-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UkQAe/SXGSXNDBfLxP5ANW5VHRkTlEweLQJrNYrv8wFvz2u9MvPtE7P6o5H40cS9 d2bAtkp4RdNZNQXW+4lk7Q== 0000950115-97-001765.txt : 19971117 0000950115-97-001765.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950115-97-001765 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOCOPI TECHNOLOGIES INC/MD/ CENTRAL INDEX KEY: 0000888981 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SERVICES, NEC [8900] IRS NUMBER: 870406496 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20333 FILM NUMBER: 97719427 BUSINESS ADDRESS: STREET 1: 230 SUGARTOWN RD STREET 2: STE 100 CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6106872000 MAIL ADDRESS: STREET 1: NOCOPI TECHNOLOGIES INC STREET 2: 230 SUGARTOWN RD STE 100 CITY: WAYNE STATE: PA ZIP: 19087 10-Q 1 QUARTERLY REPORT ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1997 Commission File No. 0-20333 NOCOPI TECHNOLOGIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) MARYLAND 87-0406496 ----------------------------------- -------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 230 Sugartown Road, Suite 100, Wayne, PA 19087 ------------------------------------------------------ (Address of principal executive offices) Registrant's telephone number, including area code: 610-687-2000 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. YES X NO ----- ----- Number of shares of common stock outstanding: Shares outstanding Title of each class at November 1, 1997 ------------------- ------------------- Common stock, par value 14,080,654 $.01 per share ================================================================================ NOCOPI TECHNOLOGIES, INC. ------------------------- INDEX ----- Part 1. FINANCIAL INFORMATION Item 1. Financial Statements PAGE ---- Statements of Operations Three Months and Nine Months Ended September 30, 1997 and September 30, 1996 1 Balance Sheets September 30, 1997 and December 31, 1996 2 Statements of Cash Flows Nine Months Ended September 30, 1997 and September 30, 1996 3 Notes to Financial Statements 4 - 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 11 Part II. OTHER INFORMATION 12 Signatures 13 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Nocopi Technologies, Inc. Statements of Operations (unaudited)
Three Months ended Nine Months ended September 30 September 30 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Revenues Licenses, royalties and fees $503,500 $698,800 $1,786,800 $2,309,800 Product and other sales 60,500 252,400 842,800 453,100 ---------- ---------- ---------- ---------- 564,000 951,200 2,629,600 2,762,900 Cost of sales Licenses, royalties and fees 96,400 98,400 517,000 370,100 Product and other sales 59,800 248,500 831,400 409,300 ---------- ---------- ---------- ---------- 156,200 346,900 1,348,400 779,400 ---------- ---------- ---------- ---------- Gross profit 407,800 604,300 1,281,200 1,983,500 Operating expenses Research and development 125,500 199,700 467,500 596,400 Sales and marketing 171,800 386,400 652,400 1,109,800 General and administrative 235,000 286,800 754,400 808,100 ---------- ---------- ---------- ---------- 532,300 872,900 1,874,300 2,514,300 ---------- ---------- ---------- ---------- Loss from operations (124,500) (268,600) (593,100) (530,800) Other income (expenses) Amortization (6,300) (6,300) (19,000) (19,000) Interest income 4,300 27,000 25,400 92,100 Interest and bank charges (18,000) (17,500) (53,800) (52,300) Ownership interest of others in loss of consolidated entity 102,000 95,800 301,200 ---------- ---------- ---------- ---------- (20,000) 105,200 48,400 322,000 ---------- ---------- ---------- ---------- Net loss ($144,500) ($163,400) ($544,700) ($208,800) ========== ========== ========== ========== Loss per common share ($.01) ($.01) ($.04) ($.01) Average common shares outstanding 14,080,654 14,080,654 14,080,654 14,063,257
See notes to financial statements. 1 Nocopi Technologies, Inc. Consolidated Balance Sheets (unaudited)
September 30 December 31 1997 1996 ------------ ----------- Assets Current assets Cash and cash equivalents $407,700 $2,229,200 Accounts receivable less allowance 330,700 513,400 Inventory 2,100 5,100 Prepaid and other 73,700 105,300 ---------- ---------- Total current assets 814,200 2,853,000 Fixed assets Leasehold improvements 45,600 43,200 Furniture, fixtures and equipment 418,500 435,000 ---------- ---------- 464,100 478,200 Less: accumulated depreciation 348,100 296,600 ---------- ---------- 116,000 181,600 Other assets Patents, net of accumulated amortization 482,500 452,000 Debt issue costs, net of accumulated amortization 12,600 31,600 Other 11,500 14,300 ---------- ---------- 506,600 497,900 ---------- ---------- Total assets $1,436,800 $3,532,500 ========== ========== Liabilities and Shareholders' Equity (Deficit) Current liabilities Current debt obligations $950,000 Accounts payable 191,700 $539,800 Accrued expenses 277,500 139,900 Accrued commissions 145,400 118,100 Deferred revenue 131,400 164,200 ---------- ---------- Total current liabilities 1,696,000 962,000 Long-term notes payable 950,000 Accumulated share of loss of deconsolidated affiliate in excess of cost 170,400 Ownership interest of others in consolidated entity 1,448,300 Shareholders' equity (deficit) Common stock, $.01 par value Authorized - 50,000,000 shares Issued and outstanding 14,080,654 shares 140,800 140,800 Paid-in capital 7,651,000 7,651,000 Currency translation adjustment 57,100 Accumulated deficit (8,221,400) (7,676,700) ---------- ---------- (429,600) 172,200 ---------- ---------- Total liabilities and shareholders' equity (deficit) $1,436,800 $3,532,500 ========== ==========
