0001553350-21-000998.txt : 20211112 0001553350-21-000998.hdr.sgml : 20211112 20211112160132 ACCESSION NUMBER: 0001553350-21-000998 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 47 CONFORMED PERIOD OF REPORT: 20210930 FILED AS OF DATE: 20211112 DATE AS OF CHANGE: 20211112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOCOPI TECHNOLOGIES INC/MD/ CENTRAL INDEX KEY: 0000888981 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 870406496 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20333 FILM NUMBER: 211403205 BUSINESS ADDRESS: STREET 1: 480 SHOEMAKER ROAD STREET 2: SUITE 104 CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6108349600 MAIL ADDRESS: STREET 1: 480 SHOEMAKER ROAD STREET 2: SUITE 104 CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 10-Q 1 nnup_10q.htm QUARTERLY REPORT
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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 September 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 November 9, 2021.

 
 

 

 
 

NOCOPI TECHNOLOGIES, INC.

 

INDEX

 

  PAGE
Part I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements 1
   
Statements of Comprehensive Income for Three Months and Nine Months Ended September 30, 2021 and September 30, 2020 1
Balance Sheets at September 30, 2021 and December 31, 2020 2
Statements of Cash Flows for Nine Months Ended September 30, 2021 and September 30, 2020 3
Statements of Stockholders’ Equity for the Periods December 31, 2020 through September 30, 2021 and December 31, 2019 through September 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 1. Legal Proceedings 16
   
Item 1A. Risk Factors 16
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 16
   
Item 3. Defaults Upon Senior Securities 16
   
Item 4. Mine Safety Disclosures 16
   
Item 5. Other Information 16
   
Item 6. Exhibits 17
   
SIGNATURES 18
   
EXHIBIT INDEX 19

 

 

 

 
 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Nocopi Technologies, Inc.

Statements of Comprehensive Income*

(unaudited)

 

                     
   Three Months ended
September 30,
   Nine Months ended
September 30,
 
   2021   2020   2021   2020 
                 
Revenues                    
Licenses, royalties and fees  $222,500   $153,300   $552,900   $425,000 
Product and other sales   90,000    601,500    884,900    1,477,400 
Total revenues   312,500    754,800    1,437,800    1,902,400 
                     
Cost of revenues                    
Licenses, royalties and fees   28,300    61,900    124,900    170,200 
Product and other sales   75,000    267,400    432,500    716,200 
Total cost of revenues   103,300    329,300    557,400    886,400 
Gross profit   209,200    425,500    880,400    1,016,000 
                     
Operating expenses                    
Research and development   44,000    40,700    134,300    123,700 
Sales and marketing   56,600    90,900    214,000    260,900 
General and administrative   122,300    123,800    385,500    383,500 
Total operating expenses   222,900    255,400    733,800    768,100 
Net income (loss) from operations   (13,700)   170,100    146,600    247,900 
                     
Other income (expenses)                    
Interest income   5,100    4,200    15,200    12,300 
Interest expense and bank charges   (500)   (1,300)   (1,700)   (5,900)
Total other income (expenses)   4,600    2,900    13,500    6,400 
Net income (loss) before income taxes   (9,100)   173,000    160,100    254,300 
Income taxes   (10,200)   9,900    1,700    (32,200)
Net income  $1,100   $163,100   $158,400   $286,500 
                     
Basic and diluted net income per common share  $.00   $.00   $.00   $.00 
                     
Weighted average common shares outstanding                    
Basic   67,495,055    66,768,023    67,416,519    62,952,473 
Diluted   67,495,055    66,893,250    67,416,519    63,069,652 

 

 

*See accompanying notes to these financial statements.

 

1 
 

Nocopi Technologies, Inc.

Balance Sheets*

 

           
   September 30,   December 31, 
   2021   2020 
   (unaudited)     
Assets          
Current assets          
Cash  $2,136,600   $1,362,800 
Accounts receivable less $12,000 allowance for doubtful accounts   668,400    1,280,800 
Inventory   480,400    324,800 
Prepaid and other   130,700    97,800 
Total current assets   3,416,100    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   125,300    104,300 
Total fixed assets   97,200    87,200 
Other assets          
Long-term receivables   278,100    559,500 
Operating lease right of use - building   127,200    160,300 
Other assets   405,300    719,800 
Total assets  $3,918,600   $3,873,200 
           
Liabilities and Stockholders' Equity          
           
Current liabilities          
Accounts payable  $14,200   $5,700 
Accrued expenses   143,400    178,600 
Income taxes       36,300 
Operating lease liability, current   46,700    44,500 
Total current liabilities   204,300    265,100 
           
Other liabilities          
Accrued expenses, non-current   19,500    39,200 
Operating lease liability, non-current   80,500    115,800 
Total other liabilities   100,000    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   (9,637,800)   (9,796,200)
Total stockholders' equity   3,614,300    3,453,100 
Total liabilities and stockholders' equity  $3,918,600   $3,873,200 

 

*See accompanying notes to these financial statements.

 

 

 

2 
 

Nocopi Technologies, Inc.

