NNUP Nocopi Technologies Inc MD (QB)

 

 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

 

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

 

For the quarterly period ended June 30, 2023

 

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: 9,251,178 shares of common stock, par value $0.01, as of August 9, 2023.

 

 

 

 

 

NOCOPI TECHNOLOGIES, INC.

 

INDEX

 

	PAGE
Part I. FINANCIAL INFORMATION
Item 1.      Financial Statements	1
Statements of Comprehensive Income for Three Months and Six Months Ended June 30, 2023 and June 30, 2022	1
Balance Sheets at June 30, 2023 and December 31, 2022	2
Statements of Cash Flows for Six Months Ended June 30, 2023 and June 30, 2022	3
Statements of Stockholders’ Equity for Three Months and Six Months Ended June 30, 2023 and June 30, 2022	4
Notes to Financial Statements	5
Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
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	16
SIGNATURES	17
EXHIBIT INDEX	18

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Nocopi Technologies, Inc.

Statements of Comprehensive Income*

(unaudited)

 

		Three Months ended June 30								Six Months ended June 30
		2023				2022				2023				2022
Revenues
Licenses, royalties and fees		$	150,200			$	169,800			$	273,200			$	307,100
Product and other sales			449,000				344,500				918,100				546,600
Total revenues			599,200				514,300				1,191,300				853,700
Cost of revenues
Licenses, royalties and fees			49,800				46,400				108,500				85,900
Product and other sales			179,200				154,800				401,000				281,500
Total cost of revenues			229,000				201,200				509,500				367,400
Gross profit			370,200				313,100				681,800				486,300
Operating expenses
Research and development			35,300				32,500				80,100				72,000
Sales and marketing			61,100				76,700				147,400				141,500
General and administrative			223,300				506,700				424,500				784,400
Total operating expenses			319,700				615,900				652,000				997,900
Net income (loss) from operations			50,500				(302,800	)			29,800				(511,600	)
Other income (expenses)
Interest income			60,400				6,100				122,500				11,900
Interest expense and bank charges			(4,400	)			(300	)			(5,000	)			(700	)
Total other income (expenses)			56,000				5,800				117,500				11,200
Net income (loss) before income taxes			106,500				(297,000	)			147,300				(500,400	)
Income taxes			27,400				—				37,900				—
Net income (loss)		$	79,100			$	(297,000	)		$	109,400			$	(500,400	)
Net income (loss) per common share
Basic		$	.01			$	(.04	)		$	.01			$	(.07	)
Diluted		$	.01			$	(.04	)		$	.01			$	(.07	)
Weighted average common shares outstanding
Basic			9,251,178				6,751,178				9,251,178				6,751,178
Diluted			9,251,178				6,751,178				9,251,178				6,751,178

 

  

*See accompanying notes to these financial statements.

 

 

 

Nocopi Technologies, Inc.

Balance Sheets*

 (unaudited)

		June 30				December 31
		2023				2022
Assets
Current assets
Cash		$	5,463,200			$	5,337,800
Accounts receivable less $12,000 allowance for doubtful accounts			1,345,600				1,103,500
Inventory			368,100				486,400
Prepaid and other			107,900				103,300
Total current assets			7,284,800				7,031,000
Fixed assets
Leasehold improvements			65,600				58,400
Furniture, fixtures and equipment			169,100				164,400
Fixed assets, gross			234,700				222,800
Less: accumulated depreciation and amortization			186,000				167,800
Total fixed assets			48,700				55,000
Other assets
Long-term receivable			2,149,500				2,463,100
Operating lease right of use – building			43,400				68,300
Other assets			2,192,900				2,531,400
Total assets		$	9,526,400			$	9,617,400
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$	68,000			$	97,700
Accrued expenses			188,600				173,700
Income taxes			148,300				287,100
Operating lease liability – current			43,400				50,700
Total current liabilities			448,300				609,200
Other liabilities
Accrued expenses – non-current			150,300				172,200
Operating lease liability – non-current			—				17,600
Total other liabilities			150,300				189,800
Stockholders' equity
Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding – 9,251,178 shares			92,500				92,500
Paid-in capital			16,659,600				16,659,600
Accumulated deficit			(7,824,300	)			(7,933,700	)
Total stockholders' equity			8,927,800				8,818,400
Total liabilities and stockholders' equity		$	9,526,400			$	9,617,400

 

 

*See accompanying notes to these financial statements.

 

 

  

Nocopi Technologies, Inc.

Statements of Cash Flows*

(unaudited)

 

		Six Months ended June 30
		2023				2022
Operating Activities
Net income (loss)		$	109,400			$	(500,400	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization			18,200				17,000
Other assets			338,500				208,400
Other liabilities			(46,800	)			(36,400	)
Net income adjusted for non-cash operating activities			419,300				(311,400	)
(Increase) decrease in assets
Accounts receivable			(242,100	)			(108,200	)
Inventory			118,300				(31,900	)
Prepaid and other			(4,600	)			100,500
Increase (decrease) in liabilities
Accounts payable and accrued expenses			(14,800	)			97,700
Taxes on income			(138,800	)
Total increase in operating capital			(282,000	)			58,100
Net cash provided by (used in) operating activities			137,300				(253,300	)
Investing Activities
Additions to fixed assets			(11,900	)			—
Net cash used in investing activities			(11,900	)			—
Increase (decrease) in cash			125,400				(253,300	)
Cash at beginning of year			5,337,800				1,846,700
Cash at end of period		$	5,463,200			$	1,593,400

 

  

 

*See accompanying notes to these financial statements.

 

 

 

 

Nocopi Technologies, Inc.

