Forward-Looking Information
This Report on Form 10-Q contains, and our officers and representatives may from
time to time make, "forward-looking statements" within the meaning of the safe
harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by words such as: "anticipate,"
"intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect,"
"strategy," "future," "likely," "may," "should," "will" and similar references
to future periods. Examples of forward-looking statements include, among others,
statements we make regarding:
· The ongoing impact of the COVID-19 coronavirus pandemic on our business
operations, revenues, employees, suppliers and customers
· Expected operating results, such as revenue growth and earnings
· Anticipated levels of capital expenditures for fiscal year 2022 and
beyond
· Current or future volatility in market conditions
· Our belief that we have sufficient liquidity to fund our business
operations during the next twelve months
· Strategy for customer retention, growth, product development, market
position, financial results and reserves
· Strategy for risk management
Forward-looking statements are neither historical facts nor assurances of future
performance. Instead, they are based only on our current beliefs, expectations
and assumptions regarding the future of our business, future plans and
strategies, projections, anticipated events and trends, the economy and other
future conditions. Because forward-looking statements relate to the future, they
are subject to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and many of which are outside of our control. Our
actual results and financial condition may differ materially from those
indicated in the forward-looking statements. Therefore, you should not rely on
any of these forward-looking statements. Important factors that could cause our
actual results and financial condition to differ materially from those indicated
in the forward-looking statements include, among others, the following:
· The extent to which the COVID-19 pandemic may impact our future
financial and operational performance will be dependent on many factors
that we may not be able to predict because they continue to change and
evolve depending on both national and local circumstances. These factors
include, among others, the following: government restrictions affecting
our employees, customers and suppliers, changes in our revenues due to
lower customer demand as a result of the pandemic and a potential
inability to obtain raw materials due to lower availability. We continue
to monitor the impact of COVID-19 and the recently identified variants
of COVID-19 on our business but we cannot accurately predict the extent
to which it will adversely affect our future results of operations,
financial condition or cash flows.
· The extent to which we are successful in gaining new long-term
relationships with customers or retaining significant existing customers
and the level of service failures that could lead customers to use
competitors' services.
· Our ability to improve our current credit rating with our vendors and
the impact on our raw materials and other costs and competitive position
of doing so.
· The impact of losing our intellectual property protections or the loss
in value of our intellectual property.
· Changes in customer demand.
· The likelihood of an economic recession in the United States and
globally.
· 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, 2021.
Any forward-looking statement made by us in this Report is based only on
information currently available to us and speaks only as of the date on which it
is made. We undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to time, whether
as a result of new information, future developments or otherwise.
9
The following discussion and analysis should be read in conjunction with our
condensed financial statements, included herewith. This discussion should not be
construed to imply that the results discussed herein will necessarily continue
into the future, or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment of our management. This information should also
be read in conjunction with our audited historical financial statements which
are included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, filed with the Securities and Exchange Commission on March
30, 2022, as amended on April 29, 2022.
Background Overview
Nocopi Technologies, Inc. develops and markets specialty reactive inks for
applications in the large educational and toy products market. We also develop
and market technologies for document and product authentication, which we
believe can reduce losses caused by fraudulent document reproduction or by
product counterfeiting and/or diversion. We derive our revenues primarily from
licensing our technologies on an exclusive or non-exclusive basis to licensees
who incorporate our technologies into their product offering and from selling
products incorporating our technologies to the licensees or to their licensed
printers.
Unless the context otherwise requires, all references to the "Company," "we,"
"our" or "us" and other similar terms means Nocopi Technologies, Inc., a
Maryland corporation.
Effects of COVID-19
To serve our customers while also providing for the safety of our employees and
service providers, we have adapted various steps to protect our employees. Any
employee who is uncomfortable coming into our facilities may choose not to come
in. We have a large enough facility to enable all of our employees to social
distance and we follow Centers for Disease Control and Prevention (CDC)
guidelines. Our production employees work with chemicals and they have always
used masks, respirators, etc., even before COVID-19. As a result, we continue to
maintain the same level of productivity and effectiveness as prior to the
COVID-19 pandemic.
