##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ________ to _________
 Commission file number 000-20333
 Nocopi Technologies, Inc.
  Maryland
    
    87-0406496State or other jurisdiction of incorporation or organization
    
    (I.R.S. Employer Identification No.)9C Portland Road, West Conshohocken, PA
    
    19428(Address of principal executive offices)
    
    (Zip Code)
 (610) 834-9600
  Title of each class
    
    Name of each exchange on which registeredNone
    
    Not Applicable
  Common Stock $.01 par value
 (Title of class)
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 
 (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
  DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



NOCOPI TECHNOLOGIES, INC.
TABLE OF CONTENTS
 Item No.
    
    Page No.Part I1. Business
    
    
    11A. Risk Factors
    
    
    71B. Unresolved Staff Comments
    
    
    72. Properties
    
    
    73. Legal Proceedings
    
    
    7Part II5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    86. Selected Financial Data
    
    
    97. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    97A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    168. Financial Statements and Supplementary Data
    
    
    169. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure
    
    
    169A. Controls and Procedures
    
    
    169B. Other Information
    
    
    17Part III10. Directors, Executive Officers and Corporate Governance
    
    
    1711. Executive Compensation
    
    
    1912. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    2113. Certain Relationships and Related Transactions, and Director Independence
    
    
    2214. Principal Accounting Fees and Services
    
    
    23Part IV15. Exhibits, Financial Statement Schedules
    
    
    23Signatures
    
    
    24Exhibit 10.19Exhibit 10.20Exhibit 31.1Exhibit 31.2Exhibit 32.1




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 Background
      1




---



##### Table of Contents



Entertainment and Toy Technologies and Products
    2




---



##### Table of Contents



Anti-Counterfeiting and Anti-Diversion Technologies and Products
     3




---



##### Table of Contents



Document Security Products
     Year Ended December 31Product Type
    
    2009
    
    
    2008Entertainment and Toy Technologies and Products
    
    
    58
    %
    
    
    63
    %Anti-Counterfeiting and Anti-Diversion Technologies and Products
    
    
    37
    %
    
    
    31
    %Document Security Products
    
    
    5
    %
    
    
    6
    %
 Marketing
     4




---



##### Table of Contents



Major Customers
  Manufacturing
   Patents
   5




---



##### Table of Contents



Research and Development
   Competition
     6




---



##### Table of Contents



Contrast Technologies (formerly Euro-Nocopi, S.A.)
  Employees
  Financial Information about Foreign and Domestic Operations
  
 ITEM 1A. RISK FACTORS
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
   7




---



##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  High Bid
    
    
    Low BidJanuary 1, 2008 to March 31, 2008
    
    $
    .61
    
    
    $
    .32April 1, 2008 to June 30, 2008
    
    $
    .47
    
    
    $
    .23July 1, 2008 to September 30, 2008
    
    $
    .35
    
    
    $
    .15October 1, 2008 to December 31, 2008
    
    $
    .16
    
    
    $
    .07January 1, 2009 to March 31, 2009
    
    $
    .15
    
    
    $
    .05April 1, 2009 to June 30, 2009
    
    $
    .09
    
    
    $
    .03July 1, 2009 to September 30, 2009
    
    $
    .20
    
    
    $
    .04October 1, 2009 to December 31, 2009
    
    $
    .16
    
    
    $
    .04January 1, 2010 to March 15, 2010
    
    $
    .12
    
    
    $
    .05
    Recent Sales of Unregistered Securities
   8




---



##### Table of Contents



Issuer Repurchases of Equity Securities
  
 ITEM 6 SELECTED FINANCIAL DATA
  
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Information
 This Form 10-K contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, regarding, among
other things, anticipated improvements in operations, the Companys plans, earnings, cash flow and
expense estimates, strategies and prospects, both business and financial. All statements other than
statements of current or historical fact contained in this report are forward-looking statements.
The words believe, expect, anticipate, should, plan, will, may, intend,
estimate, potential, continue and similar expressions, as they relate to the Company, are
intended to identify forward-looking statements.
   Results of Operations
   9




