SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission File No. 0-20333
NOCOPI TECHNOLOGIES, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 87-0406496
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
230 Sugartown Road, Suite 100, Wayne, PA 19087
----------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 610-687-2000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Number of shares of common stock outstanding:
Shares outstanding
Title of each class at August 1, 1997
- ----------------------- ------------------
Common stock, par value 14,080,654
$.01 per share
<PAGE>
NOCOPI TECHNOLOGIES, INC.
INDEX
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements PAGE
Statements of Operations
Three Months and Six Months Ended
June 30, 1997 and June 30, 1996 1
Balance Sheets
June 30, 1997 and December 31, 1996 2
Statements of Cash Flows
Six Months Ended June 30, 1997 and
June 30, 1996 3
Notes to Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 10
Part II. OTHER INFORMATION 11 - 12
Signatures 13
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Nocopi Technologies, Inc.
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three Months ended June 30 Six Months ended June 30
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues
Licenses, royalties and fees .................. $ 479,700 $ 778,400 $ 1,283,300 $ 1,611,000
Product and other sales ....................... 753,000 157,800 782,300 200,700
------------ ------------ ------------ ------------
1,232,700 936,200 2,065,600 1,811,700
Cost of sales
Licenses, royalties and fees .................. 217,000 140,700 420,600 271,700
Product and other sales ....................... 745,000 121,600 771,600 160,800
------------ ------------ ------------ ------------
962,000 262,300 1,192,200 432,500
------------ ------------ ------------ ------------
Gross profit ................................. 270,700 673,900 873,400 1,379,200
Operating expenses
Research and development ...................... 121,900 191,700 342,000 396,700
Sales and marketing ........................... 145,500 351,500 480,600 723,400
General and administrative .................... 264,200 281,700 519,400 521,300
------------ ------------ ------------ ------------
531,600 824,900 1,342,000 1,641,400
------------ ------------ ------------ ------------
Loss from operations ......................... (260,900) (151,000) (468,600) (262,200)
Other income (expenses)
Amortization .................................. (6,400) (6,400) (12,700) (12,700)
Interest income ............................... 6,700 28,000 21,100 65,100
Interest and bank charges ..................... (17,800) (17,300) (35,800) (34,800)
Ownership interest of others in
loss of consolidated entity .................. 112,100 95,800 199,200
------------ ------------ ------------ ------------
(17,500) 116,400 68,400 216,800
------------ ------------ ------------ ------------
Net loss ..................................... ($ 278,400) ($ 34,600) ($ 400,200) ($ 45,400)
============ ============ ============ ============
Loss per common share .......................... ($.02) ($.00) ($.03) ($.00)
Average common shares outstanding .............. 14,080,654 14,064,951 14,080,654 14,054,558
</TABLE>
See notes to financial statements.
1
<PAGE>
Nocopi Technologies, Inc.
Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
----------- -----------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents ..................................................... $ 250,000 $ 2,229,200
Accounts receivable less allowance ............................................ 995,100 513,400
Inventory ..................................................................... 3,600 5,100
Prepaid and other ............................................................. 46,200 105,300
----------- -----------
Total current assets ......................................................... 1,294,900 2,853,000
Fixed assets
Leasehold improvements ........................................................ 45,600 43,200
Furniture, fixtures and equipment ............................................. 414,200 435,000
----------- -----------
459,800 478,200
Less: accumulated depreciation ................................................ 326,200 296,600
----------- -----------
133,600 181,600
Other assets
Patents, net of accumulated amortization ...................................... 473,500 452,000
Debt issue costs, net of accumulated amortization ............................. 18,900 31,600
Other ......................................................................... 12,500 14,300
----------- -----------
504,900 497,900
----------- -----------
Total assets ................................................................ $ 1,933,400 $ 3,532,500
=========== ===========
Liabilities and Shareholders' Equity (Deficit)
Current liabilities
Current debt obligations ...................................................... $ 950,000
Accounts payable .............................................................. 758,600 $ 539,800
Accrued expenses .............................................................. 106,000 139,900
Accrued commissions ........................................................... 123,300 118,100
Deferred revenue .............................................................. 110,200 164,200
----------- -----------
Total current liabilities .................................................... 2,048,100 962,000
Long-term notes payable ........................................................ 950,000
Accumulated share of loss of deconsolidated affiliate
in excess of cost ............................................................. 170,400
Ownership interest of others in consolidated entity ............................ 1,448,300
Shareholders' equity (deficit)
Common stock, $.01 par value
Authorized - 50,000,000 shares
Issued and outstanding
14,080,654 shares ........................................................... 140,800 140,800
Paid-in capital ............................................................... 7,651,000 7,651,000
Currency translation adjustment ............................................... 57,100
Accumulated deficit ........................................................... (8,076,900) (7,676,700)
----------- -----------
(285,100) 172,200
----------- -----------
Total liabilities and shareholders' equity (deficit) ........................ $ 1,933,400 $ 3,532,500
=========== ===========
</TABLE>
See notes to financial statements.