The impact of COVID-19 on our Company had little effect on the financial results
through the first six months of 2021; however, beginning in the third quarter of
2021, certain of the Company's licensees in the entertainment and toy products
market who utilize printers in China to produce their products have been
adversely affected by the cargo surge related to congestion experienced in
certain Chinese ports due to a COVID-19 outbreak that began in the second
quarter of 2021. The cargo surge continues to the present time, now adversely
affecting major United States ports. The world-wide cargo surge along with a
container shortage resulted in significantly higher shipping costs since the
third quarter of 2021. Certain of our Company's licensees in the entertainment
and toy products market have responded by deferring or scaling back production
and size of future orders and, in some cases, rescheduling the shipping of
completed orders. Ink orders from our Company's licensed printers in China have
fallen significantly beginning in the third quarter of 2021 compared to earlier
periods. These supply chain disruptions are being experienced by many businesses
including our Company's licensees. A continuance of these supply chain
disruptions that are forecast to persist into mid-2023 may negatively impact the
number and value of orders placed by our Company's licensed printers in the
entertainment and toy products market with a resultant negative impact on our
Company's results of operations and cash flow in future periods.
We did not suffer a drop off in total earned royalties in the entertainment and
toy products market as a result of COVID-19 through the third quarter of 2021 as
retail demand continued to be strong for the products marketed by our licensees
in the entertainment and toy products market. Beginning in the fourth quarter of
2021 and continuing through the second quarter of 2022, reflecting the
significantly higher shipping costs caused by the COVID-19 related cargo surge
at major China and United States ports and the world-wide container shortage,
ink orders from the printers of our licensees in the entertainment and toy
products market were significantly below historical levels. We continue to
experience a negative impact on revenues in our smaller anti-counterfeiting and
anti-diversion products market due to reduced production activity at certain
printing facilities that utilize these technologies and anticipate that these
conditions may continue for a period of time. Licensing revenues in the
entertainment and toy products market declined in both the fourth quarter of
2021 and the first quarter of 2022; however, in the second quarter of 2022,
licensing revenues in the entertainment and toy products market increased by
approximately 38% compared to the second quarter of 2021. While the products of
our licensees in the larger entertainment and toy products market are sold by
both large and smaller retailers, most of whom are now open, and are also
available for purchase online, we believe that revenues may not continue to be
achieved at levels experienced in earlier periods due to the negative economic
conditions that are expected to continue over the balance of the year and beyond
as a result of COVID-19, increasing inflation, interest rate increases, the
probability of an economic recession in the United States and globally along
with and other factors affecting consumer spending. A slowdown and/or a
reallocation in overall consumer spending resulting from the record inflationary
conditions being experienced world-wide may affect the sales of products
marketed by our licensees. Our major licensees in the entertainment and toy
products market are large, well-known businesses in this market with whom we
believe our long-term relationship will not be adversely affected by the
COVID-19 pandemic, supply chain disruptions, effects of the ongoing
Russia-Ukraine war and the record inflation currently being experienced in the
major markets for our products.
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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 2022 were $514,300 compared to $513,900 in
the second quarter of 2021, an increase of $400. Licenses, royalties and fees
increased by $24,900, or approximately 17%, to $169,800 in the second quarter of
2022 from $144,900 in the second quarter of 2021. The increase in licenses,
royalties and fees in the second quarter of 2022 compared to the second quarter
of 2021 is due primarily to higher royalties from our Company's licensees in
entertainment and toy products market offset in part by lower revenues from our
Company's licensees in the security markets which continue to be negatively
affected by the COVID-19 pandemic and the variants of COVID-19 that have
recently been identified. We cannot assure you that the marketing and product
development activities of our Company's licensees or other businesses in the
entertainment and toy products market will produce a significant increase in
revenues for our Company, nor can the timing of any potential revenue increases
be predicted, particularly given the uncertain economic conditions being
experienced worldwide as a result of the ongoing COVID-19 pandemic that is
continuing to negatively impact all worldwide economies.
Product and other sales decreased by $24,500, or approximately 7%, to $344,500
in the second quarter of 2022 from $369,000 in the second quarter of 2021. Sales
of ink decreased in the second quarter of 2022 compared to the second quarter of
2021 due primarily to lower ink shipments to the third party authorized printers
used by our Company's major licensees in the entertainment and toy products
market. In the second quarter of 2022, our Company derived revenues of
approximately $471,300 from our licensees and their authorized printers in the
entertainment and toy products market compared to revenues of approximately
$461,100 in the second quarter of 2021.
