0001553350-16-002316.txt : 20160812 0001553350-16-002316.hdr.sgml : 20160812 20160812090105 ACCESSION NUMBER: 0001553350-16-002316 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20160630 FILED AS OF DATE: 20160812 DATE AS OF CHANGE: 20160812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOCOPI TECHNOLOGIES INC/MD/ CENTRAL INDEX KEY: 0000888981 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 870406496 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20333 FILM NUMBER: 161826390 BUSINESS ADDRESS: STREET 1: 480 SHOEMAKER ROAD STREET 2: SUITE 104 CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6108349600 MAIL ADDRESS: STREET 1: 480 SHOEMAKER ROAD STREET 2: SUITE 104 CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 nnup_10q.htm QUARTERLY REPORT Quarterly Report

 



 

 

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 June 30, 2016


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, PA 19406

(Address of principal executive offices) (Zip Code)


(610) 834-9600

(Registrant’s telephone number, including area code)


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 þ  No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes þ  No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer

¨ 

 

Accelerated filer

¨

Non-accelerated filer

¨ 

 

Smaller reporting company

þ

(Do not check if a smaller reporting company)

 

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No þ


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. 58,599,016 shares of common stock, par value $0.01, as of August 1, 2016.


 

 





 


NOCOPI TECHNOLOGIES, INC.

INDEX


 

PAGE

Part I. FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

1

 

 

Statements of Operations for Three Months and Six Months ended June 30, 2016 and June 30, 2015

1

Balance Sheets at June 30, 2016 and December 31, 2015

2

Statements of Cash Flows for Six Months ended June 30, 2016 and June 30, 2015

3

Notes to Financial Statements

4

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

8

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

14

 

 

Item 4.

Controls and Procedures

14

 

 

Part II. OTHER INFORMATION

 

 

 

Item 6.

Exhibits

15

 

 

SIGNATURES

16

 

 

EXHIBIT INDEX

17




 


PART I – FINANCIAL INFORMATION


Item 1. Financial Statements


Nocopi Technologies, Inc.

Statements of Operations*

(unaudited)


 

 

Three Months ended June 30

 

 

Six Months ended June 30

 

 

 

2016

 

 

2015

 

 

2016

 

 

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

 

 

 

 

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

 

 

 

 

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

 

 

 

 

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

)

 

 

 

(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   common share

 

(.00

)

 

$

.00

 

 

(.00

)

 

(.00

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 



*See accompanying notes to these financial statements.




1



 


Nocopi Technologies, Inc.

Balance Sheets*


 

 

June 30

 

 

December 31

 

 

 

2016

 

 

2015

 

 

 

(unaudited)

 

 

(audited)

 

Assets

 

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

 

 

 

 

196,600

 

 

 

196,600

 

Less: accumulated depreciation and amortization

 

 

179,400

 

 

 

175,700

 

 

 

 

17,200

 

 

 

20,900

 

Total assets

 

$

416,000

 

 

$

344,800

 

 

 

Liabilities and Stockholders' Deficiency

 

 

 

 

 

 

 

 

 

 

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

 



*See accompanying notes to these financial statements.






2



 


Nocopi Technologies, Inc.

Statements of Cash Flows*

(unaudited)


 

 

Six Months ended June 30

 

 

 

2016

 

 

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

 

 

 

 

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

)

 

 

 

129,600

 

 

 

99,800

 

Net cash provided by operating activities

 

 

130,200

 

 

 

93,200

 

 

 

 

 

 

 

 

 

 

Investment 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

 



*See accompanying notes to these financial statements.






3



 


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. (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).


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.


Note 3. Stock Based Compensation


The 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 June 30, 2016, the Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at June 30, 2016.


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.





4



NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)



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

 

 

 

 

 

 

 

 

 


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.


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.



5



NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)



Tax years from 2011 through 2015 remain subject to examination by U.S. federal and state jurisdictions.


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.


Note 9. Earnings (Loss) per Share


In accordance with FASB ASC 260, Earnings per Share, basic earnings (loss) per common share is computed using net earnings (loss) 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 stock options and warrants for which the market price exceeds the exercise price. The number of shares issuable upon the exercise of such stock options and warrants is decreased by shares that could have been purchased by the Company with related proceeds. For the three months ended June 30, 2015, the number of incremental common shares resulting from the assumed conversion of warrants was 1,351. Because the Company reported a net loss for the three months and six months ended June 30, 2016 and for the six months ended June 30, 2015, common stock equivalents, consisting of stock options and warrants, were anti-dilutive.


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

 





6



NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)



Note 11. Subsequent Event


In early August 2016, the Company repaid $4,500 of the principal of the outstanding demand loans.





.




7



 


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Forward-Looking Information


This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), regarding, among other things, anticipated improvements in operations, the Company’s plans, earnings, cash flow and expense estimates, strategies and prospects, both business and financial. All statements other than statements of current or historical fact contained in this report are forward-looking statements. The words “believe,’’ “expect,’’ “anticipate,’’ “should,’’ “plan,’’ “will,’’ “may,’’ “intend,’’ “estimate,’’ “potential,’’ “continue’’ and similar expressions, as they relate to the Company, are intended to identify, where possible, forward-looking statements.


