Nocopi (NNUP) 10-Q 12 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 01, 2016
Document And Entity Information
Entity Registrant Name	NOCOPI TECHNOLOGIES INC/MD/
Entity Central Index Key	888,981
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		58,599,016
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

Statements of Operations

Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues
Licenses, royalties and fees	$ 98,700	$ 78,800	$ 211,500	$ 156,900
Product and other sales	104,700	237,900	274,700	348,200
Total revenues	203,400	316,700	486,200	505,100
Cost of revenues
Licenses, royalties and fees	16,900	23,800	36,500	42,000
Product and other sales	49,200	88,200	118,300	143,800
Total cost of revenues	66,100	112,000	154,800	185,800
Gross profit	137,300	204,700	331,400	319,300
Operating expenses
Research and development	32,400	31,100	70,000	64,000
Sales and marketing	47,400	55,300	103,900	105,200
General and administrative	66,800	67,900	154,300	151,400
Total operating expenses	146,600	154,300	328,200	320,600
Net income (loss) from operations	(9,300)	50,400	3,200	(1,300)
Other income (expenses)
Interest expense, bank charges and accretion of interest	(3,400)	(5,100)	(6,800)	(10,300)
Total other income (expenses)	(3,400)	(5,100)	(6,800)	(10,300)
Net income (loss)	$ (12,700)	$ 45,300	$ (3,600)	$ (11,600)
Basic and diluted net income (loss) per per common share	$ 0	$ 0	$ 0	$ 0
Weighted average common shares outstanding
Basic	58,599,016	58,599,016	58,599,016	58,599,016
Diluted	58,599,016	58,600,367	58,599,016	58,599,016

Balance Sheets

Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash	$ 132,600	$ 11,400
Accounts receivable less $5,000 allowance for doubtful accounts	168,200	253,300
Inventory	62,900	36,600
Prepaid and other	35,100	22,600
Total current assets	398,800	323,900
Fixed assets
Leasehold improvements	19,700	19,700
Furniture, fixtures and equipment	176,900	176,900
Fixed assets, gross	196,600	196,600
Less: accumulated depreciation and amortization	179,400	175,700
Total fixed assets	17,200	20,900
Total assets	416,000	344,800
Current liabilities
Demand loans	14,500	23,500
Convertible debentures	33,300	32,800
Accounts payable	83,100	76,200
Accrued expenses	476,000	443,000
Deferred revenue	155,800	112,400
Total current liabilities	762,700	687,900
Convertible debentures	95,000	95,000
Stockholders' deficiency
Common stock, $0.01 par value, Authorized - 75,000,000 shares, Issued and outstanding - 58,599,016 shares	586,000	586,000
Paid-in capital	12,426,600	12,426,600
Accumulated deficit	(13,454,300)	(13,450,700)
Total stockholders' deficiency	(441,700)	(438,100)
Total liabilities and stockholders' deficiency	$ 416,000	$ 344,800

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 5,000	$ 5,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	58,599,016	58,599,016
Common stock, shares outstanding	58,599,016	58,599,016

Statements of Cash Flows

Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Operating Activities
Net loss	$ (3,600)	$ (11,600)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization	3,700	2,400
Accretion of interest - convertible debentures	500	2,600
Net loss adjusted for non-cash operating activities	600	(6,600)
(Increase) decrease in assets
Accounts receivable	85,100	62,000
Inventory	(26,300)	7,200
Prepaid and other	(12,500)	(2,900)
Increase (decrease) in liabilities
Accounts payable and accrued expenses	39,900	53,400
Deferred revenue	43,400	(19,900)
Total increase in operating capital	129,600	99,800
Net cash provided by operating activities	130,200	93,200
Investing Activities
Additions to fixed assets		(800)
Net cash used in investing activities		(800)
Financing Activities
Repayment of demand loans	(9,000)	(17,000)
Net cash used in financing activities	(9,000)	(17,000)
Increase in cash	121,200	75,400
Cash at beginning of year	11,400	28,000
Cash at end of period	$ 132,600	$ 103,400

Financial Statements

Financial Statements	6 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Financial Statements	Note 1. Financial Statements The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (the “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 of Accounting Policies included in the Company's 2015 Annual Report on Form 10-K. 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 the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2015 Annual Report on Form 10-K should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and six months ended June 30, 2016 may not be necessarily indicative of the operating results expected for the full year. The 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 the Company has no items of other comprehensive income, comprehensive income (loss) is equal to net income (loss).