2
<PAGE>
Nocopi Technologies, Inc.
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months ended June 30
1997 1996
----------- -----------
<S> <C> <C>
Operating Activities
Net loss .............................................................. ($ 400,200) ($ 45,400)
Adjustments to reconcile net loss to
cash from operating activities
Depreciation ......................................................... 45,700 42,900
Amortization ......................................................... 41,400 39,000
Allowance for doubtful accounts ...................................... 12,000 7,400
Ownership interest of others in
loss of consolidated entity ......................................... (95,800) (199,200)
----------- -----------
(396,900) (155,300)
Changes in working capital
Accounts receivable ................................................... (685,400) 69,600
Inventory ............................................................. 1,500 (6,600)
Prepaid and other ..................................................... 20,200 (5,900)
Accounts payable and accrued expenses ................................. 627,300 (78,600)
Deferred revenue ...................................................... 29,500 95,700
----------- -----------
(6,900) 74,200
----------- -----------
Cash used by operating activities .................................... (403,800) (81,100)
Investing Activities
Additions to fixed assets ............................................. (6,800) (37,500)
Additions to patents .................................................. (48,400) (24,000)
Deconsolidation of affiliate .......................................... (1,419,100)
----------- -----------
Cash used by investing activities .................................... (1,474,300) (61,500)
Financing Activities
Exercise of stock options ............................................. 128,500
----------- -----------
Cash provided by financing activities ................................ 128,500
Effect of exchange rate changes on cash ................................ (101,100) (98,000)
----------- -----------
Decrease in cash and cash equivalents ................................ (1,979,200) (112,100)
Cash and cash equivalents - beginning of period ........................ 2,229,200 2,982,100
----------- -----------
Cash and cash equivalents - end of period .............................. $ 250,000 $ 2,870,000
=========== ===========
</TABLE>
See notes to financial statements.
3
<PAGE>
NOCOPI TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Financial Statements
The accompanying interim financial statements have been
prepared by the Company without audit. These statements
include all adjustments (consisting only of normal recurring
adjustments) which management believes necessary for a fair
presentation of the statements and have been prepared on a
consistent basis, except as described in Note 2, using the
accounting policies described in the summary of Accounting
Policies included in the Company's 1996 Annual Report. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
The Notes to Financial Statements included in the 1996 Annual
Report should be read in conjunction with the accompanying
interim financial statements. The interim operating results
are not necessarily indicative of the operating results
expected for the full year.
Note 2. Basis of Presentation
Prior to April 1, 1997, the financial statements included the
accounts of the Company and Euro-Nocopi S.A. (Euro), the
European affiliate of the Company on a consolidated basis.
Consolidation was appropriate due to the operational and
financial control the Company exercised over Euro.
Additionally, the Company held approximately an 18% interest
in Euro and warrants permitting it to increase its interest in
Euro to 55%. During the second quarter of 1997, the Company
ceased to exercise effective control over Euro. The cessation
of effective control resulted from a dispute which arose in
April 1997 between the Company and Euro under the license
agreement between the Company and Euro concerning Euro's
contention that it was entitled to a share of certain minimum
royalties under a worldwide agreement with a manufacturer who
distributes products incorporating the Company's technologies.
In an agreement negotiated during the second quarter of 1997
and concluded in July 1997, the Company agreed to credit Euro
$154,500 as Euro's share of previously collected minimum
royalties, the $154,500 to be applied to license fee payments
due the Company by Euro through the first quarter of 1998. The
Company also agreed to pay Euro 35% of future guaranteed
royalties from this manufacturer.