Statements of Stockholders’ Equity*

For the Periods December 31, 2022 through June 30, 2023 and December 31, 2021 through June 30, 2022

(unaudited)

 

		Common stock								Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance at December 31, 2022			9,251,178			$	92,500			$	16,659,600			$	(7,933,700	)		$	8,818,400
Net income							-				-				30,300				30,300
Balance at March 31, 2023			9,251,178				92,500				16,659,600				(7,903,400	)			8,848,700
Net income			—				—				—				79,100				79,100
Balance – June 30, 2023			9,251,178			$	92,500			$	16,659,600			$	(7,824,300	)		$	8,927,800

 

		Common stock								Paid-in				Accumulated
		Shares				Amount				Capital				Deficit				Total
Balance – December 31, 2021			6,751,178			$	67,500			$	13,184,600			$	(9,746,800	)		$	3,505,300
Net loss			—				—				—				(203,400	)			(203,400	)
Balance – March 31, 2022			6,751,178				67,500				13,184,600				(9,950,200	)			3,301,900
Net loss			—				—				—				(297,000	)			(297,000	)
Balance June 30, 2022			6,751,178			$	67,500			$	13,184,600			$	(10,247,200	)		$	3,004,900

 

 

 

* See accompanying notes to these financial statements.

 

 

 

  

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, 2022, as filed with the Securities and Exchange Commission on March 31, 2023, as amended on April 28, 2023 (the “2022 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 2022 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and six months ended June 30, 2023 may not be necessarily indicative of the operating results expected for the full year.

 

Our Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss).  Comprehensive income (loss) 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 (loss).  Since our Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

 

Note 2. Stock Based Compensation

 

Our Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At June 30, 2023, our Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at June 30, 2023.

 

 

 

 

5

  

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

 

Note 3. Cash and Cash Equivalents

 

Schedule of Cash and Cash Equivalents
		June 30 2023				December 31 2022
Cash and cash equivalents
Cash and money market funds		$	2,130,800			$	917,400
U.S. Treasury Bills			3,332,400				4,420,400
Cash and cash equivalents		$	5,463,200			$	5,337,800

 

The amortized cost and fair value of securities held to maturity at June 30, 2023 are as follows:

 

Schedule of amortized cost and fair value of securities held to maturity
		Amortized Cost				Fair Value
U.S. Treasury Bills
Due July 13, 2023			1,111,700				1,123,400
Due October 5, 2023			1,099,400				1,109,800
Due January 25, 2024			1,084,100				1,092,700
Total		$	3,295,200			$	3,325,900

 

Note 4. Long-term Receivables

 

As of June 30, 2023, the Company had long-term receivables of $2,149,500 from three licensees representing the present value of fixed guaranteed royalty payments that will be payable over varying periods of two through five years that commenced in the second half of 2022 and terminate in the second quarter of 2028. The fixed guaranteed royalty payments result from amendments to license agreements with two existing licensees and a license agreement with a new licensee. The receivable represents the present value of the fixed minimum annual payments due under the license agreements, discounted at the Company's incremental borrowing rate of 4%. 

 

The three agreements grant licenses for the use of certain patented ink technology as it exists at the time that it is granted which is considered functional intellectual property. Under Topic 606, a performance obligation to transfer a license for functional intellectual property is satisfied at a point in time and the fixed consideration could be recognized upfront when the Company transfers control of the licensee if certain criteria are met. Specifically, the minimum royalty guarantee could be recognized upfront if the following conditions are met:

 

·

The royalty payment is fixed or determinable

 

·

Collection of the royalty payment is considered probable

 

·

The licensee has the ability to benefit from the licensed technology

 

The Company determined that the above conditions were met upon execution of the agreements and, in the year ended December 31, 2022, recognized $2,810,600 of royalty revenue along with $206,600 of commission expense net of imputed interest of $131,300. The commissions are payable over the term of the license agreements and are due when payments are received by the Company. As of June 30, 2023, the accrued commission payable balance was approximately $194,700.

 

The current portion of the three new license agreements and one license agreement entered into in prior years, in the amount of $623,600 and $507,500, is included in accounts receivable on the balance sheets as of June 30, 2023 and December 31, 2022, respectively.

 

 

6

 

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

 

 

The following table summarizes the future minimum payments due under the three new license agreements as of June 30, 2023:

Schedule of future minimum payments
Year Ending December 31:
	2023			$	315,000
	2024				642,000
	2025				570,000
	2026				570,000
	2027				557,500
	2028				260,000
	Total			$	2,914,500

 

The Company has evaluated the collectibility of the long-term receivables and believes them to be fully collectible as of June 30, 2023. However, there can be no assurance that the receivables will not be impaired in the future due to changes in the licensees’ financial condition or other factors. 

 

The long-term receivables are recorded at its present value as of June 30, 2023, and will be amortized over the term of the license agreements using the effective interest method. The unamortized balance of the long-term receivables as of June 30, 2023 is $2,149,500.

 

Note 5. 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 were no borrowings under the line of credit since its inception. The line of credit was closed as of June 30, 2023.

 

Note 6. Income Taxes

 

At June 30, 2023, our Company had federal and state taxable income of approximately $138,400 and $88,400, respectively. State income taxes in the six months ended June 30, 2023 resulted from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania. There was no income tax benefit for the losses for the three and six months ended June 30, 2022 because our Company determined that the realization of the net deferred tax asset was not assured. Our Company created a valuation allowance for the entire amount of such benefits.

 

The components for federal and state income tax expense are:

State Income Tax Expense
		Three Months ended June 30								Six Months ended June 30
		2023				2022				2023				2022
Current federal taxes		$	21,000			$	—			$	29,100			$	—
Current state taxes			6,400				—				8,800				—
Income tax expense (benefit)		$	27,400			$	—			$	37,900			$	—

 

There was no change in unrecognized tax benefits during the period ended June 30, 2023 and there was no accrual for uncertain tax positions as of June 30, 2023. Tax years from 2020 through 2022 remain subject to examination by U.S. federal and state jurisdictions

 

7

 

NOCOPI TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

 

Note 7. Earnings (Loss) per Share

 

In accordance with FASB ASC 260, Earnings per Share, basic earnings (loss) per common share is computed using net earnings (loss) divided by the weighted average number of common shares outstanding for the periods presented. Diluted earnings (loss) per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Since our Company did not have any common stock equivalents outstanding as of June 30, 2023 and June 30, 2022, basic and diluted earnings (loss) per share were the same. 