The Company has based these forward-looking statements largely on its current expectations and projections about future events, financial trends, market opportunities, competition, and the adequacy of the Company’s available cash resources, which the Company believes may affect its financial condition, results of operations, business strategy and financial needs. This Form 10-Q also contains forward-looking statements attributed to third parties. All such statements can be affected by inaccurate assumptions, including, without limitation, with respect to risks, uncertainties, anticipated operating efficiencies, new business prospects and the rate of expense increases. In light of these risks, uncertainties and assumptions, the forward-looking statements in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. For these reasons, and because of the uncertainty relating to the current financial conditions in today’s economic environment and the potential reduction in demand for the Company’s products, you should not consider this information to be a guarantee by the Company or any other person that its objectives and plans will be achieved. When you consider these forward-looking statements, you should keep in mind the “Risk Factors” and other cautionary statements set forth in this Item 2 and elsewhere in this Form 10-Q. The Company’s forward-looking statements speak only as of the date made. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Financial Statements and related notes included elsewhere in this report as well as with the Company’s audited Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2016 and keeping in mind this cautionary statement regarding forward-looking information.


Results of Operations


The Company’s revenues are derived from (i) royalties paid by licensees of the Company’s technologies; (ii) fees for the provision of technical services to licensees; and (iii) the direct sale of (a) products incorporating the Company’s technologies, such as inks, security paper and pressure sensitive labels, and (b) equipment used to support the application of the Company’s technologies, such as ink-jet printing systems. Royalties consist of guaranteed minimum royalties payable by the Company’s licensees and/or additional royalties, which typically vary with the licensee’s sales or production of products incorporating the licensed technology. Technical services, in the form of on-site or telephone consultations by members of the Company’s technical staff, may be offered to licensees of the Company’s technologies. The consulting fees are billed at agreed upon per diem or hourly rates at the time the services are rendered. Service fees and sales revenues vary directly with the number of units of service or product provided.


The Company recognizes revenue on its lines of business as follows:


a)

License fees and royalties are recognized when the license term begins. Upon inception of the license term, revenue is recognized in a manner consistent with the nature of the transaction and the earnings process, which generally is ratably over the license term;

b)

Product sales are recognized (i) upon shipment of products; (ii) when the price is fixed or determinable; and (iii) when collectability is reasonably assured; and

c)

Fees for technical services are recognized when (i) the service has been rendered; (ii) an arrangement exists; (iii) the price is fixed or determinable based upon a per diem or hourly rate; and (iv) collectability is reasonably assured.  




8



 


The Company believes that, as fixed cost reductions beyond those it has achieved in recent years may not be achievable, 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 customer’s product development delays, engineering changes, changes in product marketing strategies and the like. In addition, certain customers have, from time to time, sought to renegotiate certain provisions of their license agreements and, when the Company agrees to revise terms, revenues from the customer may be affected. The addition of a substantial new customer or the loss of a substantial existing customer may also have a substantial effect on the Company’s total revenue, revenue mix and operating results.


Revenues for the second quarter of 2016 were $203,400 compared to $316,700 in the second quarter of 2015, a decrease of $113,300, or approximately 36%. Licenses, royalties and fees increased by $19,900, or approximately 25%, to $98,700 in the second quarter of 2016 from $78,800 in the second quarter of 2015. The increase in licenses, royalties and fees is due primarily to higher licensing revenue received from five licensees including two licensees added in the second half of 2015. There can be no assurances that the marketing and product development activities of the Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for the Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions being experienced worldwide.


Product and other sales decreased by $133,200, or approximately 56%, to $104,700 in the second quarter of 2016 from $237,900 in the second quarter of 2015. Sales of ink decreased in the second quarter of 2016 compared to the second quarter of 2015 due primarily to lower ink shipments to a third party authorized printer used by two of the Company’s major licensees in the entertainment and toy products market offset in part by initial shipments of ink late in the second quarter of 2016 to a new authorized printer used by a major licensee and a new licensee in the entertainment and toy products market. This new authorized printer in the entertainment and toy products market has placed a significant amount of ink orders that the Company plans to produce and ship during the third quarter of 2016. In the second quarter of 2016, the Company derived revenues of approximately $164,300 from its licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $267,800 in the second quarter of 2015.


For the first six months of 2016, revenues were $486,200, representing a decrease of $18,900, or approximately 4%, from revenues of $505,100 in the first six months of 2015. Licenses, royalties and fees increased by $54,600, or approximately 35%, to $211,500 in the first six months of 2016 from $156,900 in the first six months of 2015. As in the second quarter of 2016, the increase in licenses, royalties and fees is due primarily to higher licensing revenue received from five licensees including two licensees added in the second half of 2015.


