10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2021

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)

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each class Trading Symbol(s) Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

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

Large accelerated filer   ☐	Accelerated filer   ☐
Non-accelerated Filer     ☒	Smaller reporting company  ☒
	Emerging growth company  ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 67,495,055 shares of common stock, par value $0.01, as of August 9, 2021.

NOCOPI TECHNOLOGIES, INC.

INDEX

	PAGE
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements	1
Statements of Comprehensive Income for Three Months and Six Months Ended June 30, 2021 and June 30, 2020	1
Balance Sheets at June 30, 2021 and December 31, 2020	2
Statements of Cash Flows for Six Months Ended June 30, 2021 and June 30, 2020	3
Statements of Stockholders’ Equity for Three Months and Six Months Ended June 30, 2021 and June 30, 2020	4
Notes to Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3. Quantitative and Qualitative Disclosures About Market Risk	15
Item 4. Controls and Procedures	15
Part II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	16
Item 6. Exhibits	16
SIGNATURES	17
EXHIBIT INDEX	18

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Nocopi Technologies, Inc.

Statements of Comprehensive Income*

(unaudited)

	Three Months ended June 30,						Six Months ended June 30,
	2021			2020			2021			2020
Revenues
Licenses, royalties and fees	$	144,900		$	107,100		$	330,400		$	271,700
Product and other sales		369,000			520,200			794,900			875,900
Total revenues		513,900			627,300			1,125,300			1,147,600
Cost of revenues
Licenses, royalties and fees		49,500			58,600			96,600			108,300
Product and other sales		184,300			247,200			357,500			448,800
Total cost of revenues		233,800			305,800			454,100			557,100
Gross profit		280,100			321,500			671,200			590,500
Operating expenses
Research and development		45,800			41,900			90,300			83,000
Sales and marketing		74,200			86,000			157,400			170,000
General and administrative		117,700			120,000			263,200			259,700
Total operating expenses		237,700			247,900			510,900			512,700
Net income from operations		42,400			73,600			160,300			77,800
Other income (expenses)
Interest income		5,300			4,300			10,100			8,100
Interest expense and bank charges		(600	)		(2,100	)		(1,200	)		(4,600	)
Total other income (expenses)		4,700			2,200			8,900			3,500
Net income before income taxes		47,100			75,800			169,200			81,300
Income taxes		4,600			5,000			11,900			(42,100	)
Net income	$	42,500		$	70,800		$	157,300		$	123,400
Basic and diluted net income per common share	$	.00		$	.00		$	.00		$	.00
Weighted average common shares outstanding
Basic		67,400,812			61,044,698			67,377,251			61,044,698
Diluted		67,400,812			61,605,985			67,377,251			61,577,129

*See accompanying notes to these financial statements.

1 

Nocopi Technologies, Inc.

Balance Sheets*

	June 30,			December 31,
	2021			2020
	(unaudited)			(audited)
Assets
Current assets
Cash	$	1,908,400		$	1,362,800
Accounts receivable less $12,000 allowance for doubtful accounts		969,100			1,280,800
Inventory		486,500			324,800
Prepaid and other		29,400			97,800
Total current assets		3,393,400			3,066,200
Fixed assets
Leasehold improvements		58,400			27,800
Furniture, fixtures and equipment		164,100			163,700
Fixed assets, gross		222,500			191,500
Less: accumulated depreciation and amortization		116,400			104,300
Total fixed assets		106,100			87,200
Other assets
Long-term receivable		371,500			559,500
Operating lease right of use – building		138,400			160,300
Other assets		509,900			719,800
Total assets	$	4,009,400		$	3,873,200
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	67,000		$	5,700
Accrued expenses		154,600			178,600
Income taxes		10,200			36,300
Operating lease liability – current		46,000			44,500
Total current liabilities		277,800			265,100
Other liabilities
Accrued expenses – non-current		26,000			39,200
Operating lease liability – non-current		92,400			115,800
Total other liabilities		118,400			155,000
Stockholders' equity
Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding 2021 – 67,495,055; 2020 – 67,353,690 shares		675,000			673,500
Paid-in capital		12,577,100			12,575,800
Accumulated deficit		(9,638,900	)		(9,796,200	)
Total stockholders' equity		3,613,200			3,453,100
Total liabilities and stockholders' equity	$	4,009,400		$	3,873,200

*See accompanying notes to these financial statements.

2 

Nocopi Technologies, Inc.

Statements of Cash Flows*

(unaudited)

	Six Months ended June 30,
	2021			2020
Operating Activities
Net income	$	157,300		$	123,400
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		12,700			9,100
Deferred income taxes		–			(47,400	)
Other assets		209,900			211,500
Other liabilities		(35,100	)		(33,900	)
Net income adjusted for non-cash operating activities		344,800			262,700
(Increase) decrease in assets
Accounts receivable		311,700			210,800
Inventory		(161,700	)		(149,600	)
Prepaid and other		68,400			39,900
Increase (decrease) in liabilities
Accounts payable and accrued expenses		37,300			26,700
Taxes on income		(26,100	)		5,200
Total increase in operating capital		229,600			133,000
Net cash provided by operating activities		574,400			395,700
Investing Activities
Additions to fixed assets		(31,600	)		(31,000	)
Net cash used in investing activities		(31,600	)		(31,000	)
Financing Activities
Exercise of warrants		2,800			–
Net cash provided by financing activities		2,800			–
Increase in cash		545,600			364,700
Cash at beginning of year		1,362,800			688,000
Cash at end of period	$	1,908,400		$	1,052,700
Supplemental Disclosure of Non Cash Investing Activities
Disposal of furniture, fixtures and equipment
Accumulated depreciation and amortization	$	600		$	500
Furniture, fixtures and equipment	$	(600	)	$	(500	)

*See accompanying notes to these financial statements.

3 

Nocopi Technologies, Inc.

Statements of Stockholders’ Equity*

For the Periods December 31, 2020 through June 30, 2021 and December 31, 2019 through June 30, 2020

(unaudited)

	Common stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance – December 31, 2020		67,353,690	$	673,500	$	12,575,800	$	(9,796,200	)	$	3,453,100
Net income		–		–		–		114,800			114,800
Balance – March 31, 2021		67,353,690		673,500		12,575,800		(9,681,400	)		3,567,900
Exercise of warrants		141,365		1,500		1,300					2,800
Net income		–		–		–		42,500			42,500
Balance – June 30, 2021		67,495,055	$	675,000	$	12,577,100	$	(9,638,900	)	$	3,613,200

	Common stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance December 31, 2019		61,044,698	$	610,400	$	12,483,900	$	(10,304,600	)	$	2,789,700
Net income		–		–		–		52,600			52,600
Balance March 31, 2020		61,044,698		610,400		12,483,900		(10,252,000	)		2,842,300
Net income		–		–		–		70,800			70,800
Balance June 30, 2020		61,044,698	$	610,400	$	12,483,900	$	(10,181,200	)	$	2,913,100

* See accompanying notes to these financial statements.