See notes to financial statements. 2 Nocopi Technologies, Inc. Statements of Cash Flows (unaudited)
Nine Months ended September 30 1997 1996 ---------- --------- Operating Activities Net loss ($544,700) ($208,800) Adjustments to reconcile net loss to cash from operating activities Depreciation 67,600 64,600 Amortization 62,300 58,500 Allowance for doubtful accounts 17,300 12,400 Ownership interest of others in loss of consolidated entity (95,800) (301,200) ---------- --------- (493,300) (374,500) Changes in working capital Accounts receivable (26,300) 6,600 Inventory 3,000 14,200 Prepaid and other (7,300) 4,700 Accounts payable and accrued expenses 254,000 75,600 Deferred revenue 50,700 (1,000) ---------- --------- 274,100 100,100 ---------- --------- Cash used by operating activities (219,200) (274,400) Investing Activities Additions to fixed assets (11,100) (51,400) Additions to patents (71,000) (44,900) Deconsolidation of affiliate (1,419,100) ---------- --------- Cash used by investing activities (1,501,200) (96,300) Financing Activities Exercise of stock options 128,500 ---------- --------- Cash provided by financing activities 128,500 Effect of exchange rate changes on cash (101,100) (106,400) ---------- --------- Decrease in cash and cash equivalents (1,821,500) (348,600) Cash and cash equivalents - beginning of period 2,229,200 2,982,100 ---------- --------- Cash and cash equivalents - end of period $407,700 $2,633,500 ========== ==========
See notes to financial statements. 3 NOCOPI TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) Note 1. Financial Statements The accompanying interim financial statements have been prepared by the Company without audit. 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, except as described in Note 2, using the accounting policies described in the summary of Accounting Policies included in the Company's 1996 Annual Report. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Notes to Financial Statements included in the 1996 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results are not necessarily indicative of the operating results expected for the full year. Note 2. Basis of Presentation Prior to April 1, 1997, the financial statements included the accounts of the Company and Euro-Nocopi S.A. (Euro), the European affiliate of the Company, on a consolidated basis. Consolidation was appropriate due to the operational and financial control the Company exercised over Euro. Additionally, the Company held approximately an 18% interest in Euro and warrants permitting it to increase its interest in Euro to 55%. During the second quarter of 1997, the Company ceased to exercise effective control over Euro. The cessation of effective control resulted from a dispute which arose in April 1997 between the Company and Euro under the license agreement between the Company and Euro concerning Euro's contention that it was entitled to a share of certain minimum royalties under a worldwide agreement with a manufacturer who distributes products incorporating the Company's technologies. In an agreement negotiated during the second quarter of 1997 and concluded in July 1997, the Company agreed to credit Euro $154,500 as Euro's share of previously collected minimum royalties, the $154,500 to be applied to license fee payments due the Company by Euro through the first quarter of 1998. 4 The Company also agreed to pay Euro 35% of future guaranteed royalties from this manufacturer. The $154,500 settlement was charged to cost of sales and was included in the results of operations for the six months ended June 30, 1997. The Company also agreed to modify its warrant by extending its term through December 2001 but making it exercisable beginning the earlier of 1) January 1, 2001; 2) in the event of a sale of all or part of Euro; or 3) in the event of a public listing of Euro's shares on a stock market. In addition, the Company agreed to defer to January 1, 2001 its right to acquire, under certain conditions, all remaining shares of Euro for shares of the Company. This call right expires December 31, 2001. Additionally, the licensing agreement between the two companies was amended relative to the negotiation of future worldwide licensing contracts and the five directors of Euro who were also Nocopi directors resigned from Euro's Board. As the Company ceased to exercise effective control and the financial information for Euro's second and third quarter was not made available to the Company, the Company ceased consolidating as of April 1, 1997 and did not apply the equity method of accounting for