2004 2nd Quarter Report
To Our Stockholders:
We are pleased to announce a second consecutive quarter of record sales. Sales for the second quarter of 2004 were $3,683,000, a 16.5% increase over the second quarter of 2003. Earnings were $274,413, or $0.14 per share, a 75% increase over the comparable quarter. The second quarter of 2003 was negatively impacted by a $75,000 write down of an investment and positively by a $42,000 tax refund.
For the first six months of 2004, sales are 18% ahead of the 2003 period and earnings are up by 134% to $0.22 per share. During the quarter, IKONICS affected a 3 for 2 stock split and the above earnings are adjusted for the new number of shares.
As was true in the first quarter,strong sales growth was experienced in all product groups and geographical markets. The company’s current financial structure of generally high margin products and relatively high fixed costs results in accelerating earnings as sales grow. The second half of 2004 will see a number of significant new product launches, which we believe will further broaden our market base.
The first of these is SignEtch, a system that will enable the customer to make a broad array of high quality sign products with an investment in equipment of about $7,000.
This also marks the commercial introduction of IKONMetals, our unique etchable metal composite.In addition to IKONMetals, the etchable signage materials will include anodized aluminum, painted metals, a proprietary resin-fiberglass, polished stone, and glass. Most of these couple with our newly introduced RapidMask High Tack photoresist film which makes the process fast and simple and our CrystalBlast cabinet which provides clean and quiet operation. IKONICS will primarily benefit from the ongoing sales of consumable photoresist films and etchable substrates,although we also sell the equipment.We are targeting SignEtch technology at new entries into the large domestic retail signage industry and in-house sign making operations.
On August 12th, Corel and IKONICS jointly launched a graphics software package that combines CorelDRAW Graphics Suite 12 with a halftone wizard developed by IKONICS. This package is designed to facilitate the creation of etched halftone photographic images using IKONICS’ RapidMask High Definition film. We believe this technology has application to the studio photography,signage,awards and architectural markets.
As with SignEtch, CorelDRAW Graphics Suite 12/Half-Wiz solution is part of our strategy to bring our proprietary RapidMask technology to new markets and to provide the customer with more product offerings.
For the Board of Directors,
William C.Ulland Chairman, President & CEO