdsecond quarter of 20202021 compared to the thirdsecond quarter of 2019.2020.
For the first ninesix months of 2020,2021, gross profit was $1,016,000,$671,200, or approximately 53%60% of revenues, compared to $1,084,500,$590,500, or approximately 69%51% of revenues, in 2019.the first six months of 2020. The lowerhigher gross profit in the first ninesix months of 20202021 compared to the first ninesix months of 20192020 results primarily from lowerhigher licenses, royalties and fees due toin the adoptionfirst six months of Topic 606 in 20182021 offset in part by higher grosslower revenues from product and other sales in the first ninesix months of 20202021 compared to the first ninesix months of 2019. 2020.
As the variable component of cost of revenues related to licenses, royalties and fees is a low percentage of these revenues and the fixed component is not substantial, period to period changes in revenues from licenses, royalties and fees can significantly affect both the gross profit from licenses, royalties and fees as well as overall gross profit. The gross profit from licenses, royalties and fees decreasedincreased to approximately 60%66% in the thirdsecond quarter of 2021 compared to approximately 45% in the second quarter of 2020 compared to approximately 78% in the third quarter of 2019 and to approximately 60%71% of revenues from licenses, royalties and fees in the first ninesix months of 20202021 from approximately 83%60% in the first ninesix months of 2019.2020.
The gross profit, expressed as a percentage of revenues, of product and other sales is dependent on both the overall sales volumes of product and other sales and on the mix of the specific goods produced and/or sold. The gross profit from product and other sales decreased to approximately 56%50% of revenues in the thirdsecond quarter of 20202021 compared to approximately 63%52% of revenues in the thirdsecond quarter of 2019.2020. For the first ninesix months of 2020,2021, the gross profit, expressed as a percentage of revenues, decreasedincreased to approximately 52%55% of revenues from product and other sales compared to approximately 62%49% of revenues from product and other sales in the first ninesix months of 2019.2020. The decrease in bothgross profit in the second quarter of 2021 compared to the second quarter of 2020 is due primarily to lower ink shipments to the third quarterparty authorized printer used by one of our Company’s major licensees in the entertainment and toy products market as well as lower ink shipments to our Company’s licensees in the retail receipt and document fraud market. The increase in gross profit in the first ninesix months of 2021 compared to the first six months of 2020 compared to the third quarter and first nine months of 2019 is due to:primarily to a) a significant increasedecline in the cost of certain raw materials utilized by ourthe Company in the manufacture of certain of its products as a resultprices of price increases relatedthese raw materials that had increased in the first six months of 2020 due to the impact of the ongoing COVID-19 pandemic on the availability and supply of these raw materials have been at least temporally eased in the third quarter and first ninesix months of 20202021 compared to the third quarter and first ninesix months of 2019 (we are not passing along these cost increases to our customers at this time);2020; b) an unfavorablea favorable mix of products sold whereby the increases in purchases of ourthe Company’s products by the licensed printers of its licensees in the entertainment and toy products market in the thirdfirst six months of 2021 compared to the second quarter and first ninesix months of 2020 compared to the third quarter and first nine monthswere of 2019 were ofhigher margin products manufactured by our Company whose raw material prices were most affected by shortages created by the COVID-19 pandemic and c) increased production salaries related to a staffing addition, higher duties and equipment depreciation in the third quarter and first nine months of 2020 compared to the third quarter and first nine months of 2019.Company.
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Research and development expenses of $40,700$45,800 and $123,700$90,300 in the thirdsecond quarter and first ninesix months of 2020,2021, respectively, were comparable to $45,200$41,900 and $122,600$83,000 in the thirdsecond quarter and first ninesix months of 2019,2020, respectively.
Sales and marketing expenses increaseddecreased to $74,200 in the thirdsecond quarter of 2021 from $86,000 in the second quarter of 2020 and to $90,900 from $81,000 in the third quarter of 2019. Sales and marketing expenses increased$157,400 in the first ninesix months of 2020 to $260,9002021 from $224,200$170,000 in the first ninesix months of 2019. This increase2020. The decrease is due primarily to higherlower commission expense on the higherlower level of salesrevenues in the thirdsecond quarter and first nine months of 20202021 compared to the thirdsecond quarter of 2020 and to lower business development expenses first ninesix months of 2019.2021 compared to the first six months of 2020.
