U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES ACT OF 1934.
For the quarterly period ended March 31, 2003.
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ___________ to ______________
Commission file number 0-20333
-------
NOCOPI TECHNOLOGIES, INC.
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
MARYLAND 87-0406496
--------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
537 Apple Street, West Conshohocken, PA 19428
--------------------------------------------------------------------------------
(Address of principal executive offices)
(610) 834-9600
--------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
State the number of shares outstanding of each of the issuer's classes
of common equity, as of May 1, 2003: Common stock, par value $.01 per share:
45,972,241 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
NOCOPI TECHNOLOGIES, INC.
INDEX
Part I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Statements of Operations 1
Three Months ended March 31, 2003
and March 31, 2002
Balance Sheet 2
March 31, 2003
Statements of Cash Flows 3
Three Months ended March 31, 2003
and March 31, 2002
Notes to Financial Statements 4 - 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 12
Part II. OTHER INFORMATION 13
Signatures 14
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Nocopi Technologies, Inc.
Statements of Operations
(unaudited)
Three Months ended March 31
2003 2002
---------- ----------
Revenues
Licenses, royalties and fees $ 92,500 $ 134,500
Product and other sales 52,400 67,400
---------- ----------
144,900 201,900
Cost of sales
Licenses, royalties and fees 35,800 50,100
Product and other sales 31,600 48,200
---------- ----------
67,400 98,300
---------- ----------
Gross profit 77,500 103,600
Operating expenses
Research and development 49,200 66,100
Sales and marketing 86,200 78,500
General and administrative (exclusive of legal
expenses) 83,800 109,700
Legal expenses 76,000 74,000
---------- ----------
295,200 328,300
---------- ----------
Loss from operations (217,700) (224,700)
Other income (expenses)
Interest income 100 100
Interest and bank charges (3,400) (700)
---------- ----------
(3,300) (600)
---------- ----------
Net loss ($221,000) ($225,300)
========== ==========
Basic and diluted loss per common share ($.00) ($.01)
Weighted average common shares outstanding 45,972,241 41,438,908
The accompanying notes are an integral part of these
financial statements.
1
Nocopi Technologies, Inc.
Balance Sheet
(unaudited)
March 31
2003
------------
Assets
Current assets
Cash and cash equivalents $ 15,500
Accounts receivable less allowances 36,200
Prepaid and other 31,800
------------
Total current assets 83,500
Fixed assets
Leasehold improvements 39,500
Furniture, fixtures and equipment 476,200
------------
515,700
Less: accumulated depreciation 503,800
------------
11,900
Other assets
Investment in unconsolidated affiliate - net 110,600
------------
Total assets $ 206,000
============
Liabilities and Stockholders' Deficiency
Current liabilities
Demand loans $ 160,400
Accounts payable 726,900
Accrued expenses 289,100
Deferred revenue 120,700
------------
Total current liabilities 1,297,100
Stockholders' deficiency
Common stock, $.01 par value
Authorized - 75,000,000 shares
Issued and outstanding - 45,972,241 shares 459,700
Paid-in capital 11,141,100
Accumulated deficit (12,691,900)
------------
(1,091,100)
------------
Total liabilities and stockholders' deficiency $ 206,000
============
The accompanying notes are an integral part of these
financial statements.
2
Nocopi Technologies, Inc.
Statements of Cash Flows
(unaudited)
Three Months ended March 31
2003 2002
---------- ----------
Operating Activities
Net loss ($221,000) ($225,300)
Adjustment to reconcile net loss to cash
used in operating activities
Depreciation 2,100 4,500
--------- ---------
(218,900) (220,800)
(Increase) decrease in assets
Accounts receivable 2,900 1,100
Prepaid and other (800) (3,200)
Increase (decrease) in liabilities
Accounts payable and accrued expenses 93,300 114,000
Deferred revenue - (3,700)
--------- ---------
95,400 108,200
--------- ---------
Cash used in operating activities (123,500) (112,600)
Financing Activities
Issuance of common stock, net - 139,000
--------- ---------
Cash provided by financing activities - 139,000
--------- ---------
Increase (decrease) in cash and cash
equivalents (123,500) 26,400
Cash and cash equivalents - beginning of period 139,000 100
--------- ---------
Cash and cash equivalents - end of period $ 15,500 $ 26,500
========= =========
The accompanying notes are an integral part of these
financial statements.