the six months ended September 30, 1997. The Company's 18% share of Euro's accumulated loss from inception through March 1997 in excess of the Company's investment, totaling $170,400, has been recorded as a deferred credit on the balance sheet. Note 3. Recently Issued Accounting Standards In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per share." This Statement establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. This Statement is effective for financial statements issued for periods ending after December 15, 1997 (earlier application is not permitted). This Statement requires restatement of all prior-period EPS data presented. The Company is currently evaluating the impact, if any, adoption of SFAS No. 128 will have on its financial statements. 5 Item 2. NOCOPI TECHNOLOGIES, INC. ------------------------- Management's Discussion and Analysis of Financial Condition and Results of Operations Basis of Presentation Prior to April 1, 1997, the financial statements included the accounts of the Company and Euro-Nocopi S.A. (Euro), the European affiliate of the Company, on a consolidated basis. Consolidation was appropriate due to the operational and financial control the Company exercised over Euro. Additionally, the Company held approximately an 18% interest in Euro and warrants permitting it to increase its interest in Euro to 55%. During the second quarter of 1997, the Company ceased to exercise effective control over Euro. The cessation of effective control resulted from a dispute which arose in April 1997 between the Company and Euro under the license agreement between the Company and Euro concerning Euro's contention that it was entitled to a share of certain minimum royalties under a worldwide agreement with a manufacturer who distributes products incorporating the Company's technologies. In an agreement negotiated during the second quarter of 1997 and concluded in July 1997, the Company agreed to credit Euro $154,500 as Euro's share of previously collected minimum royalties, the $154,500 to be applied to license fee payments due the Company by Euro through the first quarter of 1998. The Company also agreed to pay Euro 35% of future guaranteed royalties from this manufacturer. The $154,500 settlement has been charged to cost of sales and was included in the results of operations for the six months ended June 30, 1997. The Company also agreed to modify its warrant by extending its term through December 2001 but making it exercisable beginning the earlier of 1) January 1, 2001; 2) in the event of a sale of all or part of Euro; or 3) in the event of a public listing of Euro's shares on a stock market. In addition, the Company agreed to defer to January 1, 2001 its right to acquire, under certain conditions, all remaining shares of Euro for shares of the Company. This call right expires December 31, 2001. Additionally, the licensing agreement between the two companies was amended relative to the negotiation of future worldwide licensing contracts and the five directors of Euro who were also Nocopi directors resigned from Euro's Board. As the Company ceased to exercise effective control and the financial information for Euro's second and third quarter was not made available to the Company, the Company ceased consolidating as of April 1, 1997 and did not apply the equity method of accounting for the six months ended September 30, 1997. The Company's 18% share of Euro's accumulated loss from inception through March 1997 in excess of the Company's investment, totaling $170,400, has been recorded as a deferred credit on the balance sheet. 6 Results of Operations The Company's revenues are derived from royalties paid by licensees of the Company's technologies, fees for the provision of technical services to licensees and from the direct sale of products incorporating the Company's technologies, principally pressure sensitive labels. Royalties consist of guaranteed minimum royalties payable by the Company's licensees in certain cases and additional royalties which typically vary with the licensee's sales of products incorporating the licensed technology. Service fee and sales revenues vary directly with the number of units of service or product provided. Because the Company has a relatively high level of fixed costs, its 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 amounts of the Company's revenues and the mix among the various sources of revenue are subject to substantial fluctuation. The Company has 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 the Company's total revenue and on its revenue mix and overall financial performance. Such changes may result from a customers product development delays, engineering changes, changes in product marketing strategies and the like. In addition, as certain customers have developed experience with the Company's technologies, they have sought to renegotiate certain provisions of their license agreements and, when the Company agrees to revise terms, revenues from the customer may be affected. Revenues for the third quarter of 1997 were $564,000 compared to $951,200 in the third quarter of 1996, a