4
<PAGE>
The $154,500 settlement has been charged to cost of sales and
has been included in the results of operations. The Company
also agreed to modify its warrant by extending its term
through December 2001 but making it exercisable beginning the
earlier of 1) January 1, 2001; 2) in the event of a sale of
all or part of Euro; or 3) in the event of a public listing of
Euro's shares on a stockmarket. In addition, the Company
agreed to defer to January 1, 2001 its right to acquire, under
certain conditions, all remaining shares of Euro for shares of
the Company. This call right expires December 31, 2001.
Additionally, the licensing agreement between the two
companies was amended relative to the negotiation of future
worldwide licensing contracts and the five directors of Euro
who were also Nocopi directors resigned from Euro's Board. As
the Company ceased to exercise effective control and the
financial information for Euro's second quarter was not made
available to the Company, the Company ceased consolidating as
of April 1, 1997 and did not apply the equity method of
accounting for the threee months ended June 30, 1997. The
Company's 18% share of Euro's accumulated loss from inception
through March 1997 in excess of the Company's investment,
totaling $170,400, has been recorded as a deferred credit on
the balance sheet.
Note 3. Recently Issued Accounting Standards
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128
"Earnings per share." This Statement establishes standards for
computing and presenting earnings per share (EPS) and applies
to entities with publicly held common stock or potential
common stock. This Statement is effective for financial
statements issued for periods ending after December 15, 1997
(earlier application is not permitted). This Statement
requires restatement of all prior-period EPS data presented.
The Company is currently evaluating the impact, if any,
adoption of SFAS No. 128 will have on its financial
statements.
5
<PAGE>
Item 2.
NOCOPI TECHNOLOGIES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Basis of Presentation
Prior to April 1, 1997, the financial statements included the accounts
of the Company and Euro-Nocopi S.A. (Euro), the European affiliate of the
Company, on a consolidated basis. Consolidation was appropriate due to the
operational and financial control the Company exercised over Euro. Additionally,
the Company held approximately an 18% interest in Euro and warrants permitting
it to increase its interest in Euro to 55%. During the second quarter of 1997,
the Company ceased to exercise effective control over Euro. The cessation of
effective control resulted from a dispute which arose in April 1997 between the
Company and Euro under the license agreement between the Company and Euro
concerning Euro's contention that it was entitled to a share of certain minimum
royalties under a worldwide agreement with a manufacturer who distributes
products incorporating the Company's technologies. In an agreement negotiated
during the second quarter of 1997 and concluded in July 1997, the Company agreed
to credit Euro $154,500 as Euro's share of previously collected minimum
royalties, the $154,500 to be applied to license fee payments due the Company by
Euro through the first quarter of 1998. The Company also agreed to pay Euro 35%
of future guaranteed royalties from this manufacturer. The $154,500 settlement
has been charged to cost of sales and has been included in the results of
operations. The Company also agreed to modify its warrant by extending its term
through December 2001 but making it exercisable beginning the earlier of 1)
January 1, 2001; 2) in the event of a sale of all or part of Euro; 3) in the
event of a public listing of Euro's shares on a stock market. In addition, the
Company agreed to defer to January 1, 2001 its right to acquire, under certain
conditions, all remaining shares of Euro for shares of the Company. This call
right expires December 31, 2001.
Additionally, the licensing agreement between the two companies was
amended relative to the negotiation of future worldwide licensing contracts and
the five directors of Euro who were also Nocopi directors resigned from Euro's
Board. As the Company ceased to exercise effective control and the financial
information for Euro's second quarter was not made available to the Company, the
Company ceased consolidating as of April 1, 1997 and did not apply the equity
method of accounting for the three months ended June 30, 1997. The Company's 18%
share of Euro's accumulated loss from inception through March 1997 in excess of
the Company's investment, totaling $170,400, has been recorded as a deferred
credit on the balance sheet.
6
<PAGE>
The results of operations for the second quarter of 1997 do not include Euro's
results of operations for that period. Consequently, the revenues and expenses
reported will differ significantly from those reported in the second quarter and
first half of 1996.
Results of Operations
Revenues for the second quarter of 1997 were $1,232,700 compared to
$936,200 in the second quarter of 1996, an increase of 31%. The increase is
attributable primarily to higher sales of security labels to 3M Corporation in
the second quarter of 1997 compared to the second quarter of 1996 as well as the
sale of ink jet based anti-diversion hardware systems to a new customer in the
second quarter of 1997 partially offset by a decline in licenses, royalties and
fees. The decline in licenses, royalties and fees to $479,700 in the second
quarter of 1997 from $778,400 in the second quarter of 1996 is attributable in
part to the change in accounting for Euro whose revenues are not consolidated in
the second quarter of 1997. In addition, domestic licenses, royalties and fees
declined by approximately $200,000 in the second quarter of 1997 compared to the
second quarter of 1996 due primarily to lower guaranteed license fees from 3M
Corporation and Georgia-Pacific Corporation compared to the second quarter of
1996.