---



##### Table of Contents



10




---



##### Table of Contents



11




---



##### Table of Contents



Plan of Operation, Liquidity and Capital Resources
  .
     12




---



##### Table of Contents



Risk Factors
  Dependency on Major Customer.
 Possible Inability to Develop New Business
 Inability to Obtain Raw Materials and Products for Resale.
  13




---



##### Table of Contents



Uneven Pattern of Quarterly and Annual Operating Results
 Volatility of Stock Price
 Access to Capital.
 Intellectual Property.
 Economic Conditions
  14




---



##### Table of Contents



Recently Adopted Accounting Pronouncements
    Fair Value Measurements
   The FASB Accounting
Standards Codification,
  Recently Issued Accounting Pronouncements Not Yet Adopted
  Off-Balance Sheet Arrangements
   15




---



##### Table of Contents



ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Internal Control over Financial Reporting
     16




---



##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Michael A. Feinstein, M.D
 W. Ward Carey
 William P. Curtis, Jr.,
 Herman M. Gerwitz
  17




---



##### Table of Contents



Richard Levitt
 Philip B. White
 Rudolph A. Lutterschmidt
  Corporate Governance
   18




---



##### Table of Contents



Audit Committee Financial Expert
  Code of Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
   
 ITEM 11. EXECUTIVE COMPENSATION
  NonqualifiedName
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonequity
    
    
    deferredand
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    incentive plan
    
    
    compensation
    
    
    All otherprincipal
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    awards
    
    
    awards
    
    
    compensation
    
    
    earnings
    
    
    compensation
    
    
    Totalposition
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)Michael A. Feinstein, M.D.Chairman, President and
    
    
    2009
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,000Chief Executive Officer
    
    
    2008
    
    
    
    49,583
    
    
    
    
    
    
    
    
    
    
    
    24,340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,923
   19




---



##### Table of Contents



Option Awards(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)EquityIncomePlanNumber
    
    
    Number
    
    
    AwardsOf
    
    
    Of
    
    
    Number ofSecurities
    
    
    Securities
    
    
    SecuritiesUnderlying
    
    
    Underlying
    
    
    UnderlyingOptions
    
    
    Options
    
    
    Unexercised
    
    
    Option
    
    
    Option(#)
    
    
    (#)
    
    
    Options
    
    
    Exercise
    
    
    ExpirationName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    Price
    
    
    DateMichael A. Feinstein, M.D.
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    $
    .10
    
    
    April 29, 2010Michael A. Feinstein, M.D.
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    $
    .215
    
    
    April 29, 2011Michael A. Feinstein, M.D.
    
    
    100,000
    
    
    
    
    
    
    
    100,000
    
    
    $
    .45
    
    
    April 29, 2013
   Director Compensation
  Feesearned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonqualifiedor
    
    
    
    
    
    
    
    
    
    
    Nonequity
    
    
    deferredpaid in
    
    
    Stock
    
    
    Option
    
    
    incentive plan
    
    
    compensation
    
    
    All othercash
    
    
    awards
    
    
    awards
    
    
    compensation
    
    
    earnings
    
    
    compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)William P. Curtis, Jr.
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Herman M. Gerwitz (1)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Stanley G. Hart (2)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Richard Levitt (3)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Philip B. White (4)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
 (1)
    
    Mr. Gerwitz held 300,000 exercisable stock options at December 31, 2009.(2)
    
    Mr. Hart resigned in September 2009.(3)
    
    Mr. Levitt held 300,000 exercisable stock options at December 31, 2009.(4)
    
    Mr. White held 100,000 exercisable stock options at December 31, 2009.  20




---



##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  Common StockNumberOf SharesBeneficially
    
    
    Percentage ofName of Beneficial Owner
    
    Owned
    
    
    Class (1)5% StockholdersPhilip N. Hudson
P.O. Box 160892
San Antonio, TX 78280-3092 (2)
    
    
    3,962,717
    
    
    
    7.1
    %Westvaco Brand Security, Inc. 
One High Ridge Park
Stamford, CT 06905 (3)
    
    
    3,917,030
    
    
    
    7.0
    %Ross. L Campbell
675 Lewis Lane
Ambler, PA 19002 (4)
    
    
    3,264,457
    
    
    
    5.8
    %Directors and OfficersMichael A Feinstein, M.D. (5)
    
    
    3,331,881
    
    
    
    5.9
    %W. Ward Carey
    
    
    760,000
    
    
    
    1.4
    %William P. Curtis, Jr.
    