4 

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Financial Statements

The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (our “Company”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on March 30, 2021, as amended on April 30, 2021 (the “2020 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although our Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2020 Annual Report 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, 2021 may not be necessarily indicative of the operating results expected for the full year.

A novel strain of coronavirus, COVID-19, that was first identified in Wuhan, China in December 2019 has surfaced in many countries around the world including the United States. Many countries continue to experience reoccurrences of COVID-19 to the current date. The World Health Organization has declared COVID-19 to constitute a global pandemic. Certain state and local governments reacted by placing significant restrictions on businesses including a closure in Pennsylvania of non-essential businesses that was announced on March 20, 2020. While many Pennsylvania businesses have been allowed to reopen, often at limited capacity and with certain restrictions, as of the current date, there can be no assurances that future closures will be avoided. A requirement to close our Company for a considerable period of time could result in a negative impact on our Company’s financial condition and results of operations. Additionally, as our Company imports certain raw materials from China, if an extended disruption of the supply of these raw materials were to occur, such as the vessel delays resulting from the congestion experienced in certain Chinese ports due to a COVID-19 outbreak in the second quarter of 2021, our ability to produce products for sale to our customers could be negatively impacted. Further, restrictions on our customers and licensees in areas affected by the COVID-19 could adversely affect our results of operations and financial condition. We cannot predict the scope or magnitude of the negative effect that may result from the impact of the COVID-19 pandemic on the Company’s financial condition and results of operations. Our Company’s results of operations were negatively affected in 2020 in part as a result of a significant increase in the cost of raw materials utilized by our Company in the manufacture of certain of its products as a result of price increases related to the impact of the ongoing COVID-19 pandemic on the availability and supply of these raw materials. While prices of these raw materials have declined at the present time, there can be no assurances that raw material prices will remain at current levels or decrease to pre-COVID-19 pandemic levels in future periods. As the COVID-19 pandemic continues to spread both in its original form and in the recently identified variants of COVID-19 along with the potential re-imposition of COVID-19 restrictions currently being considered by federal, state and local governments and presently implemented in certain states, any future financial impact cannot be reasonably estimated at this time.

Our Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income.  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.  Since our Company has no items of other comprehensive income, comprehensive income is equal to net income.

Note 2. Stock Based Compensation

Our Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At June 30, 2021, our Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at June 30, 2021.

Note 3. Line of Credit

In November 2018, our Company negotiated a $150,000 revolving line of credit with a bank to provide a source of working capital, if required. The line of credit is secured by all the assets of our Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The line of credit is subject to an annual review and quiet period. There have been no borrowings under the line of credit since its inception.

5 

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Note 4. Stock Warrants

During the second quarter of 2021, holders of the remaining 141,365 warrants that had been outstanding exercised their options to purchase a total of 141,365 shares of our Company’s common stock at $0.02 per share. The warrants were granted in 2014 to two individuals who acquired convertible debentures from the Company in 2014. The warrants were exercisable two years after issuance and expire seven years after issuance. The fair value of the warrants was determined using the Black-Scholes pricing model. The relative fair value of the warrants was recorded as a discount to the notes payable with an offsetting credit to additional paid-in capital since our Company determined that the warrants were an equity instrument in accordance with FASB ASC 815. The debt discount related to the warrant issuances has been accreted through interest expense over the term of the notes payable. At June 30, 2021, our Company had no warrants outstanding.

The following table summarizes our Company’s warrant position at June 30, 2021 and December 31, 2020:

				Weighted Average
	Number		Exercise	Exercise
	of Shares		Price	Price
Outstanding warrants -
December 31, 2020		141,365	$0.02	$0.02
Outstanding warrants -
June 30, 2021		0

Note 5. Other Income (Expenses)

Other income (expenses) for the three months and six months ended June 30, 2020 included interest on convertible debentures held by seven investors.

Note 6. Income Taxes

There is no provision for federal income taxes for the three and six months ended June 30, 2021 and 2020 due to the availability of net operating loss carryforwards. Our Company has established a valuation allowance for the entire amount of benefits resulting from our Company’s net operating loss carryforwards because our Company has determined that the realization of the net deferred tax asset is not assured.

The components for state income tax expense resulting from the limitation on the use of net operating losses are:

	Three Months ended June 30,				Six Months ended June 30,
	2021		2020		2021		2020
Current state taxes	$	4,600	$	5,000	$	11,900	$	5,300
Deferred state taxes		–		–		–		(47,400	)
Income tax expense (benefit)	$	4,600	$	5,000	$	11,900	$	(42,100	)

During the first quarter of 2020, our Company reversed $47,400 of accrued Pennsylvania income taxes that are not payable.

There was no change in unrecognized tax benefits during the period ended June 30, 2021 and there was no accrual for uncertain tax positions as of June 30, 2021. Tax years from 2017 through 2020 remain subject to examination by U.S. federal and state jurisdictions.

6 

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Note 7. Earnings per Share

In accordance with FASB ASC 260, Earnings per Share, basic earnings per common share is computed using net earnings divided by the weighted average number of common shares outstanding for the periods presented. The computation of diluted earnings per common share involves the assumption that outstanding common shares are increased by shares issuable upon exercise of those warrants for which the market price exceeds the exercise price. The number of shares issuable upon the exercise of such warrants is decreased by shares that could have been purchased by our Company with related proceeds. As all of the previously outstanding warrants were exercised during the three months ended June 30, 2021, basic and diluted earnings per share for the three and six months ended June 30, 2021 are equal in each period since there are no incremental common shares in either period. For the three and six months ended June 30, 2020, the number of incremental common shares resulting from the assumed conversion of warrants was 561,287 and 532,431, respectively.

Note 8. Major Customer and Geographic Information

Our Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were:

	Three Months ended June 30,						Six Months ended June 30,
	2021			2020			2021			2020
Customer A		38	%		72	%		54	%		59	%
Customer B		32	%		8	%		14	%		14	%
Customer C		17	%		8	%		18	%		13	%

Our Company’s non-affiliate customers whose individual balances amounted to more than 10% of our Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were:

	June 30,			December 31,
	2021			2020
Customer A		15	%		25	%
Customer B		12	%		–
Customer C		70	%		65	%

Our Company performs ongoing credit evaluations of its customers and generally does not require collateral. Our Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on our Company’s business operations and financial condition.

Our Company’s revenues by geographic region are as follows:

	Three Months ended June 30,				Six Months ended June 30,
	2021		2020		2021		2020
North America	$	141,200	$	107,000	$	310,900	$	290,400
South America		2,600		–		4,100		1,400
Asia		362,100		505,100		775,600		840,600
Australia		8,000		15,200		34,700		15,200
	$	513,900	$	627,300	$	1,125,300	$	1,147,600

7 

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

Note 9. Leases

Our Company conducts its operations in leased facilities under a non-cancelable operating lease expiring in 2024.

Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, our Company has capitalized the present value of the minimum lease payments commencing January 1, 2019, using an estimated incremental borrowing rate of 6%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.