Product and other sales decreased by $73,500, or approximately 21%, to $274,700 in the first six months of 2016 from $348,200 in the first six months of 2015. Sales of ink decreased in the first six months of 2016 compared to the first six months of 2015 due primarily to lower ink shipments to a third party authorized printer used by two of the Company’s major licensees in the entertainment and toy products market offset in part by initial sales late in the second quarter of 2016 of ink to a new authorized printer used by a major licensee and a new licensee in the entertainment and toy products market. As noted above, this new authorized printer in the entertainment and toy products market has placed a significant amount of ink orders that the Company plans to produce and ship during the third quarter of 2016. The Company derived revenues of approximately $393,700 from licensees and their authorized printers in the entertainment and toy products market in the first six months of 2016 compared to revenues of approximately $422,400 in the first six months of 2015.




9



 


The Company’s gross profit decreased to $137,300 in the second quarter of 2016, or approximately 68% of revenues, from $204,700 in the second quarter of 2015 or approximately 65% 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 the Company’s technologies or equipment used to support the application of its technologies. These items (except for inks which are manufactured by the 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 second quarter of 2016 compared to the second quarter of 2015 results primarily from lower gross revenues from product and other sales in the second quarter of 2016 compared to the second quarter of 2015 offset in part by higher licenses, royalties and fees and gross profit improvements related to both the mix of products sold and favorable raw material prices in the second quarter of 2016 compared to the second quarter of 2015.


For the first six months of 2016, gross profit was $331,400, or approximately 68% of revenues, compared to $319,300, or approximately 63% of revenues, in the first six months of 2015. The higher gross profit in the first six months of 2016 compared to the first six months of 2015 results primarily from higher licenses, royalties and fees and gross profit improvements related to both the mix of products sold and favorable raw material prices in the first six months of 2016 compared to the first six months of 2015 offset in part by lower gross revenues from product and other sales in the first six months of 2016 compared to the first six months of 2015.


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 increased to approximately 83% in the second quarter of 2016 compared to approximately 70% in the second quarter of 2015. The gross profit from licenses, royalties and fees increased to approximately 83% of revenues from licenses, royalties and fees in the first six months of 2016 from approximately 73% in the first six months of 2015.


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 53% of revenues in the second quarter of 2016 compared to approximately 63% of revenues in the second quarter of 2015. This decrease was due to lower sales volume of product and other sales offset in part by higher margins on certain products due to a favorable mix of products sold and raw materials prices. For the first six months of 2016, the gross profit, expressed as a percentage of revenues, decreased to approximately 57% of revenues from product and other sales compared to approximately 59% of revenues from product and other sales in the first six months of 2015.


Research and development expenses of $32,400 in the second quarter of 2016 were comparable to $31,100 in the second quarter of 2015. In the first six months of 2016, research and development expenses increased to $70,000 from $64,000 in the first six months of 2015 due primarily to higher product development expenses in the first six months of 2016 compared to the first six months of 2015.


Sales and marketing expenses decreased to $47,400 in the second quarter of 2016 from $55,300 in the second quarter of 2015 and to $103,900 in the first six months of 2016 from $105,200 in the first six months of 2015. This decrease is due primarily to lower commission expense on the lower level of sales in the second quarter and first six months of 2016 compared to the second quarter and first six months of 2015.


General and administrative expenses of $66,800 in the second quarter of 2016 were comparable to $67,900 in the second quarter of 2015. In the first six months of 2016, general and administrative expenses increased to $154,300 from $151,400 in the second quarter and first six months of 2015 due primarily to higher employment expenses in the first six months of 2016 compared to the first six months of 2015.


Other income (expenses) in the second quarter and first six months of 2016 and 2015 included interest on unsecured loans from three individuals and on convertible debentures held by ten investors. Other income (expenses) decreased to $3,400 in the second quarter of 2016 from $5,100 in the second quarter of 2015 and to $6,800 in the first six months of 2016 from $10,300 in the first six months of 2015. This decrease is due primarily to lower interest expense on the lower level of unsecured loans and convertible debentures in the second quarter and first six months of 2016 compared to the second quarter and first six months of 2015.




10



 


The net loss of $12,700 in the second quarter of 2016 compared to net income of $45,300 in the second quarter of 2015 resulted primarily from a lower gross profit on a lower level of revenues in the second quarter of 2016 compared to the second quarter offset in part by lower overhead expenses in the second quarter of 2016 compared to the second quarter of 2015. The lower net loss of $3,600 in the first six months 2016 compared to the net loss of $11,600 in the first six months of 2015 resulted primarily from a higher gross profit related to the favorable revenue mix in the first six months of 2016 compared to the six months of 2015 offset in part by higher overhead expenses in the first six months of 2016 compared to the first six months of 2015.


Plan of Operation, Liquidity and Capital Resources


During the first six months of 2016, the Company’s cash increased to $132,600 at June 30, 2016 from $11,400 at December 31, 2015. During the first six months of 2016, the Company generated $130,200 from its operating activities and repaid $9,000 to an individual lender.