For the first six months of 2022, revenues were $853,700, representing a
decrease of $271,600, or approximately 24%, from revenues of $1,125,300 in the
first six months of 2021. Licenses, royalties and fees decreased by $23,300, or
approximately 7%, to $307,100 in the first six months of 2022 from $330,400 in
the first six months of 2021. 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 offset by lower revenues from our
Company's licensees in the security markets which continue to be negatively
affected by the COVID-19 pandemic and the variants of COVID-19 that have
recently been identified. We cannot assure you that the marketing and product
development activities of our Company's licensees or other businesses in the
entertainment and toy products market will produce a significant increase in
revenues for our Company, nor can the timing of any potential revenue increases
be predicted, particularly given the uncertain economic conditions being
experienced worldwide as a result of the COVID-19 pandemic that is continuing to
negatively impact all worldwide economies along with recently identified
variants of the COVID-19 virus.
11
Product and other sales decreased by $248,300, or approximately 31%, to $546,600
in the first six months of 2022 from $794,900 in the first six months of 2021.
Sales of ink decreased in the first six months of 2022 compared to the first six
of 2021 due primarily to lower ink shipments to the third party authorized
printers used by our Company's major licensees in the entertainment and toy
products market and lower ink shipments to our Company's licensees in the retail
receipt and document fraud market. Our Company derived revenues of approximately
$777,800 from licensees and their authorized printers in the entertainment and
toy products market in the first six months of 2022 compared to revenues of
approximately $1,022,700 in the first six months of 2021.
Our Company's gross profit increased to $313,100 in the second quarter of 2022,
or approximately 61% of revenues, from $280,100 in the second quarter of 2021,
or approximately 55% of revenues. Licenses, royalties and fees have historically
carried a higher gross profit than product and other sales. Such other sales
generally consist of supplies or other manufactured products which incorporate
our Company's technologies or equipment used to support the application of its
technologies. These items (except for inks which are manufactured by our
Company) are generally purchased from third-party vendors and resold to the
end-user or licensee and carry a lower gross profit than licenses, royalties and
fees. The higher gross profit in the second quarter of 2022 compared to the
second quarter of 2021 results primarily from higher revenues from licenses,
royalties and fees and a favorable mix of product and other sales in the second
quarter of 2022 compared to the second quarter of 2021.
For the first six months of 2022, gross profit was $486,300, or approximately
57% of revenues, compared to $671,200, or approximately 60% of revenues, in the
first six months of 2021. The lower gross profit in the first six months of 2022
compared to the first six months of 2021 results primarily from lower licenses,
royalties and fees in the first six months of 2022 and lower revenues from
product and other sales in the first six months of 2022 compared to the first
six months of 2021.
As the variable component of cost of revenues related to licenses, royalties and
fees is a low percentage of these revenues and the fixed component is not
substantial, period to period changes in revenues from licenses, royalties and
fees can significantly affect both the gross profit from licenses, royalties and
fees as well as overall gross profit. The gross profit from licenses, royalties
and fees increased to approximately 73% in the second quarter of 2022 compared
to approximately 66% in the second quarter of 2021 and to approximately 72% of
revenues from licenses, royalties and fees in the first six months of 2022 from
approximately 71% in the first six months of 2021.
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 55% of revenues in the second
quarter of 2022 compared to approximately 50% of revenues in the second quarter
of 2021. For the first six months of 2022, the gross profit, expressed as a
percentage of revenues, decreased to approximately 48% of revenues from product
and other sales compared to approximately 55% of revenues from product and other
sales in the first six months of 2021. The increase in gross profit from product
and other sales in the second quarter of 2022 compared to the second quarter of
2021 is due primarily to a favorable mix of products in the second quarter of
2022 compared to the second quarter of 2021. The decrease in gross profit from
product and other sales in the first six months of 2022 compared to the first
six months of 2021 is due primarily to lower ink shipments to the third party
authorized printers used by two of our Company's major licensees in the
entertainment and toy products market.
Research and development expenses decreased in the second quarter of 2022 to
$32,500 from $45,800 in the second quarter of 2021 and to $72,000 in the first
six months of 2022 from $90,300 in the first six months of 2021 due primarily to
lower employee related expenses in the second quarter and first six months of
2022 compared to the second quarter and first six months of 2022.