As of January 1, 2019 the operating lease right-of-use asset and operating lease liability amounted to $241,100 with no cumulative-effect adjustment to the opening balance of accumulated deficit.

There are no other material operating leases. Our Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.

Total lease expense under operating leases for the three and six months ended June 30, 2021 was $13,400 and $26,700, respectively. Total lease expense under operating leases for the three and six months ended June 30, 2020 was $13,400 and $26,700, respectively.

Maturities of lease liabilities are as follows:

	Operating Leases
Year ending December 31
2021	$	26,800
2022		54,600
2023		56,200
2024		18,900
Total lease payments		156,500
Less imputed interest		(18,100	)
Total	$	138,400

8 

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

Forward-Looking Information

This Report on Form 10-Q contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding:

· The ongoing impact of the COVID-19 coronavirus pandemic on our business operations, revenues, employees, suppliers and customers

· Expected operating results, such as revenue growth and earnings

· Anticipated levels of capital expenditures for fiscal year 2021 and beyond

· Current or future volatility in market conditions

· Our belief that we have sufficient liquidity to fund our business operations during the next twelve months

· Strategy for customer retention, growth, product development, market position, financial results and reserves

· Strategy for risk management

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:

· The extent to which the COVID-19 pandemic may impact our future financial and operational performance will be dependent on many factors that we may not be able to predict because they continue to change and evolve depending on both national and local circumstances. These factors include, among others, the following: government restrictions affecting our employees, customers and suppliers, changes in our revenues due to lower customer demand as a result of the pandemic and a potential inability to obtain raw materials due to lower availability. We continue to monitor the impact of COVID-19 and the recently identified variants of COVID-19 on our business but we cannot accurately predict the extent to which it will adversely affect our future results of operations, financial condition or cash flows.

· The extent to which we are successful in gaining new long-term relationships with customers or retaining significant existing customers and the level of service failures that could lead customers to use competitors' services.

· Our ability to improve our current credit rating with our vendors and the impact on our raw materials and other costs and competitive position of doing so.

· The impact of losing our intellectual property protections or the loss in value of our intellectual property.

· Changes in customer demand.

· The adequacy of our cash flow and earnings and other conditions which may affect our ability to timely service our debt obligations.

· Such other factors as discussed throughout Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q, and throughout Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020.

Any forward-looking statement made by us in this Report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

9 

The following discussion and analysis should be read in conjunction with our condensed financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the Securities and Exchange Commission on March 30, 2021, as amended on April 30, 2021.

Background Overview

Nocopi Technologies, Inc. develops and markets specialty reactive inks for applications in the large educational and toy products market. We also develop and market technologies for document and product authentication, which we believe can reduce losses caused by fraudulent document reproduction or by product counterfeiting and/or diversion. We derive our revenues primarily from licensing our technologies on an exclusive or non-exclusive basis to licensees who incorporate our technologies into their product offering and from selling products incorporating our technologies to the licensees or to their licensed printers.

Unless the context otherwise requires, all references to the “Company,” “we,” “our” or “us” and other similar terms means Nocopi Technologies, Inc., a Maryland corporation.

Effects of COVID-19

To serve our customers while also providing for the safety of our employees and service providers, we have adapted various steps to protect our employees. Any employee who is uncomfortable coming into our facilities may choose not to come in. We have a large enough facility to enable all of our employees to social distance and we follow Centers for Disease Control and Prevention (CDC) guidelines. Our production employees work with chemicals and they have always used masks, respirators, etc., even before COVID-19. As a result, we continue to maintain the same level of productivity and effectiveness as prior to the COVID-19 pandemic.

The impact of COVID-19 on our Company had little impact on the financial results during the second quarter and first six months of 2021 as the shortage of raw materials used in certain of our Company’s products experienced throughout 2020 as a consequence of the COVID-19 pandemic and the resultant price increases have been at least temporarily eased, though still higher than pre-pandemic levels, so our Company’s gross margins on those products returned to similar levels as were experienced before the inception of the COVID-19 pandemic. We cannot accurately predict the availability and pricing of these raw materials in subsequent quarters due to ongoing uncertainties related to COVID-19 particularly in light of the recently identified variants of the COVID-19 virus and the potential re-imposition of restrictions currently being considered by federal, state and local governments and in certain states presently implemented. The full extent of the impact to the Company due to the impact of the COVID-19 pandemic for our third quarter and beyond cannot be currently determined. The extent to which the COVID-19 pandemic may impact our future financial and operational performance will be dependent on many factors that we may not be able to predict because they continue to change and evolve depending on both national and local circumstances. These factors include, among others, the following: government restrictions affecting our employees, customers and suppliers, changes in our revenues due to lower customer demand as a result of the pandemic and a potential inability to obtain raw materials due to lower availability. We continue to monitor the impact of COVID-19 along with the recently identified variants of COVID-19 on our business but we cannot accurately predict the extent to which it will adversely affect our future results of operations, financial condition or cash flows.

To date, we have not suffered a drop off in total customer orders and earned royalties in the entertainment and toy products market as a result of COVID-19, but we continue to experience a negative impact on revenues in our smaller anti-counterfeiting and anti-diversion products market due to closures of certain printing facilities that utilize these technologies and we anticipate that these closures may continue for a period of time. We continue to retain revenues at historical levels in the entertainment and toy products market through the current date despite the downturns in the overall economy. While the products of our licensees in the larger entertainment and toy products market are sold by both large and smaller retailers, some of whom remain open, and are also available for purchase online, we believe that revenues may not continue to be achieved at levels experienced to the current date due to the negative economic conditions that are expected to continue over the balance of the year and beyond as a result of COVID-19 and the recently identified variants of COVID-19. A slowdown in overall consumer spending may affect the sales of products marketed by our licensees. Our major licensees in the entertainment and toy products market are large, well-known businesses in this market with whom we believe our long-term relationship will not be adversely affected by the current COVID-19 pandemic.

10 

Results of Operations

Our Company’s revenues are derived from (a) royalties paid by licensees of our technologies, (b) fees for the provision of technical services to licensees and (c) from the direct sale of (i) products incorporating our technologies, such as inks, security paper and pressure sensitive labels, and (ii) equipment used to support the application of our technologies, such as ink-jet printing systems. Royalties consist of guaranteed minimum royalties payable by our licensees in certain cases and additional royalties which typically vary with the licensee’s sales or production of products incorporating the licensed technology. Service fees and sales revenues vary directly with the number of units of service or product provided.

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

a.	License fees for the use of our technology and royalties with guaranteed minimum amounts are recognized at a point in time when the term begins;
b.	Product sales are recognized at the time of the transfer of goods to customers at an amount that our Company expects to be entitled to in exchange for these goods, which is at the time of shipment; and
c.	Fees for technical services are recognized at the time of the transfer of services to customers at an amount that our Company expects to be entitled to in exchange for the services, which is when the service has been rendered.

We believe that, as fixed cost reductions beyond those we have achieved in recent years may not be achievable, our operating results are substantially dependent on revenue levels. Because revenues derived from licenses and royalties carry a much higher gross profit margin than other revenues, operating results are also substantially affected by changes in revenue mix.