General and administrative expenses increaseddecreased nominally in the thirdsecond quarter of 20202021 to $123,800$117,700 from $84,200$120,000 in the thirdsecond quarter of 2019. General2020. In the first six months of 2021, general and administrative expenses increased nominally to $263,200 from $259,700 in the first ninesix months of 2020 to $383,500 from $265,200 in the first nine months of 2019. The increase in third quarter of 2020 compared to the third quarter of 2019 is due primarily to higher public relations and salary expenses in the third quarter of 2020 compared to the third quarter of 2019. The increase in the first nine months of 2020 compared to the first nine months of 2019 is due primarily to higher public relations and salary expenses in the first nine months of 2020 compared to the first nine months of 2019.2020.
Other income (expenses) in the thirdsecond quarter and first ninesix months of 2020 and 2019 included interest on convertible debentures held by seven investors and interest earned on invested funds.investors.
Income taxes in the thirdsecond quarter and first ninesix months of 20202021 and 20192020 result from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania. In the first quarter of 2020, our Company reversed $47,400 of accrued Pennsylvania income taxes that are not payable.
The lower net income of $163,100$42,500 in the thirdsecond quarter of 20202021 compared to net income of $206,800$70,800 in the thirdsecond quarter of 20192020 resulted primarily from a lower gross profit on a lower level of licenses, royaltiesproduct and fees, higher cost of revenues and higherother sales offset in part by lower operating expenses in the thirdsecond quarter of 20202021 compared to the thirdsecond quarter of 2019.2020. The lowerhigher net income of $286,500$157,300 in the first ninesix months of 20202021 compared to net income of $441,100$123,400 in the first ninesix months of 20192020 resulted primarily from a lowerhigher gross profit on a lowerhigher level of licenses, royalties and fees higherand lower cost of revenues and higher operating expenses in the first ninesix months of 20202021 compared to the first ninesix months of 20192020 offset in part by the reversal ofhigher income taxes in the first quartersix months of 2020.2021.
Plan of Operation, Liquidity and Capital Resources
During the first ninesix months of 2020,2021, our Company’s cash increased to $1,428,900$1,908,400 at SeptemberJune 30, 20202021 from $688,000$1,362,800 at December 31, 2019.2020. During the first ninesix months of 2020,2021, our Company generated $768,500$574,400 from its operating activities, received $11,000$2,800 upon the exercise of warrants and used $38,600$31,600 for capital expenditures.
During the first ninesix months of 2020,2021, our Company’s revenues increaseddecreased approximately 22%2% primarily as a result of higherlower sales of ink to one of the authorized printers of our Company’s licensees in the entertainment and toy products market offset in part by lowerhigher royalty revenues from two licenseesa licensee in the entertainment and toy products market.
Our Company’sAdditionally, our total overhead expenses increaseddecreased in the first ninesix months of 20202021 compared to the first ninesix months of 20192020 and our Company’s net interest expense decreasedincome increased in the first ninesix months of 20202021 compared to the first ninesix months of 2019.2020. As a result of these factors, our Company generated net income of $286,500$157,300 in the first ninesix months of 20202021 compared to $441,100$123,400 in the first ninesix months of 2019.2020. Our Company had positive operating cash flow of $768,500$574,400 during the first ninesix months of 2020 and at September2021. At June 30, 2020,2021, our Company had positive working capital of $2,469,900$3,115,600 and stockholders’ equity of $3,231,200.$3,613,200. For the full year of 2019,2020, our Company had net income of $754,900$508,400 and had positive operating cash flow of $360,600.$702,400. At December 31, 2019,2020, our Company had positive working capital of $1,835,300$2,801,100 and stockholders’ equity of $2,789,700.$3,453,100.
In November 2018, our Company negotiated a $150,000 revolving line of credit (“Lineof Credit”) with a bank to provide a source of working capital, if required. The Line of Credit is secured by all the assets of our Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The Line of Credit is subject to an annual review and quiet period. There have been no borrowings under the Line of Credit since its inception. We may need to obtain additional capital in the future to further support the working capital requirements associated with our existing revenue base and to develop new revenue sources. We cannot assure you that we will be successful in obtaining such additional capital, if needed. We continue to maintain a cost containment program including curtailment, where possible, of discretionary research and development and sales and marketing expenses.