Sales and marketing expenses increased to $76,700 in the second quarter of 2022
from $74,200 in the second quarter of 2021 and decreased to $141,500 in the
first six months of 2022 from $157,400 in the first six months of 2021. The
increase in the second quarter of 2022 compared to the second quarter of 2021 is
due primarily to higher commission and employee related expenses in the second
quarter of 2022 compared to the second quarter of 2021. The decrease in the
first six months of 2022 compared to the first six months of 2021 is due
primarily to lower commission expense on the lower level of revenues in the
first six months of 2022 compared to the first six months of 2021.
12
General and administrative expenses increased in the second quarter and first
six months of 2022 to $506,700 and $784,400, respectively, from $117,700 and
$263,200, respectively, in the second quarter and first six months of 2021 due
primarily to significantly higher professional fees in the second quarter and
first six months of 2022 compared to the second quarter and first six months of
2021.
Income taxes in the second quarter and first six months of 2021 result from
limitations placed on income tax net operating loss deductions by the
Commonwealth of Pennsylvania.
The net loss of $297,000 in the second quarter of 2022 compared to net income
$42,500 in the second quarter of 2021 resulted primarily from higher operating
expenses in the second quarter of 2022 compared to the second quarter of 2021.
The net loss of $500,400 in the first six months of 2022 compared to net income
of $157,300 in the first six months of 2021 resulted primarily from a lower
gross profit on a lower level of licenses, royalties and fees and product and
other sales in the first six months of 2022 compared to the first six months of
2021 and higher operating expenses in the first six months of 2022 compared to
the first six months of 2021.
Plan of Operation, Liquidity and Capital Resources
During the first six months of 2022, our Company's cash decreased to $1,593,400
at June 30, 2022 from $1,846,700 at December 31, 2021. During the first six
months of 2022, our Company used $253,300 to fund its operating activities.
During the first six months of 2022, our Company's revenues decreased
approximately 24% primarily as a result of lower sales of ink to the authorized
printers of our Company's licensees in the entertainment and toy products
market.
Additionally, our Company's total overhead expenses increased in the six months
of 2022 to $997,900 compared to $510,900 in the first six months of 2021 and our
Company's income tax expense decreased in the first six months of 2022 compared
to the first six months of 2021. As a result of these factors, our Company
sustained a net loss of $500,400 in the first six months of 2022 compared to net
income of $157,300 in the first six months of 2021. Our Company had negative
operating cash flow of $253,300 during the first six months of 2022. At June 30,
2022, our Company had positive working capital of $2,884,600 and stockholders'
equity of $3,004,900. For the full year of 2021, our Company had net income of
$49,400 and had positive operating cash flow of $512,700. At December 31, 2021,
our Company had working capital of $3,197,500 and stockholders' equity of
$3,505,300.
On August 1, 2022 our Company entered into a stock purchase agreement in
connection with a private placement for total gross proceeds of $3.5 million.
The purchase agreement provides for the issuance of an aggregate of 2,500,000
shares of our Company's common stock, par value $0.01 per share, to two
investors at a purchase price of $1.40 per share, as adjusted for our Company's
contemplated one-for-ten (1:10) reverse stock split of our common stock. To
enable the private placement transaction, our Board approved a 1-for-10 (1:10)
reverse stock split of our common stock. The effective date of the reverse stock
split is Friday, August 26, 2022. The closing of the purchase agreement is
expected to occur as soon as possible following the consummation of the reverse
stock split. If the closing has not occurred by September 15, 2022, any
purchaser named in the stock purchase agreement may, at its sole discretion,
terminate the purchase agreement by providing written notice to our Company. The
closing is subject to the occurrence of the reverse stock split and our
Company's satisfaction of certain additional conditions. There is no guarantee
that the closing of the purchase agreement will occur or, if completed, that the
proceeds derived from the purchase agreement will enable our Company to generate
additional revenues and positive cash flow.
In November 2018, our Company negotiated a $150,000 revolving line of credit
("Line of Credit") with a bank to provide a source of working capital, if
required. The Line of Credit is secured by all the assets of our Company and
bears interest at the bank's prime rate for a period of one year and its prime
rate plus 1.5% thereafter. The Line of Credit is subject to an annual review and
quiet period. There have been no borrowings under the Line of Credit since its
inception. We may need to obtain additional capital in the future to further
support the working capital requirements associated with our existing revenue
base and to develop new revenue sources. We cannot assure you that we will be
successful in obtaining such additional capital, if needed. We continue to
maintain a cost containment program including curtailment, where possible, of
discretionary research and development and sales and marketing expenses.