During the first six months of 2016, the Company’s revenues decreased primarily as a result of lower sales of ink to an authorized printer of four of the Company’s licensees in the entertainment and toy products market offset in part by higher license fees from five licensees. While the Company’s total overhead expenses increased in the first six months of 2016 compared to the total overhead expenses in the first six months of 2015, the Company’s gross profit increased in the first six months of 2016 compared to the first six months of 2015. As a result of these factors, the Company’s net loss declined in the first six months of 2016 compared to the first six months of 2015. The Company had positive operating cash flow of $130,200 during the first six months of 2016. At June 30, 2016, the Company had negative working capital of $363,900 and a stockholders’ deficiency of $441,700. For the full year of 2015, the Company had a net loss of $18,000 and had positive operating cash flow of $41,800. At December 31, 2015, the Company had negative working capital of $364,000 and a $438,100 stockholders’ deficiency.


Through June 30, 2016, the Company repaid $48,500 of $63,000 of short-term loans that had been outstanding at January 1, 2015. In 2015, the Company repaid $10,000 of convertible debentures and extended the maturity dates of $95,000 of convertible debentures from the third quarter of 2015 to the third quarter of 2017. Borrowings and sales of common stock in years prior to January 1, 2015 have allowed the Company to remain in operation through the current date. There can be no assurances that the Company will be able to secure sufficient additional funding through investments or borrowings that will allow the Company to fund losses that it presently believes may continue during 2016. The Company believes that without additional investment, it may be forced to cease operations at an undetermined date in the future.


The Company’s plan of operation 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 the Company has developed in the entertainment and toy products market including two licensees with a significant presence in the entertainment and toy products market that have been marketing products incorporating the Company’s technologies since 2012. These two licensees in the entertainment and toy products market are well-known and highly regarded participants in this market. The Company believes that these two licensees will expand their offerings incorporating the Company’s technologies currently being marketed and will introduce new products incorporating available technologies covered by the license agreements that are not currently being marketed by them. The Company plans to continue developing applications for these licensees while expanding its licensee base in the entertainment and toy market. The Company has additional licensees marketing or developing products incorporating the Company’s technologies in certain niche markets of the overall entertainment and toy products market. In late 2015, the Company added a licensee who the Company believes will market products incorporating the Company’s available technologies in certain international markets beginning in the second half of 2016. The Company maintains its presence in the retail loss prevention market and believes that revenue growth in this market could be achieved through increased security ink sales to its licensees in this market. The Company will continue to adjust its production and technical staff as necessary. The Company will also, subject to available financial resources, invest in capital equipment needed to support potential growth in ink production requirements beyond its current capacity. Additionally, the Company will pursue opportunities to market its current technologies in specific security and non-security markets. There can be no assurances that these efforts will enable the Company to generate additional revenues and positive cash flow.


The Company has received and continues to seek additional capital, in the form of debt, equity or both, to support its working capital requirements. There can be no assurances that the Company will be successful in raising additional capital, or that such additional capital, if obtained, will enable the Company to generate additional revenues and positive cash flow.




11



 


The Company generates a significant portion of its total revenues from licensees in the entertainment and toy products market. These licensees generally sell their products through retail outlets. During the year, such sales may be adversely affected by changes in consumer spending that may occur as a result of an uncertain economic environment. As a result, the Company’s revenues, results of operations and liquidity may be negatively impacted as they were in previous years.


Risk Factors


The Company’s operating results, financial condition and stock price are subject to certain risks, some of which are beyond the Company’s control. These risks could cause actual operating and financial results to differ materially from those expressed in the Company’s forward-looking statements, including the risks described below and the risks identified in other documents which are filed and furnished with the SEC including the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 that was filed with the SEC on March 30, 2016:


Limited Interim Historical Information. In September 2015, the Company filed a comprehensive annual report on Form 10-K for the fiscal years ended December 31, 2012, 2013 and 2014. The Form 10-K contains summarized quarterly financial information for each of the quarters ended June 30 and September 30, 2012 and for each of the quarters ended March 31, June 30 and September 30, 2013 and 2014. As the complete periodic filings for those periods have not been filed, certain financial information, disclosures and discussions normally contained in a Form 10-Q were not included in the Form 10-K. The omission of the information that would have been contained in these periodic filings leaves current and prospective investors, customers, employees and others without this source of information about the Company’s business achievements and prospects and may negatively impact the Company’s business opportunities and its ability to raise capital. There can be no assurances that the Company will be able to remain current with its required SEC filing obligations in the future.   


Access to Capital. The Company anticipates that it may need to raise capital in the future to fund its historical and new business operations. Negative or uncertain global economic conditions would make it more difficult for the Company to raise capital. If the Company is unable to secure capital, if needed, in the future, in the form debt, equity or both, it may be forced to cease operations. There can be no assurances that, if required, the Company will be successful in obtaining additional investment in sufficient amounts to fund its ongoing business operations.


