Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 05, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | IKONICS CORP | |
Entity Central Index Key | 1,083,301 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 2,018,753 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 800,889 | $ 2,248,466 |
Short-term investments | 3,399,000 | |
Trade receivables, less allowance of $60,000 in 2016 and $122,000 in 2015 | 1,811,231 | 2,165,194 |
Inventories | 2,215,548 | 2,119,805 |
Prepaid expenses and other assets | 141,273 | 85,648 |
Income taxes receivable | 131,894 | 102,778 |
Total current assets | 8,499,835 | 6,721,891 |
PROPERTY, PLANT, AND EQUIPMENT, at cost: | ||
Land and building | 9,383,591 | 6,391,555 |
Machinery and equipment | 4,873,106 | 4,275,910 |
Office equipment | 961,770 | 933,596 |
Vehicles | 272,144 | 272,141 |
Construction in progress | 361,381 | 2,491,432 |
Gross property, plant, and equipment, at cost | 15,851,992 | 14,364,634 |
Less accumulated depreciation | (6,691,206) | (6,407,304) |
Net property, plant, and equipment, at cost | 9,160,786 | 7,957,330 |
INTANGIBLE ASSETS, less accumulated amortization of $136,113 in 2016 and $123,957 in 2015 | 346,335 | 336,096 |
Total assets | 18,006,956 | 15,015,317 |
CURRENT LIABILITIES: | ||
Current portion of long-term debt | 125,529 | |
Accounts payable - Trade | 510,715 | 420,245 |
Accounts payable - Construction | 60,166 | 333,339 |
Accrued compensation | 308,707 | 350,518 |
Other accrued liabilities | 118,025 | 31,000 |
Total current liabilities | 1,123,142 | 1,135,102 |
LONG-TERM LIABILITIES | ||
Long-term debt less current portion | 3,141,424 | |
Deferred income taxes | 385,000 | 385,000 |
Total long-term liabilities | 3,526,424 | 385,000 |
Total liabilities | 4,649,566 | 1,520,102 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, par value $.10 per share; authorized 250,000 shares: issued none | ||
Common stock, par value $.10 per share; authorized 4,750,000 shares; issued and outstanding 2,018,753 shares in 2016 and 2,018,253 in 2015 | 201,875 | 201,825 |
Additional paid-in capital | 2,718,762 | 2,703,050 |
Retained earnings | 10,436,753 | 10,590,340 |
Total stockholders' equity | 13,357,390 | 13,495,215 |
Total liabilities and stockholders' equity | $ 18,006,956 | $ 15,015,317 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
CONDENSED BALANCE SHEETS | ||
Trade receivables, allowance | $ 60,000 | $ 122,000 |
INTANGIBLE ASSETS, accumulated amortization | $ 136,113 | $ 123,957 |
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 250,000 | 250,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 4,750,000 | 4,750,000 |
Common stock, shares issued | 2,018,753 | 2,018,253 |
Common stock, shares outstanding | 2,018,753 | 2,018,253 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
CONDENSED STATEMENTS OF OPERATIONS | ||||
NET SALES | $ 4,196,578 | $ 4,653,548 | $ 8,209,788 | $ 8,251,437 |
COST OF GOODS SOLD | 2,674,367 | 3,013,806 | 5,390,903 | 5,511,020 |
GROSS PROFIT | 1,522,211 | 1,639,742 | 2,818,885 | 2,740,417 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 1,325,170 | 1,252,521 | 2,764,286 | 2,668,118 |
RESEARCH AND DEVELOPMENT EXPENSES | 147,125 | 192,539 | 324,989 | 348,383 |
INCOME (LOSS) FROM OPERATIONS | 49,916 | 194,682 | (270,390) | (276,084) |
INTEREST EXPENSE | (14,999) | (14,999) | ||
OTHER | 2,048 | 1,510 | 2,162 | 3,206 |
INCOME (LOSS) BEFORE INCOME TAXES | 36,965 | 196,192 | (283,227) | (272,878) |
INCOME TAX EXPENSE (BENEFIT) | (2,260) | 168,468 | (129,640) | (71,655) |
NET INCOME (LOSS) | $ 39,225 | $ 27,724 | $ (153,587) | $ (201,223) |
INCOME (LOSS) PER COMMON SHARE: | ||||
Basic (in dollars per share) | $ 0.02 | $ 0.01 | $ (0.08) | $ (0.10) |
Diluted (in dollars per share) | $ 0.02 | $ 0.01 | $ (0.08) | $ (0.10) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic (in shares) | 2,018,753 | 2,018,253 | 2,018,544 | 2,018,253 |
Diluted (in shares) | 2,018,833 | 2,018,792 | 2,018,544 | 2,018,253 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (153,587) | $ (201,223) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation | 352,000 | 327,759 |
Amortization | 14,385 | 13,161 |
Stock based compensation | 11,763 | 10,433 |
Net gain on sale and disposal of property, plant and equipment | (5,750) | |
Loss on intangible asset abandonment | 45,873 | |
Changes in working capital components: | ||