    
    457,428
    
    
    
    *Herman M. Gerwitz (6)
    
    
    533,500
    
    
    
    *Richard Levitt (7)
    
    
    550,000
    
    
    
    *Philip B. White (8)
    
    
    222,833
    
    
    
    *All Executive Officers and Directors as a Group (7 individuals) (9)
    
    
    5,906,242
    
    
    
    10.5
    %
 *
    
    Less than 1.0%.(1)
    
    Where the Number of Shares Beneficially Owned (reported in the preceding column)
includes shares which may be purchased upon the exercise of outstanding stock options which
are or within sixty days will become exercisable (presently exercisable options) the
percentage of class reported in this column has been calculated assuming the exercise of
such presently exercisable options.(2)
    
    As reflected in a Schedule 13D dated August 11, 2008 filed on behalf of Philip N.
Hudson and subsequent open market purchases as reported to the Company by Mr. Hudson.(3)
    
    As reflected in a Schedule 13D dated March 14, 2001 filed on behalf of Westvaco Brand
Security, Inc.(4)
    
    As reflected in a Schedule 13D dated April 4, 2005 filed on behalf of Ross L. Campbell.(5)
    
    Includes 656,000 shares held by a pension plan of which Dr. Feinstein is a trustee,
100,000 shares held in an IRA and 300,000 presently exercisable stock options.(6)
    
    Includes 50,000 shares held by a trust on behalf of a child of Mr. Gerwitz, 10,000
shares held by a child of Mr. Gerwitz, 6,000 shared held in an IRA and 300,000 presently
exercisable stock options.(7)
    
    Includes 300,000 presently exercisable stock options.(8)
    
    Includes 100,000 presently exercisable stock options and 50,000 presently exercisable
stock options held by Mr. Whites wife.(9)
    
    Includes 1,100,000 presently exercisable stock options.  21




---



##### Table of Contents



Number of securitiesremaining available forWeighted-average
    
    
    future issuance underNumber of securities to
    
    
    exercise price of
    
    
    equity compensationbe issued upon exercise
    
    
    outstanding options,
    
    
    plans (excludingof outstanding options,
    
    
    warrants and rights
    
    
    securities reflected inPlan Category
    
    warrants and rights
    
    
    compensation plans
    
    
    column (a))(a)
    
    
    (b)
    
    
    (c)Equity Compensation
plans approved by
security holders
    
    
    300,000
    
    
    $
    .22
    
    
    
    -0-Equity Compensation
plans not approved by
security holders (1)
    
    
    1,025,000
    
    
    $
    .24
    
    
    
    -0-Warrants issued in
connection with
short-term loans (2)
    
    
    47,000
    
    
    $
    .23
    
    
    
    -0-Total
    
    
    1,372,000
    
    
    $
    .24
    
    
    
    -0-
 (1)
    
    Registrants 1999 Stock Option Plan was adopted by the Registrants Board of Directors
in February 1999. The Plan provided for the grant of incentive or non-qualified options to
purchase up to 2,000,000 shares of common restricted stock of the Registrant to employees,
directors, consultants and advisors. The Plan was administered by the Board of Directors or
a committee of not less than two board members appointed by the board. The Plan terminated
in February 2009 on the tenth anniversary of its adoption.(2)
    
    Warrants issued in connection with the receipt of $57,000 of short term-notes were
approved by the Board of Directors. In 2008, 10,000 warrants were exercised. The warrants
expire in five years. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
      22




---



##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
  Audit Committee Approval
  
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
   23




---



##### Table of Contents



SIGNATURES
  NOCOPI TECHNOLOGIES, INC.Date: March 31, 2010
    By:
    /s/ Michael A. Feinstein, M.D.Michael A. Feinstein, M.D.Title:
    Chairman of the Board, President and Chief
Executive Officer  Signature
    
    Title
    
    Date/s/ Michael A. Feinstein, M.D.

Michael A. Feinstein, M.D.
    
    Chairman of the Board,
President and Chief
Executive Officer
(Principal Executive
Officer)
    
    March 31, 2010/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt
    
    Vice President, Chief
Financial Officer and
Chief Accounting
Officer (Principal
Financial and Accounting
Officer)
    
    March 31, 2010/s/ W. Ward Carey

W. Ward Carey
    
    Director
    
    March 31, 2010/s/ William P. Curtis, Jr.