Dependency on Major Customers. The Company is dependent on its licensees to develop new products and markets that will generate increases in its licensing and product revenues. The inability of the Company’s licensees to maintain at least current levels of sales of products utilizing the Company’s technologies would adversely affect the Company’s operating results and cash flow. To the extent that the Company’s licensees are affected by negative economic conditions, the Company’s revenues would also be negatively impacted. The Company derives a significant percentage of its revenues through licensing relationships with two major customers. Revenues obtained directly from these two licensees and indirectly, through the licensees’ third party authorized printers, equaled approximately 73% and 74% of the Company’s revenues in the second quarter and first six months of 2016, respectively, and approximately 73% of the Company’s revenues in 2015. Receivables from these two licensees and their third party authorized printers were approximately 71% and 58% of the Company’s net accounts receivable at June 30, 2016 and December 31, 2015, respectively. The Company has a license agreement containing guaranteed minimum royalties expiring in 2019 with one of these two licensees and a license with the second that expires in 2017. Products incorporating the Company’s technologies that are sold by these two licensees have certain dissimilar characteristics and are marketed generally through distinctly different channels of distribution. These two licensees are well-known and highly regarded participants in the entertainment and toy products market. The agreements with both licensees contain renewal options but there can be no assurances that the licenses will be renewed or that they will be renewed at the same or more favorable terms beyond their current termination dates, nor can there be any assurances that the relationships with these two licensees will generate increased revenues for the Company in the future.


Possible Inability to Develop New Business. Management of the Company believes that any significant improvement in the Company’s cash flow must result from increases in revenues from traditional sources and from new revenue sources. The Company raised cash through additional capital investment and loans from investors in 2012, 2013 and 2014. The Company also benefited from limiting increases in its operating expenses and reducing its operating expenses when possible. The Company’s ability to develop new revenues may depend on the extent of its marketing activities and its research and development activities, both of which are limited. There are no assurances that the resources that the Company can devote to marketing and to research and development will be sufficient to increase its revenues to levels that will enable it to maintain positive operating cash flow in the future.




12



 


Inability to Obtain Raw Materials and Products for Resale. The Company’s adverse financial condition in the past has required it to significantly defer payments due to (i) vendors who supply raw materials and other components of the lines of inks marketed by the Company, (ii) providers of professional and other services and (iii) certain employees to whom salary and sales commissions are owed. As a result, the Company is required to pay cash in advance of shipment to certain of its suppliers. The inability to obtain materials on a timely basis and the possibility that certain vendors may permanently discontinue supplying the Company with needed products and services threaten to result in delayed shipments to customers and further impact the Company’s ability to service its customers, thereby adversely affecting the Company’s relationships with its customers and licensees. There can be no assurances that the Company will be able to maintain its vendor relationships in an acceptable manner.


Uneven Pattern of Quarterly and Annual Operating Results. The Company’s revenues, which are derived primarily from licensing, royalties and sales of products incorporating its technologies, are difficult to forecast; such forecasting difficulty is due to, among other reasons,  the long sales cycle of 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 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 ordering decisions of customers can have a material adverse effect on the Company’s quarterly and annual revenue expectations. As the Company’s operating expenses are substantially fixed, income expectations will be subject to a similar adverse outcome. As licensees for the entertainment and toy products markets are added, the predictability of the Company’s revenue stream may be further impacted.


Volatility of Stock Price. The market price for the Company’s common stock has historically experienced significant fluctuations and may continue to do so. From inception, with the exception of 2007, 2013 and 2014, the Company has 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. Additionally, securities analysts and traders do not extensively follow the Company’s stock and its stock is thinly traded. The Company’s 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.


Intellectual Property. The Company relies on a combination of protections as may be available under applicable domestic, foreign or international patent, trademark and trade secret laws. The Company also relies on confidentiality, non-analysis and licensing agreements to establish and protect its rights in its proprietary technologies. While the Company attempts to protect these rights, its technologies may be compromised through reverse engineering, independent invention or other means. In addition, the Company’s ability to enforce its intellectual property rights through appropriate legal action has been and will continue to be limited by its adverse liquidity. There can be no assurances that the Company will be able to protect the basis of its technologies from discovery by third parties or to preclude third parties from conducting activities that infringe on the Company’s rights. The Company’s adverse liquidity situation also impacts its ability to obtain patent protection on its intellectual property and to maintain protection on previously issued patents. There can be no assurances that the Company will be able to continue to prosecute new patents and maintain issued patents. As a result, the Company’s customer and licensee relationships could be adversely affected, and the value of the Company’s technologies and intellectual property (including their value upon liquidation) could be substantially diminished.


Economic Conditions. The Company’s revenue is susceptible to changes in general economic conditions. The Company’s sales, liquidity and overall results of operations may be negatively affected by decreasing consumer confidence, slowdowns in consumer spending or other downturns in the U.S. economy as a whole or in any geographic markets from which the Company derives revenue. In addition, these factors may result in decreased customer and licensee demand for the Company’s products and may negatively impact the Company’s ability to develop new customers and licensees. Due to uncertainties surrounding the worldwide economy, the Company is unable to predict the effect of such conditions on its customers and licensees. Consequently, the Company cannot predict the scope or magnitude of the negative effect resulting from ongoing global financial uncertainties or economic slowdowns.