Revenues for the first half of 1997 increased 14% to $2,065,600 in the
first half of 1997 compared to $1,811,700 in the first half of 1996. The
increase is attributable to the same factors as the quarter-to-quarter change,
that is, increased sales of products, primarily security labels, offset in part
by the exclusion of Euro's second quarter revenues from the statement of
operations as well as an approximate $340,000 reduction in domestic licenses,
royalties and fees principally attributable to lower guaranteed license fees
from 3M and Georgia-Pacific.
The Company's gross profit declined to $270,700 or 22% of revenues in
the second quarter of 1997 from $673,900 or 72% of revenues in the second
quarter of 1996. The decline in the second quarter of 1997, both in absolute
dollars and as a percentage of sales, is attributable to a change in revenue mix
compared to the second quarter of 1996. Included in 1997's second quarter
revenues are sales of security labels to 3M and an ink-jet based anti-diversion
system. These product sales carry significantly lower gross margins than
revenues derived from licenses, royalties and fees. The gross margin was also
negatively affected by lower license, royalty and fee revenue in the quarter.
Additionally, as agreed in the amended license arrangement with Euro, the
Company recorded a one-time charge to cost of sales totaling $154,500.
The first half of 1997 gross profit declined to $873,400 or 42% of
revenues from $1,379,200, or 76% of revenues in the first half of 1996. The
decline in gross revenues in the first half of 1997 compared to the first half
of 1996 results from the same factors as those affecting the second quarter.
7
<PAGE>
Research and development expenses declined to $121,900 for the second
quarter of 1997 compared to $191,700 in the second quarter of 1996 and to
$342,000 in the first half of 1997 versus $396,700 in the first half of 1996.
The second quarter and first half period to period decline results from the
exclusion of Euro's second quarter 1997 costs from the statement of operations.
Selling expenses declined to $145,500 in the second quarter of 1996
from $351,500 in the second quarter of 1996. For the first six months of 1997,
selling expenses were $480,600 compared to $723,400 in the first half of 1996.
The effect of the deconsolidation of Euro in the second quarter of 1997 was most
profound in selling expenses. Euro's selling expenses in the second quarter and
first half of 1996 were $131,300 and $274,600, respectively. Additionally, the
Company's second quarter and first half selling expenses declined substantially
as a result of fewer sales personnel, lower commissions and lower discretionary
sales promotion expenses as the Company sought to conserve cash.
General and administrative expenses declined to $264,200 in the second
quarter of 1997 from $281,700 in the second quarter of 1996. The first half 1997
general and administrative expenses were $519,400 compared to $521,300 in the
first half of 1996. The period to period declines resulted from the exclusion of
the general and administrative expenses associated with Euro in the second
quarter of 1997 which are not consolidated effective with the second quarter of
1997, offset in part by higher legal and other professional expenses, costs
associated with the Company's international patent activities and, in the second
quarter of 1997, legal expenses incurred in the Company's restructuring of its
ownership and license arrangements with Euro.
Other income (expenses) include interest on the Series B 7%
Subordinated Convertible Promissory Notes issued in May 1993 and amortization of
debt issue costs related to the Notes. Interest income includes interest on
funds invested in the U.S. as well as the investment of funds held by Euro
during the periods that its accounts were included in the Company's financial
statements.
Ownership interest of others in loss of consolidated entity represents
the proportionate share in the loss of Euro attributable to the 82% ownership
interest of the outside shareholders of that company.
The net loss increased in the second quarter of 1997 to $278,400 from
$34,600 in the second quarter of 1996. For the first six months of 1997, the net
loss was $400,200 compared to $45,400 in the first six months of 1996.
Liquidity and Capital Resources
The Company's cash and cash equivalents decreased to $250,000 at June
30, 1997. The Company's consolidated cash and cash equivalent position at
December 31, 1996 was $2,229,200 of which $1,641,200 was held by Euro and
$588,000
8
<PAGE>
was held by the Company. The amount held by Euro was available primarily to fund
Euro's operations. As a result of the circumstances requiring that the financial
statements of the Company no longer be consolidated with those of Euro, the cash
position declined by the $1,641,200 held by Euro-Nocopi at December 31, 1996.