decrease of $387,200. The decline is attributable to a reduction of product sales of approximately $200,000, principally pressure sensitive labels, in the third quarter of 1997 compared to the third quarter of 1996 as well as lower licenses, royalties and fees, in part due to the change in accounting for Euro, whose revenues are not consolidated in the third quarter of 1997. The Company's third quarter 1996 results included revenues of $80,000 attributable to Euro. In addition, domestic licenses, royalties and fees declined by approximately $100,000 due to lower minimum license fees due under renegotiated contracts with 3M Corporation and Georgia-Pacific offset in part by increased license fees and royalties from new and existing end-user customers. Revenues for the first nine months of 1997 were $2,629,600 compared to $2,762,900 in the first nine months of 1996, a decrease of 5%. The decrease is attributable to the exclusion of Euro's revenues for periods subsequent to March 31, 1997, an approximate reduction of $450,000 in domestic licenses, royalties 7 and fees principally attributable to lower guaranteed license fees from 3M and Georgia-Pacific offset in part by increased sales of products, primarily security labels during the second quarter of 1997. The Company's results for the six months ended September 30, 1996 included revenues of $180,000 attributable to Euro. The Company's gross profit declined to $407,800 or 72% of revenues in the third quarter of 1997 compared to $604,300 or 64% or revenues in the third quarter of 1996. The decline in the third quarter in absolute dollars is attributable to lower domestic licenses, royalties and fees of approximately $100,000 and the change in accounting for Euro whose revenues and costs were not included with those of the Company in the third quarter of 1997. The higher gross profit as a percentage of revenues in the third quarter of 1997 is due primarily to the change in revenue mix in favor of licenses, royalties and fees as product sales declined during to the third quarter of 1997 compared to the third quarter of 1996. Revenues derived from licenses, royalties and fees carry a substantially higher gross margin than those derived from product and other sales. For the first nine months of 1997, the gross profit declined to $1,281,200 or 49% of revenues from $1,983,500 or 72% of revenues in the first nine months of 1996. The decline in gross profit, both in absolute dollars and as a percentage of revenues is due to three factors: 1). Lower licenses, royalties and fees resulting from the exclusion of Euro's revenues in periods subsequent to March 31, 1997 as well as lower domestic licenses, royalties and fees; 2). Higher levels of product sales during the first six months of 1997 whose profit margins are significantly lower than those realized on licenses, royalties and fees; and 3). The Company recorded one-time charge to cost of sales totaling $154,500 in the first half of 1997 in connection with the settlement of its dispute with Euro. Research and development expenses declined to $125,500 in the third quarter of 1997 from $199,700 in the third quarter of 1996 and to $467,500 in the first nine months of 1997 from $596,400 in the first nine months of 1996. The reduction in both the third quarter and first nine months of 1997 results from the exclusion of Euro's costs from the statement of operations in periods subsequent to March 31, 1997 and the expansion in the third quarter of 1997 of a cost containment program implemented earlier in the year. Sales and marketing expenses declined to $171,800 in the third quarter of 1997 from $386,400 in the third quarter of 1996. For the first nine months of 1997, sales and marketing expenses were $652,400 compared to $1,109,800 in the first nine months of 1996. Euro's sales and marketing expenses for the third quarter and first nine months of 1996 were $127,600 and $402,200, respectively. The exclusion of Euro's expenses from the consolidated statement of operations from periods subsequent to March 31, 1997 is the principal reason for the decline in sales and marketing expenses compared to the third quarter and nine months of the prior year. Additionally, the Company's domestic sales and marketing expenses declined in the third quarter and first nine months of 1997 8 as a result of fewer sales personnel, lower commissions and lower discretionary sales promotion expenses as the Company sought to conserve cash. General and administrative expenses declined to $235,000 in the third quarter of 1997 from $286,800 in the third quarter of 1996. For the first nine months of 1997, general and administrative expenses were $754,400 compared to $808,100 in the first nine months of 1996. The decline for the third quarter and first nine months is due primarily to the exclusion of the general and administrative expenses associated with Euro in periods subsequent to March 31, 1997 offset in part by higher legal and professional expenses and costs associated with the Company's international patent activities. The Company also incurred legal expenses in the second quarter of 1997 