Recently Adopted Accounting Pronouncements


As of June 30, 2016 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.




13



 


Recently Issued Accounting Pronouncements Not Yet Adopted


In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update provide guidance about management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. Management is assessing the impact of the adoption to the financial statements.


Off-Balance Sheet Arrangements


The Company does not have any off-balance sheet arrangements.


Item 3. Quantitative and Qualitative Disclosures About Market Risk


Not applicable.


Item 4. Controls and Procedures


(a) Disclosure Controls and Procedures


The Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified within the rules and forms of the SEC, and are designed to ensure that information required to be disclosed by the Company in these reports is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.


(b) Changes in Internal Control over Financial Reporting


There have been no changes in the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.







14



 


PART II - OTHER INFORMATION


Item 6.  Exhibits


(a) Exhibits


 

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.

 

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.

 

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.

 

101.INS

XBRL Instance Document

 

101.SCH

XBRL Taxonomy Extension Schema

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase

 

101.LAB

XBRL Taxonomy Extension Label Linkbase

 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase








15



 


SIGNATURES


Pursuant to the requirement of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



 

 

NOCOPI TECHNOLOGIES, INC.

 

 

 

DATE: August 12, 2016

 

/s/ Michael A. Feinstein, M.D.

 

 

Michael A. Feinstein, M.D.

 

 

Chairman of the Board, President & Chief Executive Officer

 

 

 

DATE: August 12, 2016

 

/s/ Rudolph A. Lutterschmidt

 

 

Rudolph A. Lutterschmidt

 

 

Vice President & Chief Financial Officer










16



 


EXHIBIT INDEX

 

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.

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.

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.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema

101.CAL

XBRL Taxonomy Extension Calculation Linkbase

101.DEF

XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.PRE

XBRL Taxonomy Extension Presentation Linkbase

  

 

 

 

 








17


EX-31.1 2 nnup_ex31z1.htm CERTIFICATION OF CHIEF EXECUTIVE OFFICER Certification

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Michael A. Feinstein, M.D., Chief Executive Officer of Nocopi Technologies, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Nocopi Technologies, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 12, 2016


/s/ Michael A. Feinstein, M.D.

Michael A. Feinstein, M.D.

Chief Executive Officer









EX-31.2 3 nnup_ex31z2.htm CERTIFICATION OF CHIEF FINANCIAL OFFICER Certification

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Rudolph A. Lutterschmidt, Vice President and Chief Financial Officer of Nocopi Technologies, Inc., certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Nocopi Technologies, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 12, 2016


/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt

Vice President and Chief Financial Officer









EX-32.1 4 nnup_ex32z1.htm CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Certification

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Nocopi Technologies, Inc. (the "Company") on Form 10-Q for the Quarter ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Michael A. Feinstein, M.D., Chief Executive Officer, and Rudolph A. Lutterschmidt, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

(1)

The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

August 12, 2016


/s/ Michael A. Feinstein, M.D.

Michael A. Feinstein, M.D.