 

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:

Company's Revenues As Percentage Of Revenue
		Three Months ended June 30								Six Months ended June 30
		2023				2022				2023				2022
Customer A			67	%			63	%			69	%			55	%
Customer B			20	%			22	%			16	%			24	%

 

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:

Schedule of Non-affiliated Customers with Accounts Receivable More Than 10%
		June 30				December 31
		2023				2022
Customer A			11	%			6	%
Customer B			77	%			84	%

 

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:

Company's Revenue by Geographic Region
		Three Months ended June 30								Six Months ended June 30
		2023				2022				2023				2022
North America		$	145,800			$	160,900			$	273,600			$	284,800
South America			—				—				—				1,600
Asia			435,200				330,000				876,700				527,900
Australia			18,200				23,400				41,000				39,400
		$	599,200			$	514,300			$	1,191,300			$	853,700

 

 

 

8

  

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 six months ended June 30, 2023 was $13,400 and $26,700, respectively. Total lease expense under operating leases for the three and six months ended June 30, 2022 was $13,400 and $26,700, respectively.

 

Maturities of lease liabilities are as follows:

Maturities of Lease Liabilities
			Operating Leases
Year ending December 31
2023			28,300
2024			18,900
Total lease payments			47,200
Less imputed interest			(3,800	)
Total		$	43,400

 

Note 10. Employee Retention Tax Credit

 

The CARES Act, signed into law on March 27, 2020 with subsequent amendments, provides for refundable employee retention credit to employers whose operations were suspended due to COVID-19 or whose revenue significantly decreased. On June 15, 2023, the Company filed a Form 941-X to claim a refundable employee retention credit for the first quarter and third quarter 2021 payroll in the total amount of $84,000. The Company will record the credit as other income in the Statement of Comprehensive Income in the period the refund is received.

 

 

 

 

  

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:

 

	·	Expected operating results, such as revenue, expenses and capital expenditures
	·	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, and 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 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.
	·	Strategic actions, including business acquisitions and our success in integrating acquired businesses.
	·	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 occurrence of hostilities, political instability or catastrophic events.
	·	Developments and changes in laws and regulations, including increased regulation of our industry through legislative action and revised rules and standards.
	·	Security breaches, cybersecurity attacks and other significant disruptions in our information technology systems.
	·	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, 2022.

 

 

Any forward-looking statement made by us in this Report on Form 10-Q 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.

 

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, 2022, filed with the Securities and Exchange Commission on March 31, 2023, as amended on April 28, 2023.

 

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.

 

 Results of Operations

 

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

 

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

 

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

 

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

 

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

 

Revenues for the second quarter of 2023 were $599,200 compared to $514,300 in the second quarter of 2022, an increase of $84,900, or approximately 17%. Licenses, royalties and fees decreased by $19,600, or approximately 12%, to $150,200 in the second quarter of 2023 from $169,800 in the second quarter of 2022. The decrease in licenses, royalties and fees in the second quarter of 2023 compared to the second quarter of 2022 is due primarily to lower royalties from our Company’s licensees in entertainment and toy products 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 presently being experienced.

 

Product and other sales increased by $104,500, or approximately 30%, to $449,000 in the second quarter of 2023 from $344,500 in the second quarter of 2022. Sales of ink increased in the second quarter of 2023 compared to the second quarter of 2022 due primarily to higher ink shipments to the third party authorized printer used by two of our Company’s major licensees in the entertainment and toy products market. In the second quarter of 2023, our Company derived revenues of approximately $578,800 from our licensees and their authorized printers in the entertainment and toy products market compared to revenues of approximately $471,200 in the second quarter of 2022.

 

 For the first six months of 2023, revenues were $1,191,300, representing an increase of $337,600, or approximately 40%, from revenues of $853,700 in the first six months of 2022. Licenses, royalties and fees decreased by $33,900, or approximately 11%, to $273,200 in the first six months of 2023 from $307,100 in the first six months of 2022. The decrease in licenses, royalties and fees is due primarily to higher royalties from our Company’s licensees in the entertainment and toy products market. 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 presently being experienced.

 

Product and other sales increased by $371,500, or approximately 68%, to $918,100 in the first six months of 2023 from $546,600 in the first six months of 2022. Sales of ink increased in the first six months of 2023 compared to the first six of 2022 due primarily to higher ink shipments to the third party authorized printer used by two of our Company’s major licensees in the entertainment and toy products market. Our Company derived revenues of approximately $1,120,300 from licensees and their authorized printers in the entertainment and toy products market in the first six months of 2023 compared to revenues of approximately $777,800 in the first six months of 2022.

 

Our Company’s gross profit increased to $370,200 in the second quarter of 2023, or approximately 62% of revenues, from $313,100 in the second quarter of 2022, or approximately 61% of revenues. Licenses, royalties and fees have historically carried a higher gross profit than product and other sales, which 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.

 

For the first six months of 2023, gross profit was $681,800, or approximately 57% of revenues, compared to $486,300, or approximately 57% of revenues, in the first six months of 2022. The higher gross profit in the first six months of 2023 compared to the first six months of 2022 was primarily due to an increase in gross profit from product and other sales.

 

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 decreased to approximately 67% in the second quarter of 2023 compared to approximately 73% in the second quarter of 2022 and to approximately 60% of revenues from licenses, royalties and fees in the first six months of 2023 from approximately 72% in the first six months of 2022.

 

 

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 increased to approximately 60% of revenues in the second quarter of 2023 compared to approximately 55% of revenues in the second quarter of 2022. For the first six months of 2023, the gross profit, expressed as a percentage of revenues, increased to approximately 56% of revenues from product and other sales compared to approximately 48% of revenues from product and other sales in the first six months of 2022

 

Research and development expenses increased in the second quarter of 2023 to $35,300 from $32,500 in the second quarter of 2022 and to $80,100 in the first six months of 2023 from $72,000 in the first six months of 2022 due primarily to higher employee and lab expenses in the second quarter and first six months of 2023 compared to the second quarter and first six months of 2022.

