##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year endedDecember 31, 2008
 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
  
  
  o þ
 o þ
 þ 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
    
    
    74.
    
    Submission of Matters to a Vote of Security Holders
    
    
    7Part II5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    76.
    
    Selected Financial Data
    
    
    87.
    
    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
    
    
    2314.
    
    Principal Accounting Fees and Services
    
    
    24Part IV15.
    
    Exhibits, Financial Statement Schedules
    
    
    24Signatures
    
    
    25




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 Background
     1




---



##### Table of Contents



Entertainment and Toy Technologies and Products
   Anti-Counterfeiting and Anti-Diversion Technologies and Products
   2




---



##### Table of Contents



Document Security Products
   3




---



##### Table of Contents



Year Ended December 31Product Type
    
    2008
    
    2007Entertainment and Toy Technologies and Products
    
    
    63
    %
    
    
    72
    %Anti-Counterfeiting and Anti-Diversion Technologies and Products
    
    
    31
    %
    
    
    22
    %Document Security Products
    
    
    6
    %
    
    
    6
    %
 Marketing
       4




---



##### Table of Contents



Major Customers
  Manufacturing
   Patents
      5




---



##### Table of Contents



Research and Development
   Competition
       Contrast Technologies (formerly Euro-Nocopi, S.A.)
  6




---



##### Table of Contents



Employees
  Financial Information about Foreign and Domestic Operations
  
 ITEM 1A. RISK FACTORS
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
  7




---



##### Table of Contents



High Bid
    
    Low BidJanuary 1, 2007 to March 31, 2007
    
    $
    .87
    
    
    $
    .45April 1, 2007 to June 30, 2007
    
    $
    .76
    
    
    $
    .51July 1, 2007 to September 30, 2007
    
    $
    .66
    
    
    $
    .38October 1, 2007 to December 31, 2007
    
    $
    .78
    
    
    $
    .40January 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 13, 2009
    
    $
    .11
    
    
    $
    .06
    Recent Sales of Unregistered Securities
  Issuer Repurchases of Equity Securities
  
 ITEM 6 SELECTED FINANCIAL DATA
  8




---



##### Table of Contents



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



Plan of Operation, Liquidity and Capital Resources
   11




---



##### Table of Contents



Risk Factors
  Dependency on Major Customer.
 12




---



##### Table of Contents



Possible Inability to Develop New Business
 Inability to Obtain Raw Materials and Products for Resale.
 Uneven Pattern of Quarterly and Annual Operating Results
 Volatility of Stock Price
 Access to Capital.
 13




---



##### Table of Contents



Intellectual Property.
 Economic Conditions
 Recently Adopted Accounting Pronouncements
     14




---



##### Table of Contents



Recently Issued Accounting Pronouncements Not Yet Adopted
           15




---



##### Table of Contents



Off-Balance Sheet Arrangements
  
 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
  16




---



##### Table of Contents



Internal Control over Financial Reporting
   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
 William P. Curtis, Jr.,
 17




---



##### Table of Contents



Herman M. Gerwitz
 Stanley G. Hart
 Richard Levitt
 Philip B. White
 Rudolph A. Lutterschmidt
 18




---



##### Table of Contents



Terry W. Stovold
  Corporate Governance
  Audit Committee Financial Expert
  Code of Ethics
  Section 16(a) Beneficial Ownership Reporting Compliance
    
 ITEM 11. EXECUTIVE COMPENSATION
  19




---



##### Table of Contents



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
    
    
    2008
    
    
    
    49,583
    
    
    
    
    
    
    
    
    
    
    
    24,340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,923Chief Executive Officer
    
    
    2007Terry W. StovoldDirector of Worldwide
    
    
    2008
    
    
    
    36,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    81,233
    (1)
    
    
    117,233Technical Sales
    
    
    2007
    
    
    
    36,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,657
    (1)
    
    
    158,657
 
 (1)
    
    Sales commissions
   OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-ENDOption Awards(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)EquityIncomeNumber
    
    Number
    
    PlanOf
    
    Of
    
    AwardsSecurities
    
    Securities
    
    Number of SecuritiesUnderlying
    
    Underlying
    
    UnderlyingOptions
    
    Options
    
    Unexercised
    
    Option
    
    Option(#)
    
    (#)
    
    Options
    
    Exercise
    
    ExpirationName
    
    Exercisable
    
    Unexercisable
    
    (#)
    
    Price
    
    DateMichael A.
Feinstein, M.D.
    