Both the absolute amount of our Company’s revenues and the mix among the various sources of revenue are subject to substantial fluctuation. We have a relatively small number of substantial customers rather than a large number of small customers. Accordingly, changes in the revenue received from a significant customer can have a substantial effect on our Company’s total revenue, revenue mix and overall financial performance. Such changes may result from a substantial customer’s product development delays, engineering changes, changes in product marketing strategies, production requirements and the like. In addition, certain customers have, from time to time, sought to renegotiate certain provisions of their license agreements and, when our Company agrees to revise such terms, revenues from the customer may be adversely affected.

Revenues for the second quarter of 2021 were $513,900 compared to $627,300 in the second quarter of 2020, a decrease of $113,400, or approximately 18%. Licenses, royalties and fees increased by $37,800, or approximately 35%, to $144,900 in the second quarter of 2021 from $107,100 in the second quarter of 2020. The increase in licenses, royalties and fees in the second quarter of 2021 compared to the second quarter of 2020 is due primarily to higher royalties from our Company’s licensees in entertainment and toy products market offset in part by lower revenues from our Company’s licensees in the security markets which continue to be negatively affected by the COVID-19 pandemic and the variants of COVID-19 that have recently been identified. We cannot assure you that the marketing and product development activities of our Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for our Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions being experienced worldwide as a result of the ongoing COVID-19 pandemic that is continuing to negatively impact all worldwide economies.

Product and other sales decreased by $151,200, or approximately 29%, to $369,000 in the second quarter of 2021 from $520,200 in the second quarter of 2020. Sales of ink decreased in the second quarter of 2021 compared to the second quarter of 2020 due primarily to lower ink shipments to the third party authorized printer used by one of our Company’s major licensees in the entertainment and toy products market. In the second quarter of 2021, our Company derived revenues of approximately $461,100 from our licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $575,200 in the second quarter of 2020.

11 

For the first six months of 2021, revenues were $1,125,300, representing a decrease of $22,300, or approximately 2%, from revenues of $1,147,600 in the first six months of 2020. Licenses, royalties and fees increased by $58,700, or approximately 22%, to $330,400 in the first six months of 2021 from $271,700 in the first six months of 2020. The increase in licenses, royalties and fees is due primarily to higher royalties from our Company’s licensees in entertainment and toy products market offset in part by lower revenues from our Company’s licensees in the security markets which continues to be negatively affected by the COVID-19 pandemic and the variants of COVID-19 that have recently been identified. We cannot assure you that the marketing and product development activities of our Company’s licensees or other businesses in the entertainment and toy products market will produce a significant increase in revenues for our Company, nor can the timing of any potential revenue increases be predicted, particularly given the uncertain economic conditions being experienced worldwide as a result of the COVID-19 pandemic that is continuing to negatively impact all worldwide economies along with recently identified variants of the COVID-19 virus.

Product and other sales decreased by $81,000, or approximately 9%, to $794,900 in the first six months of 2021 from $875,900 in the first six months of 2020. Sales of ink decreased in the first six months of 2021 compared to the first six of 2020 due primarily to lower ink shipments to the third party authorized printer used by one of our Company’s major licensees in the entertainment and toy products market and lower ink shipments to our Company’s licensees in the retail receipt and document fraud market. Our Company derived revenues of approximately $1,022,700 from licensees and their authorized printers in the entertainment and toy products market in the first six months of 2021 compared to revenues of approximately $1,028,700 in the first six months of 2020.

Our Company’s gross profit decreased to $280,100 in the second quarter of 2021, or approximately 55% of revenues, from $321,500 in the second quarter of 2020, or approximately 51% of revenues. Licenses, royalties and fees have historically carried a higher gross profit than product and other sales. Such other sales generally consist of supplies or other manufactured products which incorporate our Company’s technologies or equipment used to support the application of its technologies. These items (except for inks which are manufactured by our Company) are generally purchased from third-party vendors and resold to the end-user or licensee and carry a lower gross profit than licenses, royalties and fees. The lower gross profit in the second quarter of 2021 compared to the second quarter of 2020 results primarily from lower revenues from product and other sales offset in part by higher revenues from licenses, royalties and fees in the second quarter of 2021 compared to the second quarter of 2020.

For the first six months of 2021, gross profit was $671,200, or approximately 60% of revenues, compared to $590,500, or approximately 51% of revenues, in the first six months of 2020. The higher gross profit in the first six months of 2021 compared to the first six months of 2020 results primarily from higher licenses, royalties and fees in the first six months of 2021 offset in part by lower revenues from product and other sales in the first six months of 2021 compared to the first six months of 2020.

As the variable component of cost of revenues related to licenses, royalties and fees is a low percentage of these revenues and the fixed component is not substantial, period to period changes in revenues from licenses, royalties and fees can significantly affect both the gross profit from licenses, royalties and fees as well as overall gross profit. The gross profit from licenses, royalties and fees increased to approximately 66% in the second quarter of 2021 compared to approximately 45% in the second quarter of 2020 and to approximately 71% of revenues from licenses, royalties and fees in the first six months of 2021 from approximately 60% in the first six months of 2020.

The gross profit, expressed as a percentage of revenues, of product and other sales is dependent on both the overall sales volumes of product and other sales and on the mix of the specific goods produced and/or sold. The gross profit from product and other sales decreased to approximately 50% of revenues in the second quarter of 2021 compared to approximately 52% of revenues in the second quarter of 2020. For the first six months of 2021, the gross profit, expressed as a percentage of revenues, increased to approximately 55% of revenues from product and other sales compared to approximately 49% of revenues from product and other sales in the first six months of 2020. The decrease in gross profit in the second quarter of 2021 compared to the second quarter of 2020 is due primarily to lower ink shipments to the third party authorized printer used by one of our Company’s major licensees in the entertainment and toy products market as well as lower ink shipments to our Company’s licensees in the retail receipt and document fraud market. The increase in gross profit in the first six months of 2021 compared to the first six months of 2020 is due primarily to a) a decline in the cost of certain raw materials utilized by the Company in the manufacture of certain of its products as prices of these raw materials that had increased in the first six months of 2020 due to the impact of the ongoing COVID-19 pandemic on the availability and supply of these raw materials have been at least temporally eased in the first six months of 2021 compared to the first six months of 2020; b) a favorable mix of products sold whereby the purchases of the Company’s products by the licensed printers of its licensees in the entertainment and toy products market in the first six months of 2021 compared to the second quarter and first six months of 2020 were of higher margin products manufactured by the Company.

12 

Research and development expenses of $45,800 and $90,300 in the second quarter and first six months of 2021, respectively, were comparable to $41,900 and $83,000 in the second quarter and first six months of 2020, respectively.

Sales and marketing expenses decreased to $74,200 in the second quarter of 2021 from $86,000 in the second quarter of 2020 and to $157,400 in the first six months of 2021 from $170,000 in the first six months of 2020. The decrease is due primarily to lower commission expense on the lower level of revenues in the second quarter of 2021 compared to the second quarter of 2020 and to lower business development expenses first six months of 2021 compared to the first six months of 2020.