 

Sales and marketing expenses decreased to $61,100 in the second quarter of 2023 from $76,700 in the second quarter of 2022 and increased to $147,400 in the first six months of 2023 from $141,500 in the first six months of 2022. The increase in the second quarter of 2023 compared to the second quarter of 2022 is due primarily to lower commission and employee related expenses in the second quarter of 2023 compared to the second quarter of 2022. The decrease in the first six months of 2023 compared to the first six months of 2022 is due primarily to higher commission expense on the higher level of revenues in the first six months of 2023 compared to the first six months of 2022. 

 

General and administrative expenses decreased in the second quarter and first six months of 2023 to $223,300 and $424,500, respectively, from $506,700 and $784,400, respectively, in the second quarter and first six months of 2022 due primarily to lower professional fees offset in part by higher employee related expenses and higher insurance expense in the second quarter and first six months of 2023 compared to the second quarter and first six months of 2022.

 

Income taxes in the second quarter and first six months of 2023 include federal and state income taxes. The state income taxes result from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania. 

 

The net income of $79,100 in the second quarter of 2023 compared to net loss $297,000 in the second quarter of 2022 resulted primarily from a higher gross profit on a higher level of product sales, lower operating expenses and interest income in the second quarter of 2023 compared to the second quarter of 2022. The net income of $109,400 in the first six months of 2023 compared to net loss of $500,400 in the first six months of 2022 resulted primarily from a higher gross profit on a higher level of product sales in the first six months of 2023 compared to the first six months of 2022, lower operating expenses and interest income in the first six months of 2023 compared to the first six months of 2022.

 

Plan of Operation, Liquidity and Capital Resources

 

During the first six months of 2023, our Company’s cash increased to $5,463,200 at June 30, 2023 from $5,337,800 at December 31, 2022. During the first six months of 2023, our Company generated $137,300 from its operating activities and used $11,900 for capital expenditures.

 

During the first six months of 2023, our Company’s revenues increased approximately 40% primarily as a result of higher sales of ink to an authorized printer of our Company’s licensees in the entertainment and toy products market offset in part by lower royalty revenues from our Company’s licensees in the entertainment and toy products market. Our total overhead expenses decreased in the first six months of 2023 to $652,000 compared to $997,900 in the first six months of 2022, our Company’s interest income and our Company’s income tax expense increased in the first six months of 2023 compared to the first six months of 2022. As a result of these factors, our Company generated net income of $109,400 in the first six months of 2023 compared to a net loss of $500,400 in the first six months of 2022. Our Company had positive operating cash flow of $137,300 during the first six months of 2023. At June 30, 2023, our Company had positive working capital of $6,836,500 and stockholders’ equity of $8,927,800. For the full year of 2022, our Company had net income of $1,813,100 and had negative operating cash flow of $8,100. At December 31, 2022, our Company had working capital of $6,421,800 and stockholders’ equity of $8,818,400. 

 

 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, therefore the line of credit has been closed as of June 30, 2023. 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.

 

 

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

 

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

 

Our future growth strategy includes expanding our business through acquisitions of other companies with competing or complementary services, technologies or businesses in order to expand our product and service offerings to grow our free cash flow. We are currently actively engaged in the process to identify acquisition candidates and negotiate transactions. As of the date of this report on Form 10-Q, we have no agreements to make any acquisition. We expect to fund our business expansion through the issuance of debt or equity securities, the payment of cash, the exchange of services, or any combination thereof.

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 in 2023 and beyond due to any future effects of the COVID-19 pandemic and its effect on the global economy, geopolitical instability including the Russia-Ukraine war and the supply chain disruptions related to both as well as the record inflation and significantly higher interest rates currently being experienced in the United States along with the probability of an economic recession both in the United States and globally. As a result, our revenues, results of operations and liquidity may be further negatively impacted in future periods.

 

Contractual Obligations

 

As of June 30, 2023, 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 31, 2023, as amended on April 28, 2023, other than those appearing elsewhere in this Quarterly Report on Form 10-Q.

 

Recently Adopted Accounting Pronouncements

 

As of June 30, 2023, 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.

  

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures. Our Company’s management, with the participation of our Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of June 30, 2023. Based on this evaluation, our Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of June 30, 2023, our Company’s disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by our Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our Company’s management, including our Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

  

PART II - OTHER INFORMATION

  

Item 1. Legal Proceedings.

 

None

 

Item 1A. Risk Factors.

 

Not applicable

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures.

 

Not applicable

 

Item 5.  Other Information

 

None

 

Item 6.  Exhibits

 

(a) Exhibits

  

Exhibit Number		Description		Location
31.1		Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
31.2		Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Filed herewith
101.INS		Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover page formatted as Inline XBRL and contained in Exhibit 101

 

 

 

 

SIGNATURES

 

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

 

		NOCOPI TECHNOLOGIES, INC.
DATE: August 11, 2023		/s/ Michael A. Feinstein, M.D.
		Michael A. Feinstein, M.D.
		Chairman of the Board, President & Chief Executive Officer
DATE: August 11, 2023		/s/ Debra E. Glickman
		Debra E. Glickman
		Chief Financial Officer

 

 

 

 

 

 

 

EXHIBIT INDEX

 

 

Exhibit Number		Description		Location
31.1		Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
31.2		Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		Filed herewith
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		Filed herewith
101.INS		Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover page formatted as Inline XBRL and contained in Exhibit 101

 

 

 

18

 

 

 

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

 

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

 

1.

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

 

2.

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

 

3.

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

 

4.

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

 

(a)

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

 

(b)

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

 

(c)

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

 

(d)

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

 

5.

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

 

(a)

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

 

(b)

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

 

Date: August 11, 2023

 

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

Michael A. Feinstein, M.D.

Chief Executive Officer

 

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

 

I, Debra  E. Glickman, Chief Financial Officer of Nocopi Technologies, Inc., certify that:

 

1.

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

 

2.

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

 

3.

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

 

4.

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

 

(a)

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

 

(b)

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

 

(c)

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

 

(d)

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

 

5.