William P. Curtis, Jr.
    
    Director
    
    March 31, 2010/s/ Herman M. Gerwitz

Herman M. Gerwitz
    
    Director
    
    March 31, 2010/s/ Richard Levitt

Richard Levitt
    
    Director
    
    March 31, 2010/s/ Philip B. White

Philip B. White
    
    Director
    
    March 31, 2010
  24




---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Balance Sheets as of December 31, 2009 and 2008
    
    
    F-3Statements of Operations for the Years ended
December 31, 2009 and 2008
    
    
    F-4Statement of Stockholders Equity (Deficiency) for
the Years ended December 31, 2009 and 2008
    
    
    F-5Statements of Cash Flows for the Years ended
December 31, 2009 and 2008
    
    
    F-6Notes to Financial Statements
    
    F-7 to F-16
  F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ MORISON COGEN, LLPBala Cynwyd, Pennsylvania
March 31, 2010
  F-2




---



##### Table of Contents



Nocopi Technologies, Inc.
 
 Balance Sheets*
 December 312009
    
    
    2008AssetsCurrent assetsCash and cash equivalents
    
    $
    37,200
    
    
    $
    87,200Accounts receivable less $5,000 allowance for doubtful
accounts
    
    
    140,400
    
    
    
    167,100Inventory
    
    
    66,100
    
    
    
    97,200Prepaid and other
    
    
    35,200
    
    
    
    35,900Total current assets
    
    
    278,900
    
    
    
    387,400Fixed assetsLeasehold improvements
    
    
    72,500
    
    
    
    72,500Furniture, fixtures and equipment
    
    
    184,900
    
    
    
    184,900257,400
    
    
    
    257,400Less: accumulated depreciation and amortization
    
    
    242,200
    
    
    
    233,10015,200
    
    
    
    24,300Total assets
    
    $
    294,100
    
    
    $
    411,700Liabilities and Stockholders Equity (Deficiency)Current liabilitiesLine of credit
    
    $
    100,000
    
    
    
    Accounts payable
    
    
    268,400
    
    
    $
    272,200Accrued expenses
    
    
    106,900
    
    
    
    117,100Deferred revenue
    
    
    13,900
    
    
    
    10,000Total current liabilities
    
    
    489,200
    
    
    
    399,300Commitments and contingenciesStockholders equity (deficiency)Series A preferred stock, $1.00 par valueAuthorized - 300,000 sharesIssued and outstanding  noneCommon stock, $.01 par valueAuthorized - 75,000,000 sharesIssued and outstanding2009 - 54,972,296 shares; 2008 - 52,285,837 shares
    
    
    549,700
    
    
    
    522,900Paid-in capital
    
    
    12,287,400
    
    
    
    12,132,300Accumulated deficit
    
    
    (13,032,200
    )
    
    
    (12,642,800
    )(195,100
    )
    
    
    12,400Total liabilities and stockholders equity (deficiency)
    
    $
    294,100
    
    
    $
    411,700
 *
    
    The accompanying notes are an integral part of these financial statements.  F-3




---



##### Table of Contents



Nocopi Technologies, Inc.
 
 Statements of Operations*
 Years ended December 312009
    
    
    2008RevenuesLicenses, royalties and fees
    
    $
    377,900
    
    
    $
    591,400Product and other sales
    
    
    290,200
    
    
    
    349,900668,100
    
    
    
    941,300Cost of revenuesLicenses, royalties and fees
    
    
    86,400
    
    
    
    90,200Product and other sales
    
    
    239,200
    
    
    
    252,900325,600
    
    
    
    343,100Gross profit
    
    
    342,500
    
    
    
    598,200Operating expensesResearch and development
    
    
    165,900
    
    
    
    166,900Sales and marketing
    
    
    259,200
    
    
    
    246,600General and administrative
    
    
    372,400
    
    
    
    547,000797,500
    
    
    
    960,500Net loss from operations
    
    
    (455,000
    )
    
    
    (362,300
    )Other income (expenses)Reversal of accounts payable and accrued expenses
    