related to the restructuring of its ownership and license arrangements with Euro. Other income (expenses) include interest on the Series B 7% Subordinated Convertible Promissory Notes issued in May 1993 and amortization of debt issue costs related to the Notes. Interest income includes interest on funds invested in the U.S. as well as the investment of funds held by Euro during the periods that its accounts were included in the Company's financial statements. Ownership interest of others in loss of consolidated entity represents the proportionate share in the loss of Euro attributable to the 82% ownership interest of the outside shareholders of that company. The net loss decreased in the third quarter of 1997 to $144,500 from $163,400 in the third quarter of 1996. For the first nine months of 1997, the net loss was $544,700 compared to $208,800 in the first nine months of 1996. The Company's share of Euro's loss for the third quarter and first nine months of 1996 was $21,600 and $63,900, respectively. Liquidity and Capital Resources The Company's cash and cash equivalents decreased to $407,700 at September 30, 1997. The Company's consolidated cash and cash equivalent position at December 31, 1996 was $2,229,200 of which $1,641,200 was held by Euro and $588,000 was held by the Company. The amount held by Euro was available primarily to fund Euro's operations. Because the financial statements of the Company can no longer be consolidated with those of Euro, the cash position declined by the $1,641,200 held by Euro-Nocopi at December 31, 1996. The Company's domestic cash position declined to $407,700 at September 30, 1997 from $588,000 at December 31, 1996. The cash was used primarily to fund operations over the nine month period. 9 In early November 1997, the Company completed initial closings under an offering of up to 10,666,667 investment units in Europe, each consisting of two shares of common stock and one five-year stock purchase warrant, at an initial price of $.30 per unit. A total of 9,066,674 units were sold. Proceeds of the initial closings totaled $2,720,000 ($2,502,000 net of placement fees) and increased the Company's cash position to approximately $2.8 million at November 12, 1997. There can be no assurances that the Company will be successful in completing the sale of the full 10,666,667 investment units in the on-going offering. Current debt obligations represent the reclassification of the Company's $950,000 Series B 7% Subordinated Convertible Promissory Notes due March 31, 1998 into current liabilities. Until August 1997, the Company had a line of credit with a bank for up to $1 million secured by a pledge of securities, including equity securities, made by certain directors. The line of credit was cancelled in August 1997 and the collateral returned to the pledgors of the collateral. During the time that the line of credit was in effect, there had been no funds drawn against it by the Company. The Company does not currently plan any significant capital investment in the foreseeable future. The Company's believes that it has sufficient working capital to support its operations and debt service requirements over the next twelve months. The foregoing contains forward looking information within the meaning of the Private Securities Litigation Act of 1995. Such forward looking statements involve certain risks and uncertainties including the particular factors described in this Management Discussion and Analysis. In each case actual results may differ materially from such forward looking statements. The Company does not undertake to publicly update or revise its forward looking statements even if experience or future changes make it clear that any projected results (expressed or implied) will not be realized. Other Factors That May Affect Future Growth and Stock Price The Company's operating results and stock price are adversely affected by the Company's current liquidity previously discussed and, in addition, are dependent upon a number of factors, some of which are beyond the Company's control. These include: Uneven Pattern of Quarterly and Annual Operating Results. The Company's revenues, which are derived primarily from licensing and royalties, are difficult to forecast due to the long sales cycle for the Company's technologies, the potential for customer delay or deferral of implementation of the Company's technologies, the size and timing of inception of individual license agreements, the success of the Company's licensees and strategic 10 partners in exploiting the market for the licensed products, modifications of customer budgets, and uneven patterns of royalty revenue and product orders. As the Company's revenue base is not substantial, delays in finalizing license contracts, implementing the technology to initiate the revenue stream and customer ordering decisions can have a material adverse effect on the Company's quarterly and annual revenue expectations and, as the Company's operating expenses are substantially fixed, income expectations will be subject to a similar adverse outcome. New Business Opportunities. The Company, with limited