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

 

(a)

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

 

(b)

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

 

Date: August 11, 2023

 

/s/ Debra  E. Glickman

Debra  E. Glickman

Chief Financial Officer

 

Exhibit 32.1

 

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

 

In connection with the Quarterly Report of Nocopi Technologies, Inc. (the "Company") on Form 10-Q for the Quarter ended June 30, 2023 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 Debra  E. Glickman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

 

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

 

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

 

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

 

August 11, 2023

 

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

Michael A. Feinstein, M.D.

Principal Executive Officer

 

/s/ Debra  E. Glickman

Debra  E. Glickman

Chief Financial Officer

 

v3.23.2

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 07, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	000-20333
Entity Registrant Name	NOCOPI TECHNOLOGIES, INC.
Entity Central Index Key	0000888981
Entity Tax Identification Number	87-0406496
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	480 Shoemaker Road
Entity Address, Address Line Two	Suite 104
Entity Address, City or Town	King of Prussia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19406
City Area Code	(610)
Local Phone Number	834-9600
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		9,251,178

v3.23.2

Statements of Comprehensive Income (unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues
Licenses, royalties and fees	$ 150,200	$ 169,800	$ 273,200	$ 307,100
Product and other sales	449,000	344,500	918,100	546,600
Total revenues	599,200	514,300	1,191,300	853,700
Cost of revenues
Licenses, royalties and fees	49,800	46,400	108,500	85,900
Product and other sales	179,200	154,800	401,000	281,500
Total cost of revenues	229,000	201,200	509,500	367,400
Gross profit	370,200	313,100	681,800	486,300
Operating expenses
Research and development	35,300	32,500	80,100	72,000
Sales and marketing	61,100	76,700	147,400	141,500
General and administrative	223,300	506,700	424,500	784,400
Total operating expenses	319,700	615,900	652,000	997,900
Net income (loss) from operations	50,500	(302,800)	29,800	(511,600)
Other income (expenses)
Interest income	60,400	6,100	122,500	11,900
Interest expense and bank charges	(4,400)	(300)	(5,000)	(700)
Total other income (expenses)	56,000	5,800	117,500	11,200
Net income (loss) before income taxes	106,500	(297,000)	147,300	(500,400)
Income taxes	27,400	0	37,900	0
Net income (loss)	$ 79,100	$ (297,000)	$ 109,400	$ (500,400)
Net income (loss) per common share
Basic	$ 0.01	$ (0.04)	$ 0.01	$ (0.07)
Diluted	$ 0.01	$ (0.04)	$ 0.01	$ (0.07)
Weighted average common shares outstanding
Basic	9,251,178	6,751,178	9,251,178	6,751,178
Diluted	9,251,178	6,751,178	9,251,178	6,751,178

v3.23.2

Balance Sheets (unaudited) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets
Cash	$ 5,463,200	$ 5,337,800
Accounts receivable less $12,000 allowance for doubtful accounts	1,345,600	1,103,500
Inventory	368,100	486,400
Prepaid and other	107,900	103,300
Total current assets	7,284,800	7,031,000
Fixed assets
Leasehold improvements	65,600	58,400
Furniture, fixtures and equipment	169,100	164,400
Fixed assets, gross	234,700	222,800
Less: accumulated depreciation and amortization	186,000	167,800
Total fixed assets	48,700	55,000
Other assets
Long-term receivable	2,149,500	2,463,100
Operating lease right of use – building	43,400	68,300
Other assets	2,192,900	2,531,400
Total assets	9,526,400	9,617,400
Current liabilities
Accounts payable	68,000	97,700
Accrued expenses	188,600	173,700
Income taxes	148,300	287,100
Operating lease liability – current	43,400	50,700
Total current liabilities	448,300	609,200
Other liabilities
Accrued expenses – non-current	150,300	172,200
Operating lease liability – non-current	0	17,600
Total other liabilities	150,300	189,800
Stockholders' equity
Common stock, $0.01 par value Authorized – 75,000,000 shares Issued and outstanding – 9,251,178 shares	92,500	92,500
Paid-in capital	16,659,600	16,659,600
Accumulated deficit	(7,824,300)	(7,933,700)
Total stockholders' equity	8,927,800	8,818,400
Total liabilities and stockholders' equity	$ 9,526,400	$ 9,617,400

v3.23.2

Balance Sheets (unaudited) (Parenthetical) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for Doubtful Accounts	$ 12,000	$ 12,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	9,251,178	9,251,178
Common stock, shares outstanding	9,251,178	9,251,178

v3.23.2

Statements of Cash Flows (unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Operating Activities
Net income (loss)	$ 109,400	$ (500,400)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	18,200	17,000
Other assets	338,500	208,400
Other liabilities	(46,800)	(36,400)
Net income adjusted for non-cash operating activities	419,300	(311,400)
(Increase) decrease in assets
Accounts receivable	(242,100)	(108,200)
Inventory	118,300	(31,900)
Prepaid and other	(4,600)	100,500
Increase (decrease) in liabilities
Accounts payable and accrued expenses	(14,800)	97,700
Taxes on income	(138,800)
Total increase in operating capital	(282,000)	58,100
Net cash provided by (used in) operating activities	137,300	(253,300)
Investing Activities
Additions to fixed assets	(11,900)	0
Net cash used in investing activities	(11,900)	0
Increase (decrease) in cash	125,400	(253,300)
Cash at beginning of year	5,337,800	1,846,700
Cash at end of period	$ 5,463,200	$ 1,593,400