Trade receivables | 353,963 | (58,580) |
Inventories | (95,743) | 266,757 |
Prepaid expenses and other assets | (55,625) | (59,520) |
Income tax receivable | (28,882) | (82,460) |
Accounts payable | 90,470 | 225,036 |
Accrued expenses | 45,214 | (17,818) |
Net cash provided by (used in) operating activities | 528,208 | 469,418 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant, equipment and construction in progress | (1,843,879) | (567,578) |
Proceeds from sales of equipment | 21,000 | |
Purchases of intangibles | (22,395) | (30,276) |
Purchases of short-term investments | (3,399,000) | (650,000) |
Proceeds on sale of short-term investments | 1,211,000 | |
Net cash used in investing activities | (5,244,274) | (36,854) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from long-term debt | 3,415,000 | |
Payment on debt issuance costs | (139,418) | |
Payments on long-term debt | (10,858) | |
Proceeds from exercise of stock options | 3,765 | |
Net cash provided by financing activities | 3,268,489 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,447,577) | 432,564 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,248,466 | 1,936,214 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 800,889 | 2,368,778 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Construction in progress included in construction accounts payable | 60,166 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 6,699 | |
Cash received (paid) for income taxes, net of $12,700 taxes paid in 2016 | $ 100,758 | $ (10,805) |
CONDENSED STATEMENTS OF CASH F6
CONDENSED STATEMENTS OF CASH FLOWS (Parenthetical) | 6 Months Ended |
Jun. 30, 2016USD ($) | |
CONDENSED STATEMENTS OF CASH FLOWS | |
Cash received (paid) for income taxes, net - income taxes paid | $ 12,700 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentatio n The condensed balance sheet of IKONICS Corporation (the “Company”) as of June 30, 2016, and the related condensed statements of operations for the three and six months ended June 30, 2016 and 2015, and cash flows for the six months ended June 30, 2016 and 2015 , have been prepared without being audited. In the opinion of management, these statements reflect all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of IKONICS Corporation as of June 30, 2016, and the results of operations and cash flows for all periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted. Therefore, these statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for interim periods are not necessarily indicative of results that will be realized for the full fiscal year. For comparability, certain 2015 amounts related to deferred tax assets and liabilities have been reclassified to conform with classifications adopted in 2016. The reclassifications had no impact on net loss or stockholders’ equity. |
Short-Term Investments
Short-Term Investments | 6 Months Ended |
Jun. 30, 2016 | |
Short-Term Investments | |
Short-Term Investments | 2. Short-Term Investments The Company’s $3,399,000 of short-term investments at June 30, 2016 is comprised of fifteen fully insured certificates of deposit with original maturities ranging from six to twelve months and interest rates ranging from 0.45% to 0.65% |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2016 | |
Inventories | |
Inventories | 3. Inventories The major components of inventories are as follows: Jun 30, 2016 Dec 31, 2015 Raw materials $ $ Work-in-progress Finished goods Reduction to LIFO cost Total Inventories $ $ |
Earnings Per Common Share (EPS)
Earnings Per Common Share (EPS) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Common Share (EPS) | |
Earnings Per Common Share (EPS) | 4. Earnings Per Common Share (EPS) Basic EPS is calculated using net income (loss) divided by the weighted average of common shares outstanding. Diluted EPS is similar to Basic EPS except that the weighted average number of common shares outstanding is increased to include the number of additional common shares that would have been outstanding if the potential dilutive common shares, such as those shares subject to options, had been issued. Shares used in the calculation of diluted EPS are summarized below: Three Months Ended Jun 30, 2016 Jun 30, 2015 Weighted average common shares outstanding Dilutive effect of stock options Weighted average common and common equivalent shares outstanding Six Months Ended Jun 30, 2016 Jun 