Going Concern

Going Concern	6 Months Ended
	Jun. 30, 2016
Going Concern [Abstract]
Going Concern	Note 2. Going Concern Since its inception, the Company has incurred significant losses and, as of June 30, 2016, had accumulated losses of $13,454,300. For the six months ended June 30, 2016, the Company had net income from operations of $3,200. At June 30, 2016, the Company had negative working capital of $363,900 and a stockholders’ deficiency of $441,700. For the year ended December 31, 2015, the Company’s net loss from operations was $38,700. Due in part to uncertainties in the US economy, the Company, which is substantially dependent on its licensees to generate licensing revenues, may incur operating losses and experience negative cash flow in the future. Achieving profitability and positive cash flow depends on the Company’s ability to generate and sustain significant increases in revenues and gross profits from its traditional business. There can be no assurances that the Company will be able to generate sufficient revenues and gross profits to return to and sustain profitability and positive cash flow in the future. Receipt of funds in periods prior to 2015 from investors and from demand loan holders have allowed the Company to remain in operation through the current date. Management of the Company believes that it may need additional capital in the future both to fund investments needed to increase its operating revenues to levels that will sustain its operations and to fund operating deficits that it believes may occur until revenue increases from traditional and new product lines can be realized. There can be no assurances that the Company will be successful in obtaining sufficient additional capital, or if it does, that the additional capital will enable the Company to impact its revenues so as to have a material positive effect on the Company’s operations and cash flow. The Company believes that without additional capital, whether in the form of debt, equity or both, it may be forced to cease operations at an undetermined future date.

Stock Based Compensation

Stock Based Compensation	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Based Compensation	Note 3. Stock Based Compensation The Company follows FASB ASC 718, Compensation – Stock Compensation

Demand Loans

Demand Loans	6 Months Ended
	Jun. 30, 2016
Debt Disclosure [Abstract]
Demand Loans	Note 4. Demand Loans At June 30, 2016, the Company had unsecured loans totaling $14,500 from two individuals outstanding. The loans bear interest at an annual rate of 8%. During the six months ended June 30, 2016, the Company repaid $9,000 of the unsecured loans.

Convertible Debentures

Convertible Debentures	6 Months Ended
	Jun. 30, 2016
Convertible Debt [Abstract]
Convertible Debentures	Note 5. Convertible Debentures At June 30, 2016, the Company had convertible debentures totaling $128,300 outstanding, of which $33,300 are due during the third quarter of 2016 and $95,000 are due during the third quarter of 2017. The convertible debentures bear interest at an annual rate of 7%. At the option of the lender, $95,000 in principal of the debentures and accrued interest are convertible in whole or part into common stock of the Company at $0.025 per share and $33,300 principal of the debentures and accrued interest are convertible in whole or part into common stock of the Company at $0.05 per share. The Company also granted warrants to purchase 691,365 shares of the Company’s common stock at $0.02 per share to the holders of the debentures. The warrants are exercisable two years after issuance and expire seven years after issuance. The Company is negotiating the extension of three convertible debentures totaling $33,300 maturing during the third quarter of 2016, one of which is held by a Director of the Company. The Company believes that extensions of the debentures can be achieved on acceptable terms. 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 the Company determined that the warrants were an equity instrument in accordance with FASB ASC 815. The debt discount related to the warrant issuances is being accreted through interest expense over the term of the notes payable. For the three months and six months ended June 30, 2016, approximately $300 and $500, respectively, was accreted through interest expense. For the three months and six months ended June 30, 2015, approximately $1,200 and $2,600, respectively, was accreted through interest expense. The following table summarizes all warrant activity of the Company since December 31, 2015: Weighted Average Number Exercise Exercise of Shares Price Price Outstanding warrants - December 31, 2015 756,365 $ 0.01 to $0.07 $ 0.022 Warrants expired 15,000 $ 0.06 $ 0.06 Outstanding warrants - June 30, 2016 741,365 $ 0.01 to $0.07 $ 0.021 Weighted average remaining contractual life (years) 4.10 Exercisable warrants - June 30, 2016 575,000 $ 0.01 to $0.07 $ 0.022 Weighted average remaining contractual life (years) 3.83