v3.23.2

Statements of Stockholders' Equity (unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance – March 31, 2022 at Dec. 31, 2021	$ 67,500	$ 13,184,600	$ (9,746,800)	$ 3,505,300
Beginning balance, shares at Dec. 31, 2021	6,751,178
Net loss			(203,400)	(203,400)
Ending balance, value at Mar. 31, 2022	$ 67,500	13,184,600	(9,950,200)	3,301,900
Ending balance, shares at Mar. 31, 2022	6,751,178
Balance – March 31, 2022 at Dec. 31, 2021	$ 67,500	13,184,600	(9,746,800)	3,505,300
Beginning balance, shares at Dec. 31, 2021	6,751,178
Net loss				(500,400)
Ending balance, value at Jun. 30, 2022	$ 67,500	13,184,600	(10,247,200)	3,004,900
Ending balance, shares at Jun. 30, 2022	6,751,178
Balance – March 31, 2022 at Mar. 31, 2022	$ 67,500	13,184,600	(9,950,200)	3,301,900
Beginning balance, shares at Mar. 31, 2022	6,751,178
Net loss			(297,000)	(297,000)
Ending balance, value at Jun. 30, 2022	$ 67,500	13,184,600	(10,247,200)	3,004,900
Ending balance, shares at Jun. 30, 2022	6,751,178
Balance – March 31, 2022 at Dec. 31, 2022	$ 92,500	16,659,600	(7,933,700)	8,818,400
Beginning balance, shares at Dec. 31, 2022	9,251,178
Net loss			30,300	30,300
Ending balance, value at Mar. 31, 2023	$ 92,500	16,659,600	(7,903,400)	8,848,700
Ending balance, shares at Mar. 31, 2023	9,251,178
Balance – March 31, 2022 at Dec. 31, 2022	$ 92,500	16,659,600	(7,933,700)	8,818,400
Beginning balance, shares at Dec. 31, 2022	9,251,178
Net loss				109,400
Ending balance, value at Jun. 30, 2023	$ 92,500	16,659,600	(7,824,300)	8,927,800
Ending balance, shares at Jun. 30, 2023	9,251,178
Balance – March 31, 2022 at Mar. 31, 2023	$ 92,500	16,659,600	(7,903,400)	8,848,700
Beginning balance, shares at Mar. 31, 2023	9,251,178
Net loss			79,100	79,100
Ending balance, value at Jun. 30, 2023	$ 92,500	$ 16,659,600	$ (7,824,300)	$ 8,927,800
Ending balance, shares at Jun. 30, 2023	9,251,178

v3.23.2

Financial Statements	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Financial Statements	Note 1. Financial Statements   The accompanying unaudited condensed financial statements have been prepared by Nocopi Technologies, Inc. (our “Company”). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in Note 2 Significant Accounting Policies included in the Notes to Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on March 31, 2023, as amended on April 28, 2023 (the “2022 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 2022 Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months and six months ended June 30, 2023 may not be necessarily indicative of the operating results expected for the full year.   Our Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income (loss).  Comprehensive income (loss) 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 (loss).  Since our Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

v3.23.2

Stock Based Compensation	6 Months Ended
	Jun. 30, 2023
Compensation Related Costs [Abstract]
Stock Based Compensation	Note 2. Stock Based Compensation   Our Company follows FASB ASC 718, Compensation – Stock Compensation, and uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. At June 30, 2023, our Company did not have an active stock option plan. There was no unrecognized portion of expense related to stock option grants at June 30, 2023.

v3.23.2

Cash and Cash Equivalents	6 Months Ended
	Jun. 30, 2023
Cash and Cash Equivalents [Abstract]
Cash and Cash Equivalents	Note 3. Cash and Cash Equivalents   Schedule of Cash and Cash Equivalents                     June 30 2023     December 31 2022   Cash and cash equivalents                   Cash and money market funds   $ 2,130,800     $ 917,400     U.S. Treasury Bills     3,332,400       4,420,400    Cash and cash equivalents   $ 5,463,200     $ 5,337,800     The amortized cost and fair value of securities held to maturity at June 30, 2023 are as follows:   Schedule of amortized cost and fair value of securities held to maturity                     Amortized Cost     Fair Value   U.S. Treasury Bills                 Due July 13, 2023     1,111,700       1,123,400   Due October 5, 2023     1,099,400       1,109,800   Due January 25, 2024     1,084,100       1,092,700       Total   $ 3,295,200     $ 3,325,900

v3.23.2

Long-term Receivables	6 Months Ended
	Jun. 30, 2023
Receivables [Abstract]
Long-term Receivables	Note 4. Long-term Receivables   As of June 30, 2023, the Company had long-term receivables of $2,149,500 from three licensees representing the present value of fixed guaranteed royalty payments that will be payable over varying periods of two through five years that commenced in the second half of 2022 and terminate in the second quarter of 2028. The fixed guaranteed royalty payments result from amendments to license agreements with two existing licensees and a license agreement with a new licensee. The receivable represents the present value of the fixed minimum annual payments due under the license agreements, discounted at the Company's incremental borrowing rate of 4%.    The three agreements grant licenses for the use of certain patented ink technology as it exists at the time that it is granted which is considered functional intellectual property. Under Topic 606, a performance obligation to transfer a license for functional intellectual property is satisfied at a point in time and the fixed consideration could be recognized upfront when the Company transfers control of the licensee if certain criteria are met. Specifically, the minimum royalty guarantee could be recognized upfront if the following conditions are met:     · The royalty payment is fixed or determinable     · Collection of the royalty payment is considered probable     · The licensee has the ability to benefit from the licensed technology   The Company determined that the above conditions were met upon execution of the agreements and, in the year ended December 31, 2022, recognized $2,810,600 of royalty revenue along with $206,600 of commission expense net of imputed interest of $131,300. The commissions are payable over the term of the license agreements and are due when payments are received by the Company. As of June 30, 2023, the accrued commission payable balance was approximately $194,700.   The current portion of the three new license agreements and one license agreement entered into in prior years, in the amount of $623,600 and $507,500, is included in accounts receivable on the balance sheets as of June 30, 2023 and December 31, 2022, respectively.   The following table summarizes the future minimum payments due under the three new license agreements as of June 30, 2023: Schedule of future minimum payments         Year Ending December 31:           2023     $ 315,000     2024       642,000     2025       570,000     2026       570,000     2027       557,500     2028       260,000        Total     $ 2,914,500     The Company has evaluated the collectibility of the long-term receivables and believes them to be fully collectible as of June 30, 2023. However, there can be no assurance that the receivables will not be impaired in the future due to changes in the licensees’ financial condition or other factors.    The long-term receivables are recorded at its present value as of June 30, 2023, and will be amortized over the term of the license agreements using the effective interest method. The unamortized balance of the long-term receivables as of June 30, 2023 is $2,149,500.