13
Our Plan of Operation for the twelve months beginning with the date of this
quarterly report consists of concentrating available human and financial
resources to continue to capitalize on the specific business relationships our
Company has developed in the entertainment and toy products market. This
includes two licensees that have been marketing products incorporating our
Company's technologies since 2012. These two licensees maintain a significant
presence in the entertainment and toy products market and are well known and
highly regarded participants in this market. We anticipate that these two
licensees will expand their current offerings that incorporate our technologies
and will introduce and market new products that will incorporate our
technologies available to them under their license agreements with our Company.
We will continue to develop various applications for these licensees. We also
plan to expand our licensee base in the entertainment and toy market. We
currently have additional licensees marketing or developing products
incorporating our technologies in certain geographic and niche markets of the
overall entertainment and toy products market.
Our Company maintains its presence in the retail loss prevention market and
believes that revenue growth in this market can be achieved through increased
security ink sales to its licensees in this market. We will continue to adjust
our production and technical staff as necessary and, subject to available
financial resources, invest in capital equipment needed to support potential
growth in ink production requirements beyond our current capacity. Additionally,
we will pursue opportunities to market our current technologies in specific
security and non-security markets. We cannot assure you that these efforts will
enable our Company to generate additional revenues and positive cash flow.
Our Company has received, and may in the future seek, additional capital in the
form of debt, equity or both, to support our working capital requirements and to
provide funding for other business opportunities. Beyond the Line of Credit, we
cannot assure you that if we require additional capital, that we will be
successful in obtaining such additional capital, or that such additional
capital, if obtained, will enable our Company to generate additional revenues
and positive cash flow.
As previously stated, we generate a significant portion of our total revenues
from licensees in the entertainment and toy products market. These licensees
generally sell their products through retail outlets. In the future, such sales
may be adversely affected by changes in consumer spending that may occur as a
result of an uncertain economic environment throughout the balance of 2022 and
beyond due to the ongoing 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.
Contractual Obligations
As of June 30, 2022, there were no material changes in our contractual
obligations from those disclosed in our Annual Report on Form 10-K filed with
the SEC on March 30, 2022, as amended on April 29, 2022, other than those
appearing in the notes to the financial statements appearing elsewhere in this
Quarterly Report on Form 10-Q.
Recently Adopted Accounting Pronouncements
As of June 30, 2022, 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.
14
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40), Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity.The amendments in this Update affect
entities that issue convertible instruments and/or contracts in an entity's own
equity. For convertible instruments, the instruments primarily affected are
those issued with beneficial conversion features or cash conversion features
because the accounting models for those specific features are removed. However,
all entities that issue convertible instruments are affected by the amendments
to the disclosure requirements in this Update. For contracts in an entity's own
equity, the contracts primarily affected are freestanding instruments and
embedded features that are accounted for as derivatives under the current
guidance because of failure to meet the settlement conditions of the derivatives
scope exception related to certain requirements of the settlement assessment.
FASB simplified the settlement assessment by removing the requirements (1) to
consider whether the contract would be settled in registered shares, (2) to
consider whether collateral is required to be posted, and (3) to assess
shareholder rights. Those amendments also affect the assessment of whether an
embedded conversion feature in a convertible instrument qualifies for the
derivatives scope exception. Additionally, the amendments in this Update affect
the diluted EPS calculation for instruments that may be settled in cash or
shares and for convertible instruments. The amendments in this Update are
effective for public business entities that meet the definition of a Securities
and Exchange Commission (SEC) filer, excluding entities eligible to be smaller
reporting companies as defined by the SEC, for fiscal years beginning after
December 15, 2021, including interim periods within those fiscal years. For all
other entities, the amendments are effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years. Early
adoption is permitted, but no earlier than fiscal years beginning after December
15, 2020, including interim periods within those fiscal years. FASB specified
that an entity should adopt the guidance as of the beginning of its annual
fiscal year. FASB decided to allow entities to adopt the guidance through either
a modified retrospective method of transition or a fully retrospective method of
transition.
Off-Balance Sheet Arrangements
Our Company does not have any off-balance sheet arrangements.
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NOCOPI TECHNOLOGIES, INC. 