    
    69,100
    
    
    
    91,000Interest income
    
    
    
    
    
    
    2,800Interest expense and bank charges
    
    
    (3,500
    )
    
    
    (2,300
    )65,600
    
    
    
    91,500Net loss before income taxes
    
    
    (389,400
    )
    
    
    (270,800
    )Income taxes
    
    
    
    
    
    
    900Net loss
    
    $
    (389,400
    )
    
    $
    (271,700
    )Basic and diluted net loss per common share
    
    $
    (.01
    )
    
    $
    (.01
    )Basic and diluted weighted average common shares
outstanding
    
    
    53,124,118
    
    
    
    52,282,920
 *
    
    The accompanying notes are an integral part of these financial statements.  F-4




---



##### Table of Contents



Nocopi Technologies, Inc.
 
 Statement of Stockholders Equity (Deficiency)*
 For the Period January 1, 2008 through December 31, 2009
 Common stock
    
    
    Paid-in
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance  January 1, 2008
    
    
    52,275,837
    
    
    $
    522,800
    
    
    $
    12,008,500
    
    
    $
    (12,371,100
    )
    
    $
    160,200Exercise of warrants
    
    
    10,000
    
    
    
    100
    
    
    
    2,100
    
    
    
    
    
    
    
    2,200Stock option compensation
    
    
    
    
    
    
    
    
    
    
    121,700
    
    
    
    
    
    
    
    121,700Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (271,700
    )
    
    
    (271,700
    )Balance  December 31, 2008
    
    
    52,285,837
    
    
    
    522,900
    
    
    
    12,132,300
    
    
    
    (12,642,800
    )
    
    
    12,400Sales of common stock
    
    
    2,686,459
    
    
    
    26,800
    
    
    
    135,200
    
    
    
    
    
    
    
    162,000Stock option compensation
    
    
    
    
    
    
    
    
    
    
    19,900
    
    
    
    
    
    
    
    19,900Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (389,400
    )
    
    
    (389,400
    )Balance  December 31, 2009
    
    
    54,972,296
    
    
    $
    549,700
    
    
    $
    12,287,400
    
    
    $
    (13,032,200
    )
    
    $
    (195,100
    )
 *
    
    The accompanying notes are an integral part of these financial statements.  F-5




---



##### Table of Contents



Nocopi Technologies, Inc.
 
 Statements of Cash Flows*
 Years ended December 312009
    
    
    2008Operating ActivitiesNet loss
    
    $
    (389,400
    )
    
    $
    (271,700
    )Adjustments to reconcile net loss to cash
used in operating activitiesDepreciation and amortization
    
    
    9,100
    
    
    
    12,500Reversal of accounts payable and accrued expenses
    
    
    (69,100
    )
    
    
    (91,000
    )Compensation expense  stock option grants
    
    
    19,900
    
    
    
    121,700(429,500
    )
    
    
    (228,500
    )(Increase) decrease in assetsAccounts receivable
    
    
    26,700
    
    
    
    54,800Inventory
    
    
    31,100
    
    
    
    (4,900
    )Prepaid and other
    
    
    700
    
    
    
    20,300Increase (decrease) in liabilitiesAccounts payable and accrued expenses
    
    
    55,100
    
    
    
    (21,100
    )Accrued income taxes
    
    
    
    
    
    
    (800
    )Deferred revenue
    
    
    3,900
    
    
    
    5,000117,500
    
    
    
    53,300Net cash used in operating activities
    
    
    (312,000
    )
    
    
    (175,200
    )Investing ActivitiesAdditions to fixed assets
    
    
    
    
    
    
    (3,400
    )Net cash used in investing activities
    
    
    
    
    
    
    (3,400
    )Financing ActivitiesNet borrowings under line of credit
    
    
    100,000
    
    
    
    Issuance of common stock
    
    
    162,000
    
    
    
    Exercise of warrants
    
    
    
    
    
    
    2,200Net cash provided by financing activities
    
    
    262,000
    
    
    
    2,200Decrease in cash and cash equivalents
    
    
    (50,000
    )
    
    
    (176,400
    )Cash and cash equivalentsBeginning of year
    
    
    87,200
    
    
    