Statements of Cash Flows*

(unaudited)

 

           
   Nine Months ended
September 30,
 
   2021   2020 
Operating Activities          
Net income  $158,400   $286,500 
Adjustments to reconcile net income to net cash provided by operating activities          
Depreciation and amortization   21,600    15,300 
Deferred income taxes       (47,400)
Other assets   314,500    316,900 
Other liabilities   (52,800)   (51,000)
Net income adjusted for non-cash operating activities   441,700    520,300 
(Increase) decrease in assets          
Accounts receivable   612,400    329,300 
Inventory   (155,600)   (158,700)
Prepaid and other   (32,900)   113,800 
Decrease in liabilities          
Accounts payable and accrued expenses   (26,700)   (6,000)
Income taxes   (36,300)   (30,200)
Total increase in operating capital   360,900    248,200 
Net cash provided by operating activities   802,600    768,500 
           
Investing Activities          
Additions to fixed assets   (31,600)   (38,600)
Net cash used in investing activities   (31,600)   (38,600)
           
Financing Activities          
Exercise of warrants   2,800    11,000 
Net cash provided by financing activities   2,800    11,000 
           
Increase in cash   773,800    740,900 
Cash at beginning of year   1,362,800    688,000 
Cash at end of period  $2,136,600   $1,428,900 
           
Supplemental Disclosure of Non-Cash Investing and Financing Activities          
Accumulated depreciation and amortization  $600   $123,800 
Furniture, fixtures and equipment  $(600)  $(123,800)
Convertible debentures  $   $97,900 
Accrued expenses  $   $46,100 
Common stock  $   $(57,600)
Paid-in capital  $   $(86,400)

 

 

*See accompanying notes to these financial statements.

 

 

 

 

 

3 
 

Nocopi Technologies, Inc.

Statements of Stockholders’ Equity*

For the Periods December 31, 2020 through September 30, 2021 and December 31, 2019 through September 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 
                          
                          
Net income                1,100    1,100 
Balance September 30, 2021   67,495,055   $675,000   $12,577,100   $(9,637,800)  $3,614,300 

 

   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 
                          
Conversion of debentures and interest   5,758,992    57,600    86,400         144,000 
                          
Exercise of warrants   550,000    5,500    5,500         11,000 
                          
Net income                  163,100    163,100 
Balance September 30, 2020   67,353,690   $673,500   $12,575,800   $(10,018,100)  $3,231,200 

  

 

* 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 nine months ended September 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 and continuing into the fourth quarter of 2021, our ability to produce products for sale to our customers could be negatively impacted. Additionally, certain of the Company’s licensees in the entertainment and toy products market who utilize printers in China to produce their products have been affected by the COVID-19 related cargo surge during the third quarter of 2021 at major Chinese and United States ports as well as the world-wide container shortage resulting in significantly higher shipping costs, and have responded by deferring or scaling back production of their orders and, in some cases, rescheduling the shipping of completed orders. Such deferrals may affect the number and value of orders placed by the Company’s licensed printers in the entertainment and toy products market. 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 September 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 September 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 September 30, 2021, our Company had no warrants outstanding.

 

The following table summarizes our Company’s warrant position at September 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 -                        
September 30, 2021     0              

 

Note 5. Other Income (Expenses)

 

Other income (expenses) for the three and nine months ended September 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 nine months ended September 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

September 30,

  

Nine Months ended

September 30,

 
   2021   2020   2021   2020 
Current state taxes  $(10,200)  $9,900   $1,700   $15,200 
Deferred state taxes               (47,400)
Income tax expense (benefit)  $(10,200)  $9,900   $1,700   $(32,200)

 

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 September 30, 2021 and there was no accrual for uncertain tax positions as of September 30, 2021.

 

Tax years from 2018 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 nine months ended September 30, 2021 are equal in each period since there are no incremental common shares in either period. For the three and nine months ended September 30, 2020, the number of incremental common shares resulting from the assumed conversion of warrants was 125,227 and 117,179, 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

September 30

  

Nine Months ended

September 30

 
   2021   2020   2021   2020 
Customer A   24%   74%   47%   65%
Customer B       3%   11%   10%
Customer C   43%   10%   24%   12%

  

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:

 

               
    September 30     December 31  
    2021     2020  
Customer A     8 %     25 %
Customer C     83 %     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

September 30

  

Nine Months ended

September 30

 
   2021   2020   2021   2020 
North America  $204,200   $155,700   $515,100   $446,100 
South America       700    4,100    2,100 
Asia   77,500    583,400    853,100    1,424,000 
Australia   30,800    15,000    65,500    30,200 
   $312,500   $754,800   $1,437,800   $1,902,400 

 

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 6.5%. 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 nine months ended September 30, 2021 was $13,300 and $40,000, respectively. Total lease expense under operating leases for the three and nine months ended September 30, 2020 was $13,300 and $40,000, respectively.

 

Maturities of lease liabilities are as follows:

 

Maturities of Lease Liabilities        
    Operating Leases  
Year ending December 31        
2021   $ 13,400  
2022     54,600  
2023     56,200  
2024     18,900  
Total lease payments     143,100  
Less imputed interest     (15,900 )
Total   $ 127,200  

 

 

 

 

 

 

 

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 among them 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 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.

 

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 effect on the financial results during the 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 were 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; however, in the third quarter of 2021, certain of the Company’s licensees in the entertainment and toy products market who utilize printers in China to produce their products have been adversely affected by the cargo surge related to congestion experienced in certain Chinese ports due to a COVID-19 outbreak that began in the second quarter of 2021. The cargo surge continues to the present time, now adversely affecting major United States ports. The world-wide cargo surge along with a container shortage resulted in significantly higher shipping costs during the third quarter of 2021. Certain of our Company’s licensees in the entertainment and toy products market have responded by deferring or scaling back production and size of future orders, and, in some cases, rescheduling the shipping of completed orders. Ink orders from our Company’s licensed printers in China fell significantly in the third quarter of 2021 compared to earlier periods. These supply chain disruptions are being experienced by many businesses including our Company’s licensees. A continuance of these supply chain disruptions may negatively impact the number and value of orders placed by our Company’s licensed printers in the entertainment and toy products market with a resultant negative impact on our Company’s results of operations and cash flow in future periods.