General and administrative expenses decreased nominally in the second quarter of 2021 to $117,700 from $120,000 in the second quarter of 2020. In the first six months of 2021, general and administrative expenses increased nominally to $263,200 from $259,700 in the first six months of 2020.

Other income (expenses) in the second quarter and first six months of 2020 included interest on convertible debentures held by seven investors.

Income taxes in the second quarter and first six months of 2021 and 2020 result from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania. In the first quarter of 2020, our Company reversed $47,400 of accrued Pennsylvania income taxes that are not payable.

The lower net income of $42,500 in the second quarter of 2021 compared to net income $70,800 in the second quarter of 2020 resulted primarily from a lower gross profit on a lower level of product and other sales offset in part by lower operating expenses in the second quarter of 2021 compared to the second quarter of 2020. The higher net income of $157,300 in the first six months of 2021 compared to net income of $123,400 in the first six months of 2020 resulted primarily from a higher gross profit on a higher level of licenses, royalties and fees and lower cost of revenues in the first six months of 2021 compared to the first six months of 2020 offset in part by higher income taxes in the first six months of 2021.

Plan of Operation, Liquidity and Capital Resources

During the first six months of 2021, our Company’s cash increased to $1,908,400 at June 30, 2021 from $1,362,800 at December 31, 2020. During the first six months of 2021, our Company generated $574,400 from its operating activities, received $2,800 upon the exercise of warrants and used $31,600 for capital expenditures.

During the first six months of 2021, our Company’s revenues decreased approximately 2% primarily as a result of lower sales of ink to one of the authorized printers of our Company’s licensees in the entertainment and toy products market offset in part by higher royalty revenues from a licensee in the entertainment and toy products market.

Additionally, our total overhead expenses decreased in the first six months of 2021 compared to the first six months of 2020 and our Company’s net interest income increased in the first six months of 2021 compared to the first six months of 2020. As a result of these factors, our Company generated net income of $157,300 in the first six months of 2021 compared to $123,400 in the first six months of 2020. Our Company had positive operating cash flow of $574,400 during the first six months of 2021. At June 30, 2021, our Company had positive working capital of $3,115,600 and stockholders’ equity of $3,613,200. For the full year of 2020, our Company had net income of $508,400 and had positive operating cash flow of $702,400. At December 31, 2020, our Company had working capital of $2,801,100 and stockholders’ equity of $3,453,100.

In November 2018, our Company negotiated a $150,000 revolving line of credit (“Line of Credit”) with a bank to provide a source of working capital, if required. The Line of Credit is secured by all the assets of our Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The Line of Credit is subject to an annual review and quiet period. There have been no borrowings under the Line of Credit since its inception. We may need to obtain additional capital in the future to further support the working capital requirements associated with our existing revenue base and to develop new revenue sources. We cannot assure you that we will be successful in obtaining such additional capital, if needed. We continue to maintain a cost containment program including curtailment, where possible, of discretionary research and development and sales and marketing expenses.

13 

Our 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 our Company has developed in the entertainment and toy products market. This includes two licensees that have been marketing products incorporating our Company’s technologies since 2012. These two licensees maintain a significant presence in the entertainment and toy products market and are well known and highly regarded participants in this market. We anticipate that these two licensees will expand their current offerings that incorporate our technologies and will introduce and market new products that will incorporate our technologies available to them under their license agreements with our Company. We will continue to develop various applications for these licensees. We also plan to expand our licensee base in the entertainment and toy market. We currently have additional licensees marketing or developing products incorporating our technologies in certain geographic and niche markets of the overall entertainment and toy products market.

Our Company maintains its presence in the retail loss prevention market and believes that revenue growth in this market can be achieved through increased security ink sales to its licensees in this market. We will continue to adjust our production and technical staff as necessary and, subject to available financial resources, invest in capital equipment needed to support potential growth in ink production requirements beyond our current capacity. Additionally, we will pursue opportunities to market our current technologies in specific security and non-security markets. We cannot assure you that these efforts will enable our Company to generate additional revenues and positive cash flow.

Our Company has received, and may in the future seek, additional capital in the form of debt, equity or both, to support our working capital requirements and to provide funding for other business opportunities. Beyond the Line of Credit, we cannot assure you that if we require additional capital, that we will be successful in obtaining such additional capital, or that such additional capital, if obtained, will enable our Company to generate additional revenues and positive cash flow.

As previously stated, we generate a significant portion of our total revenues from licensees in the entertainment and toy products market. These licensees generally sell their products through retail outlets. In the future, such sales may be adversely affected by changes in consumer spending that may occur as a result of an uncertain economic environment throughout the balance of 2021 and beyond due to the COVID-19 virus and its effect on the global economy particularly in light of the COVID-19 variants that have recently been identified. As a result, our revenues, results of operations and liquidity may be negatively impacted.

Contractual Obligations

As of June 30, 2021, there were no material changes in our contractual obligations from those disclosed in our Annual Report on Form 10-K filed with the SEC on March 30, 2021, as amended on April 30, 2021, other than those appearing in the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Recently Adopted Accounting Pronouncements

As of June 30, 2021, there were no recently adopted accounting standards that had a material effect on our Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments in this Update affect loans, debt securities, trade receivables, and any other financial assets that have the contractual right to receive cash. The ASU requires an entity to recognize expected credit losses rather than incurred losses for financial assets. For public entities, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. ASU No. 2019-10 extends the effective dates for two years for smaller reporting companies and nonpublic companies.

Off-Balance Sheet Arrangements

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

14 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our Company’s management, with the participation of our Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2021. Based on this evaluation, our Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of June 30, 2021, our Company’s disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by our Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our Company’s management, including our Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

15 

PART II - OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Date	Security
June 2021	Common Stock – 141,365 shares of common stock at $0.02 per share pursuant to warrant exercises for total proceeds of approximately $2,800.

These persons were the only offerees in connection with these transactions. We relied on Section 4(a)(2), 4(a)(5) and Regulation D of the Securities Act since the transactions do not involve any public offering. No underwriters were utilized and no commissions or fees were paid with respect to any of the above transactions.