The Company's domestic cash position declined to $250,000 at June 30, 1997 from
$588,000 at December 31, 1996. The cash was required primarily to fund
operations over the six month period.
Current debt obligations represent the reclassification of the
Company's $950,000 Series B 7% Subordinated Convertible Promissory Notes due
March 31, 1998 into current liabilities.
The Company has a line of credit with a bank for up to $1 million
secured by a pledge of certain securities, including equity securities, made by
certain directors of the Company. Borrowings under the line of credit may be
limited based on the value of the equity securities pledged. There have been no
borrowings under this line of credit. In June 1997, the Company was notified by
the bank of its decision that requests for advances against the line would be
considered only after consultation with the pledgors of the collateral. There
can be no assurance that requests for borrowings under the line will be honored
by the bank after its consultations with the pledgors of the assets, but, based
on the current market value of the collateral, the Company believes that the
bank would make no more than $600,000 available under the line.
Without access to the full $1 million line of credit, the Company will
not have sufficient working capital to support its operations and debt service
requirements, specifically the maturing of the $950,000 Series B Notes on March
31, 1998.
The Company is seeking financing which will allow it to replace the
line of credit with funding at least equal to the $1 million provided by the
line. There can be no assurances that the Company will be successful in
arranging such financing.
In addition, the Company's continued liquidity will be dependent on its
ability to refinance the $950,000 aggregate principle amount of the Series B
Notes maturing March 31, 1998 by extending the maturity of the Notes or
converting the principle balance thereof into equity. The Company has not
secured any commitment from any party providing for the extension of such Notes
or their conversion into equity. There can be no assurances that such extension
or conversion will be obtained.
Other Factors That May Affect Future Growth and Stock Price
The Company's operating results and stock price are adversely affected
by the Company's current illiquidity previously discussed and, in addition, are
dependent upon a number of factors, some of which are beyond the Company's
control. These include:
9
<PAGE>
Uneven Pattern of Quarterly and Annual Operating Results. The Company's
revenues, which are derived primarily from licensing and royalties, are
difficult to forecast due to the long sales cycle for the Company's
technologies, the potential for customer delay or deferral of implementation of
the Company's technologies, the size and timing of inception of individual
license agreements, the success of the Company's licensees and strategic
partners in exploiting the market for the licensed products, modifications of
customer budgets, and uneven patterns of royalty revenue and product orders. As
the Company's revenue base is not substantial, delays in finalizing license
contracts, implementing the technology to initiate the revenue stream and
customer ordering decisions can have a material adverse effect on the Company's
quarterly and annual revenue expectations and, as the Company's operating
expenses are substantially fixed, income expectations will be subject to a
similar adverse outcome.
New Business Opportunities. The Company, with limited research and development
resources, is compelled to develop new technologies which it believes will
enhance and expand its position in the anti-counterfeiting and anti-diversion
marketplace it serves. There can be no assurance that the resources expended in
this effort will generate significant revenues for the Company.
Intellectual Property. The Company relies on a combination of protections
provided under applicable international patent, trademark and trade secret laws.
It also relies on confidentially, non-analysis and licensing agreements to
establish and protect its rights in its proprietary technologies. While the
Company actively attempts to protect these rights, the Company's technologies
could possibly be compromised through reverse engineering or other means. There
can be no assurance that the Company will be able to protect the basis of its
technologies from discovery by unauthorized third parties, thus adversely
affecting its customer and licensee relationships.
Volatility of Stock Price. The market price for the Company's common stock has
historically experienced significant fluctuations and may continue to do so. The
Company has, since its inception, operated at a loss and has not produced
revenue levels traditionally associated with publicly traded companies. The
Company's common stock is not listed on a national or regional securities
exchange and, consequently, the Company receives limited publicity regarding its
business achievements and prospects nor is it extensively followed by securities
analysts and traders. The market price may be affected by announcements of new
relationships or modifications to existing relationships. The stock prices of
many developing public companies, particularly those with small capitalizations
have experienced wide fluctuations not necessarily related to operating
performance. Such fluctuations may adversely affect the market price of the
Company's common stock.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Registrant's 1997 Annual Meeting of Shareholders was held
on June 9, 1997. At such meeting, Registrant's shareholders
elected six (6) persons nominated by the Nominating Committee
of the Board to serve as directors of Registrant and ratified
the selection of Coopers & Lybrand L.L.P. as Registrant's
independent public accountants.