 

To date, we have not suffered a drop off in total earned royalties in the entertainment and toy products market as a result of COVID-19 as retail demand continues to be strong for the products marketed by our licensees in the entertainment and toy products market; however, during the third quarter of 2021, reflecting the significantly higher shipping costs caused by the COVID-19 related cargo surge at major China and United States ports and the world-wide container shortage, ink orders from the printers of our licensees in the entertainment and toy products market were significantly below historical levels. We continue to experience a negative impact on revenues in our smaller anti-counterfeiting and anti-diversion products market due to reduced production activity at certain printing facilities that utilize these technologies and anticipate that these conditions may continue for a period of time. We continue to retain licensing 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. 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 affected.

 

Revenues for the third quarter of 2021 were $312,500 compared to $754,800 in the third quarter of 2020, a decrease of $442,300, or approximately 59%. Licenses, royalties and fees increased by $69,200, or approximately 45%, to $222,500 in the third quarter of 2021 from $153,300 in the third quarter of 2020. The increase in licenses, royalties and fees in the third quarter of 2021 compared to the third quarter of 2020 is due primarily to higher royalties from our Company’s licensees in the entertainment and toy products market due to ongoing strong retail demand for these products offset in part by lower revenues from our licensees in the security markets. 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 the massive international supply chain disruptions currently being experienced. The products marketed by the Company’s major licensees in the entertainment and toy products markets are produced in China. Trans-Pacific ocean shipping has been negatively affected by container shortages and port delays both in the United States and China.

 

Product and other sales decreased by $511,500, or approximately 85%, to $90,000 in the third quarter of 2021 from $601,500 in the third quarter of 2020. Sales of ink decreased in the third quarter of 2021 compared to the third quarter of 2020 due primarily to significantly lower ink shipments to the third party authorized printers used by two of our Company’s major licensees in the entertainment and toy products market. In the third quarter of 2021, our Company derived revenues of approximately $257,000 from our licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $699,100 in the third quarter of 2020.

 

11 
 

For the first nine months of 2021, revenues were $1,437,800, representing a decrease of $464,600, or approximately 24%, from revenues of $1,902,400 in the first nine months of 2020. Licenses, royalties and fees increased by $127,900, or approximately 30%, to $552,900 in the first nine months of 2021 from $425,000 in the first nine 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 certain of 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 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 $592,500, or approximately 40%, to $884,900 in the first nine months of 2021 from $1,477,400 in the first nine months of 2020. Sales of ink decreased in the first nine months of 2021 compared to the first nine months of 2020 due primarily to lower ink shipments to the third party authorized printers used by two of our Company’s major licensees in the entertainment and toy products market along with lower ink shipments to our Company’s licensees in the retail receipt and document fraud market. Our Company derived revenues of approximately $1,279,700 from licensees and their authorized printers in the entertainment and toy products market in the first nine months of 2021 compared to revenues of approximately $1,727,800 in the first nine months of 2020.

 

Our Company’s gross profit decreased to $209,200 in the third quarter of 2021, or approximately 67% of revenues, from $425,500 in the third quarter of 2020 or approximately 56% 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 third quarter of 2021 compared to the third quarter of 2020 results primarily from lower gross revenues from product and other sales offset in part by higher licenses, royalties and fees in the third quarter of 2021 compared to the third quarter of 2020.

 

For the first nine months of 2021, gross profit was $880,400, or approximately 61% of revenues, compared to $1,016,000, or approximately 53% of revenues in 2020. The lower gross profit in the first nine months of 2021 compared to the first nine months 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 first nine months of 2021 compared to the first nine 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 87% in the third quarter of 2021 compared to approximately 60% in the third quarter of 2020 and to approximately 77% of revenues from licenses, royalties and fees in the first nine months of 2021 from approximately 60% in the first nine 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 17% of revenues in the third quarter of 2021 compared to approximately 56% of revenues in the third quarter of 2020. For the first nine months of 2021, the gross profit, expressed as a percentage of revenues, decreased to approximately 51% of revenues from product and other sales compared to approximately 52% of revenues from product and other sales in the first nine months of 2020. The decrease in gross profit in the third quarter of 2021 compared to the third quarter of 2020 is due primarily to significantly 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. The decrease in gross profit in the first nine months of 2021 compared to the first nine months of 2020 is due primarily to significantly 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 offset in part by 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 nine 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 nine months of 2021 compared to the first nine months of 2020 and 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 nine months of 2021 compared to the first nine months of 2020 were of higher margin products manufactured by the Company.

 

12 
 

Research and development expenses of $44,000 and $134,300 in the third quarter and first nine months of 2021, respectively, were comparable to $40,700 and $123,700 in the third quarter and first nine months of 2020, respectively.

 

Sales and marketing expenses decreased in the third quarter of 2021 to $56,600 from $90,900 in the third quarter of 2020. Sales and marketing expenses decreased in the first nine months of 2021 to $214,000 from $260,900 in the first nine months of 2020. The decrease is due primarily to lower commission expense on the lower level of sales in the third quarter and first nine months of 2021 compared to the third quarter and first nine months of 2020.