    
    150,000
    
    
    
    
    
    
    
    150,000
    
    
    $
    .17
    
    
    April 29, 2009Michael 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, 2013Terry W. Stovold
    
    
    0
    
    
    
    
    
    
    
    0
 20




---



##### Table of Contents



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
    
    
    
    24,340
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    24,340Stanley G. Hart (2)
    
    
    0
    
    
    
    0
    
    
    
    24,340
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    24,340Richard Levitt (3)
    
    
    0
    
    
    
    0
    
    
    
    24,340
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    24,340Philip B. White (4)
    
    
    0
    
    
    
    0
    
    
    
    24,340
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    24,340
 
 At December 31, 2008:(1)
    
    Mr. Gerwitz held 200,000 exercisable stock options and 100,000 non-exercisable stock options.(2)
    
    Mr. Hart held 350,000 exercisable stock options and 100,000 non-exercisable stock options.(3)
    
    Mr. Levitt held 350,000 exercisable stock options and 100,000 non-exercisable stock options.(4)
    
    Mr. White held 150,000 exercisable stock options and 100,000 non-exercisable stock options.
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  21




---



##### Table of Contents



Common StockNumberOf SharesBeneficially
    
    Percentage ofName of Beneficial Owner
    
    Owned
    
    Class (1)5% StockholdersWestvaco Brand Security, Inc. (2)
One High Ridge Park
Stamford, CT 06905
    
    
    3,917,030
    
    
    
    7.2
    %Philip N. Hudson
P.O. Box 160892
San Antonio, TX 78280-3092 (3)
    
    
    3,777,777
    
    
    
    6.9
    %Ross. L Campbell
675 Lewis Lane
Ambler, PA 19002 (4)
    
    
    3,264,457
    
    
    
    6.0
    %Directors, Officers and Named ExecutiveMichael A Feinstein, M.D. (5)
    
    
    3,387,281
    
    
    
    6.2
    %Willian P. Curtis, Jr
    
    
    197,011
    
    
    
    *Herman M. Gerwitz (6)
    
    
    498,500
    
    
    
    *Stanley G. Hart (7)
    
    
    450,000
    
    
    
    *Richard Levitt (8)
    
    
    700,000
    
    
    
    1.3
    %Philip B. White (9)
    
    
    472,833
    
    
    
    *Terry W. Stovold
    
    
    0
    
    
    
    *All Executive Officers and Directors as a Group (7 individuals) (10)
    
    
    5,806,225
    
    
    
    10.7
    %
 
 *
    
    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 March 14, 2001 filed on behalf of Westvaco Brand
Security, Inc.(3)
    
    As reflected in a Schedule 13D dated August 11, 2008 filed on behalf of Philip N.
Hudson.(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 450,000 presently exercisable stock options.(6)
    
    Includes 50,000 shares held by a trust on behalf of a child of Mr. Gerwitz, 6,000
shared held in an IRA and 300,000 presently exercisable stock options.(7)
    
    Includes 450,000 presently exercisable stock options.(8)
    
    Includes 450,000 presently exercisable stock options.(9)
    
    Includes 250,000 presently exercisable stock options and 150,000 presently exercisable
stock options held by Mr. Whites wife.(10)
    
    Includes 2,150,000 presently exercisable stock options.
 22




---



##### 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
    
    
    575,000
    
    
    $
    .20
    
    
    
    -0-Equity Compensation
plans not approved
by security holders
(1)
    
    
    1,675,000
    
    
    $
    .24
    
    
    
    325,000Warrants issued in
connection with
short-term loans
(2)
    
    
    47,000
    
    
    $
    .23
    
    
    
    -0-Total
    
    
    2,297,000
    
    
    $
    .23
    
    
    
    325,000
 
 (1)
    