Item 6.  Exhibits

(a) Exhibits

Exhibit Number	Description	Location
3.1	Amended and Restated Articles of Incorporation	Incorporated by reference to the Company’s Form 10-Q filed on November 14, 2008
3.2	Amended and Restated Bylaws	Incorporated by reference to the Company’s Form 8-K filed on March 12, 2019
10.1	Form of Convertible Debenture Purchase Agreement and Exhibits	Incorporated by reference to the Company’s Annual Report on Form 10-K filed on September 11, 2015
10.2	Form of Letter Agreement re: Convertible Debenture Purchase Agreement Election	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2019
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith
101.INS	Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover page formatted as Inline XBRL and contained in Exhibit 101

16 

SIGNATURES

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

	NOCOPI TECHNOLOGIES, INC.
DATE: August 11, 2021	/s/ Michael A. Feinstein, M.D.
	Michael A. Feinstein, M.D.
	Chairman of the Board, President & Chief Executive Officer
DATE: August 11, 2021	/s/ Rudolph A. Lutterschmidt
	Rudolph A. Lutterschmidt
	Vice President & Chief Financial Officer

17 

EXHIBIT INDEX

Exhibit Number	Description	Location
3.1	Amended and Restated Articles of Incorporation	Incorporated by reference to the Company’s Form 10-Q filed on November 14, 2008
3.2	Amended and Restated Bylaws	Incorporated by reference to the Company’s Form 8-K filed on March 12, 2019
10.1	Form of Convertible Debenture Purchase Agreement and Exhibits	Incorporated by reference to the Company’s Annual Report on Form 10-K filed on September 11, 2015
10.2	Form of Letter Agreement re: Convertible Debenture Purchase Agreement Election	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed on November 13, 2019
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith
101.INS	Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover page formatted as Inline XBRL and contained in Exhibit 101

18

EX-31.1

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 11, 2021

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

Michael A. Feinstein, M.D.

Chief Executive Officer

EX-31.2

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 11, 2021

/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt

Vice President and Chief Financial Officer

EX-32.1

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, 2021 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 11, 2021

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

Michael A. Feinstein, M.D.

Principal Executive Officer

/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt

Principal Financial Officer

XML

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 09, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	000-20333
Entity Registrant Name	NOCOPI TECHNOLOGIES, INC.
Entity Central Index Key	0000888981
Entity Tax Identification Number	87-0406496
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	480 Shoemaker Road
Entity Address, Address Line Two	Suite 104
Entity Address, City or Town	King of Prussia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19406
City Area Code	610
Local Phone Number	834-9600
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		67,495,055

XML

Statements of Comprehensive Income (unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues
Licenses, royalties and fees	$ 144,900	$ 107,100	$ 330,400	$ 271,700
Product and other sales	369,000	520,200	794,900	875,900
Total revenues	513,900	627,300	1,125,300	1,147,600
Cost of revenues
Licenses, royalties and fees	49,500	58,600	96,600	108,300
Product and other sales	184,300	247,200	357,500	448,800
Total cost of revenues	233,800	305,800	454,100	557,100
Gross profit	280,100	321,500	671,200	590,500
Operating expenses
Research and development	45,800	41,900	90,300	83,000
Sales and marketing	74,200	86,000	157,400	170,000
General and administrative	117,700	120,000	263,200	259,700
Total operating expenses	237,700	247,900	510,900	512,700
Net income from operations	42,400	73,600	160,300	77,800
Other income (expenses)
Interest income	5,300	4,300	10,100	8,100
Interest expense and bank charges	(600)	(2,100)	(1,200)	(4,600)
Total other income (expenses)	4,700	2,200	8,900	3,500
Net income before income taxes	47,100	75,800	169,200	81,300
Income taxes	4,600	5,000	11,900	(42,100)
Net income	$ 42,500	$ 70,800	$ 157,300	$ 123,400
Basic and diluted net income per common share	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Weighted average common shares outstanding
Basic	67,400,812	61,044,698	67,377,251	61,044,698
Diluted	67,400,812	61,605,985	67,377,251	61,577,129

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Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash	$ 1,908,400	$ 1,362,800
Accounts receivable less $12,000 allowance for doubtful accounts	969,100	1,280,800
Inventory	486,500	324,800
Prepaid and other	29,400	97,800
Total current assets	3,393,400	3,066,200
Fixed assets
Leasehold improvements	58,400	27,800
Furniture, fixtures and equipment	164,100	163,700
Fixed assets, gross	222,500	191,500
Less: accumulated depreciation and amortization	116,400	104,300
Total fixed assets	106,100	87,200
Other assets
Long-term receivable	371,500	559,500
Operating lease right of use – building	138,400	160,300
Other assets	509,900	719,800
Total assets	4,009,400	3,873,200
Current liabilities
Accounts payable	67,000	5,700
Accrued expenses	154,600	178,600
Income taxes	10,200	36,300
Operating lease liability – current	46,000	44,500
Total current liabilities	277,800	265,100
Other liabilities
Accrued expenses – non-current	26,000	39,200
Operating lease liability – non-current	92,400	115,800
Total other liabilities	118,400	155,000
Stockholders' equity
Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding 2021 – 67,495,055; 2020 – 67,353,690 shares	675,000	673,500
Paid-in capital	12,577,100	12,575,800
Accumulated deficit	(9,638,900)	(9,796,200)
Total stockholders' equity	3,613,200	3,453,100
Total liabilities and stockholders' equity	$ 4,009,400	$ 3,873,200

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Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	67,495,055	67,353,690
Common stock, shares outstanding	67,495,055	67,353,690

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Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating Activities
Net income	$ 157,300	$ 123,400
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	12,700	9,100
Deferred income taxes		(47,400)
Other assets	209,900	211,500
Other liabilities	(35,100)	(33,900)
Net income adjusted for non-cash operating activities	344,800	262,700
(Increase) decrease in assets
Accounts receivable	311,700	210,800
Inventory	(161,700)	(149,600)
Prepaid and other	68,400	39,900
Increase (decrease) in liabilities
Accounts payable and accrued expenses	37,300	26,700
Taxes on income	(26,100)	5,200
Total increase in operating capital	229,600	133,000
Net cash provided by operating activities	574,400	395,700
Investing Activities
Additions to fixed assets	(31,600)	(31,000)
Net cash used in investing activities	(31,600)	(31,000)
Financing Activities
Exercise of warrants	2,800
Net cash provided by financing activities	2,800
Increase in cash	545,600	364,700
Cash at beginning of year	1,362,800	688,000
Cash at end of period	1,908,400	1,052,700
Supplemental Disclosure of Non Cash Investing Activities
Accumulated depreciation and amortization	600	500
Furniture, fixtures and equipment	$ (600)	$ (500)

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Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2019	$ 610,400	$ 12,483,900	$ (10,304,600)	$ 2,789,700
Beginning balance, shares at Dec. 31, 2019	61,044,698
Net income			52,600	52,600
Ending balance, value at Mar. 31, 2020	$ 610,400	12,483,900	(10,252,000)	2,842,300
Ending balance, shares at Mar. 31, 2020	61,044,698
Net income			70,800	70,800
Ending balance, value at Jun. 30, 2020	$ 610,400	12,483,900	(10,181,200)	2,913,100
Ending balance, shares at Jun. 30, 2020	61,044,698
Beginning balance, value at Dec. 31, 2020	$ 673,500	12,575,800	(9,796,200)	3,453,100
Beginning balance, shares at Dec. 31, 2020	67,353,690
Net income			114,800	114,800
Ending balance, value at Mar. 31, 2021	$ 673,500	12,575,800	(9,681,400)	3,567,900
Ending balance, shares at Mar. 31, 2021	67,353,690
Net income			42,500	42,500
Exercise of warrants	$ 1,500	1,300		2,800
Exercise of warrants, shares	141,365
Ending balance, value at Jun. 30, 2021	$ 675,000	$ 12,577,100	$ (9,638,900)	$ 3,613,200
Ending balance, shares at Jun. 30, 2021	67,495,055

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Financial Statements

6 Months Ended

Jun. 30, 2021

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. (our “Company”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on March 30, 2021, as amended on April 30, 2021 (the “2020 Annual Report”). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although our Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the 2020 Annual Report 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, 2021 may not be necessarily indicative of the operating results expected for the full year.