3
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. (the 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 the summary of
Accounting Policies included in the Company's 2002 Annual Report on
Form 10-KSB. 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 the Company believes
that the accompanying disclosures are adequate to make the information
presented not misleading. The Notes to Financial Statements included in
the 2002 Annual Report on Form 10-KSB should be read in conjunction
with the accompanying interim financial statements. The interim
operating results for the three months ended March 31, 2003 may not be
necessarily indicative of the operating results expected for the full
year.
Note 2. Affiliate
The Company organized Euro-Nocopi, S.A. (Euro) in 1994 to market the
Company's technologies in Europe under an exclusive license
arrangement. Euro was capitalized through a European private placement.
The Company holds an approximately 18% interest in Euro. During 2000,
there arose between Euro and the Company a number of areas of conflict
and dispute, leading each party to the licensing arrangement to assert
informally that the other was in breach of its obligations under that
arrangement. The parties initially sought to resolve their differences
by negotiating a transaction in which Euro would have purchased from
the Company its entire equity interest as well as the paid-up European
rights to the Company's technologies. These negotiations terminated
without agreement early in December 2000. Following the termination of
the transaction negotiations, the Company was informed by Euro that it
had adopted resolutions to liquidate and dissolve. In mid-December
2000, the Company terminated its license agreement with Euro in
accordance with its terms and discontinued the provision of support
(including the sale of proprietary inks) to Euro and its customers. As
a result of the license termination the technological dependency of
Euro on the Company ceased and the Company was no longer permitted to
account for its investment in Euro on the equity method. Accordingly,
the Company, effective October 1, 2000, changed its method of
accounting for its investment in Euro to the cost method and recorded
the carrying value at that date as the cost of its investment.
4
Euro responded to the license termination by denying that the Company's
action was permissible or effective, and by asserting a claim that, as
a result of alleged breaches of the licensing agreement by the Company,
it was entitled to a royalty-free license to exploit the Company's
technologies in Europe.
Promptly thereafter, Euro commenced an action before a court in Paris,
France in which it sought the entry of an order, in the nature of a
preliminary injunction, to compel the Company to honor the license
agreement pending judicial or arbitral resolution of the dispute
between the parties under the license agreement. In the French
litigation, Euro did not seek an adjudication on the merits of the
underlying dispute. Certain shareholders of Euro subsequently joined in
the proceedings commenced by Euro.
In March 2001, the Emergency Judge hearing the action issued a decision
denying the relief requested by Euro and the shareholders. The
decision, which does not purport to be a final adjudication of the
merits of the controversy but only of Euro's request for preliminary
relief, held that Euro was not entitled to the requested order because
the Company had validly terminated the licensing arrangement in
mid-December, and also ordered Euro to pay into escrow the
approximately $125,000 that the Company claimed was due and owing under
the licensing arrangement.
In March 2001, Euro commenced an arbitration proceeding before the
American Arbitration Association in New York, NY against the Company.
In this proceeding, Euro has not asserted a claim for damages but has
asserted a claim for an award in the nature of a declaratory judgment
to the effect that, because the Company has (allegedly) breached the
license agreement, Euro is entitled to a perpetual royalty-free license
to exploit the Company's technologies in Europe. The Company has filed
a response denying that Euro is entitled to the relief requested,
asserting that it has validly terminated Euro's license agreement, and
seeking damages for Euro's breaches of the licensing agreement and its
continuing use of the licensed technologies. The parties are currently
engaged in discussions relating to the settlement of the arbitration,
and all related matters, and the arbitration hearing on the merits has
been postponed pending such discussions.
In March 2001 certain shareholders of Euro filed suit in a court in
Paris, France against certain current and former officers and directors
of the Company and against a licensee of the Company. The Company is
not named as a defendant in the suit. The suit seeks damages in excess
of $7 million from the defendants for various alleged acts of
oppression, self-dealing and fraud in connection with the organization
and capitalization of Euro, the management of that company and the
Company's management of its relationship with that company. The
defendants have denied any liability to the plaintiffs and have sought
indemnification from the Company in connection with the lawsuit. The
Company has advanced certain costs of defense for the benefit of the
named defendants. The Company believes that its Directors and Officers
Insurance carrier may provide reimbursement of certain expenditures for
legal fees (above the policy deductible) in accordance with the terms
of the insurance policy.
5
Note 3. Going Concern
Since its inception, the Company has incurred significant losses and,
as of March 31, 2003, had accumulated losses of $12,691,900. For the
years ended December 31, 2002 and 2001, the Company's net losses were
$924,500 and $828,600, respectively. In addition, the Company had
negative working capital of $1,213,600 at March 31, 2003. The Company
may incur further operating losses and experience negative cash flow in
the future. Achieving profitability and positive cash flow depends on
the Company's ability to generate and sustain significant increases in
revenues and gross profits from its traditional business. There can be
no assurances that the Company will be able to generate sufficient
revenues and gross profits to achieve and sustain profitability and
positive cash flow in the future.
