NOCOPI TECHNOLOGIES INC. - Annual Report Guide

I’ve put together this plain-English guide to help you understand Nocopi Technologies’ performance. My goal is to break down their latest filing so you can decide if this company fits your investment goals.

1. What does this company do?

Nocopi specializes in high-tech, specialty inks. They don’t make standard printer ink. Instead, they focus on:

• Fun & Games: Their "Rub-it & Color" technology is used in children’s books and activity kits. It is non-toxic and reveals colors when rubbed.
• Security: They create invisible inks to prevent counterfeiting. This helps companies prove their products, receipts, or documents are authentic.
• Business Model: Nocopi licenses its technology and manufactures ink. They earn money by selling their unique formulas and collecting royalties from companies that use their patents in consumer products.

2. How did they perform this year?

The company relies heavily on the toy and entertainment industry. In 2025, 84% of their total revenue came from this sector. While toys remain their primary engine, their security business is growing, rising to 16% of revenue in 2025.

A major point for investors: 61% of their revenue comes from outside the U.S., even though they manufacture everything in Pennsylvania. This creates risk because changes in foreign currency values against the U.S. Dollar directly impact their profit margins.

3. Major wins and challenges

• The "Two-Customer" Trap: This is the biggest risk. In 2025, just two customers accounted for 80% of total revenue. Even more concerning, 93% of the money owed to the company comes from these same two partners. If one stops using Nocopi’s ink, it would be a massive blow to the company’s survival.
• Small but Mighty: They have only seven full-time employees. This keeps costs low, but it also means they have limited resources to find new customers or speed up research for new products.
• Patent Protection: Their global patents act as their competitive advantage. However, they must pay annual fees to keep these patents active. They regularly drop patents that aren't providing enough value to save on these recurring costs.

4. Financial health and strategy

The company is exploring growth through potential acquisitions. If they do find a company to buy, they might borrow money or issue more shares, which could reduce your ownership percentage. They also spent $180,000 on research and development this year, showing they are committed to staying ahead in the security ink market.

5. The Bottom Line

Nocopi is a very small company with a highly concentrated customer base. They are essentially a bet on two major partners. While they are trying to diversify, their success depends on license agreements that expire in 2027 and 2028. If they fail to renew these, they could lose most of their revenue.

Investor Checklist:

• Are you comfortable with high concentration risk? If you are looking for a diversified portfolio, this company’s reliance on two customers may be a red flag.
• Are you looking for long-term stability? The upcoming expiration of key license agreements makes this a high-stakes play over the next few years.
• Do you believe in their niche? If you see significant growth potential in their security ink technology, you may find their current valuation attractive despite the risks.