v3.23.2

Line of Credit	6 Months Ended
	Jun. 30, 2023
Line Of Credit
Line of Credit	Note 5. 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 were no borrowings under the line of credit since its inception. The line of credit was closed as of June 30, 2023.

v3.23.2

Income Taxes	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Note 6. Income Taxes   At June 30, 2023, our Company had federal and state taxable income of approximately $138,400 and $88,400, respectively. State income taxes in the six months ended June 30, 2023 resulted from limitations placed on income tax net operating loss deductions by the Commonwealth of Pennsylvania. There was no income tax benefit for the losses for the three and six months ended June 30, 2022 because our Company determined that the realization of the net deferred tax asset was not assured. Our Company created a valuation allowance for the entire amount of such benefits.   The components for federal and state income tax expense are: State Income Tax Expense                             Three Months ended June 30     Six Months ended June 30       2023     2022     2023     2022   Current federal taxes   $ 21,000     $ —       $ 29,100     $ —     Current state taxes     6,400       —         8,800       —     Income tax expense (benefit)   $ 27,400     $ —       $ 37,900     $ —       There was no change in unrecognized tax benefits during the period ended June 30, 2023 and there was no accrual for uncertain tax positions as of June 30, 2023. Tax years from 2020 through 2022 remain subject to examination by U.S. federal and state jurisdictions

v3.23.2

Earnings (Loss) per Share	6 Months Ended
	Jun. 30, 2023
Net income (loss) per common share
Earnings (Loss) per Share	Note 7. Earnings (Loss) per Share   In accordance with FASB ASC 260, Earnings per Share, basic earnings (loss) per common share is computed using net earnings (loss) divided by the weighted average number of common shares outstanding for the periods presented. Diluted earnings (loss) per share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Since our Company did not have any common stock equivalents outstanding as of June 30, 2023 and June 30, 2022, basic and diluted earnings (loss) per share were the same.

v3.23.2

Major Customer and Geographic Information	6 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
Major Customer and Geographic Information	Note 8. Major Customer and Geographic Information   Our Company’s revenues, expressed as a percentage of total revenues, from non-affiliated customers that equaled 10% or more of the Company’s total revenues were: Company's Revenues As Percentage Of Revenue                             Three Months ended June 30     Six Months ended June 30       2023     2022     2023     2022   Customer A     67 %     63 %     69 %     55 % Customer B     20 %     22 %     16 %     24 %   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: Schedule of Non-affiliated Customers with Accounts Receivable More Than 10%                     June 30     December 31       2023     2022   Customer A     11 %     6 % Customer B     77 %     84 %   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: Company's Revenue by Geographic Region                             Three Months ended June 30     Six Months ended June 30       2023     2022     2023     2022   North America   $ 145,800     $ 160,900     $ 273,600     $ 284,800   South America     —         —         —         1,600   Asia     435,200       330,000       876,700       527,900   Australia     18,200       23,400       41,000       39,400       $ 599,200     $ 514,300     $ 1,191,300     $ 853,700

v3.23.2

Leases	6 Months Ended
	Jun. 30, 2023
Leases
Leases	Note 9. Leases   Our Company conducts its operations in leased facilities under a non-cancelable operating lease expiring in 2024.   Due to the adoption of the new lease standard under the optional transition method which allows the entity to apply the new lease standard at the adoption date, our Company has capitalized the present value of the minimum lease payments commencing January 1, 2019, using an estimated incremental borrowing rate of 6.5%. 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 six months ended June 30, 2023 was $13,400 and $26,700, respectively. Total lease expense under operating leases for the three and six months ended June 30, 2022 was $13,400 and $26,700, respectively.   Maturities of lease liabilities are as follows: Maturities of Lease Liabilities               Operating Leases   Year ending December 31         2023     28,300   2024     18,900   Total lease payments     47,200   Less imputed interest     (3,800 )  Total   $ 43,400

v3.23.2

Employee Retention Tax Credit	6 Months Ended
	Jun. 30, 2023
Employee Retention Tax Credit
Employee Retention Tax Credit	Note 10. Employee Retention Tax Credit   The CARES Act, signed into law on March 27, 2020 with subsequent amendments, provides for refundable employee retention credit to employers whose operations were suspended due to COVID-19 or whose revenue significantly decreased. On June 15, 2023, the Company filed a Form 941-X to claim a refundable employee retention credit for the first quarter and third quarter 2021 payroll in the total amount of $84,000. The Company will record the credit as other income in the Statement of Comprehensive Income in the period the refund is received.

v3.23.2

Cash and Cash Equivalents (Tables)	6 Months Ended
	Jun. 30, 2023
Cash and Cash Equivalents [Abstract]
Schedule of Cash and Cash Equivalents	Schedule of Cash and Cash Equivalents                     June 30 2023     December 31 2022   Cash and cash equivalents                   Cash and money market funds   $ 2,130,800     $ 917,400     U.S. Treasury Bills     3,332,400       4,420,400    Cash and cash equivalents   $ 5,463,200     $ 5,337,800
Schedule of amortized cost and fair value of securities held to maturity	Schedule of amortized cost and fair value of securities held to maturity                     Amortized Cost     Fair Value   U.S. Treasury Bills                 Due July 13, 2023     1,111,700       1,123,400   Due October 5, 2023     1,099,400       1,109,800   Due January 25, 2024     1,084,100       1,092,700       Total   $ 3,295,200     $ 3,325,900

v3.23.2

Long-term Receivables (Tables)	6 Months Ended
	Jun. 30, 2023
Receivables [Abstract]
Schedule of future minimum payments	Schedule of future minimum payments         Year Ending December 31:           2023     $ 315,000     2024       642,000     2025       570,000     2026       570,000     2027       557,500     2028       260,000        Total     $ 2,914,500