    Registrants 1999 Stock Option Plan was adopted by the Registrants Board of Directors
in February 1999. The Plan provides 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 is administered by the Board of Directors or
a committee of not less than two board members appointed by the board and terminates 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
      23




---



##### 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
  24




---



##### Table of Contents



SIGNATURES
  NOCOPI TECHNOLOGIES, INC.Date: March 31, 2009
    
    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, 2009/s/ Rudolph A. Lutterschmidt

Rudolph A. Lutterschmidt
    
    Vice President, Chief
Financial Officer and
Chief Accounting
Officer (Principal

Financial and
Accounting Officer)
    
    March 31, 2009/s/ William P. Curtis, Jr.

William P. Curtis, Jr.
    
    Director
    
    March 31, 2009/s/ Herman M. Gerwitz

Herman M. Gerwitz
    
    Director
    
    March 31, 2009/s/ Stanley G. Hart

Stanley G. Hart
    
    Director
    
    March 31, 2009/s/ Richard Levitt

Richard Levitt
    
    Director
    
    March 31, 2009/s/ Philip B. White

Philip B. White
    
    Director
    
    March 31, 2009
 25




---



##### Table of Contents



INDEX TO FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Balance Sheets as of December 31, 2008 and 2007
    
    
    F-3Statements of Operations for the Years ended
December 31, 2008 and 2007
    
    
    F-4Statements of Stockholders Equity (Deficiency) for
the Years ended December 31, 2008 and 2007
    
    
    F-5Statements of Cash Flows for the Years ended
December 31, 2008 and 2007
    
    
    F-6Notes to Financial Statements
    
    F-7 to F-17
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ MORISON COGEN, LLP
 
 F-2




---



##### Table of Contents



Nocopi Technologies, Inc.
 
 Balance Sheets*
 December 312008
    
    2007AssetsCurrent assetsCash and cash equivalents
    
    $
    87,200
    
    
    $
    263,600Accounts receivable less $5,000 allowance for doubtful
accounts
    
    
    167,100
    
    
    
    221,900Inventory
    
    
    97,200
    
    
    
    92,300Prepaid and other
    
    
    35,900
    
    
    
    56,200Total current assets
    
    
    387,400
    
    
    
    634,000Fixed assetsLeasehold improvements
    
    
    72,500
    
    
    
    72,500Furniture, fixtures and equipment
    
    
    184,900
    
    
    
    509,400257,400
    
    
    
    581,900Less: accumulated depreciation and amortization
    
    
    233,100
    
    
    
    548,50024,300
    
    
    
    33,400Total assets
    
    $
    411,700
    
    
    $
    667,400Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    272,200
    
    
    $
    364,200Accrued expenses
    
    
    117,100
    
    
    
    137,200Accrued income taxes
    
    
    
    
    
    
    800Deferred revenue
    
    
    10,000
    
    
    
    5,000Total current liabilities
    
    
    399,300
    
    
    
    507,200Commitments and contingenciesStockholders equitySeries A preferred stock, $1.00 par valueAuthorized - 300,000 sharesIssued and outstanding  noneCommon stock, $.01 par valueAuthorized - 75,000,000 sharesIssued and outstanding2008 - 52,285,837 shares; 2007 - 52,275,837 shares
    
    
    522,900
    
    
    
    522,800Paid-in capital
    
    
    12,132,300
    
    
    
    12,008,500Accumulated deficit
    
    
    (12,642,800
    )
    
    
    (12,371,100
    )12,400
    
    
    
    160,200Total liabilities and stockholders equity
    
    $
    411,700
    
    
    $
    667,400
 
 *
    
    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 312008
    
    
    2007RevenuesLicenses, royalties and fees
    
    $
    591,400
    
    
    $
    512,000Product and other sales
    
    
    349,900
    
    
    
    881,800941,300
    
    
    
    1,393,800Cost of revenuesLicenses, royalties and fees
    
    
    90,200
    
    
    
    106,100Product and other sales
    
    
    252,900
    
    
    
    442,400343,100
    
    
    
    548,500Gross profit
    
    
    598,200
    
    
    
    845,300Operating expensesResearch and development
    
    
    166,900
    
    
    