30, 2015 Weighted average common shares outstanding Dilutive effect of stock options — — Weighted average common and common equivalent shares outstanding For the three months ended June 30, 2016, options to purchase 11,418 shares of common stock with a weighted average price of $15.99 were outstanding but were excluded from the computation of common share equivalents because they were anti-dilutive. For the three months ended June 30, 2015, options to purchase 6,250 shares of common stock with a weighted average price of $18.28 were outstanding but were excluded from the computation of common share equivalents because they were anti-dilutive. If the Company was in a net income position for the first six months of 2016, 4,750 options with a weighted average exercise price of $10.59 would have been included as part of the weighted average common and common equivalent shares outstanding as the options would have been dilutive, while 11, 418 options with a weighted average exercise price of $15.99 would have remained excluded as the options were anti-dilutive. If the Company was in a net income position for the first six months of 2015, 5,918 options with a weighted average exercise price of $12.49 would have been included as part of the weighted average common and common equivalent shares outstanding as the options would have been dilutive while 6,250 options with a weighted average exercise price of $18.28 would have remained excluded as the options were anti-dilutive . |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | 5. Stock-Based Compensation The Company maintains a stock incentive plan which authorizes the issuance of up to 442,750 shares of common stock. Of those shares, 16,168 were subject to outstanding options and 104,239 were reserved for future grants at June 30, 2016. The plan provides for granting eligible participants stock options or other stock awards, as described by the plan, at option prices ranging from 85% to 110% of fair market value at the date of grant. Options granted expire up to seven years after the date of grant. Such options generally become exercisable over a one - to three - year period. The Company charged compensation cost of approximately $6,500 against income for the three months ended June 30, 2016 and approximately $5,700 for the three months ended June 30, 2015. For the first six months of 2016, the Company charged compensation cost of approximately $11,800 and approximately $10,400 for the same period in 2015. As of June 30, 2016, there was approximately $46,000 of unrecognized compensation cost related to unvested share-based compensation awards. That cost is expected to be recognized over the next three years. The Company receives a tax deduction for certain stock option exercises during the period in which the options are exercised, generally for the excess of the market price at the time the stock options are exercised over the exercise price of the options, which increases additional paid in capital and reduces income taxes payable. Proceeds from the exercise of 5 00 stock options were approximately $4,000 for the six months ended June 30, 2016. No stock options were exercised during the six months ended June 30, 2015. The fair value of options granted during the six months ended June 30, 2016 and 2015 was estimated using the Black-Scholes option pricing model with the following assumptions: 2016 2015 Dividend yield 0% 0% Expected volatility 42.4% 42.3% - 42.4% Expected life of option Five Years Five Years Risk-free interest rate 1.3% 1.4% - 1.5% Fair value of each option on grant date $ 4.02 $5.43 - $6.14 There wer e 4,500 and 7,250 opti ons granted during each of the six months ended June 30, 2016 and 2015, respectively. Stock option activity during the six months ended June 30, 2016 was as follows: Weighted Average Exercise Shares Price Outstanding at January 1, 2016 $ Granted Exercised Outstanding at June 30, 2016 $ Exercisable at June 30, 2016 $ The aggregate intrinsic value of all options outstanding and for those exercisable at June 30, 2016 was approximately $3,000 and $1,000 , respectively. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 6. Long-Term Debt On April 1, 2016, the Company entered into a financing agreement (the “Financing Agreement”) under which the Duluth Economic Development Authority (the “Issuer”) agreed to sell $3,415,000 of its Tax Exempt Industrial Revenue Bonds, Series 2016 (IKONICS Project) (the “Bonds”) to Wells Fargo Bank, National Association (the “Bank”), and the Bank agreed to lend to the Company the proceeds received from the sale of the Bonds (the “Loan”). The closing of the sale of the Bonds occurred on April 29, 2016. The proceeds from the Loan were used to finance the construction of a 27,300 -square foot building as well as related equipment for use in the Company’s manufacture of sound deadening technology used in the aerospace industry and products consisting of etched composites, ceramics, glass and silicon wafers, to be located in Duluth, Minnesota (the “Project”). The Loan requires monthly payments of approximately $18,000 , including interest. The Loan bears interest at a rate of 2.14% per year, payable monthly, and matures on April 1, 2041. Including debt costs of approximately $139,000 , the Loan’s effective interest rate is 2.77% per year. The Loan is subject to mandatory purchase provisions, under which any owners of the Bonds (the “Owners”) must tender the Bonds to the Issuer on April 1, 2021 and the Issuer, using solely funds furnished by the Company for such purpose, will purchase the Bonds at a purchase price of 100% of the principal amount of the outstanding Bonds, plus accrued and unpaid interest thereon. In the event the Bonds are not repurchased on April 1, 2021, the Bonds shall be subject to the interest rate and redemption provisions set forth in the associated covenant agreement. Subject to limitations in the associated covenant agreement, the Company may cause a redemption of the Bonds, in whole or in part, in authorized denominations at the redemption prices set forth in the Financing Agreement, together with any accrued or unpaid interest to the date of redemption. The Bonds are also subject to redemption in whole in the event of certain extraordinary events related to the Project. The Company is subject to certain customary covenants set forth in the associated covenant agreement, including a requirement that the Company maintain a debt service coverage ratio as of the end of each calendar quarter of not less than 1.25 to 1.00 on a rolling four-quarter basis. At June 30, 2016 the Company was in compliance with all financial and non-financial covenants under the Financing Agreement. The remaining principal payments required under the agreement for years ended December 31, and the current and long ‑term portion of the principal, are as follows: 2016 $ 2017 2018 2019 2020 Thereafter Total Principal Less: Current portion Long-term portion $ In connection with the agreement, the Company incurred debt issuance costs of approximately $139,000 during the six months ended June 30, 2016, which were deferred and are being amortized over the term of the Financing Agreement. Amortization of debt issuance costs was approximately $2,000 for the six months ended June 30, 2016 and is included in interest expense. Debt issuance costs of $124,000 and $13,000 are netted against long-term debt and current portion of long ‑term debt, respectively as of June 30, 2016. Amortization of debt costs is expected to be approximately $9,000 in 2016 and approximately $12,000 annually for each of the next four years. In addition to the $3,415,000 in indebtedness pursuant to the Loan, the Company has a bank line of credit providing for borrowings of up to $2,050,000 , expiring on May 31, 2017 that bears interest at 1.8 percentage points over the 30 ‑day LIBOR rate. The Company did not utilize this line of credit during the first six months of 2016 or 2015 and there were no borrowings outstanding as of June 30, 2016 and December 31, 2015. There are no financial covenants related to the line of credit. Both the $3,415,000 financing pursuant to the Loan and the line of credit are collateralized by substantially all assets of the Company. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information | |