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Our planPlan of operationOperation for the twelve months beginning with the date of this quarterly report consists of concentrating available human and financial resources to continue to capitalize on the specific business relationships our Company has developed in the entertainment and toy products market. This includes two licensees that have been marketing products incorporating our Company’s technologies since 2012. These two licensees maintain a significant presence in the entertainment and toy products market and are well known and highly regarded participants in this market. We anticipate that these two licensees will expand their current offerings that incorporate our technologies and will introduce and market new products that will incorporate our technologies available to them under their license agreements with our Company. We will continue to develop various applications for these licensees. We also plan to expand our licensee base in the entertainment and toy market. We currently have additional licensees marketing or developing products incorporating our technologies in certain geographic and niche markets of the overall entertainment and toy products market.
Our Company maintains its presence in the retail loss prevention market and believes that revenue growth in this market can be achieved through increased security ink sales to its licensees in this market. We will continue to adjust our production and technical staff as necessary and, subject to available financial resources, invest in capital equipment needed to support potential growth in ink production requirements beyond our current capacity. Additionally, we will pursue opportunities to market our current technologies in specific security and non-security markets. There can be no assurancesWe cannot assure you that these efforts will enable our Company to generate additional revenues and positive cash flow.
Our Company has received, and may in the future seek, additional capital in the form of debt, equity or both, to support our working capital requirementsand to provide funding for other business opportunities. Beyond the Line of Credit, we cannot assure you that if we require additional capital, that we will be successful in obtaining such additional capital, or that such additional capital, if obtained, will enable our Company to generate additional revenues and positive cash flow.
As previously stated, we generate a significant portion of our total revenues from licensees in the entertainment and toy products market. These licensees generally sell their products through retail outlets. In the future, such sales may be adversely affected by changes in consumer spending that may occur as a result of an uncertain economic environment throughout the balance of 20202021 and beyond due to the COVID-19 virus and its effect on the global economy.economy particularly in light of the COVID-19 variants that have recently been identified. As a result, our revenues, results of operations and liquidity may be negatively impacted.
Contractual Obligations
As of SeptemberJune 30, 2020,2021, there were no material changes in our contractual obligations from those disclosed in our Annual Report on Form 10-K filed with the SEC on March 30, 2020,2021, as amended on April 29, 2020,30, 2021, other than those appearing in the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Recently Adopted Accounting Pronouncements
As of SeptemberJune 30, 2020,2021, there were no recently adopted accounting standards that had a material effect on our Company’s financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
AsIn June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of September 30, 2020, thereCredit Losses on Financial Instruments. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. For public entities, the amendments are no recently issued accounting standards not yet adopted which would have a material effect on our Company’s financial statements.effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. ASU No. 2019-10 extends the effective dates for two years for smaller reporting companies and nonpublic companies.
Off-Balance Sheet Arrangements
Our Company does not have any off-balance sheet arrangements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Our Company’s management, with the participation of our Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of SeptemberJune 30, 2020.2021. Based on this evaluation, our Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of SeptemberJune 30, 2020,2021, our Company’s disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by our Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our Company’s management, including our Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended SeptemberJune 30, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
The following risk factors supplement the Risk Factors described in the Company’s annual report on Form 10-K for the year ended December 31, 2019, as amended, and should be read in conjunction therewith.
We expect the COVID-19 pandemic to continue to negatively impact our results of operations, cash flow and financial position.
The negative impact of COVID-19 on our Company’s financial results during the third quarter and first nine months of 2020 resulted primarily from a significant increase in the price of raw materials used in certain of our Company’s products caused by shortages of these ingredients as a result of the COVID-19 pandemic along with a mix of our Company’s products purchased by our licensees’ third party printers toward certain products with formulations that require ingredients whose prices have increased as a result of COVID-19. We expect these higher raw material prices to negatively affect subsequent quarters until the shortages are alleviated. We expect the fourth quarter to see a similar impact from COVID-19 and the various operational adjustments we made.
Other disruptions to our business operations due to COVID-19 with a resultant impact on our results of operations are expected to continue to occur as a result of quarantines of employees and suppliers in areas affected by the outbreak, availability of raw materials required to manufacture our products, disruption of supply chains that provide our raw materials, price increases of raw materials and supplies used in our production processes, facility closures of domestic and international customers who purchase and use our products, and travel and logistics restrictions affecting our inbound and outbound shipments in connection with the COVID-19 outbreak. While we expect this global COVID-19 pandemic to continue to negatively impact our results of operations, cash flow and financial position, the related financial impact cannot be reasonably estimated at this time.