Other Income (Expenses)

Other Income (Expenses)	6 Months Ended
	Jun. 30, 2016
Other Income and Expenses [Abstract]
Other Income (Expenses)	Note 6. Other Income (Expenses) Other income (expenses) in the three months and six months ended June 30, 2016 and June 30, 2015 includes interest on unsecured loans from three individuals and on convertible debentures held by ten investors.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Income Taxes	Note 7. Income Taxes There is no provision for income taxes for the three months ended June 30, 2015 due to the availability of net operating loss carryforwards. There is no income tax benefit for the losses for the three months and six months ended June 30, 2016 and for the six months ended June 30, 2015 because the Company has determined that the realization of the net deferred tax asset is not assured. The Company has created a valuation allowance for the entire amount of such benefits. There was no change in unrecognized tax benefits during the period ended June 30, 2016 and there was no accrual for uncertain tax positions as of June 30, 2016. Tax years from 2011 through 2015 remain subject to examination by U.S. federal and state jurisdictions.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2016
Related Party Transactions [Abstract]
Related Party Transactions	Note 8. Related Party Transactions In January 2016, the Company paid $15,000 to Michael A. Feinstein, M.D., the Company’s Chairman of the Board and Chief Executive Officer, representing a portion of previously deferred salary owed to him under an employment agreement with the Company. During the six months ended June 30, 2016, Dr. Feinstein deferred $42,500 of salary. At June 30, 2016, Dr. Feinstein was owed $317,900 of salary deferred by him.

Earnings (Loss) per Share

Earnings (Loss) per Share	6 Months Ended
	Jun. 30, 2016
Weighted average common shares outstanding
Earnings (Loss) per Share	Note 9. Earnings (Loss) per Share In accordance with Earnings per Share

Major Customer and Geographic I

Major Customer and Geographic Information	6 Months Ended
	Jun. 30, 2016
Major Customer and Geographic Information [Abstract]
Major Customer and Geographic Information	Note 10. Major Customer and Geographic Information The Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were: Three Months ended June 30 Six Months ended June 30 2016 2015 2016 2015 Customer A 17 % 64 % 37 % 59 % Customer B 24 % 16 % 23 % 20 % Customer C 29 % – 12 % – The Company’s non-affiliate customers whose individual balances amounted to more than 10% of the Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were: June 30 December 31 2016 2015 Customer A 21 % 31 % Customer B 29 % 25 % Customer C 17 % – The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on the Company’s business operations and financial condition. The Company’s revenues by geographic region are as follows: Three Months ended June 30 Six Months ended June 30 2016 2015 2016 2015 North America $ 100,400 $ 109,000 $ 226,400 $ 198,600 Asia 95,600 207,700 245,000 306,500 Australia 7,400 – 14,800 – $ 203,400 $ 316,700 $ 486,200 $ 505,100

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2016
Subsequent Events [Abstract]
Subsequent Event	Note 11. Subsequent Event In early August 2016, the Company repaid $4,500 of the principal of the outstanding demand loans.

