Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 11, 2018 | |
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 | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 58,616,716 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | ||
Licenses, royalties and fees | $ 174,900 | $ 158,800 |
Product and other sales | 250,500 | 182,600 |
Total revenues | 425,400 | 341,400 |
Cost of revenues | ||
Licenses, royalties and fees | 25,000 | 21,000 |
Product and other sales | 92,200 | 72,200 |
Total cost of revenues | 117,200 | 93,200 |
Gross profit | 308,200 | 248,200 |
Operating expenses | ||
Research and development | 37,100 | 36,400 |
Sales and marketing | 70,100 | 60,900 |
General and administrative | 102,700 | 90,700 |
Total operating expenses | 209,900 | 188,000 |
Net income from operations | 98,300 | 60,200 |
Other income (expenses) | ||
Interest income | 400 | |
Interest expense, bank charges and accretion of interest | (2,900) | (16,200) |
Total other income (expenses) | (2,500) | (16,200) |
Net income | $ 95,800 | $ 44,000 |
Basic and diluted net income per common share | $ 0 | $ 0 |
Weighted average common shares outstanding | ||
Basic | 58,616,716 | 58,599,016 |
Diluted | 58,911,883 | 58,756,023 |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash | $ 346,400 | $ 360,400 |
Accounts receivable less $5,000 allowance for doubtful accounts | 382,600 | 292,100 |
Inventory | 108,600 | 110,600 |
Prepaid and other | 50,200 | 35,300 |
Total current assets | 887,800 | 798,400 |
Fixed assets | ||
Leasehold improvements | 19,700 | 19,700 |
Furniture, fixtures and equipment | 184,900 | 184,900 |
Fixed assets, gross | 204,600 | 204,600 |
Less: accumulated depreciation and amortization | 192,300 | 190,500 |
Total fixed assets | 12,300 | 14,100 |
Total assets | 900,100 | 812,500 |
Current liabilities | ||
Convertible debentures | 128,300 | 128,300 |
Accounts payable | 49,200 | 4,900 |
Accrued expenses | 315,500 | 364,700 |
Deferred revenue | 99,400 | |
Total current liabilities | 493,000 | 597,300 |
Stockholders' equity | ||
Common stock, $0.01 par value Authorized - 75,000,000 shares Issued and outstanding 2017 - 58,616,716 shares | 586,200 | 586,200 |
Paid-in capital | 12,440,000 | 12,440,000 |
Accumulated deficit | (12,619,100) | (12,811,000) |
Total stockholders' equity | 407,100 | 215,200 |
Total liabilities and stockholders' equity | $ 900,100 | $ 812,500 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
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 | 58,616,716 | 58,616,716 |
Common stock, shares outstanding | 58,616,716 | 58,616,716 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating Activities | ||
Net income | $ 95,800 | $ 44,000 |
Adjustments to reconcile net income to net cash used in operating activities | ||
Depreciation and amortization | 1,800 | 1,700 |
Accretion of interest - convertible debentures | 13,200 | |
Cumulative effect of accounting change | 96,100 | |
Net income adjusted for non-cash operating activities | 193,700 | 58,900 |
(Increase) decrease in assets | ||
Accounts receivable | (90,500) | (40,100) |
Inventory | 2,000 | 9,800 |
Prepaid and other | (14,900) | (3,400) |
Decrease in liabilities | ||
Accounts payable and accrued expenses | (4,900) | (67,900) |
Deferred revenue | (99,400) | (5,600) |
Total increase in operating capital | (207,700) | (107,200) |
Net cash used in operating activities | (14,000) | (48,300) |
Investing Activities | ||
Additions to fixed assets | (700) | |
Net cash used in investing activities | (700) | |
Financing Activities | ||
Decrease in cash | (14,000) | (49,000) |
Cash at beginning of year | 360,400 | 199,100 |
Cash at end of period | $ 346,400 | $ 150,100 |
Financial Statements
Financial Statements | 3 Months Ended |
Mar. 31, 2018 | |
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 2017 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 2017 Annual Report on Form10-K should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months ended March 31, 2018 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 is equal to net income. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Note 2. Revenues On January 1, 2018, the Company adopted ASU 214-09, Revenue from Contracts with Customers Revenue Recognition The Company recorded a decrease to the opening balance of the accumulated deficit of $96,100 and a corresponding charge to deferred revenue as of January 1, 2018 due to the cumulative impact of the adoption of Topic 606. The impact to the revenue for the quarter ended March 31, 2018 as a result of applying Topic 606 was not material. The disclosure of disaggregated revenue is disclosed in Note 9. The adoption of the new guidance affected our recognition of revenue from licenses and royalties. Under our previous accounting practice, we recognized revenue from licenses and royalties on a straight-line basis over the term of the related license agreement. As a result of our adoption of the new guidance, we will recognize revenue from licensees and royalties at a point in time when the term begins. The change in accumulated deficit on our Balance Sheet at March 31, 2018, including the aggregate impact of the change in accounting principles which was effective on January 1, 2018, was as follows: Accumulated deficit January 1, 2018 $ (12,811,000 ) Net earnings 95,800 Cumulative effect of accounting change 96,100 Accumulated deficit March 31, 2018 $ (12,619,100 ) |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
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 |
Convertible Debentures
Convertible Debentures | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt [Abstract] | |
Convertible Debentures | Note 4. Convertible Debentures At March 31, 2018, the Company had convertible debentures totaling $128,300 outstanding, which are due during the third quarter of 2018. The convertible debentures bear interest at 7%. At the option of the lender, the debentures and accrued interest are convertible in whole or part into common stock of the Company at $0.025 per share. In March 2017, the Companys Board of Directors approved the extension of three convertible debentures totaling $33,300 that had matured in the third quarter of 2016, one of which is held by a Director of the Company. The maturity dates of the convertible debentures are extended for two years and the conversion rate of the debentures and accrued interest into Common Stock of the Company is reduced from $0.05 to $0.025. In accordance with FASB ASC 470, this modification was recorded as a debt discount to the notes payable of approximately $13,300 with an offsetting credit to additional paid-in capital. This modification of the $33,300 principal of the debentures and accrued interest would result in the issuance of 944,953 additional shares of Common Stock of the Company if the entire $33,300 principal and all accrued interest through maturity were converted into Common Stock of the Company at the new maturity dates. In the fourth quarter of 2017, the holders of $95,000 of convertible debentures agreed to extend the maturity dates of those convertible debentures for one year with no change in the terms or conditions of the debentures. The Company also granted warrants to purchase 691,365 shares of the Companys 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 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 has been accreted through interest expense over the term of the notes payable. 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 has been accreted through interest expense over the term of the notes payable. The following table summarizes the Companys warrant position at March 31, 2018 and December 31, 2017: Weighted Average Number Exercise Exercise of Shares Price Price Outstanding warrants - December 31, 2017 691,365 $ 0.02 $ 0.02 Outstanding warrants - March 31, 2018 691,365 $ 0.02 $ 0.02 Weighted average remaining contractual life (years) 2.58 Exercisable warrants - March 31, 2018 691,365 $ 0.02 $ 0.02 Weighted average remaining contractual life (years) 2.58 |
Other Income (Expenses)
Other Income (Expenses) | 3 Months Ended |
Mar. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Other Income (Expenses) | Note 5. Other Income (Expenses) Other income (expenses) in the three months ended March 31, 2018 and March 31, 2017 includes interest on convertible debentures held by nine investors and, in the three months ended March 31, 2017, interest on an unsecured loan from an individual. Also included in other income (expenses) is accretion of debt discounts in the three months ended March 31, 2017 related to the extension of the maturity dates of $33,300 of convertible debentures. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6. Income Taxes There is no provision for income taxes for the three months ended March 31, 2018 and March 31, 2017 due to the availability of net operating loss carryforwards. The Company has established a valuation allowance for the entire amount of benefits resulting from the Companys net operating loss carryforwards because the Company has determined that the realization of the net deferred tax asset is not assured. There was no change in unrecognized tax benefits during the period ended March 31, 2018 and there was no accrual for uncertain tax positions as of March 31, 2018. Tax years from 2014 through 2017 remain subject to examination by U.S. federal and state jurisdictions. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7. Related Party Transactions During the three months ended March 31, 2018 and March 31, 2017, the Company paid $70,900 and $95,500, respectively, to Michael A. Feinstein, M.D., the Companys 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 each of the three month periods ended March 31, 2018 and March 31, 2017, Dr. Feinstein deferred $21,250 of salary. At March 31, 2018, Dr. Feinstein was owed approximately $150,300 of salary deferred by him. Since March 31, 2018, Dr. Feinstein has been paid approximately $118,600 of salary previously deferred by him. There is no interest payable on the deferred salary. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2018 | |
Weighted average common shares outstanding | |
Earnings per Share | Note 8. Earnings per Share In accordance with FASB ASC 260, Earnings per Share |
Major Customer and Geographic I
Major Customer and Geographic Information | 3 Months Ended |
Mar. 31, 2018 | |
Major Customer and Geographic Information [Abstract] | |
Major Customer and Geographic Information | Note 9. Major Customer and Geographic Information The Companys revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Companys total revenues were: Three Months ended March 31 2018 2017 Customer A 40 % 33 % Customer B 27 % 28 % Customer C 15 % 12 % The Companys non-affiliate customers, whose individual balances amounted to more than 10% of the Companys net accounts receivable, expressed as a percentage of net accounts receivable, were: March 31 December 31 2018 2017 Customer A 41 % 14 % Customer B 30 % 47 % Customer C 17 % 15 % 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 Companys business operations and financial condition. The Companys revenues by geographic region are as follows: Three Months ended March 31 2018 2017 North America $ 184,900 $ 175,100 South America 1,500 Asia 239,000 158,900 Australia 7,400 $ 425,400 $ 341,400 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Change in Accumulated Deficit Balance | The change in accumulated deficit on our Balance Sheet at March 31, 2018, including the aggregate impact of the change in accounting principles which was effective on January 1, 2018, was as follows: Accumulated deficit January 1, 2018 $ (12,811,000 ) Net earnings 95,800 Cumulative effect of accounting change 96,100 Accumulated deficit March 31, 2018 $ (12,619,100 ) |
Convertible Debentures (Tables)
Convertible Debentures (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Debt [Abstract] | |
Schedule of Warrants Outstanding | The following table summarizes the Companys warrant position at March 31, 2018 and December 31, 2017: Weighted Average Number Exercise Exercise of Shares Price Price Outstanding warrants - December 31, 2017 691,365 $ 0.02 $ 0.02 Outstanding warrants - March 31, 2018 691,365 $ 0.02 $ 0.02 Weighted average remaining contractual life (years) 2.58 Exercisable warrants - March 31, 2018 691,365 $ 0.02 $ 0.02 Weighted average remaining contractual life (years) 2.58 |
Major Customer and Geographic17
Major Customer and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Revenues from Non-affiliated Customers | The Companys revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Companys total revenues were: Three Months ended March 31 2018 2017 Customer A 40 % 33 % Customer B 27 % 28 % Customer C 15 % 12 % |
Schedule of Non-affiliated Customers with Accounts Receivable More Than 10% | The Companys non-affiliate customers, whose individual balances amounted to more than 10% of the Companys net accounts receivable, expressed as a percentage of net accounts receivable, were: March 31 December 31 2018 2017 Customer A 41 % 14 % Customer B 30 % 47 % Customer C 17 % 15 % |
Schedule of Revenue by Geographic Region | The Companys revenues by geographic region are as follows: Three Months ended March 31 2018 2017 North America $ 184,900 $ 175,100 South America 1,500 Asia 239,000 158,900 Australia 7,400 $ 425,400 $ 341,400 |
Revenues (Details)
Revenues (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue from Contract with Customer [Abstract] | ||
Accumulated deficit | $ (12,811,000) | |
Net earnings | 95,800 | $ 44,000 |