The receipt of $200,000 in late 2002 from the sale of 3,333,333 shares
of the Company's common stock and an additional demand loan of $3,000
in late April 2003 from the Company's Chairman of the Board has
permitted the Company to continue in operation to the current date.
Management of the Company believes that, to survive, it must obtain
additional capital immediately both to fund continuing operating
deficits and to fund investments needed to increase its operating
revenues to levels that will sustain its operations. There can be no
assurances that the Company will be successful in obtaining sufficient
additional capital, or if it does, that the additional capital will
enable the Company to improve its business so as to have a material
positive effect on the Company's operations and cash flow. The Company
believes that without substantial immediate investment, it will be
forced to cease operations during the second quarter of 2003. Further,
the Company requires investment to fund the ongoing arbitration with
Euro-Nocopi, S.A. There are no assurances that, even if funding, for
which the Company has no commitments and only limited prospects, is
arranged, the Company will prevail in the arbitration.
Note 4. Income Taxes
There is no income tax benefit for the losses for the three months
ended March 31, 2003 and March 31, 2002 since Management has determined
that the realization of the net deferred tax asset is not assured and
has created a valuation allowance for the entire amount of such
benefits.
6
Item 2.
NOCOPI TECHNOLOGIES, INC.
Management's Discussion and Analysis
of Financial Condition and Results of Operation
Forward-Looking Information
The following Management's Discussion and Analysis of Results of Operations
and Financial Condition should be read in conjunction with our audited Financial
Statements and Notes thereto for the year ended December 31, 2002 included in
our Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission.
The information in this discussion contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause our actual results, performance or achievements
or industry results to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. Such factors include those described in "Uncertainties That May
Affect the Company, its Operating Results and Stock Price." The forward-looking
statements included in this report may prove to be inaccurate. In light of the
significant uncertainties inherent in these forward-looking statements, you
should not consider this information to be a guarantee by us or any other person
that our objectives and plans will be achieved. The Company does not undertake
to publicly update or revise its forward-looking statements even if experience
or future changes make it clear that any projected results (expressed or
implied) will not be realized.
Results of Operations
The Company's revenues are derived from royalties paid by licensees of the
Company's technologies, fees for the provision of technical services to
licensees and from the direct sale of products incorporating the Company's
technologies, such as inks, security paper and pressure sensitive labels, and
equipment used to support the application of the Company's technologies, such as
ink-jet printing systems. Royalties consist of guaranteed minimum royalties
payable by the Company's 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.
Because the Company has a relatively high level of fixed costs, its
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.
7
Both the absolute amounts of the Company's revenues and the mix among the
various sources of revenue are subject to substantial fluctuation. The Company
has 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 the Company's total
revenue and on its revenue mix and overall financial performance. Such changes
may result from a customer's product development delays, engineering changes,
changes in product marketing strategies and the like. In addition, certain
customers have, from time to time, sought to renegotiate certain provisions of
their license agreements and, when the Company agrees to revise terms, revenues
from the customer may be affected. The addition of a substantial new customer or
the loss of a substantial existing customer may also have a substantial effect
on the Company's total revenue, revenue mix and operating results.
Revenues for the first quarter of 2003 were $144,900 compared to $201,900
in the first quarter of 2002, a 28% decrease. Licenses, royalties and fees
decreased by $42,000, or 31%, in the first quarter of 2003 to $92,500 from
$134,500 in the first quarter of 2002. The reduction in licenses, royalties and
fees is due primarily to the termination during the April 2002 to March 2003
period of license arrangements with four licensees offset in part by license and
royalty revenues received from two new licensees acquired during the same
period. Product sales were $52,400 in the first quarter of 2003 compared to
$67,400 in the first quarter of 2002, a decrease of $15,000 or 22%. The decrease
in product sales reflects lower levels of sales of the Company's line of
security papers in the first quarter of 2003 compared to the first quarter of
2002.
The Company's gross profit decreased to $77,500 in the first quarter of
2003 or 53% of revenues from $103,600 or 51% of revenues in the first quarter of
2002. Licenses, royalties and fees have historically carried a higher gross
profit than product sales, which generally consist of supplies or other
manufactured products which incorporate the Company's technologies or equipment
used to support the application of its technologies. These items (except for
inks which are manufactured by the 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 first quarter 2003 gross
profit was negatively impacted by the decline in revenues from licenses,
royalties and fees; however, the Company's expenditures for paper purchased for
resale and production costs incurred in the manufacture of the Company's line of
security inks were lower in the first quarter of 2003 compared to the first
quarter of 2002.