The extent to which the COVID-19 pandemic will negatively impact our results of operations, cash flow and financial position is highly uncertain and cannot be reasonably estimated at this time.
The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption. The extent to which COVID-19 will negatively impact our results of operations, cash flow and financial position is dependent upon numerous factors, many of which are highly uncertain, rapidly changing and uncontrollable. These factors include, but are not limited to: (i) the duration and scope of the pandemic; (ii) governmental, business and individual actions that have been and continue to be taken in response to the pandemic, including travel restrictions, quarantines, social distancing, work-from-home and shelter-in-place orders and shut-downs; (iii) the impact on U.S. and global economies and the timing and rate of economic recovery; (iv) potential adverse effects on the financial markets and access to capital; (v) potential goodwill or other impairment charges; and (vi) the ability of our licensees and other customers to sell products that utilize or incorporate our technology.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Date | ||
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| Common Stock – |
These persons were the only offerees in connection with these transactions. We relied on Section 4(a)(2), 4(a)(5) and Regulation D of the Securities Act since the transactions do not involve any public offering. No underwriters were utilized and no commissions or fees were paid with respect to any of the above transactions.We relied on Section 4(a)(2) and/or Regulation D of the Securities Act of 1933, as amended, since the transactions did not involve any public offering.
During the third quarter of 2020, the holders of outstanding convertible debentures totaling approximately $97,900 that were due during the third quarter of 2020 elected to convert those debentures plus approximately $46,100 of accrued interest into 5,758,992 shares of our Company’s common stock. The convertible debentures bore interest at 7%. The conversion price was $0.025 per share.
During the third quarter of 2020, holders of 550,000 warrants exercised their warrants to purchase a total of 550,000 shares of our Company’s common stock at an exercise price of $0.02 per share. Our Company received $11,000 upon the exercise of these warrants.
The following exhibits are included herein:(a) Exhibits
Exhibit Number | Description | Location | |||||
| 3.1 |
| Amended and Restated Articles of |
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| 3.2 | Amended and Restated Bylaws | Incorporated by reference to the Company’s Form 8-K filed on March 12, 2019 | ||||
10.1 | Form of Convertible Debenture Purchase Agreement and Exhibits | Incorporated by reference to the Company’s Annual Report on Form 10-K filed on September 11, 2015 | |||||
| 10.2 | Form of Letter Agreement re: Convertible Debenture Purchase Agreement Election | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2019 | ||||
| 31.1 | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||
| 31.2 | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||
| 32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||
| 101.INS | Inline XBRL Instance |
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| 101.SCH | Inline XBRL Taxonomy Extension Schema |
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| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase |
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| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase |
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| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase |
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| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |
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104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 |
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Pursuant to the requirement of the Securities Exchange Act of 1934, our Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NOCOPI TECHNOLOGIES, INC. | ||
DATE: | /s/ Michael A. Feinstein, M.D. | |
Michael A. Feinstein, M.D. | ||
Chairman of the Board, President & Chief Executive Officer | ||
DATE: | /s/ Rudolph A. Lutterschmidt | |
Rudolph A. Lutterschmidt | ||
Vice President & Chief Financial Officer |
17 |
Exhibit Number | Description | Location | |||||
| 3.1 |
| Amended and Restated Articles of |
| |||
| 3.2 | Amended and Restated Bylaws | Incorporated by reference to the Company’s Form 8-K filed on March 12, 2019 | ||||
10.1 | Form of Convertible Debenture Purchase Agreement and Exhibits | Incorporated by reference to the Company’s Annual Report on Form 10-K filed on September 11, 2015 | |||||
| 10.2 | Form of Letter Agreement re: Convertible Debenture Purchase Agreement Election | Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2019 | ||||
| 31.1 | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||
| 31.2 | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||
| 32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||
| 101.INS | Inline XBRL Instance |
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| 101.SCH | Inline XBRL Taxonomy Extension Schema |
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| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase |
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| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase |
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| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase |
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| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |
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104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 |
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