/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt








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75,000,000 shares, Issued and outstanding - 58,599,016 shares Paid-in capital Accumulated deficit Total stockholders' deficiency Total liabilities and stockholders' deficiency Allowance for doubtful accounts Unaccreted discount on convertible debentures Preferred stock, par value Preferred stock, shares authorized Preferred stock, shares issued Preferred stock, shares outstanding Common stock, par value Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Statement of Cash Flows [Abstract] Operating Activities Net loss Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization Accretion of interest - convertible debentures Net loss adjusted for non-cash operating activities (Increase) decrease in assets Accounts receivable Inventory Prepaid and other Increase (decrease) in liabilities Accounts payable and accrued expenses Deferred revenue Total increase in operating capital Net cash provided by operating activities Investing Activities Additions to fixed assets Net cash used in investing activities Financing Activities Repayment of demand loans Net cash used in financing activities Increase in cash Cash at beginning of year Cash at end of period Supplemental Disclosure of Cash Flow Information Cash paid for interest Supplemental Disclosure of Non Cash Investing Activities Write-off of fully depreciated leasehold improvements and furniture fixtures and equipment Accumulated depreciation and amortization Leasehold improvements Furniture, fixtures and equipment Supplemental Disclosure of Non Cash Financing Activities Conversion of demand loans and interest to convertible debentures Demand loans Accrued expenses Convertible debentures Paid-in capital Organization, Consolidation and Presentation of Financial Statements [Abstract] Financial Statements Going Concern [Abstract] Going Concern Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Stock Based Compensation Debt Disclosure [Abstract] Demand Loans Convertible Debt [Abstract] Convertible Debentures Other Income and Expenses [Abstract] Other Income (Expenses) Income Tax Disclosure [Abstract] Income Taxes Related Party Transactions [Abstract] Related Party Transactions Earnings Per Share [Abstract] Earnings (Loss) per Share Major Customer and Geographic Information [Abstract] Major Customer and Geographic Information Subsequent Events [Abstract] Subsequent Event Schedule of Warrants Outstanding Segment Reporting [Abstract] Schedule of Revenues from Non-affiliated Customers Schedule of Non-affiliated Customers with Accounts Receivable More Than 10% Schedule of Revenue by Geographic Region Accumulated deficit Working capital deficit Operating income (loss) Stockholders' deficiency Unrecognized portion of expense related to stock option grants Schedule of Long-term Debt Instruments [Table] Debt Instrument [Line Items] Debt instrument, interest rate Repayment of demand loans ConvertibleDebtConversionPriceAxis [Axis] Convertible debt, amount outstanding Convertible debt due during the third quarter of 2016 Convertible debt due during the third quarter of 2017 Amount of principal that can be converted Debt instrument, conversion price per share Repayments of convertible debenture Debt discount recognized on notes payable Accretion of debt discount recognized as interest expense Number of shares of common stock that can be purchased through warrants Price per share of warrants Warrant exercisable term Warrant expiration term Pricing model used to value warrants Interest expense Schedule of Share-based Compensation Arrangements by Share-based Payment Award [Table] Share-based Compensation Arrangement by Share-based Payment Award [Line Items] Warrants Warrants outstanding at beginning of period Granted Exercised Warrants expired Warrants outstanding at end of period Price Warrants outstanding at beginning of period Granted Exercised Warrants expired Warrants outstanding at end of period Schedule Of Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options By Exercise Price Range [Table] Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options Exercise Price Range [Line Items] Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options By Exercise Price Range [Axis] Warrants outstanding exercise price range, lower limit Warrants outstanding exercise price range, upper limit Warrants granted exercise price range, lower limit Warrants granted exercise price range, upper limit Warrants expired exercise price range, lower limit Warrants expired exercise price range, upper limit Warrants exercisable exercise price range, lower limit Warrants exercisable exercise price range, upper limit Weighted average remaining contractual life Warrants exercisable, number Warrants exercisable, weighted average exercise price Warrants exercisable, weighted average remaining contractual life Income Tax Contingency [Table] Income Tax Contingency [Line Items] Income tax provision Unrecognized tax benefits Change in unrecognized tax benefits during the period Accrual for uncertain tax positions Tax years open for examination Schedule of Related Party Transactions, by Related Party [Table] Related Party Transaction [Line Items] Deferred salary paid to related party Portion of salary to related party deferred during period Deferred salary owed to related party Number of incremental common shares resulting from the assumed conversion of warrants Schedule of Revenue by Major Customers, by Reporting Segments [Table] Revenue, Major Customer [Line Items] Concentration Risk Benchmark [Axis] Customer [Axis] Risk percentage Concentration Risk [Table] Concentration Risk [Line Items] Schedule of Revenues from External Customers and Long-Lived Assets [Table] Revenues from External Customers and Long-Lived Assets [Line Items] Revenues Subsequent Event [Table] Subsequent Event [Line Items] Conversion of demand loans and interest to convertible debentures [Abstract] The entire disclosure for convertible debentures. Customer A [Member] Customer B [Member] Customer C [Member] The increase (decrease) during the reporting period in accrued expenses due to conversion of demand loans and interest to convertible debentures in non cash financing activities. The increase (decrease) during the reporting period in convertible debentures due to conversion of demand loans and interest to convertible debentures in non cash financing activities. The increase (decrease) during the reporting period in demand loans outstanding due to conversion of demand loans and interest to convertible debentures in non cash financing activities. The increase (decrease) during the reporting period in additional paid-in capital due to conversion of demand loans and interest to convertible debentures in non cash financing activities. The value of accumulated depreciation and amortization from writedown of fully depreciated property, plant and equipment in noncash investing transactions. The value of writedown from cost of furniture, fixtures and equipment from noncash investing transactions. The value of writedown from cost of leasehold improvements from noncash investing transactions. Schedule Of Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options By Exercise Price Range [Table] Weighted average price at which holders acquired shares when converting equity instruments other than options into shares. Weighted average price at which grantees could have acquired the underlying shares with respect to equity instrument other than options that have expired. Weighted average per share amount at which grantees can acquire shares of common stock by exercise of equity instruments other than options. Weighted average price at which grantees can acquire the shares reserved for issuance for equity instruments other than options. Share Based Compensation Arrangement By Share Based Payment Award Non Option Equity Instruments Outstanding Weighted Average Exercise Price Roll Forward [Abstract] Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options By Exercise Price Range [Axis] Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options Exercise Price Range [Domain] Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options Exercise Price Range [Line Items] The floor of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants cancelled during the period. The floor of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants exercisable. The floor of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants granted during the period. The floor of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants outstanding. The number of shares reserved for issuance pertaining to the outstanding exercisable equity instruments other than options as of the balance sheet date in the customized range of exercise prices for which the market and performance vesting condition has been satisfied. The ceiling of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants cancelled during the period. The ceiling of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants exercisable. The ceiling of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants granted during the period. The ceiling of a customized range of exercise prices for purposes of disclosing shares potentially issuable under equity instruments other than options and other required information pertaining to awards in the customized range for warrants outstanding. Weighted average exercise price as of the balance sheet date for those equity-based payment arrangements exercisable and outstanding. Weighted average remaining contractual term of exercisable equity instruments other than options, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Weighted average remaining contractual term of outstanding equity instruments other than options, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Exercisable term of warrant, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Expiration term of warrant, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. The amount that current liabilities exceed current assets. Convertible Debt Conversion Price [Axis] Convertible Debt Conversion Price One [Member] Convertible Debt Conversion Price Two [Member] Portion of salary to related party deferred during period. Revenues [Default Label] Cost of Services, Licenses and Services Cost of Goods Sold Cost of Revenue Gross Profit Operating Expenses Nonoperating Income (Expense) Assets, Current Property, Plant and Equipment, Gross Property, Plant and Equipment, Net Assets [Default Label] Liabilities, Current Convertible Debt, Noncurrent Stockholders' Equity Attributable to Parent Liabilities and Equity Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities Increase (Decrease) in Accounts Receivable Increase (Decrease) in Inventories Increase (Decrease) in Prepaid Expense and Other Assets Increase (Decrease) in Deferred Revenue Increase (Decrease) in Operating Capital Net Cash Provided by (Used in) Operating Activities Payments to Acquire Property, Plant, and Equipment Net Cash Provided by (Used in) Investing Activities Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) NoncashInvestingActivitiesWriteoffOfLeaseholdImprovementsCost NoncashInvestingActivitiesWriteoffOfFurnitureFixturesAndEquipment IncreaseDecreaseInDemandLoansFromConversionToConvertibleDebenturesDueToNonCashFinancingActivity IncreaseDecreaseInAccruedExpensesFromConversionToConvertibleDebenturesDueToNonCashFinancingActivity IncreaseDecreaseInConvertibleDebenturesFromConversionToConvertibleDebenturesDueToNonCashFinancingActivity IncreaseDecreaseInPaidInCapitalFromConversionToConvertibleDebenturesDueToNonCashFinancingActivity Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised ShareBasedCompensationArrangementByShareBasedPaymentAwardInstrumentsOtherThanOptionsOutstandingWeightedAverageExercisePrice ShareBasedCompensationArrangementByShareBasedPaymentAwardInstrumentsOtherThanOptionsGrantsInPeriodWeightedAverageExercisePrice ShareBasedCompensationArrangementByShareBasedPaymentAwardInstrumentsOtherThanOptionsExpiredInPeriodWeightedAverageExercisePrice ShareBasedCompensationSharesAuthorizedUnderEquityInstrumentsOtherThanOptionsExercisePriceRangeDomain EX-101.PRE 10 nnup-20160630_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.5.0.2
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 0000888981  
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 2016  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
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 $ 0.00 $ 0.00 $ 0.00 $ 0.00
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
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
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
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
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
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
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
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
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).