Convertible Debentures (Tables)

Convertible Debentures (Tables)	6 Months Ended
	Jun. 30, 2016
Convertible Debt [Abstract]
Schedule of Warrants Outstanding	The following table summarizes all warrant activity of the Company since December 31, 2015: Weighted Average Number Exercise Exercise of Shares Price Price Outstanding warrants - December 31, 2015 756,365 $ 0.01 to $0.07 $ 0.022 Warrants expired 15,000 $ 0.06 $ 0.06 Outstanding warrants - June 30, 2016 741,365 $ 0.01 to $0.07 $ 0.021 Weighted average remaining contractual life (years) 4.10 Exercisable warrants - June 30, 2016 575,000 $ 0.01 to $0.07 $ 0.022 Weighted average remaining contractual life (years) 3.83

Major Customer and Geographic18

Major Customer and Geographic Information (Tables)	6 Months Ended
	Jun. 30, 2016
Segment Reporting [Abstract]
Schedule of Revenues from Non-affiliated Customers	The Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were: Three Months ended June 30 Six Months ended June 30 2016 2015 2016 2015 Customer A 17 % 64 % 37 % 59 % Customer B 24 % 16 % 23 % 20 % Customer C 29 % – 12 % –
Schedule of Non-affiliated Customers with Accounts Receivable More Than 10%	The Company’s non-affiliate customers whose individual balances amounted to more than 10% of the Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were: June 30 December 31 2016 2015 Customer A 21 % 31 % Customer B 29 % 25 % Customer C 17 % –
Schedule of Revenue by Geographic Region	The Company’s revenues by geographic region are as follows: Three Months ended June 30 Six Months ended June 30 2016 2015 2016 2015 North America $ 100,400 $ 109,000 $ 226,400 $ 198,600 Asia 95,600 207,700 245,000 306,500 Australia 7,400 – 14,800 – $ 203,400 $ 316,700 $ 486,200 $ 505,100

Going Concern (Details)

Going Concern (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Going Concern [Abstract]
Accumulated deficit	$ 13,454,300		$ 13,454,300		$ 13,450,700
Working capital deficit	363,900		363,900
Operating income (loss)	(9,300)	$ 50,400	3,200	$ (1,300)	(38,700)
Stockholders' deficiency	$ 441,700		$ 441,700		$ 438,100

Stock Based Compensation (Detai

Stock Based Compensation (Details)	Jun. 30, 2016USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Unrecognized portion of expense related to stock option grants

Demand Loans (Details)

Demand Loans (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Debt Instrument [Line Items]
Demand loans	$ 14,500		$ 23,500
Repayment of demand loans	9,000	$ 17,000
Unsecured Debt [Member]
Debt Instrument [Line Items]
Demand loans	$ 14,500
Debt instrument, interest rate	8.00%
Repayment of demand loans	$ 9,000

Convertible Debentures (Narrati

Convertible Debentures (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Interest expense	$ 3,400	$ 5,100	$ 6,800	$ 10,300
Convertible Debt [Member]
Debt Instrument [Line Items]
Convertible debt, amount outstanding	128,300		128,300
Convertible debt due during the third quarter of 2016	33,300		33,300
Convertible debt due during the third quarter of 2017	$ 95,000		$ 95,000
Debt instrument, interest rate	7.00%		7.00%
Number of shares of common stock that can be purchased through warrants	691,365		691,365
Price per share of warrants	$ 0.02		$ 0.02
Warrant exercisable term			2 years
Warrant expiration term			7 years
Pricing model used to value warrants			Black-Scholes pricing model
Interest expense	$ 300	$ 1,200	$ 500	$ 2,600
Convertible Debt [Member] | Conversion Price One [Member]
Debt Instrument [Line Items]
Amount of principal that can be converted			$ 95,000
Debt instrument, conversion price per share	$ 0.025		$ 0.025
Convertible Debt [Member] | Conversion Price Two [Member]
Debt Instrument [Line Items]
Amount of principal that can be converted			$ 33,300
Debt instrument, conversion price per share	$ 0.05		$ 0.05