Cumulative effect of accounting change | 96,100 | |
Accumulated deficit | $ (12,619,100) |
Stock Based Compensation (Detai
Stock Based Compensation (Details) | Mar. 31, 2018USD ($) |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Unrecognized portion of expense related to stock option grants | $ 0 |
Convertible Debentures (Narrati
Convertible Debentures (Narrative) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||
Interest expense | $ 2,900 | $ 16,200 |
Convertible Debt [Member] | ||
Debt Instrument [Line Items] | ||
Convertible debt amount outstanding | 128,300 | |
Convertible debt due during the third quarter of 2018 | $ 128,300 | |
Debt instrument, interest rate | 7.00% | |
Number of shares of common stock that can be purchased through warrants | 691,365 | |
Price per share of warrants | $ 0.02 | |
Warrant exercisable term | 2 years | 2 years |
Warrant expiration term | 7 years | 7 years |
Convertible Debt [Member] | Price One [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument, conversion price per share | $ 0.025 | |
Convertible Debt [Member] | Price Two [Member] | ||
Debt Instrument [Line Items] | ||
Amount of principal that can be converted | $ 33,300 | |
Debt instrument, conversion price per share | $ 0.05 | |
Debt discount recognized on notes payable | $ 13,300 | |
Accretion of debt discount recognized as interest expense | $ 13,300 | |
Shares issued if converted | 944,953 |
Convertible Debentures (Warrant
Convertible Debentures (Warrants Activity) (Details) - Warrant [Member] - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Warrants | ||
Warrants outstanding | 691,365 | 691,365 |
Exercise price | $ 0.02 | $ 0.02 |
Weighted average exercise price | $ 0.02 | 0.02 |
Weighted average remaining contractual life | 2 years 6 months 29 days | |
Exercisable | 691,365 | |
Exercisable weighted average exercise price | $ 0.02 | $ 0.02 |
Exercisable weighted average remaining contractual life | 2 years 6 months 29 days |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Contingency [Line Items] | ||
Income tax provision | ||
Change in unrecognized tax benefits during the period | ||
Accrual for uncertain tax positions | ||
Minimum [Member] | ||
Income Tax Contingency [Line Items] | ||
Tax years open for examination | 2,014 | |
Maximum [Member] | ||
Income Tax Contingency [Line Items] | ||
Tax years open for examination | 2,017 |
Related Party Transactions (Det
Related Party Transactions (Details) - Related Party [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Deferred salary paid to related party | $ 70,900 | $ 95,500 |
Portion of salary to related party deferred during period | 21,250 | $ 21,250 |
Deferred salary owed to related party | 150,300 | |
Salary paid previously deferred | $ 118,600 |
Earnings per Share (Details)
Earnings per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Weighted average common shares outstanding | ||
Number of incremental common shares resulting from the assumed conversion of warrants | 295,167 | 157,007 |
Major Customer and Geographic25
Major Customer and Geographic Information (Schedule of Revenues from Non-affiliated Customers) (Details) - Revenue [Member] | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Customer A [Member] | ||
Revenue, Major Customer [Line Items] | ||
Risk percentage | 40.00% | 33.00% |
Customer B [Member] | ||
Revenue, Major Customer [Line Items] | ||
Risk percentage | 27.00% | 28.00% |
Customer C [Member] | ||
Revenue, Major Customer [Line Items] | ||
Risk percentage | 15.00% | 12.00% |
Major Customer and Geographic26
Major Customer and Geographic Information (Schedule of Non-affiliated Customers with Accounts Receivable) (Details) - Accounts Receivable [Member] | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Customer A [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 41.00% | 14.00% |
Customer B [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 30.00% | 47.00% |
Customer C [Member] | ||
Concentration Risk [Line Items] | ||
Risk percentage | 17.00% | 15.00% |
Major Customer and Geographic27
Major Customer and Geographic Information (Schedule of Revenue by Geographic Region) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 425,400 | $ 341,400 |
North America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 184,900 | 175,100 |
South America [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 1,500 | 0 |
Asia [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 239,000 | 158,900 |
Australia [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 0 | $ 7,400 |