SEGMENT INFORMATION | 7. Segment Information The Company’s reportable segments are strategic business units that offer different products and have varied customer bases. There are five reportable segments: Domestic, Export, IKONICS Imaging, Digital Texturing (DTX) and Advanced Material Solutions (AMS). Domestic sells screen printing film, emulsions, and inkjet receptive film to distributors located in the United States and Canada. IKONICS Imaging sells photo resistant film, art supplies, glass, metal medium and related abrasive etching equipment to end user customers located in the United States and Canada. AMS provides sound deadening and weight reduction technology to the aerospace industry along with products and services for etched composites, ceramics, glass and silicon wafers. DTX includes products and customers related to patented and proprietary inkjet technology used for mold texturing and prototyping. Export sells primarily the same products as Domestic and the IKONICS Imaging products not related to AMS or DTX. The accounting policies applied to determine the segment information are the same as those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Management evaluates the performance of each segment based on the components of divisional income. Assets and liabilities are not allocated to segments, except for trade receivables which are allocated based on the previous segmentation. Financial information with respect to the reportable segments follows: For the three months ended June 30, 2016: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ For the three months ended June 30, 2015: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ For the six months ended June 30, 2016: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ For the six months ended June 30, 2015: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ * The Company does not allocate all general and administrative expenses or any research and development expenses to its operating segments for internal reporting. Trade receivables by segment as of June 30, 2016 and December 31, 2015 were as follows: Jun 30, 2016 Dec 31, 2015 Domestic $ $ Export IKONICS Imaging DTX AMS Unallocated Total $ $ |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
INCOME TAXES | 8. Income Taxes The Company reports a liability for unrecognized tax benefits taken or expected to be taken when they are uncertain. As of June 30, 2016 and December 31, 2015, there was no liability for unrecognized tax benefits. The Company is subject to taxation in the United States and various states. The material jurisdictions that are subject to examination by tax authorities primarily include Minnesota and the United States, in each case for tax years 2013, 2014, and 2015. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Inventories | |
Schedule of major components of inventories | Jun 30, 2016 Dec 31, 2015 Raw materials $ $ Work-in-progress Finished goods Reduction to LIFO cost Total Inventories $ $ |
Earnings Per Common Share (EP16
Earnings Per Common Share (EPS) (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Common Share (EPS) | |
Summary of shares used in the calculation of diluted EPS | Three Months Ended Jun 30, 2016 Jun 30, 2015 Weighted average common shares outstanding Dilutive effect of stock options Weighted average common and common equivalent shares outstanding Six Months Ended Jun 30, 2016 Jun 30, 2015 Weighted average common shares outstanding Dilutive effect of stock options — — Weighted average common and common equivalent shares outstanding |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Stock-Based Compensation | |
Assumptions used in estimating fair value of stock options | 2016 2015 Dividend yield 0% 0% Expected volatility 42.4% 42.3% - 42.4% Expected life of option Five Years Five Years Risk-free interest rate 1.3% 1.4% - 1.5% Fair value of each option on grant date $ 4.02 $5.43 - $6.14 |
Stock option activity | Weighted Average Exercise Shares Price Outstanding at January 1, 2016 $ Granted Exercised Outstanding at June 30, 2016 $ Exercisable at June 30, 2016 $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
LONG-TERM DEBT | |
Schedule of remaining principal payments and current and long-term portion of the principal | 2016 $ 2017 2018 2019 2020 Thereafter Total Principal Less: Current portion Long-term portion $ |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information | |
Schedule of financial information with respect to the reportable segments | IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ For the three months ended June 30, 2015: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ For the six months ended June 30, 2016: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ For the six months ended June 30, 2015: IKONICS IKONICS Domestic Export Imaging DTX AMS Unalloc. Total Net sales $ $ $ $ $ $ — $ Cost of goods sold — Gross profit (loss) — Selling, general and administrative* Research and development* — — — — — Income (loss) from operations $ $ $ $ $ $ $ * The Company does not allocate all general and administrative expenses or any research and development expenses to its operating segments for internal reporting. |