    263,600End of year
    
    $
    37,200
    
    
    $
    87,200Supplemental Disclosure of Cash Flow InformationCash paid for interest
    
    $
    2,100
    
    
    $
    2,700Cash paid for income taxes
    
    
    
    
    
    $
    2,400Supplemental Disclosure of Non
Cash Investing ActivitiesWrite-off of fully depreciated
furniture, fixtures and equipmentFurniture, fixtures and equipment
    
    
    
    
    
    $
    (327,900
    )Accumulated depreciation
    
    
    
    
    
    $
    327,900
 *
    
    The accompanying notes are an integral part of these financial statements.  F-6




---



##### Table of Contents



NOCOPI TECHNOLOGIES, INC.
 
 NOTES TO FINANCIAL STATEMENTS
 December 31, 2009 and 2008
 1.
    
    Organization of the Company
  2.
    
    Significant Accounting Policies
 Financial Statement Presentation -
 Estimates
 Cash and cash equivalents
 Accounts receivable
 Inventory
 Fixed assets
 Patent costs
  F-7




---



##### Table of Contents



Revenues Revenue Recognition
 Income taxes
 Fair value
 Earnings (loss) per share
 Comprehensive income (loss)
 Recoverability of Long-Lived Assets
  Recently Adopted Accounting Pronouncements
   F-8




---



##### Table of Contents



Fair Value
Measurements
   The FASB Accounting
Standards Codification,
  Recently Issued Accounting Pronouncements Not Yet Adopted
   F-9




---



##### Table of Contents



3.
    
    Going Concern
    4.
    
    Concentration of Credit Risk
   F-10




---



##### Table of Contents



5.
    
    Line of Credit
  6.
    
    Stockholders Equity
  7.
    
    Other Income (Expenses)
  8.
    
    Income Taxes
   F-11




---



##### Table of Contents



9.
    
    Commitments and Contingencies
      10.
    
    Stock Options and401(k)Savings Plan
 Share Based Payment. Share-Based Payment
   F-12




---



##### Table of Contents



Exercise
    
    WeightedNumber of
    
    
    Price Range
    
    AverageShares
    
    
    Per Share
    
    Exercise PriceOutstanding at December 31, 2007
    
    
    1,750,000
    
    
    $.10 to $.22
    
    $
    .16Options granted
    
    
    500,000
    
    
    .45
    
    
    .45Outstanding at December 31, 2008
    
    
    2,250,000
    
    
    .10 to .45
    
    
    .23Options granted
    
    
    325,000
    
    
    .12
    
    
    .12Options canceled
    
    
    1,250,000
    
    
    .10 to .45
    
    
    .19Outstanding at December 31, 2009
    
    
    1,325,000
    
    
    $.10 to $.45
    
    $
    .24
 Exercise
    
    WeightedOption
    
    
    Price Range
    
    AverageShares
    
    
    Per Share
    
    Exercise PriceExercisable at year end:2008
    
    
    1,750,000
    
    
    $.10 to $.22
    
    $
    .162009
    
    
    1,000,000
    
    
    $.10 to $.45
    
    $
    .28Options available for future grant under all plans:2008
    
    
    325,0002009
    
    
    0
  F-13




---



##### Table of Contents



Range of exercise prices
    
    $
    .10 to $.45Number outstanding at
December 31, 2009
    
    
    1,325,000Weighted average remaining contractual life (years)
    
    
    2.43Weighted average exercise price
    
    $
    .24Exercisable options:Number outstanding at
December 31, 2009
    
    
    1,000,000Weighted average remaining contractual life (years)
    
    
    1.87Weighted average exercise price
    
    $
    .28
    F-14




---



##### Table of Contents



11.
    
    Major Customer and Geographic Information
  Year ended December 312009
    
    
    2008Customer A
    
    
    35
    %
    
    
    45
    %Customer B
    
    
    21
    %
    
    
    18
    %Customer C
    
    
    19
    %
    
    
    23
    %
  December 312009
    
    
    2008Customer A
    
    
    59
    %
    
    
    65
    %Customer B
    
    
    13
    %
    
    
    Customer C
    
    
    19
    %
    
    
    28
    %
   Year ended December 312009
    
    
    2008North America
    
    $
    524,600
    
    
    $
    765,300Asia
    
    
    142,600
    
    
    
    174,400Europe
    
    
    900
    
    
    
    1,600$
    668,100
    
    
    $
    941,300
  F-15




---



##### Table of Contents



12.
    