Research and development expenses were $49,200 in the first quarter of 2003
compared to $66,100 in the first quarter of 2002. The decrease relates primarily
to the termination at December 31, 2002 of a consulting agreement with a former
executive officer and director of the Company.
Sales and marketing expenses increased to $86,200 in the first quarter of
2003 from $78,500 in the first quarter of 2002. The increase reflects the
engagement of a member of the partnership that acquired 3,333,333 shares of the
Company's common stock in late 2002 as a sales and marketing consultant in
accordance with the terms of the subscription agreement offset in part by lower
travel and sales promotion expenses.
General and administrative expenses (exclusive of legal expenses) decreased
by $25,900 in the first quarter of 2003 to $83,800 from $109,700 in the first
quarter of 2002. The decrease relates to lower audit fees and costs involved in
the acquisition of new patents and the maintenance of existing patents in the
first quarter of 2003 compared to the first quarter of 2002.
8
Legal expenses were $76,000 in the first quarter of 2003 compared to
$74,000 in the first quarter of 2002. Significant legal expenses have been
incurred since early 2001 as a result of the arbitration proceedings and other
litigation in both the United States and France between the Company and
Euro-Nocopi, S.A., its former European licensee. While the arbitration was
scheduled to be heard by the arbitrators in December 2002, the arbitration has
been suspended at the request of the parties as attorneys seek to negotiate a
settlement. There can be no assurances that a settlement acceptable to both
parties will be concluded.
Other income (expense) includes interest income on funds invested and, in
2003, interest expense on the Demand Loans.
The net loss of $221,000 in the first quarter of 2003 approximated the net
loss of $225,300 in the first quarter of 2002.
Plan of Operation, Liquidity and Capital Resources
The Company's cash and cash equivalents decreased to $15,500 at March 31,
2003 from $139,000 at December 31, 2002. The cash was used to fund operations
over the three-month period.
The loss of a number of customers during the past three years and the
termination of the Company's exclusive European licensee in 2000 has had a
material adverse effect on the Company's results of operations and upon its
liquidity and capital resources. The Company believes that the conditions
arising from these circumstances raise substantial doubts about the Company's
ability to continue as a going concern. The receipt of funds in conjunction with
the sale of 3,333,333 shares of the Company's common stock in late 2002 and an
additional demand loan of $3,000 in late April 2003 from the Company's Chairman
of the Board has permitted it to continue in operation through the current date.
In addition, the Company's increasing illiquidity has forced it to follow a
policy of deferring payment to its vendors, even where such deferral has not
been agreed to by the vendors. As a result, the Company's trade payables have
increased to $726,900 at March 31, 2003 from $649,200 at December 31, 2002.
Accordingly, the Company is currently in default of the payment terms extended
by a significant number of its suppliers, professional service providers and
other vendors, some of which have suspended providing products and services
and/or credit to the Company and may require payment in advance. Management of
the Company believes that, to survive, it must obtain additional capital
immediately to reduce its substantial obligations, fund continuing operating
deficits and fund investment needed to increase its operating revenues to levels
that will sustain its operations. If the Company fails to significantly increase
its cash balances through further equity investment, for which it has no
commitments and only very limited prospects, it will be forced to cease
operations due to a lack of cash during the second quarter of 2003. There can be
no assurances that the Company will be able to secure additional equity
investment before it is forced to cease operations.
9
The Company, in response to the ongoing adverse liquidity situation, has
maintained a cost reduction program including staff reductions, where possible,
and curtailment of discretionary research and development and sales and
marketing expenses.
Uncertainties That May Affect the Company, its Operating Results and Stock Price
The Company's operating results and stock price are dependent upon a number of
factors, some of which are beyond the Company's control. These include:
Inability to Continue in Operation Without Immediate New Equity Investment. The
Company had a negative working capital of $1,213,600 at March 31, 2003 and
experienced negative cash flow from operations of $123,500 in the three months
ended March 31, 2003. Additionally, it experienced negative cash flow from
operations of $432,500 in the year ended December 31, 2002. Management does not
believe the Company can significantly improve its negative cash flow in the near
future. Since year-end 2001, the Company continued to experience negative cash
flow and, at the present time is in need of immediate equity or other
investment; otherwise, it will be forced to cease operations due to a lack of
cash during the second quarter of 2003. It is uncertain whether the Company's
assets will retain any value if the Company ceases operations. There are no
assurances that the Company will be able to secure additional equity investment
before it is forced to cease operations.