 

General and administrative expenses decreased nominally in the third quarter of 2021 to $122,300 from $123,800 in the third quarter of 2020. In the first nine months of 2021, general and administrative expenses increased nominally to $385,500 nine from $383,500 in the first nine months of 2020.

 

Other income (expenses) in the third quarter and first nine months of 2020 included interest on convertible debentures held by seven investors and interest earned on invested funds.

 

Income taxes in the third quarter and first nine 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 net income of $1,100 in the third quarter of 2021 compared to net income of $163,100 in the third quarter of 2020 resulted primarily from a lower gross profit on a lower level of product and other sales offset in part by a higher level of licenses, royalties and fees, lower cost of revenues, lower operating expenses and lower income tax expense in the third quarter of 2021 compared to the third quarter of 2020. The lower net income of $158,400 in the first nine months of 2021 compared to net income of $286,500 in the first nine months of 2020 resulted primarily from a lower gross profit on a lower level of product and other sales offset in part by a higher level of licenses, royalties and fees, lower cost of revenues and lower operating expenses in the first nine months of 2021 compared to the first nine months of 2020 along with the reversal of income taxes in the first quarter of 2020.

 

Plan of Operation, Liquidity and Capital Resources

 

During the first nine months of 2021, our Company’s cash increased to $2,136,600 at September 30, 2021 from $1,362,800 at December 31, 2020. During the first nine months of 2021, our Company generated $802,600 from its operating activities, received $2,800 upon the exercise of warrants and used $31,600 for capital expenditures.

 

During the first nine months of 2021, our Company’s revenues decreased approximately 24% primarily as a result of lower sales of ink to the authorized printers of our Company’s licensees in the entertainment and toy products market offset in part by higher royalty revenues from two licensees in the entertainment and toy products market.

 

Our Company’s total overhead expenses decreased in the first nine months of 2021 compared to the first nine months of 2020 and our Company’s net interest income increased in the first nine months of 2021 compared to the first nine months of 2020. As a result of these factors, our Company generated net income of $158,400 in the first nine months of 2021 compared to $286,500 in the first nine months of 2020. Our Company had positive operating cash flow of $802,600 during the first nine months of 2021 and at September 30, 2021, had positive working capital of $3,211,800 and stockholders’ equity of $3,614,300. 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 positive 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. There can be no assurances 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. As a result, our revenues, results of operations and liquidity may be negatively impacted.

 

Contractual Obligations

 

As of September 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 September 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 September 30, 2021. Based on this evaluation, our Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of September 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 September 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 1. Legal Proceedings.

 

None

 

Item 1A. Risk Factors.

 

None

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

None

 

Item 5.  Other Information

 

(b)   Item 407(c)(3) of Regulation S-K Information

 

Articles Supplementary

 

On October 28, 2021, the Board of Directors (the “Board”) of our Company adopted resolutions providing that the Company be subject to Sections 3-803, 3-804(a), 3-804(b) and 3-804(c) of the Maryland General Corporation Law (“MGCL”) and authorized the Company to file Articles Supplementary with the State Department of Assessments and Taxation of the State of Maryland describing the resolutions adopted.  The Articles Supplementary were filed with the State Department of Assessments and Taxation of the State of Maryland on October 29, 2021. Descriptions of each provision within the Articles Supplementary are set forth below.

 

The Articles Supplementary provide that the Company shall be governed by Section 3-803 of the MGCL, which provides for the classification of the Board into three classes as nearly as equal as possible, with directors serving three year terms. Section 3-803 of the MGCL requires the Board, before the next annual meeting of stockholders, to designate by resolution, from among its members, directors to serve as Class I directors, Class II directors and Class III directors. Prior to filing the Articles Supplementary, membership of the Board existed without regard to class, and all directors were subject to renomination and reelection at each annual meeting of the stockholders. The Company intends to hold an annual meeting of stockholders in the spring of 2022.

 

Second, the Articles Supplementary  provide that the Company shall be governed by Section 3-804(a) of the MGCL, which  provides that the Company’s stockholders may only remove any member of the Board by the affirmative vote of at least two-thirds of all the votes entitled to be cast by the stockholders generally in the election of directors and, as a result of the classification of the Board, such removal is required by Section 2-406(b)(3) of the MGCL to be for cause. Prior to filing the Articles Supplementary, the removal of any member of the Board, with or without cause,  required the affirmative vote of a simple majority of all the votes entitled to be cast by the stockholders generally in the election of directors.

 

Third, the Articles Supplementary provide that the Company shall be governed by Section 3-804(b) of the MGCL, which provides that the number of directors of a corporation shall be fixed only by vote of the board of directors. Prior to filing the Articles Supplementary, the number of directors also could have been fixed by a change to the Company’s Articles of Incorporation or Bylaws.

