2002 Annual Report
Letter to the Shareholders
The year 2002 marked a return to growth and profitability for the company. For the year, sales were a record $11,797,279, a 10% increase over 2001. Earnings were $359,817 or $.29 per share compared to a loss of $.16 per share in 2001. This growth was led by an increase in sales to Asia and through our PhotoBrasive Systems division.
Equally important as the financial performance is the foundation that was laid for future growth. In December, we changed our name to IKONICS Corporation. This reflects the expansion from our traditional base in the screen printing industry, where the Chromaline brand commands a strong position, into other markets where we are or can become technology and industry leaders.
To date, our other primary market has been abrasive etching, served by our PhotoBrasive Systems Division. In 2000 and 2001 this division was severely hurt by the effects of a patent infringement suit with the Aicello Corporation of Japan. Although the suit was settled in January of 2001, it was not until 2002 that we regained market leadership. Our future in this industry has been strengthened by a recent technology agreement with DuPont Corporation. This agreement gives IKONICS the exclusive worldwide right to manufacture, use and sell Dupont’s RapidMask™ photoresist film in the abrasive etching market. We have distributed RapidMask since February of 2000, and believe that with some product improvements and a lowering of cost, it could become the premier product in this market as well as a means to expand the market. With the assistance of DuPont, we have begun to reformulate RapidMask and I am very optimistic that we will achieve our goal of product improvement. The cost objective has already been substantially met.
In our traditional screen printing market, the Chromaline Screen Print Products Division of IKONICS is planning for significant growth, led by our AccuArt™ Family of inkjet receptive films. Our AccuArt and AccuBlack films are recognized as leadership products for the printing of high contrast waterproof images, photopositives and photonegatives. These films are now joined by AccuMark, which meets the demands of the more price-sensitive user. In 2003 we will be offering multiple formats and prompt delivery of these films.
Through our SplitRock Technologies Division we are actively exploring new markets for our technologies, particularly in the metal engraving industry. We believe that the key technologies are patentable, and see significant market potential particularly in the signage and die-making industry where this technology is unique and, we believe, may offer substantial benefits over the existing methods.
On a geographical basis, we see expanded sales for all our products in Asia and are planning to open a training center in Singapore in the second quarter.
While we are positioning for growth in 2003, the experience of the past two years has made us a leaner and more cost-conscious company. This attention to cost will continue, ensuring that increased revenues get to the bottom line.
For the Board of Directors,
William C. Ulland Chairman, President and CEO