A novel strain of coronavirus, COVID-19, that was first identified in Wuhan, China in December 2019 has surfaced in many countries around the world including the United States. Many countries continue to experience reoccurrences of COVID-19 to the current date. The World Health Organization has declared COVID-19 to constitute a global pandemic. Certain state and local governments reacted by placing significant restrictions on businesses including a closure in Pennsylvania of non-essential businesses that was announced on March 20, 2020. While many Pennsylvania businesses have been allowed to reopen, often at limited capacity and with certain restrictions, as of the current date, there can be no assurances that future closures will be avoided. A requirement to close our Company for a considerable period of time could result in a negative impact on our Company’s financial condition and results of operations. Additionally, as our Company imports certain raw materials from China, if an extended disruption of the supply of these raw materials were to occur, such as the vessel delays resulting from the congestion experienced in certain Chinese ports due to a COVID-19 outbreak in the second quarter of 2021, our ability to produce products for sale to our customers could be negatively impacted. Further, restrictions on our customers and licensees in areas affected by the COVID-19 could adversely affect our results of operations and financial condition. We cannot predict the scope or magnitude of the negative effect that may result from the impact of the COVID-19 pandemic on the Company’s financial condition and results of operations. Our Company’s results of operations were negatively affected in 2020 in part as a result of a significant increase in the cost of raw materials utilized by our Company in the manufacture of certain of its products as a result of price increases related to the impact of the ongoing COVID-19 pandemic on the availability and supply of these raw materials. While prices of these raw materials have declined at the present time, there can be no assurances that raw material prices will remain at current levels or decrease to pre-COVID-19 pandemic levels in future periods. As the COVID-19 pandemic continues to spread both in its original form and in the recently identified variants of COVID-19 along with the potential re-imposition of COVID-19 restrictions currently being considered by federal, state and local governments and presently implemented in certain states, any future financial impact cannot be reasonably estimated at this time.

Our Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income.  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.  Since our Company has no items of other comprehensive income, comprehensive income is equal to net income.

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Stock Based Compensation

6 Months Ended

Jun. 30, 2021

Compensation Related Costs [Abstract]

Stock Based Compensation

Note 2. Stock Based Compensation

Our Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At June 30, 2021, our Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at June 30, 2021.

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Line of Credit

6 Months Ended

Jun. 30, 2021

Line Of Credit

Line of Credit

Note 3. Line of Credit

In November 2018, our Company negotiated a $150,000 revolving line of credit with a bank to provide a source of working capital, if required. The line of credit is secured by all the assets of our Company and bears interest at the bank’s prime rate for a period of one year and its prime rate plus 1.5% thereafter. The line of credit is subject to an annual review and quiet period. There have been no borrowings under the line of credit since its inception.

NOCOPI TECHNOLOGIES, INC.

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Stock Warrants

6 Months Ended

Jun. 30, 2021

Stock Warrants

Stock Warrants

Note 4. Stock Warrants

During the second quarter of 2021, holders of the remaining 141,365 warrants that had been outstanding exercised their options to purchase a total of 141,365 shares of our Company’s common stock at $0.02 per share. The warrants were granted in 2014 to two individuals who acquired convertible debentures from the Company in 2014. The warrants were exercisable two years after issuance and expire seven years after issuance. The fair value of the warrants was determined using the Black-Scholes pricing model. The relative fair value of the warrants was recorded as a discount to the notes payable with an offsetting credit to additional paid-in capital since our Company determined that the warrants were an equity instrument in accordance with FASB ASC 815. The debt discount related to the warrant issuances has been accreted through interest expense over the term of the notes payable. At June 30, 2021, our Company had no warrants outstanding.

The following table summarizes our Company’s warrant position at June 30, 2021 and December 31, 2020:

				Weighted Average
	Number		Exercise	Exercise
	of Shares		Price	Price
Outstanding warrants -
December 31, 2020		141,365	$0.02	$0.02
Outstanding warrants -
June 30, 2021		0

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Other Income (Expenses)

6 Months Ended

Jun. 30, 2021

Other Income and Expenses [Abstract]

Other Income (Expenses)

Note 5. Other Income (Expenses)

Other income (expenses) for the three months and six months ended June 30, 2020 included interest on convertible debentures held by seven investors.

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Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 6. Income Taxes

There is no provision for federal income taxes for the three and six months ended June 30, 2021 and 2020 due to the availability of net operating loss carryforwards. Our Company has established a valuation allowance for the entire amount of benefits resulting from our Company’s net operating loss carryforwards because our Company has determined that the realization of the net deferred tax asset is not assured.

The components for state income tax expense resulting from the limitation on the use of net operating losses are:

	Three Months ended June 30,				Six Months ended June 30,
	2021		2020		2021		2020
Current state taxes	$	4,600	$	5,000	$	11,900	$	5,300
Deferred state taxes		–		–		–		(47,400	)
Income tax expense (benefit)	$	4,600	$	5,000	$	11,900	$	(42,100	)

During the first quarter of 2020, our Company reversed $47,400 of accrued Pennsylvania income taxes that are not payable.

There was no change in unrecognized tax benefits during the period ended June 30, 2021 and there was no accrual for uncertain tax positions as of June 30, 2021. Tax years from 2017 through 2020 remain subject to examination by U.S. federal and state jurisdictions.

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Earnings per Share

6 Months Ended

Jun. 30, 2021

Weighted average common shares outstanding

Earnings per Share

Note 7. Earnings per Share

In accordance with FASB ASC 260, Earnings per Share, basic earnings per common share is computed using net earnings divided by the weighted average number of common shares outstanding for the periods presented. The computation of diluted earnings per common share involves the assumption that outstanding common shares are increased by shares issuable upon exercise of those warrants for which the market price exceeds the exercise price. The number of shares issuable upon the exercise of such warrants is decreased by shares that could have been purchased by our Company with related proceeds. As all of the previously outstanding warrants were exercised during the three months ended June 30, 2021, basic and diluted earnings per share for the three and six months ended June 30, 2021 are equal in each period since there are no incremental common shares in either period. For the three and six months ended June 30, 2020, the number of incremental common shares resulting from the assumed conversion of warrants was 561,287 and 532,431, respectively.