v3.23.2

Income Taxes (Tables)	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
State Income Tax Expense	State Income Tax Expense                             Three Months ended June 30     Six Months ended June 30       2023     2022     2023     2022   Current federal taxes   $ 21,000     $ —       $ 29,100     $ —     Current state taxes     6,400       —         8,800       —     Income tax expense (benefit)   $ 27,400     $ —       $ 37,900     $ —

v3.23.2

Major Customer and Geographic Information (Tables)	6 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
Company's Revenues As Percentage Of Revenue	Company's Revenues As Percentage Of Revenue                             Three Months ended June 30     Six Months ended June 30       2023     2022     2023     2022   Customer A     67 %     63 %     69 %     55 % Customer B     20 %     22 %     16 %     24 %
Schedule of Non-affiliated Customers with Accounts Receivable More Than 10%	Schedule of Non-affiliated Customers with Accounts Receivable More Than 10%                     June 30     December 31       2023     2022   Customer A     11 %     6 % Customer B     77 %     84 %
Company's Revenue by Geographic Region	Company's Revenue by Geographic Region                             Three Months ended June 30     Six Months ended June 30       2023     2022     2023     2022   North America   $ 145,800     $ 160,900     $ 273,600     $ 284,800   South America     —         —         —         1,600   Asia     435,200       330,000       876,700       527,900   Australia     18,200       23,400       41,000       39,400       $ 599,200     $ 514,300     $ 1,191,300     $ 853,700

v3.23.2

Leases (Tables)	6 Months Ended
	Jun. 30, 2023
Leases
Maturities of Lease Liabilities	Maturities of Lease Liabilities               Operating Leases   Year ending December 31         2023     28,300   2024     18,900   Total lease payments     47,200   Less imputed interest     (3,800 )  Total   $ 43,400

v3.23.2

Stock Based Compensation (Details Narrative)	Jun. 30, 2023 USD ($)
Compensation Related Costs [Abstract]
Unrecognized portion of expense related to stock option grants	$ 0

v3.23.2

Cash and Cash Equivalents (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Cash and Cash Equivalents [Abstract]
Cash and money market funds	$ 2,130,800	$ 917,400
U.S. Treasury Bills	3,332,400	4,420,400
Cash and cash equivalents	$ 5,463,200	$ 5,337,800

v3.23.2

Cash and Cash Equivalents (Details 1)	Jun. 30, 2023 USD ($)
Cash and Cash Equivalents [Line Items]
Amortized Cost	$ 3,295,200
Fair Value	3,325,900
Due July [Member]
Cash and Cash Equivalents [Line Items]
Amortized Cost	1,111,700
Fair Value	1,123,400
Due October [Member]
Cash and Cash Equivalents [Line Items]
Amortized Cost	1,099,400
Fair Value	1,109,800
Due January [Member]
Cash and Cash Equivalents [Line Items]
Amortized Cost	1,084,100
Fair Value	$ 1,092,700

v3.23.2

Long-term Receivables (Details)	Jun. 30, 2023 USD ($)
Receivables [Abstract]
2023	$ 315,000
2024	642,000
2025	570,000
2026	570,000
2027	557,500
2028	260,000
Total	$ 2,914,500

v3.23.2

Long-term Receivables (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Long-term receivables	$ 2,149,500
Incremental borrowing rate	4.00%
Royalty revenue		$ 2,810,600
Commission expense		206,600
Imputed interest		131,300
Accrued commission payable	$ 194,700
Accounts receivable	623,600	$ 507,500
Long-term receivables	$ 2,149,500

v3.23.2

Line of Credit (Details Narrative)	6 Months Ended
	Jun. 30, 2023 USD ($)
Line Of Credit
Line of Credit Facility, Maximum Borrowing Capacity	$ 150,000
Line of Credit Facility, Interest Rate Description	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

v3.23.2

Income Taxes (Details - State Income Tax Expense) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Current federal taxes	$ 21,000	$ 0	$ 29,100	$ 0
Current state taxes	6,400	0	8,800	0
Income tax expense (benefit)	$ 27,400	$ 0	$ 37,900	$ 0

v3.23.2

Income Taxes (Details Narrative)	6 Months Ended
	Jun. 30, 2023 USD ($)
Income Tax Disclosure [Abstract]
Federal and state taxable income	$ 138,400
State income taxes	88,400
Unrecognized tax benefits	0
Uncertain tax positions	$ 0

v3.23.2

Major Customer and Geographic Information (Details - Non-affiliated Customers) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage	67.00%	63.00%	69.00%	55.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	20.00%	22.00%	16.00%	24.00%

v3.23.2

Major Customer and Geographic Information (Details - Non-affiliated Customers with Accounts Receivable) - Accounts Receivable [Member] - Customer Concentration Risk [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Customer A [Member]
Revenue, Major Customer [Line Items]
Risk percentage	11.00%	6.00%
Customer B [Member]
Revenue, Major Customer [Line Items]
Risk percentage	77.00%	84.00%

v3.23.2

Major Customer and Geographic Information (Details - Revenue by Geographic Region) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 599,200	$ 514,300	$ 1,191,300	$ 853,700
North America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	145,800	160,900	273,600	284,800
South America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	0	0	0	1,600
Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	435,200	330,000	876,700	527,900
AUSTRALIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 18,200	$ 23,400	$ 41,000	$ 39,400

v3.23.2

Leases (Maturities of Lease Liabilities) (Details)	Jun. 30, 2023 USD ($)
Leases
2023	$ 28,300
2024	18,900
Total lease payments	47,200
Less imputed interest	(3,800)
Total	$ 43,400

v3.23.2

Leases (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Jan. 01, 2019
Leases
Incremental borrowing rate						6.50%
Operating lease right-of-use asset	$ 43,400		$ 43,400		$ 68,300	$ 241,100
Operating Lease, Expense	$ 13,400	$ 13,400	$ 26,700	$ 26,700

v3.23.2

Employee Retention Tax Credit (Details Narrative)	Sep. 30, 2021 USD ($)
Employee Retention Tax Credit
Accrued Payroll Taxes, Current	$ 84,000

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