Convertible Debentures (Summary

Convertible Debentures (Summary of Warrants Activity) (Details) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016$ / sharesshares
Warrants
Warrants outstanding at beginning of period | shares	756,365
Warrants expired | shares	15,000
Warrants outstanding at end of period | shares	741,365
Price
Warrants outstanding at beginning of period | $ / shares	$ 0.022
Warrants expired | $ / shares	0.06
Warrants outstanding at end of period | $ / shares	$ 0.021

Convertible Debentures (Summa24

Convertible Debentures (Summary of Warrants Outstanding by Price Range) (Details) - Warrant [Member] - $ / shares	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options Exercise Price Range [Line Items]
Warrants outstanding exercise price range, lower limit	$ .01	$ 0.01
Warrants outstanding exercise price range, upper limit	.07	$ 0.07
Warrants expired exercise price range, lower limit	0.06
Warrants expired exercise price range, upper limit	0.06
Warrants exercisable exercise price range, lower limit	0.01
Warrants exercisable exercise price range, upper limit	$ 0.07
Weighted average remaining contractual life	4 years 1 month 6 days
Warrants exercisable, number	575,000
Warrants exercisable, weighted average exercise price	$ 0.022
Warrants exercisable, weighted average remaining contractual life	3 years 9 months 29 days

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Contingency [Line Items]
Income tax provision
Change in unrecognized tax benefits during the period
Accrual for uncertain tax positions
Minimum [Member]
Income Tax Contingency [Line Items]
Tax years open for examination			2,011
Maximum [Member]
Income Tax Contingency [Line Items]
Tax years open for examination			2,015

Related Party Transactions (Det

Related Party Transactions (Details) - Chief Executive Officer [Member] - USD ($)	1 Months Ended	6 Months Ended
	Jan. 31, 2016	Jun. 30, 2016
Related Party Transaction [Line Items]
Deferred salary paid to related party	$ 15,000
Portion of salary to related party deferred during period		$ 42,500
Deferred salary owed to related party		$ 317,900

Earnings (Loss) per Share (Deta

Earnings (Loss) per Share (Details)	3 Months Ended
	Jun. 30, 2015shares
Weighted average common shares outstanding
Number of incremental common shares resulting from the assumed conversion of warrants	1,351

Major Customer and Geographic28

Major Customer and Geographic Information (Schedule of Revenues from Non-affiliated Customers) (Details) - Revenue [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage	17.00%	64.00%	37.00%	59.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	24.00%	16.00%	23.00%	20.00%
Customer C [Member]
Revenue, Major Customer [Line Items]
Risk percentage	29.00%		12.00%

Major Customer and Geographic29

Major Customer and Geographic Information (Schedule of Non-affiliated Customers with Accounts Receivable) (Details) - Accounts Receivable [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Customer A [Member]
Concentration Risk [Line Items]
Risk percentage	21.00%	31.00%
Customer B [Member]
Concentration Risk [Line Items]
Risk percentage	29.00%	25.00%
Customer C [Member]
Concentration Risk [Line Items]
Risk percentage	17.00%

Major Customer and Geographic30

Major Customer and Geographic Information (Schedule of Revenue by Geographic Region) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 203,400	$ 316,700	$ 486,200	$ 505,100
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	100,400	109,000	226,400	198,600
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	95,600	207,700	245,000	306,500
Australia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 7,400		$ 14,800

Subsequent Events (Details)

Subsequent Events (Details) - USD ($)	Aug. 12, 2016	Jun. 30, 2016	Jun. 30, 2015
Subsequent Event [Line Items]
Repayment of demand loans		$ 9,000	$ 17,000
Subsequent Event [Member]
Subsequent Event [Line Items]
Repayment of demand loans	$ 4,500