 

 16

 

 

 

Finally, the Articles Supplementary provide that the Company shall be governed by  Section 3-804(c) of the MGCL, which  provides that any vacancy on the board of directors of a corporation  be filled only by the affirmative vote of a majority of the remaining directors then in office even if remaining directors do not constitute a quorum. Prior to filing the Articles Supplementary,  vacancies on the Board resulting from the removal of a director in accordance with Section 3.4 of the Company’s Bylaws could have been filled by the affirmative vote of the majority of the Company’s stockholders at an annual or special meeting of stockholders, provided that, if the stockholders of any class or series are entitled to elect one or more directors, only the stockholders of that class or series could elect a successor to fill a vacancy on the Board which results from the removal of a director previously elected by that class or series;  vacancies on the Board resulting from any cause other than an increase in the number of directors could be filled by a majority of the remaining directors, whether or not sufficient to constitute a quorum, and vacancies on the Board resulting from an increase in the number of directors could be filled by a majority of the entire Board, provided that, if the stockholders of any class or series are entitled separately to elect one or more directors, a majority of the remaining directors elected by that class or series or the sole remaining director elected by that class or series could fill a vacancy for the directors elected by that class or series.

 

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
  3.3  

Articles Supplementary relating to Nocopi Technologies, Inc.’s election to be subject to Sections 3-803, 3-804(a), 3-804(b) and 3-804(c) of the Maryland General Corporation Law

 

Incorporated by reference to the Company’s Form 8-K filed on 10/29/2021

  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    
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  104   Cover page formatted as Inline XBRL and contained in Exhibit 101    

 

 

17 
 

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: November 12, 2021   /s/ Michael A. Feinstein, M.D.
    Michael A. Feinstein, M.D.
    Chairman of the Board, President & Chief Executive Officer
     
DATE: November 12, 2021   /s/ Rudolph A. Lutterschmidt
    Rudolph A. Lutterschmidt
    Vice President & Chief Financial Officer

 

 

 

 

 

 

 

18 
 

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
  3.3  

Articles Supplementary relating to Nocopi Technologies, Inc.’s election to be subject to Sections 3-803, 3-804(a), 3-804(b) and 3-804(c) of the Maryland General Corporation Law

 

Incorporated by reference to the Company’s Form 8-K filed on 10/29/2021

  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    
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19

 

 

 

 

 

 

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

 

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: November 12, 2021

 

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

Michael A. Feinstein, M.D.

Chief Executive Officer

 

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

 

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: November 12, 2021

 

/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt

Vice President and Chief Financial Officer

 

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

 

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 September 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.

 

November 12, 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

 

 