research and development resources, is compelled to develop new technologies, which it believes will enhance and expand its position in the anti-counterfeiting and anti-diversion marketplace it serves. There can be no assurance that the resources expended in this effort will generate significant revenues for the Company. Intellectual Property. The Company relies on a combination of protections provided under applicable international patent, trademark and trade secret laws. It also relies on confidentially, non-analysis and licensing agreements to establish and protect its rights in its proprietary technologies. While the Company actively attempts to protect these rights, the Company's technologies could possibly be compromised through reverse engineering or other means. There can be no assurance that the Company will be able to protect the basis of its technologies from discovery by unauthorized third parties, thus adversely affecting its customer and licensee relationships. Volatility of Stock Price. The market price for the Company's common stock has historically experienced significant fluctuations and may continue to do so. The Company has, since its inception, operated at a loss and has not produced revenue levels traditionally associated with publicly traded companies. The Company's common stock is not listed on a national or regional securities exchange and, consequently, the Company receives limited publicity regarding its business achievements and prospects nor is it extensively followed by securities analysts and traders. The market price may be affected by announcements of new relationships or modifications to existing relationships. The stock prices of many developing public companies, particularly those with small capitalizations have experienced wide fluctuations not necessarily related to operating performance. Such fluctuations may adversely affect the market price of the Company's common stock. 11 PART II - OTHER INFORMATION Item 1. Legal Proceedings Not Applicable Item 2. Changes in Securities Not Applicable Item 3. Defaults Upon Senior Securities Not Applicable Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information Not Applicable Item 6. Exhibits and Reports on Form 8-K (a). Exhibit 11 - Computation of loss per common share. (b). Exhibit 27 - Financial Data Schedule (c). The Registrant filed the following Current Report on Form 8-K during the quarter ended September 30, 1997. August 25, 1997 - Change in Registrant's Certifying Accountant. 12 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NOCOPI TECHNOLOGIES, INC. DATE: November 13, 1997 /s/ Richard A. Check -------------------- Richard A. Check President & Chief Executive Officer DATE: November 13, 1997 /s/ Rudolph A. Lutterschmidt ---------------------------- Rudolph A. Lutterschmidt Vice President & Chief Financial Officer 13 EX-11 2 COMPUTATION OF LOSS PER COMMON SHARE NOCOPI TECHNOLOGIES, INC. COMPUTATION OF LOSS PER COMMON SHARE EXHIBIT 11
Three Months ended September 30 Nine Months ended September 30 1997 1996 1997 1996 ---- ---- ---- ---- Primary Net loss applicable to common shares ($144,500) ($163,400) ($544,700) ($208,800) ============ ============ ============ ============ Weighted average common shares outstanding 14,080,654 14,080,654 14,080,654 14,063,257 Dilutive shares - based on the treasury stock method using the average market price (1) 20,094 103 57,615 ------------ ------------ ------------ ------------ 14,080,654 14,100,748 14,080,757 14,120,872 ============ ============ ============ ============ Per share amount applicable to net loss ($.01) ($.01) ($.04) ($.01) Three Months ended September 30 Nine Months ended September 30 1997 1996 1997 1996 ---- ---- ---- ---- Fully diluted Net loss ($144,500) ($163,400) ($544,700) ($208,800) Add interest on Series B notes 16,700 16,700 49,900 49,900 Deduct ownership interest of others in consolidated entity (102,000) (95,800) (301,200) ------------ ------------ ------------ ------------ Net loss applicable to common shares ($127,800) ($248,700) ($590,600) ($460,100) ============ ============ ============ ============ Weighted average common shares outstanding 14,080,654 14,080,654 14,080,654 14,063,257 Dilutive shares - based on the treasury stock method using the greater of the period-end market price or the average market price (2) 1,292,706 1,312,800 1,292,809 1,350,321 ------------ ------------ ------------ ------------ 15,373,360 15,393,454 15,373,463 15,413,578 ============ ============ ============ ============ Per share amount applicable to net loss ($.01) ($.02) ($.04) ($.03)
- ---------- (1) represents shares resulting from stock options and warrants. (2) represents shares resulting from stock options, warrants and the assumed conversion of the convertible notes and Euro-Nocopi S.A. stock. EX-27 3 FDS
5 9-MOS DEC-31-1996 SEP-30-1997 407,700 0 376,800 46,100 2,100 814,200 464,100 348,100 1,436,800 1,696,000 0 0 0 140,800 (570,400) 1,436,800 2,629,600 2,629,600 1,348,400 1,348,400 0 17,300 53,800 (544,700) 0 (544,700) 0 0 0 (544,700) (0.04) (0.04)
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