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
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.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
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, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At June 30, 2016, the Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at June 30, 2016.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
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.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
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

 

 

 

 

 

 

 

 

 

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
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.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
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.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
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.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
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 FASB ASC 260, Earnings per Share, basic earnings (loss) per common share is computed using net earnings (loss) 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 stock options and warrants for which the market price exceeds the exercise price. The number of shares issuable upon the exercise of such stock options and warrants is decreased by shares that could have been purchased by the Company with related proceeds. For the three months ended June 30, 2015, the number of incremental common shares resulting from the assumed conversion of warrants was 1,351. Because the Company reported a net loss for the three months and six months ended June 30, 2016 and for the six months ended June 30, 2015, common stock equivalents, consisting of stock options and warrants, were anti-dilutive.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
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

 


XML 26 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
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.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
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

 

 

 

 

 

 

 

 

 

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
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

 

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
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
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stock Based Compensation (Details)
Jun. 30, 2016
USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Unrecognized portion of expense related to stock option grants
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Demand Loans (Details) - USD ($)
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    
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
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  
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Convertible Debentures (Summary of Warrants Activity) (Details) - Warrant [Member]
6 Months Ended
Jun. 30, 2016
$ / shares
shares
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
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
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  
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Taxes (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Income Tax Contingency [Line Items]        
Income tax provision
Change in unrecognized tax benefits during the period      
Accrual for uncertain tax positions    
Minimum [Member]        
Income Tax Contingency [Line Items]        
Tax years open for examination     2011  
Maximum [Member]        
Income Tax Contingency [Line Items]        
Tax years open for examination     2015  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions (Details) - Chief Executive Officer [Member] - USD ($)
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
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Earnings (Loss) per Share (Details)
3 Months Ended
Jun. 30, 2015
shares
Weighted average common shares outstanding  
Number of incremental common shares resulting from the assumed conversion of warrants 1,351
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
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%
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
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%
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
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
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events (Details) - USD ($)
6 Months Ended
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    
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