    Subsequent Events
   F-16




---



##### Table of Contents



Exhibit Index
  ExhibitNumber
    
    Description3.1
    
    
    Amended and Restated Articles of Incorporation (15)3.2
    
    
    Amended and Restated Bylaws (15)4.1
    
    
    Form of Certificate of Common Stock (11)10.1
    
    
    Summary Plan Description for Nocopi Technologies, Inc. 401(k)
Profit Sharing Plan (1)10.2
    
    
    Nocopi Technologies, Inc. 1996 Stock Option Plan (2)10.3
    
    
    Nocopi Technologies, Inc. 1999 Stock Option Plan (3)10.4
    
    
    Amended Summary Plan Description for Nocopi Technologies, Inc. 401(k) Profit Sharing Plan (3)10.5
    
    
    Director Indemnification Agreement (4)10.6
    
    
    Officer Indemnification Agreement (4)10.7
    
    
    Stock Purchase Agreement with Westvaco Brand Security, Inc. (5)10.8
    
    
    Registration Rights Agreement with Westvaco Brand Security, Inc. (5)10.9
    
    
    Subscription Agreement with Entrevest I Associates (6)10.10
    
    

Lease
Agreement dated March 19, 2003 relating to premises at 9 Portland Road, West Conshohocken, PA 19428 (6)10.11
    
    
    Settlement Agreement with Euro-Nocopi, S.A. (7)10.12
    
    
    Agreement of Terms with Entrevest I Associates (8)10.13
    
    
    Conversion Agreement (9)10.14
    
    
    Patent License Agreement with Giddy Up, LLC and Color Loco, LLC (12)10.15
    
    
    Addendum #1 to Patent License Agreement with Giddy Up, LLC and Color Loco, LLC (12)10.16
    
    
    Amendment dated July 18, 2007 to Lease Agreement dated March 19, 2003
relating to premises at 9 Portland Road, West Conshohocken, PA 19428 (13)10.17
    
    
    Employment Agreement with Michael A. Feinstein, M.D. (14)10.18
    
    
    Business Loan Agreement, Promissory Note and Commercial Security Agreement
dated August 19, 2008 between the Company and Sovereign Bank (15)10.19
    *
    
    Amended Summary Plan Description for Nocopi Technologies, Inc. 401(k) Profit
Sharing Plan10.20
    *
    
    Patent License Agreement with Elmers Products, Inc.




---



##### Table of Contents



ExhibitNumber
    
    Description14.1
    
    
    Code of Ethics (10)31.1
    *
    
    Certification of Chief Financial Officer required by Rule 13a-14(a)31.2
    *
    
    Certification of Chief Executive Officer required by Rule 13a-14(a)32.1
    *
    
    Certifications of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 *
    
    Exhibit filed with this Report.
    
    Compensation plans and arrangements for executives and others.(1)
    
    Incorporated by reference to Registrants Annual Report on Form 10-K for the Year Ended
December 31, 1993(2)
    
    Incorporated by reference to Registrants Annual Report on Form 10-K for the Year Ended
December 31, 1996(3)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 1998(4)
    
    Incorporated by reference to Registrants Quarterly Report on Form 10-QSB for the Three
Months Ended September 30, 1999(5)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 2000(6)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 2002(7)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 2003(8)
    
    Incorporated by reference to Registrants Current Report on Form 8-K filed with the
Commission on September 16, 2004(9)
    
    Incorporated by reference to Registrants Quarterly Report on Form 10-QSB for the Three
Months Ended September 30, 2004(10)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 2004(11)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 2005(12)
    
    Incorporated by reference to Registrants Annual Report on Form 10-KSB for the Year Ended
December 31, 2006(13)
    
    Incorporated by reference to Registrants Quarterly Report on Form 10-QSB for the Three
Months Ended September 30, 2007(14)
    
    Incorporated by reference to Registrants Quarterly Report on Form 10-Q for the Three Months
Ended June 30, 2008(15)
    
    Incorporated by reference to Registrants Quarterly Report on Form 10-Q for the Three Months
Ended September 30, 2008