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Major Customer and Geographic Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Major Customer and Geographic Information

Note 8. Major Customer and Geographic Information

Our Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were:

	Three Months ended June 30,						Six Months ended June 30,
	2021			2020			2021			2020
Customer A		38	%		72	%		54	%		59	%
Customer B		32	%		8	%		14	%		14	%
Customer C		17	%		8	%		18	%		13	%

Our Company’s non-affiliate customers whose individual balances amounted to more than 10% of our Company’s net accounts receivable, expressed as a percentage of net accounts receivable, were:

	June 30,			December 31,
	2021			2020
Customer A		15	%		25	%
Customer B		12	%		–
Customer C		70	%		65	%

Our Company performs ongoing credit evaluations of its customers and generally does not require collateral. Our Company also maintains allowances for potential credit losses. The loss of a major customer could have a material adverse effect on our Company’s business operations and financial condition.

Our Company’s revenues by geographic region are as follows:

	Three Months ended June 30,				Six Months ended June 30,
	2021		2020		2021		2020
North America	$	141,200	$	107,000	$	310,900	$	290,400
South America		2,600		–		4,100		1,400
Asia		362,100		505,100		775,600		840,600
Australia		8,000		15,200		34,700		15,200
	$	513,900	$	627,300	$	1,125,300	$	1,147,600

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Leases

6 Months Ended

Jun. 30, 2021

Leases

Leases

Note 9. Leases

Our Company conducts its operations in leased facilities under a non-cancelable operating lease expiring in 2024.

Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, our Company has capitalized the present value of the minimum lease payments commencing January 1, 2019, using an estimated incremental borrowing rate of 6%. The minimum lease payments do not include common area annual expenses which are considered to be non-lease components.

As of January 1, 2019 the operating lease right-of-use asset and operating lease liability amounted to $241,100 with no cumulative-effect adjustment to the opening balance of accumulated deficit.

There are no other material operating leases. Our Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.

Total lease expense under operating leases for the three and six months ended June 30, 2021 was $13,400 and $26,700, respectively. Total lease expense under operating leases for the three and six months ended June 30, 2020 was $13,400 and $26,700, respectively.

Maturities of lease liabilities are as follows:

	Operating Leases
Year ending December 31
2021	$	26,800
2022		54,600
2023		56,200
2024		18,900
Total lease payments		156,500
Less imputed interest		(18,100	)
Total	$	138,400

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Stock Warrants (Tables)

6 Months Ended

Jun. 30, 2021

Stock Warrants

Schedule of warrant outstanding

				Weighted Average
	Number		Exercise	Exercise
	of Shares		Price	Price
Outstanding warrants -
December 31, 2020		141,365	$0.02	$0.02
Outstanding warrants -
June 30, 2021		0

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Components for State Income Tax Expense

	Three Months ended June 30,				Six Months ended June 30,
	2021		2020		2021		2020
Current state taxes	$	4,600	$	5,000	$	11,900	$	5,300
Deferred state taxes		–		–		–		(47,400	)
Income tax expense (benefit)	$	4,600	$	5,000	$	11,900	$	(42,100	)

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Major Customer and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Company's Revenues As Percentage Of Revenue

	Three Months ended June 30,						Six Months ended June 30,
	2021			2020			2021			2020
Customer A		38	%		72	%		54	%		59	%
Customer B		32	%		8	%		14	%		14	%
Customer C		17	%		8	%		18	%		13	%

Schedule of Non-affiliated Customers with Accounts Receivable More Than 10%

	June 30,			December 31,
	2021			2020
Customer A		15	%		25	%
Customer B		12	%		–
Customer C		70	%		65	%

Company's Revenue by Geographic Region

	Three Months ended June 30,				Six Months ended June 30,
	2021		2020		2021		2020
North America	$	141,200	$	107,000	$	310,900	$	290,400
South America		2,600		–		4,100		1,400
Asia		362,100		505,100		775,600		840,600
Australia		8,000		15,200		34,700		15,200
	$	513,900	$	627,300	$	1,125,300	$	1,147,600

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Leases (Tables)

6 Months Ended

Jun. 30, 2021

Leases

Maturities of Lease Liabilities

	Operating Leases
Year ending December 31
2021	$	26,800
2022		54,600
2023		56,200
2024		18,900
Total lease payments		156,500
Less imputed interest		(18,100	)
Total	$	138,400

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Stock Based Compensation (Details Narrative)	Mar. 31, 2021 USD ($)
Compensation Related Costs [Abstract]
Unrecognized portion of expense related to stock option grants	$ 0

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Line of Credit (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021
Line Of Credit
Line of credit		$ 150,000
Interest rate	The line of credit is subject to an annual review and quiet period. There have been no borrowings under the line of credit since its inception.

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Stock Warrants (Warrants Activity) (Details) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding warrants	0
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding warrants	0	141,365
Exercise price at beginning	$ 0.02	$ 0.02
Weighted average exercise price		$ 0.02

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Stock Warrants (Details Narrative) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Warrants Outstanding	0
Warrant [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding warrants	141,365
Exercise price	$ 0.02	$ 0.02
Warrants Outstanding	0	141,365

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Income Taxes (Components for State Income Tax Expense) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Current state taxes	$ 4,600	$ 5,000	$ 11,900	$ 5,300
Deferred state taxes				(47,400)
Income tax expense (benefit)	$ 4,600	$ 5,000	$ 11,900	$ (42,100)

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Income Taxes (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Mar. 31, 2020
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Reversal accrued income taxes			$ 47,400
Unrecognized tax benefits	$ 0
Uncertain tax positions		$ 0
Minimum [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Tax years open for examination	2017
Maximum [Member]
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items]
Tax years open for examination	2020

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Earnings per Share (Details Narrative) - shares	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Weighted average common shares outstanding
Number of incremental common shares resulting from the assumed conversion of warrants	561,287	532,431

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Major Customer and Geographic Information (Schedule of Revenues from Non-affiliated Customers) (Details) - Revenue Benchmark [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage	38.00%	72.00%	54.00%	59.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	32.00%	8.00%	14.00%	14.00%
Customer C [Member]
Revenue, Major Customer [Line Items]
Risk percentage	17.00%	8.00%	18.00%	13.00%

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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, 2021	Dec. 31, 2020
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage	15.00%	25.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	12.00%
Customer C [Member]
Revenue, Major Customer [Line Items]
Risk percentage	70.00%	65.00%

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Major Customer and Geographic Information (Schedule of Revenue by Geographic Region) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 513,900	$ 627,300	$ 1,125,300	$ 1,147,600
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	141,200	107,000	310,900	290,400
South America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	2,600	0	4,100	1,400
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	362,100	505,100	775,600	840,600
AUSTRALIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 8,000	$ 15,200	$ 34,700	$ 15,200

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Leases (Maturities of Lease Liabilities) (Details) - USD ($)	Jun. 30, 2021	Jan. 01, 2019
Leases
2021	$ 26,800
2022	54,600
2023	56,200
2024	18,900
Total lease payments	156,500
Less imputed interest	(18,100)
Total	$ 138,400	$ 241,100

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Leases (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020	Jan. 01, 2019
Leases
Incremental borrowing rate						6.00%
Operating lease right-of-use asset	$ 138,400		$ 138,400		$ 160,300	$ 241,100
Operating lease liability	138,400		138,400			$ 241,100
Lease expense	$ 13,400	$ 13,400	$ 26,700	$ 26,700