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2013 Annual Report

Letter to Shareholders

Important foundations for growth were laid at IKONICS in 2013.

For the year, sales were $17,491,000. This is a 1% increase over 2012, while earnings fell by 2% to $682,000 or $0.34 per diluted share. I believe 2014 will be a better year for the following reasons:

  • In the first quarter, Ikonics Imaging shipped a very large initial stocking order, which will have a substantial effect on profits and sales for the quarter and the year.
  • Our Micro-Machining Aerospace business suffered the loss of a major customer in 2013. The division was also negatively impacted by high costs related to product development. In 2014, we will be transitioning to more profitable production parts. We are currently producing advanced composite parts for four customers and are in negotiations with others. This business is being driven primarily by the growth of the civilian aviation sector and its increasing use of composites. We are also in the development phase of a major defense project. We added technical staff in 2013, and in the first quarter of 2014 brought in a respected veteran of the aerospace industry to lead this business. Investment in high-quality people and advanced production equipment are costly, but I believe it is a path Ikonics must follow to grow and prosper in this high technology field.
  • Chromaline, our traditional technology for the screen print industry, continues to be a steady source of sales and profits and should benefit in 2014 from new products aimed at the touch screen and solar panel industries. I am also optimistic about further growth in sales to customers in China, particularly in the consumer electronics industry.
  • Our DTX business has been slow to develop due to technical issues, but we are now making a major effort in the 3D printing and prototyping arena, where our technology offers higher precision and larger format prints than are available with most other offerings in this market.

Given these developments, in 2014, I anticipate a robust performance from our traditional businesses, a new focus on growth and profits in our aerospace business, and an exciting entry into the 3D printing market with our DTX technology.

WILLIAM C. ULLAND Chairman, President & CEO
March 20, 2014

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