Nocopi Technologies, Inc. is a Maryland corporation organized in 1983 that currently
develops and markets specialty reactive inks that it believes have applications
in the large educational and toy products market. Company also develops and
markets technologies for document and product authentication which it believes
can reduce losses caused by fraudulent document reproduction or by product counterfeiting
and/or diversion. Company derives its revenues primarily from licensing its
technologies on an exclusive or non-exclusive basis to licensees who incorporate
the technologies into their product offering and from selling products incorporating
its technologies to the licensees or to their licensed printers.
Company’s technology for the entertainment and toy products market
consists of removable dyes that can be produced in a variety of colors and can
be revealed by rubbing with a fingernail or other firm object such as a plastic
pen cap. This technology, introduced in 2004, has been named Rub-it & Color.
Company believes that this technology does not compromise the confidentiality
of its security and authentication technologies whose chemistry is similar but
the specific formulations are different for each application. Applications include
children’s activity products such as coloring books without crayons or
restaurant place mats, educational instruction books and testing review manuals.
Company has obtained certifications of non-toxicity from the Consumer Products
Services, Inc. and the American Society for Testing and Materials Laboratories.
Since January 2012, Company has had a license agreement, expiring in 2017,
with a licensee who has a significant presence in the entertainment and toy
products market which permits this licensee to exclusively market (1) a specific
line of products incorporating Company’s technologies through a specific
distribution channel but permitting Company to license the covered technologies
to others (including Bendon, Inc., as noted below) for applications and sale
through channels of distribution not available to this licensee under the terms
of the license and (2) since January 2013, an additional technology on an exclusive
basis in certain geographic areas of the world and on a non-exclusive basis
in other geographic areas of the world.
Company has a license agreement, expiring in 2019, containing guaranteed
minimum royalties over the term of the license, with Bendon, Inc. (Bendon),
an international, well-known children’s coloring and activity book publishing
company that permits Bendon to exclusively market products with other characteristics
that incorporate Company’s technologies through a distinctly different
channel of distribution. The new four-year license agreement with Bendon was
completed.in June 2015, replacing a previous three-year license agreement.
These two licensees are well known and highly regarded participants in the
entertainment and toy products market with significant market recognition and
retail distribution. These two licensees have been distributing products incorporating
Company’s technologies for more than three years. Since the inception
of these licenses, sales of ink to the licensed printer of the licensees have
been increasing. The agreements with both licensees contain renewal options
but there can be no assurances that the licenses will continue in force at the
same or more favorable terms beyond their current termination dates nor can
there be any assurances that the relationships with these two licensees will
generate significant additional operating revenues for Company in the future.
Since March 2011, Company has had a license agreement with a privately-held
designer of creative educational products for children granting the licensee
the exclusive right to utilize Company’s Rub-it & Color ink technology
in a newly-created vertical market in the United States. In addition to an annual
license fee, Company receives a royalty based on units of product produced.
The license was renewed in July 2014 for a period of up to three years. There
can be no assurances that the marketing efforts of Company’s licensee
will generate significant additional operating revenues for the Company in
the future.
Since November 2012, Company has had a license agreement with a privately-held
children’s meal entertainment program provider that allows the licensee
to use Company’s Rub-it & Color ink technology in children’s
menus, placemats, butcher paper and certain other products for restaurant use
and for sale in certain children’s retail outlets. In December 2014, the
license was renewed for a period of six years, expiring in December 2020. There
can be no assurances that the marketing efforts of Company’s licensee
will generate significant additional operating revenues for the Company in
the future.
Continuing developments in copying and printing technologies have made it ever
easier to counterfeit a wide variety of documents. Product labels and packaging,
retail receipts, event and transportation tickets and the like are all susceptible
to counterfeiting, and Company believes that losses from such counterfeiting
have increased substantially with improvements in the copying and printing technologies.
Product counterfeiting has long caused losses to manufacturers of brand name
products, and Company believes these losses have increased as the counterfeiting
of labeling and packaging has become easier.
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