The following table shows the votes cast for and against each person
nominated to serve as a director, as well as all abstentions, authority withheld
and broker non-votes:
<TABLE>
<CAPTION>
Name of Votes For Votes Abstentions Broker
Nominee Against Non-
or Votes
authority
withheld
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. A. Gundjian 10,029,058 457,997 -0- -0-
Norman Gardner 10,024,352 462,703 -0- -0-
Joel Pinsky 10,004,758 482,297 -0- -0-
William Drake 9,969,184 517,871 -0- -0-
Edward Patrone 9,727,158 759,897 -0- -0-
Ray B. Mundt 9,726,958 760,097 -0- -0-
</TABLE>
11
<PAGE>
The voting on the proposal to ratify the selection of Coopers & Lybrand L.L.P.
as Registrant's independent public accountants was as follows: 10,126,567 For;
325,191 Against; 35,297 Abstentions; and -0- Broker Non-Votes.
Item 5. Other Information
Not Applicable
Item 6 Exhibits and Reports on Form 8-K
(a). Exhibit 11 Computation of loss per common share
(b). Exhibit 27 - Financial Data Schedule
(c). No Current Reports on Form 8-K have been filed by the
Registrant during the quarter ended June 30, 1997.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOCOPI TECHNOLOGIES, INC.
DATE: August 18, 1997 /s/ Norman A. Gardner
----------------------------------
Norman A. Gardner
President & Chief Executive
Officer
DATE: August 18, 1997 /s/ Rudolph A. Lutterschmidt
----------------------------------
Rudolph A. Lutterschmidt
Vice President & Chief Financial
Officer
13
<PAGE>
NOCOPI TECHNOLOGIES, INC.
COMPUTATION OF LOSS PER COMMON SHARE
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months ended June 30 Six Months ended June 30
1997 1996 1997 1996
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Primary
Net loss applicable to common shares ($278,400) ($34,600) ($400,200) ($45,400)
========== ========== ========== ===========
Weighted average common shares
outstanding 14,080,654 14,064,951 14,080,654 14,054,558
Dilutive shares - based on the
treasury stock method using the
average market price (1) 119,481 154 76,376
---------- ---------- ---------- ----------
14,080,654 14,184,432 14,080,808 14,130,934
========== ========== ========== ==========
Per share amount applicable to
net loss ($.02) ($.00) ($.03) ($.00)
Three Months ended June 30 Six Months ended June 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
Fully diluted
Net loss ($278,400) ($34,600) ($400,200) ($45,400)
Add interest on Series B notes 16,600 16,600 33,200 33,200
Deduct ownership interest of others
in consolidated entity (112,100) (95,800) (199,200)
---------- ---------- ---------- ----------
Net loss applicable to common shares ($261,800) ($130,100) ($462,800) ($211,400)
========== ========== ========== ==========
Weighted average common shares
outstanding 14,080,654 14,064,951 14,080,654 14,054,558
Dilutive shares - based on the
treasury stock method using the
greater of the period-end market
price or the average market price (2) 1,292,706 1,412,187 1,292,860 1,369,082
---------- ---------- ---------- ----------
15,373,360 15,477,138 15,373,514 15,423,640
========== ========== ========== ==========
Per share amount applicable to
net loss ($.02) ($.01) ($.03) ($.01)
</TABLE>
(1) represents shares resulting from stock options and warrants.
(2) represents shares resulting from stock options, warrants and the assumed
conversion of the convertible notes and Euro-Nocopi S.A. stock.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUN-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 250,000
<SECURITIES> 0
<RECEIVABLES> 1,035,900
<ALLOWANCES> 40,800
<INVENTORY> 3,600
<CURRENT-ASSETS> 1,294,900
<PP&E> 459,800
<DEPRECIATION> 326,200
<TOTAL-ASSETS> 1,933,400
<CURRENT-LIABILITIES> 2,048,100
<BONDS> 0
0
0
<COMMON> 140,800
<OTHER-SE> (425,900)
<TOTAL-LIABILITY-AND-EQUITY> 1,933,400
<SALES> 2,065,600
<TOTAL-REVENUES> 2,065,600
<CGS> 1,192,200
<TOTAL-COSTS> 1,192,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 35,800
<INCOME-PRETAX> (400,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> (400,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (400,200)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