Continuing Euro-Nocopi Litigation. The Company is currently expending sums
representing a substantial portion of its revenues for professional fees and
costs relating to legal disputes between the Company and its former affiliate,
Euro-Nocopi, S.A. as described under the heading "Legal Proceedings" in the
Company's Annual Report on Form 10-KSB. Management believes that successful
resolution of the disputes between it and Euro-Nocopi is necessary for the
Company to be able to license its technologies to European users. If Euro-Nocopi
succeeds in asserting its rights to a paid-up European license, it will be
entitled to license European end users of the Company's technologies with no
payment of license fees (by Euro-Nocopi or such users) to the Company, and the
Company will not be entitled to grant licenses or collect license fees from
European users or to grant worldwide licenses. The Company cannot continue to
pay the costs of this dispute unless it can obtain substantial new capital
investment, of which there can be no assurances, and the Company will not
prevail in this dispute if it cannot continue to pay such costs. Even if the
Company is able to continue its dispute with Euro-Nocopi through resolution, or
complete the settlement discussions currently underway, there can be no
assurance that the resolution will be a successful one for the Company or that
it will have a material positive effect on the financial condition of the
Company.
Possible Inability to Develop New Business. Even if the Company is able to raise
cash through additional capital investment or otherwise, it must quickly improve
its operating cash flow. Because the Company has already significantly reduced
its operating expenses, Management believes that any significant improvement in
the Company's cash flow must result from increases in its revenues from
traditional sources and from new revenue sources. The Company's ability to
develop new revenues may depend on the extent of both its marketing activities
and its research and development activities. There are no assurances that the
resources the Company, even with additional investment, can devote to marketing
and to research and development will be sufficient to increase the Company's
revenues to levels resulting in positive cash flow.
10
Inability to Obtain Raw Materials and Products for Resale. The Company's adverse
financial condition has required it to significantly defer payments due vendors
who supply raw materials and other components of the Company's security inks,
security paper that the Company purchases for resale and professional and other
services. As a result, the Company is on credit hold with certain of its
suppliers and is required to pay cash in advance of shipment to others. Delays
in shipments to customers caused by the Company's inability to obtain materials
on a timely basis and the possibility that certain current vendors may
permanently discontinue to supply the Company with needed products could impact
the Company's ability to service its customers and adversely affect its customer
and licensee relationships. Management of the Company believes that, without
significant capital investment in the very near term, the Company will not be
able to maintain acceptable relationships with its vendors and professional
service providers. There are no assurances that the Company will be able to
secure sufficient capital investment to maintain its vendor accounts on
satisfactory terms.
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 of 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.
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 do securities analysts and traders
extensively follow it. 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.
11
Intellectual Property. The Company relies on a combination of protections
provided under applicable international patent, trademark and trade secret laws.
It also relies on confidentiality, 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. In
addition, the Company's ability to enforce its intellectual property rights
through appropriate legal action has been and will continue to be limited by the
Company's adverse liquidity. There can be no assurances that the Company will be
able to protect the basis of its technologies from discovery by unauthorized
third parties or to preclude unauthorized persons from conducting activities
that infringe on the Company's rights. The Company's adverse liquidity situation
has also impacted its ability to obtain patent protection on its intellectual
property and to maintain protection on previously issued patents. The Company
has been advised by its patent counsel that patent maintenance fees
approximating $20,000 will be due during 2003. The Company has not yet made a
decision on keeping any or all of these patents in force. There can be no
assurances that the Company will be able to continue to prosecute new patents
and maintain issued patents. As a result, the Company's customer and licensee
relationships could be adversely affected and the value of the Company's
technologies and intellectual property (including their value upon a liquidation
of the Company) could be substantially diminished.
12
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
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
99.1 Certificate of Chief Executive Officer and Chief Financial
Officer Pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002.
(b) No Current Reports on Form 8-K have been filed by the Registrant
during the quarter ended March 31, 2003.
13
SIGNATURES
Pursuant to the requirement 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: May 15, 2003 Michael A. Feinstein, M.D.
------------------------------
Michael A. Feinstein, M.D.
Chairman of the Board
DATE: May 15, 2003 Rudolph A. Lutterschmidt
------------------------------
Rudolph A. Lutterschmidt
Vice President & Chief Financial Officer
14