    164,600Sales and marketing
    
    
    246,600
    
    
    
    241,600General and administrative
    
    
    547,000
    
    
    
    227,700960,500
    
    
    
    633,900Net income (loss) from operations
    
    
    (362,300
    )
    
    
    211,400Other income (expenses)Reversal of accounts payable and accrued expenses
    
    
    91,000
    
    
    
    175,900Interest income
    
    
    2,800
    
    
    
    6,200Interest expense and bank charges
    
    
    (2,300
    )
    
    
    (6,700
    )91,500
    
    
    
    175,400Net income (loss) before income taxes
    
    
    (270,800
    )
    
    
    386,800Income taxes
    
    
    900
    
    
    
    800Net income (loss)
    
    $
    (271,700
    )
    
    $
    386,000Net income (loss) per common shareBasic
    
    $
    (.01
    )
    
    $
    .01Diluted
    
    $
    (.01
    )
    
    $
    .01Weighted average common shares outstandingBasic
    
    
    52,282,920
    
    
    
    52,078,349Diluted
    
    
    52,282,920
    
    
    
    53,392,882
 
 *
    
    The accompanying notes are an integral part of these financial statements. F-4




---



##### Table of Contents



Nocopi Technologies, Inc.
 
 Statements of Stockholders Equity (Deficiency)*
 For the Period January 1, 2007 through December 31, 2008
 Common stock
    
    
    Paid-in
    
    
    AccumulatedShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance  January 1, 2007
    
    
    51,686,811
    
    
    $
    516,900
    
    
    $
    11,731,700
    
    
    $
    (12,757,100
    )
    
    $
    (508,500
    )Sales of common stock
    
    
    589,026
    
    
    
    5,900
    
    
    
    276,800
    
    
    
    
    
    
    
    282,700Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    386,000
    
    
    
    386,000Balance  December 31, 2007
    
    
    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
    )
    
    $
    12,400
 
 *
    
    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 312008
    
    
    2007Operating ActivitiesNet income (loss)
    
    
    ($271,700
    )
    
    $
    386,000Adjustments to reconcile net income (loss) to cash
provided by (used in) operating activitiesDepreciation and amortization
    
    
    12,500
    
    
    
    20,000Decrease in allowance for doubtful accounts
    
    
    
    
    
    
    (15,000
    )Reversal of accounts payable and accrued expenses
    
    
    (91,000
    )
    
    
    (175,900
    )Compensation expense  stock option grants
    
    
    121,700
    
    
    
    (228,500
    )
    
    
    215,100(Increase) decrease in assetsAccounts receivable
    
    
    54,800
    
    
    
    (114,900
    )Arbitration settlement receivable
    
    
    
    
    
    
    50,000Inventory
    
    
    (4,900
    )
    
    
    (34,000
    )Prepaid and other
    
    
    20,300
    
    
    
    (31,400
    )Increase (decrease) in liabilitiesAccounts payable and accrued expenses
    
    
    (21,100
    )
    
    
    (28,700
    )Accrued income taxes
    
    
    (800
    )
    
    
    800Deferred revenue
    
    
    5,000
    
    
    
    (800
    )53,300
    
    
    
    (159,000
    )Net cash provided by (used in) operating activities
    
    
    (175,200
    )
    
    
    56,100Investing ActivitiesAdditions to fixed assets
    
    
    (3,400
    )
    
    
    (29,300
    )Net cash used in investing activities
    
    
    (3,400
    )
    
    
    (29,300
    )Financing ActivitiesExercise of warrants
    
    
    2,200
    
    
    
    Issuance of common stock
    
    
    
    
    
    
    282,700Proceeds from demand and other loans
    
    
    
    
    
    
    7,000Demand and other loan repayments
    
    
    
    
    
    
    (106,000
    )Net cash provided by financing activities
    
    
    2,200
    
    
    
    183,700Increase (decrease) in cash and cash equivalents
    
    
    (176,400
    )
    
    
    210,500Cash and cash equivalentsBeginning of year
    
    
    263,600
    
    
    
