2013 1st Quarter Report

DULUTH, MN – IKONICS Corporation (NASDAQ:IKNX), a Duluth based imaging technology company, announced record first quarter sales in 2013 of $4,022,000, slightly higher than last year’s record first quarter sales of $4,010,000. The company posted a loss of $88,000 or $0.04 per share in the first quarter of 2013 compared with a loss of $62,000, $0.03 per share, for the corresponding quarter in 2012.

Bill Ulland, IKONICS CEO, said that although sales set a record for the quarter, earnings were down, reflecting investments in the Company’s new technologies and the cyclical nature of first quarter sales to our traditional customers.

“We believe we are on a path for significant growth, particularly with our composite machining technology,” Ulland said. “In the first quarter of 2011 we had one account for composite machining. Last year in the first quarter the number of accounts stood at three. Today, we have thirteen.”

Ulland added: “For the most part, these accounts represent the use of our technology for sound deadening in commercial aircraft. We have expanded our business model to include the machining of composite parts, in addition to selling masks for use in machining by the customer. Consequently, we are substantially increasing our machining capabilities and have strengthened our intellectual property position through patent applications and the protection of trade secrets.

“In addition to our focus on sound deadening, we recently announced an exciting project with Lockheed Martin for the machining of ceramic matrix composites (CMC). We are seeing additional interest in this application of our technology from other companies. In the aerospace industry, CMC is projected to replace metal, thereby reducing weight and improving performance in a new generation of jet engines as indicated in this educational video produced by General Electric:

“While composite machining is a major opportunity for IKONICS, aerospace programs are slow to develop and ramp-up to full production can take years. In the second half of 2013 we anticipate sales to increase significantly leading to major production in 2014 and beyond. As the aerospace industry replaces its aging commercial fleet with aircraft using a far greater percentage of composites, we believe we are well positioned to grow within this industry.

“Our Digital Texturing business is also beginning to reach its potential. The technology is currently in use in Europe and North America on mold texturing projects for major German and Japanese automakers, and our unique prototyping capability is helping to drive these sales. “Our traditional businesses are also healthy. Chromaline Screen Print Products is being boosted by our Alpha line of products aimed at the electronics/touch panel industry and a new film product is being very well received in Asia.”

 

IKONICS Corporation

 

CONDENSED STATEMENTS OF OPERATIONS (unaudited)

For the Three Months Ended March 31, 2013 and 2012

                                                           

                                                                                          Three Months Ended                        

                                                                                               3/31/13              3/31/12         

  

Net Sales                                                                       $4,022,272         $4,009,624

 

Cost of Goods Sold                                                          2,558,013          2,504,064

 

Gross Profit                                                                     1,464,259          1,505,560

 

Operating expenses                                                          1,638,061          1,601,911

 

Loss from operations                                                         (173,802)              (96,351)

 

Interest income                                                                       2,215                3,726

 

Loss before income taxes                                                (171,587)             (92,625)

 

Loss tax benefit                                                                    83,837                30,219

 

Net loss                                                                         $   (87,750)        $    (62,406)

 

Earnings per common share-basic and diluted                     $       (0.04)       $        (0.03)

 

Average shares outstanding-basic and diluted                     2,000,555           1,984,695

 

Condensed Balance Sheets

As of March 31, 2013 and December 31, 2012

 

                                                                                      3/31/13          12/31/12        

                                                                                   (unaudited)

Assets 

Current assets                                                    $   7,477,807      $  7,417,041

Property, plant and equipment, net                       5,534,208         5,461,878

Intangible assets, net                                                  327,660            305,357

$ 13,339,675      $13,184,276

Liabilities and Stockholders’ Equity                                                                                

Current liabilities                                                 $  1,150,189       $  1,023,531

Deferred income taxes                                                431,000             366,000

Long term debt                                                                   –                          –

Stockholders’ equity                                             11,758,486         11,794,745

 $13,339,675       $13,184,276

 

 

CONDENSED STATEMENTS OF CASH FLOW (unaudited)

For the Three Months Ended March 31, 2013 and 2012

 

                                                                                                                3/31/13              3/31/12                     

Net cash provided by (used in) operating activities               $   (247,578)      $  158,995

 

Net cash used in investing activities                                        (244,616)          (39,544)

 

Net cash provided by financing activities                                   40,997               3,750

 

Net increase (decrease) in cash                                           (451,197)          123,201

 

Cash at beginning of period                                                   967,943         1,867,165

 

Cash at end of period                                                      $    516,746       $1,990,366

 

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