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MD 87-0406496 480 Shoemaker Road Suite 104 King of Prussia PA 19406 610 834-9600 Yes Yes Non-accelerated Filer true false false 67495055 222500 153300 552900 425000 90000 601500 884900 1477400 312500 754800 1437800 1902400 28300 61900 124900 170200 75000 267400 432500 716200 103300 329300 557400 886400 209200 425500 880400 1016000 44000 40700 134300 123700 56600 90900 214000 260900 122300 123800 385500 383500 222900 255400 733800 768100 -13700 170100 146600 247900 5100 4200 15200 12300 500 1300 1700 5900 4600 2900 13500 6400 -9100 173000 160100 254300 -10200 9900 1700 -32200 1100 163100 158400 286500 0.00 0.00 0.00 0.00 67495055 66768023 67416519 62952473 67495055 66893250 67416519 63069652 2136600 1362800 12000 12000 668400 1280800 480400 324800 130700 97800 3416100 3066200 58400 27800 164100 163700 222500 191500 125300 104300 97200 87200 278100 559500 127200 160300 405300 719800 3918600 3873200 14200 5700 143400 178600 36300 46700 44500 204300 265100 19500 39200 80500 115800 100000 155000 0.01 0.01 75000000 75000000 67495055 67495055 67353690 67353690 675000 673500 12577100 12575800 -9637800 -9796200 3614300 3453100 3918600 3873200 -158400 -286500 21600 15300 -47400 -314500 -316900 -52800 -51000 441700 520300 -612400 -329300 155600 158700 32900 -113800 -26700 -6000 -36300 -30200 -360900 -248200 802600 768500 31600 38600 -31600 -38600 2800 11000 2800 11000 773800 740900 1362800 688000 2136600 1428900 600 123800 -600 -123800 97900 46100 -57600 -86400 67353690 673500 12575800 -9796200 3453100 114800 114800 67353690 673500 12575800 -9681400 3567900 141365 1500 1300 2800 42500 42500 67495055 675000 12577100 -9638900 3613200 1100 1100 67495055 675000 12577100 -9637800 3614300 61044698 610400 12483900 -10304600 2789700 52600 52600 61044698 610400 12483900 -10252000 2842300 70800 70800 61044698 610400 12483900 -10181200 2913100 5758992 57600 86400 144000 550000 5500 5500 11000 163100 163100 67353690 673500 12575800 -10018100 3231200 <p id="xdx_80B_eus-gaap--NatureOfOperations_zjthHUvb61Sb" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 1. <span id="xdx_828_zfzElIHKGbc1">Financial Statements</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 nine months ended September 30, 2021 may not be necessarily indicative of the operating results expected for the full year.</p> <p style="font: 9pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 and continuing into the fourth quarter of 2021, our ability to produce products for sale to our customers could be negatively impacted. Additionally, certain of the Company’s licensees in the entertainment and toy products market who utilize printers in China to produce their products have been affected by the COVID-19 related cargo surge during the third quarter of 2021 at major Chinese and United States ports as well as the world-wide container shortage resulting in significantly higher shipping costs, and have responded by deferring or scaling back production of their orders and, in some cases, rescheduling the shipping of completed orders. Such deferrals may affect the number and value of orders placed by the Company’s licensed printers in the entertainment and toy products market. Further, restrictions on our customers and licensees in areas affected by the COVID-19 could adversely affect our results of operations and financial condition. <span style="background-color: white">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 </span>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. <span style="background-color: white">A</span>s 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p id="xdx_80D_eus-gaap--CompensationRelatedCostsGeneralTextBlock_zqHTmOB7wOPf" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 2. <span id="xdx_82E_zTZ1kgqTlzWi">Stock Based Compensation</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Company follows FASB ASC 718, <i>Compensation – Stock Compensation</i>, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At September 30, 2021, our Company did not have an active stock option plan. There was <span id="xdx_906_eus-gaap--EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedStockOptions_iI_pp0p0_do_c20210930_zl6DFYbNoZ1c" title="Unrecognized portion of expense related to stock option grants">no</span> unrecognized portion of expense related to stock option grants at September 30, 2021.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> 0 <p id="xdx_80A_ecustom--LineOfCreditTextBlock_zAUbaf3MQhQ8" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 3. <span id="xdx_82F_zN5krS9ZKU56">Line of Credit</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In November 2018, our Company negotiated a <span id="xdx_90D_eus-gaap--LineOfCreditFacilityMaximumBorrowingCapacity_iI_pp0p0_c20210930_zojK0uzQBIRg">$150,000 </span>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. <span id="xdx_904_eus-gaap--LineOfCreditFacilityInterestRateDescription_c20210101__20210930_zvKIcC3k7W13">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. </span></p> 150000 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. <p id="xdx_80A_ecustom--StockWarrantsTextBlock_zhP3Cb0Hyvrl" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 4. <span id="xdx_82F_zfTJfDPjRbye">Stock Warrants</span><span id="a_Aci_Pg7"/></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 <span id="xdx_90A_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsOutstandingNumber_iI_c20210930__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_z8xLT5K6bA52" title="Outstanding warrants">141,365</span> shares of our Company’s common stock at <span id="xdx_90C_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_c20210930__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zqefm1NbiDSk" title="Exercise price">$0.02</span> 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 September 30, 2021, our Company had <span id="xdx_90D_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_do_c20210930_zMQKTMFhmN79" title="Warrants Outstanding">no</span> warrants outstanding.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table summarizes our Company’s warrant position at September 30, 2021 and December 31, 2020:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" id="xdx_881_eus-gaap--ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock_zx5uX7Mqmxr7" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse" summary="xdx: Disclosure - Stock Warrants (Warrants Activity) (Details)"> <tr style="vertical-align: bottom"> <td><span id="xdx_8B2_zJy7bvzefCa3" style="display: none">Schedule of warrant outstanding</span></td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Weighted Average</b></span></td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Number</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Exercise</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Exercise</b></span></td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><span style="font-size: 8pt"><b>of Shares</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><span style="font-size: 8pt"><b>Price</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><span style="font-size: 8pt"><b>Price</b></span></td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Outstanding warrants -</td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 1.5pc; text-indent: -0.5pc">December 31, 2020</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td id="xdx_987_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_c20201231__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_z8nkhJNU915h" style="border-bottom: black 1pt solid; text-align: right" title="Outstanding warrants">141,365</td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" id="xdx_986_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_c20201231__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zFhBpuCrkWD7" style="border-bottom: black 1pt solid; text-align: center" title="Exercise price at beginning">$0.02</td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" id="xdx_980_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iI_c20201231__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zyxeEwR1Jkg2" style="border-bottom: black 1pt solid; text-align: center" title="Weighted average exercise price">$0.02</td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 61%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right"> </td> <td style="white-space: nowrap; width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: center"> </td> <td