    53,100End of year
    
    $
    87,200
    
    
    $
    263,600Supplemental Disclosure of Cash Flow InformationCash paid for interest
    
    $
    2,700
    
    
    $
    5,500Cash paid for income taxes
    
    $
    2,400
    
    
    
    Supplemental 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, 2008 and 2007
 1. Organization of the Company
  2. Significant Accounting Policies
 Financial Statement Presentation 
 Estimates
 Cash and cash equivalents
 Accounts receivable
 Inventory
 Fixed assets
 F-7




---



##### Table of Contents



Patent costs
 Revenues Revenue Recognition
 Income taxes
 Fair value
 Earnings (loss) per share
 2008
    
    2007Basic shares outstanding
    
    
    52,282,920
    
    
    
    52,078,349Incremental shares from
assumed conversion of
stock options and warrants
    
    
    
    
    
    
    1,314,533Diluted shares outstanding
    
    
    52,282,920
    
    
    
    53,392,882
 Comprehensive income (loss)
 Recoverability of Long-Lived Assets
  F-8




---



##### Table of Contents



Recently Adopted Accounting Pronouncements
       F-9




---



##### Table of Contents



Recently Issued Accounting Pronouncements Not Yet Adopted
           F-10




---



##### Table of Contents



3. Going Concern
  F-11




---



##### Table of Contents



4 Concentration of Credit Risk
  5. Line of Credit
  6. Demand and Other Short-Term Loans
  F-12




---



##### Table of Contents



7. Stockholders Equity
  8. Other Income (Expenses)
  9. Income Taxes
   F-13




---



##### Table of Contents



10. Commitments and Contingencies
      11. Stock Options and 401(k) Savings Plan
     F-14




---



##### Table of Contents



Exercise
    
    
    WeightedNumber of
    
    
    Price Range
    
    
    AverageShares
    
    
    Per Share
    
    
    Exercise PriceOutstanding at December 31, 2006 and 2007
    
    
    1,750,000
    
    
    $
    .10 to $.22
    
    
    
    .16Options granted
    
    
    500,000
    
    
    
    .45
    
    
    
    .45Outstanding at December 31, 2008
    
    
    2,250,000
    
    
    $
    .10 to $.45
    
    
    $
    .23
 Exercise
    
    WeightedOption
    
    Price Range
    
    AverageShares
    
    Per Share
    
    Exercise PriceExercisable at year end:2007 and 2008
    
    
    1,750,000
    
    
    $
    .10 to $.22
    
    
    $
    .16Options available for future grant under all plans:2007
    
    
    825,0002008
    
    
    325,000
  Range of exercise prices
    
    $
    .10 to $.45Number outstanding at
December 31, 2008
    
    
    2,250,000Weighted average remaining contractual life (years)
    
    
    1.77Weighted average exercise price
    
    $
    .23Exercisable options:Number outstanding at
December 31, 2008
    
    
    1,750,000Weighted average remaining contractual life (years)
    
    
    1.04Weighted average exercise price
    
    $
    .16
 F-15




---



##### Table of Contents



12. Major Customer and Geographic Information
  Year ended December 312008
    
    2007Customer A
    
    
    45
    %
    
    
    47
    %Customer B
    
    
    23
    %
    
    
    15
    %Customer C
    
    
    18
    %
    
    
    24
    %
  December 312008
    
    2007Customer A
    
    
    65
    %
    
    
    68
    %Customer B
    
    
    28
    %
    
    
    22
    %Customer C
    
    
    
    
    
    
    10
    %
  F-16




---



##### Table of Contents



Year ended December 312008
    
    
    2007North America
    
    $
    765,300
    
    
    $
    1,054,500Asia
    
    
    174,400
    
    
    
    330,200Europe
    
    
    1,600
    
    
    
    8,300Australia and New Zealand
    
    
    
    
    
    
    800$
    941,300
    
    
    $
    1,393,800
 13. Subsequent Events
   F-17




---



##### 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)14.1
    
    Code of Ethics (10)31.1*
    
    Certification of Chief Financial Officer required by Rule 13a-14(a)




---



##### Table of Contents



ExhibitNumber
    
    Description31.2*
    
    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