style="border-top: black 1pt solid; width: 11%"> </td> <td style="white-space: nowrap; width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="border-top: black 1pt solid; width: 9%; text-align: right"> </td> <td style="white-space: nowrap; width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td>Outstanding warrants -</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td style="text-align: center"> </td> <td> </td> <td style="white-space: nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pc; text-indent: -0.5pc">September 30, 2021</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td id="xdx_985_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_c20210930__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zpXRGF4dtpX3" style="border-bottom: black 1pt solid; text-align: right" title="Outstanding warrants">0</td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> </td> <td style="white-space: nowrap"> </td></tr> </table> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> 141365 0.02 0 <table cellpadding="0" cellspacing="0" id="xdx_881_eus-gaap--ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock_zx5uX7Mqmxr7" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse" summary="xdx: Disclosure - Stock Warrants (Warrants Activity) (Details)"> <tr style="vertical-align: bottom"> <td><span id="xdx_8B2_zJy7bvzefCa3" style="display: none">Schedule of warrant outstanding</span></td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Weighted Average</b></span></td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Number</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Exercise</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="text-align: center"><span style="font-size: 8pt"><b>Exercise</b></span></td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><span style="font-size: 8pt"><b>of Shares</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><span style="font-size: 8pt"><b>Price</b></span></td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><span style="font-size: 8pt"><b>Price</b></span></td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td>Outstanding warrants -</td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2"> </td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td style="padding-left: 1.5pc; text-indent: -0.5pc">December 31, 2020</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td id="xdx_987_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_c20201231__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_z8nkhJNU915h" style="border-bottom: black 1pt solid; text-align: right" title="Outstanding warrants">141,365</td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" id="xdx_986_eus-gaap--ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1_iI_c20201231__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zFhBpuCrkWD7" style="border-bottom: black 1pt solid; text-align: center" title="Exercise price at beginning">$0.02</td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" id="xdx_980_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice_iI_c20201231__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zyxeEwR1Jkg2" style="border-bottom: black 1pt solid; text-align: center" title="Weighted average exercise price">$0.02</td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 61%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right"> </td> <td style="white-space: nowrap; width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; text-align: center"> </td> <td style="border-top: black 1pt solid; width: 11%"> </td> <td style="white-space: nowrap; width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="border-top: black 1pt solid; width: 9%; text-align: right"> </td> <td style="white-space: nowrap; width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCFFCC"> <td>Outstanding warrants -</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td style="text-align: center"> </td> <td> </td> <td style="white-space: nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td style="white-space: nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pc; text-indent: -0.5pc">September 30, 2021</td> <td> </td> <td style="border-bottom: black 1pt solid"> </td> <td id="xdx_985_eus-gaap--ClassOfWarrantOrRightOutstanding_iI_c20210930__us-gaap--AwardTypeAxis__us-gaap--WarrantMember_zpXRGF4dtpX3" style="border-bottom: black 1pt solid; text-align: right" title="Outstanding warrants">0</td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center"> </td> <td style="white-space: nowrap"> </td> <td> </td> <td colspan="2" style="border-bottom: black 1pt solid"> </td> <td style="white-space: nowrap"> </td></tr> </table> 141365 0.02 0.02 0 <p id="xdx_802_eus-gaap--OtherIncomeAndOtherExpenseDisclosureTextBlock_z8XVBi0J2mQ9" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 5. <span id="xdx_82A_zth6GbKYn0Ch">Other Income (Expenses)</span></b></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other income (expenses) for the three and nine months ended September 30, 2020 included interest on convertible debentures held by seven investors.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p id="xdx_80C_eus-gaap--IncomeTaxDisclosureTextBlock_zEZdjqLQX6Qk" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 6. <span id="xdx_823_zSw20niUhiZk">Income Taxes</span></b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There is no provision for federal income taxes for the three and nine months ended September 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.</p> <p style="font: 12pt/8pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The components for state income tax expense resulting from the limitation on the use of net operating losses are:</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <table cellpadding="0" cellspacing="0" id="xdx_884_eus-gaap--ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock_zr1gN5WO7EWf" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%" summary="xdx: Disclosure - Income Taxes (Components for State Income Tax Expense) (Details)"> <tr style="vertical-align: bottom; background-color: transparent"> <td style="text-align: left"><span id="xdx_8BD_zJizt7zJLq9g" style="display: none">Components for State Income Tax Expense</span></td><td> </td> <td style="text-align: left"> </td><td id="xdx_497_20210701__20210930_zzkS8DaTmKzj" style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_495_20200701__20200930_zDa9SYtuPB64" style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_49D_20210101__20210930_z9NV3xHrzwK6" style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_49B_20200101__20200930_zoA0XXo7R3jd" style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-size: 8pt; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-size: 8pt; text-align: center"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Three Months ended</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30,</b></p></td><td style="padding-bottom: 1pt; font-size: 8pt"> </td><td style="font-size: 8pt; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-size: 8pt; text-align: center"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Nine Months ended</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30,</b></p></td><td style="padding-bottom: 1pt; font-size: 8pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td></tr> <tr id="xdx_40F_eus-gaap--CurrentStateAndLocalTaxExpenseBenefit_maITEBzy1C_zbpkjUFFM0sf" style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 48%; text-align: left">Current state taxes</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">(10,200</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">9,900</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">1,700</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">15,200</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--DeferredStateAndLocalIncomeTaxExpenseBenefit_maITEBzy1C_zunhrt4Bfbmi" style="vertical-align: bottom; background-color: transparent"> <td style="text-align: left; padding-bottom: 1pt">Deferred state taxes</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0541">—</span></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0542">—</span></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0543">—</span></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(47,400</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr id="xdx_407_eus-gaap--IncomeTaxExpenseBenefit_iT_pp0p0_mtITEBzy1C_z8Sm0uCWKgT6" style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="color: rgb(204,255,204); text-align: left; padding-bottom: 2.5pt">Income tax expense (benefit)</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(10,200</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,900</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,700</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(32,200</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the first quarter of 2020, our Company reversed <span id="xdx_90D_ecustom--ReversalOfAccruedIncomeTaxes_iI_pp0p0_c20200630_z5I25lI0rFue" title="Reversal accrued income taxes">$47,400</span> of accrued Pennsylvania income taxes that are not payable<i>.</i></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There was <span id="xdx_905_eus-gaap--UnrecognizedTaxBenefitsPeriodIncreaseDecrease_pdp0_do_c20210101__20210930_zs6NbP1LD376" title="Unrecognized tax benefits">no</span> change in unrecognized tax benefits during the period ended September 30, 2021 and there was <span id="xdx_902_eus-gaap--LiabilityForUncertainTaxPositionsCurrent_iI_pdp0_do_c20210930_z9RiXOg4axS4" title="Uncertain tax positions">no</span> accrual for uncertain tax positions as of September 30, 2021.<span id="a_Aci_Pg8"/></p> <p style="font: 12pt/8pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Tax years from <span id="xdx_90B_eus-gaap--OpenTaxYear_c20210101__20210930__srt--RangeAxis__srt--MinimumMember_zXKTcJYdOe0j" title="Tax years open for examination">2018</span> through <span id="xdx_901_eus-gaap--OpenTaxYear_c20210101__20210930__srt--RangeAxis__srt--MaximumMember_zwX8hy2CyShg" title="Tax years open for examination">2020</span> remain subject to examination by U.S. federal and state jurisdictions.</p> <table cellpadding="0" cellspacing="0" id="xdx_884_eus-gaap--ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock_zr1gN5WO7EWf" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%" summary="xdx: Disclosure - Income Taxes (Components for State Income Tax Expense) (Details)"> <tr style="vertical-align: bottom; background-color: transparent"> <td style="text-align: left"><span id="xdx_8BD_zJizt7zJLq9g" style="display: none">Components for State Income Tax Expense</span></td><td> </td> <td style="text-align: left"> </td><td id="xdx_497_20210701__20210930_zzkS8DaTmKzj" style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_495_20200701__20200930_zDa9SYtuPB64" style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_49D_20210101__20210930_z9NV3xHrzwK6" style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td id="xdx_49B_20200101__20200930_zoA0XXo7R3jd" style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-size: 8pt; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-size: 8pt; text-align: center"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Three Months ended</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30,</b></p></td><td style="padding-bottom: 1pt; font-size: 8pt"> </td><td style="font-size: 8pt; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-size: 8pt; text-align: center"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Nine Months ended</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30,</b></p></td><td style="padding-bottom: 1pt; font-size: 8pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td></tr> <tr id="xdx_40F_eus-gaap--CurrentStateAndLocalTaxExpenseBenefit_maITEBzy1C_zbpkjUFFM0sf" style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 48%; text-align: left">Current state taxes</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">(10,200</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">9,900</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">1,700</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">15,200</td><td style="width: 1%; text-align: left"> </td></tr> <tr id="xdx_401_eus-gaap--DeferredStateAndLocalIncomeTaxExpenseBenefit_maITEBzy1C_zunhrt4Bfbmi" style="vertical-align: bottom; background-color: transparent"> <td style="text-align: left; padding-bottom: 1pt">Deferred state taxes</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0541">—</span></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0542">—</span></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0543">—</span></td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(47,400</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr id="xdx_407_eus-gaap--IncomeTaxExpenseBenefit_iT_pp0p0_mtITEBzy1C_z8Sm0uCWKgT6" style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="color: rgb(204,255,204); text-align: left; padding-bottom: 2.5pt">Income tax expense (benefit)</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(10,200</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">9,900</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,700</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(32,200</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr> </table> -10200 9900 1700 15200 -47400 -10200 9900 1700 -32200 47400 0 0 2018 2020 <p id="xdx_809_eus-gaap--EarningsPerShareTextBlock_zvnt56PdStjh" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 7. <span id="xdx_82C_z5Soi460o7hh">Earnings per Share</span></b></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In accordance with FASB ASC 260, <i>Earnings per Share</i>, 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 nine months ended September 30, 2021 are equal in each period since there are no incremental common shares in either period. For the three and nine months ended September 30, 2020, the number of incremental common shares resulting from the assumed conversion of warrants was <span id="xdx_90F_eus-gaap--IncrementalCommonSharesAttributableToCallOptionsAndWarrants_c20200701__20200930_zRzlx9xiGFXb" title="Number of incremental common shares resulting from the assumed conversion of warrants">125,227</span> and <span id="xdx_902_eus-gaap--IncrementalCommonSharesAttributableToCallOptionsAndWarrants_c20200101__20200930_zmBBRH6A5OI6" title="Number of incremental common shares resulting from the assumed conversion of warrants">117,179</span>, respectively.</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> 125227 117179 <p id="xdx_808_eus-gaap--SegmentReportingDisclosureTextBlock_zsqJqTG4iXz4" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 8. <span id="xdx_824_z0pocjqqYYP1">Major Customer and Geographic Information</span></b></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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:</p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"> </p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0pt 0"/> <table cellpadding="0" cellspacing="0" id="xdx_894_eus-gaap--ScheduleOfRevenueByMajorCustomersByReportingSegmentsTableTextBlock_zknP6Jw9Evqf" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%" summary="xdx: Disclosure - Major Customer and Geographic Information (Schedule of Revenues from Non-affiliated Customers) (Details)"> <tr style="vertical-align: bottom; background-color: transparent"> <td style="text-align: left"><span id="xdx_8B5_z2ZJbWlfelqc" style="display: none">Company's Revenues As Percentage Of Revenue</span></td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-size: 8pt; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-size: 8pt; text-align: center"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Three Months ended</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30</b></p></td><td style="padding-bottom: 1pt; font-size: 8pt"> </td><td style="font-size: 8pt; padding-bottom: 1pt"> </td> <td colspan="6" style="border-bottom: Black 1pt solid; font-size: 8pt; text-align: center"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Nine Months ended</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>September 30</b></p></td><td style="padding-bottom: 1pt; font-size: 8pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td><td style="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="2" style="border-bottom: Black 1pt solid; font-size: 8pt; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1pt; font-size: 8pt; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,255,204)"> <td style="width: 48%; text-align: left">Customer A</td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left"> </td><td id="xdx_982_eus-gaap--ConcentrationRiskPercentage1_dp_c20210701__20210930__us-gaap--ConcentrationRiskByBenchmarkAxis__us-gaap--SalesRevenueNetMember__srt--MajorCustomersAxis__custom--CustomerAMember_zz0iClqP96i4" style="width: 10%; text-align: right" title="Risk percentage">24</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&