Schedule of trade receivables by segment | Jun 30, 2016 Dec 31, 2015 Domestic $ $ Export IKONICS Imaging DTX AMS Unallocated Total $ $ |
Short-Term Investments (Details
Short-Term Investments (Details) - Certificates of Deposit | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Short-term investments | |
Fully insured certificates of deposit | $ 3,399,000 |
Minimum | |
Short-term investments | |
Maturity period | 6 months |
Interest rate (as a percent) | 0.45% |
Maximum | |
Short-term investments | |
Maturity period | 12 months |
Interest rate (as a percent) | 0.65% |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Inventories | ||
Raw materials | $ 1,675,957 | $ 1,640,098 |
Work-in-progress | 378,449 | 375,229 |
Finished goods | 1,334,910 | 1,336,707 |
Reduction to LIFO cost | (1,173,768) | (1,232,229) |
Total inventories | $ 2,215,548 | $ 2,119,805 |
Earnings Per Common Share (EP22
Earnings Per Common Share (EPS) (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Shares used in calculation of diluted EPS | ||||
Weighted average common shares outstanding | 2,018,753 | 2,018,253 | 2,018,544 | 2,018,253 |
Dilutive effect of stock options | 80 | 539 | ||
Weighted average common and common equivalent shares outstanding | 2,018,833 | 2,018,792 | 2,018,544 | 2,018,253 |
Dilutive effect | ||||
Based on the Company's net income position, dilutive effect of stock options (in shares) | 4,750 | 5,918 | ||
Based on the Company's net income position, dilutive effect of stock options, weighted average exercise price (in dollars per share) | $ 10.59 | $ 12.49 | ||
Stock Options | ||||
Dilutive effect | ||||
Anti-dilutive securities (in shares) | 11,418 | 6,250 | ||
Weighted average exercise price of options, anti-dilutive (in dollars per share) | $ 15.99 | $ 18.28 | ||
Based on the Company's net income position, anti-dilutive securities (in shares) | 11,418 | 6,250 | ||
Based on the Company's net income position, anti-dilutive securities, weighted average exercise price (in dollars per share) | $ 15.99 | $ 18.28 |
Stock-Based Compensation - Plan
Stock-Based Compensation - Plan and Expense Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Stock-Based Compensation | |||||
Common stock reserved for future grants (in shares) | 104,239 | 104,239 | |||
Proceeds from exercise of stock options | $ 3,765 | ||||
Maximum | |||||
Stock-Based Compensation | |||||
Number of shares of common stock authorized for issuance | 442,750 | 442,750 | |||
Stock Options | |||||
Stock-Based Compensation | |||||
Outstanding options (in shares) | 16,168 | 16,168 | 12,168 | ||
Compensation cost recognized | $ 6,500 | $ 5,700 | $ 11,800 | $ 10,400 | |
Unrecognized compensation cost | $ 46,000 | $ 46,000 | |||
Period during which compensation cost is expected to be recognized | 3 years | ||||
Exercise of stock options (in shares) | 500 | 0 | |||
Stock Options | Minimum | |||||
Stock-Based Compensation | |||||
Price range of stock award (as a percent) | 85.00% | ||||
Period over which options become exercisable | 1 year | ||||
Stock Options | Maximum | |||||
Stock-Based Compensation | |||||
Price range of stock award (as a percent) | 110.00% | ||||
Expiration period of options granted | 7 years | ||||
Period over which options become exercisable | 3 years |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions and Activity (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Weighted Average Exercise Price | ||
Aggregate intrinsic value of all options outstanding | $ 3,000 | |
Aggregate intrinsic value of all options exercisable | $ 1,000 | |
Stock Options | ||
Assumptions used to determine fair value of stock options granted | ||
Dividend yield (as a percent) | 0.00% | 0.00% |
Expected volatility (as a percent) | 42.40% | |
Expected life of option | 5 years | 5 years |
Risk-free interest rate (as a percent) | 1.30% | |
Fair value of each option on grant date (in dollars per share) | $ 4.02 | |
Shares | ||
Outstanding at beginning of period (in shares) | 12,168 | |
Granted (in shares) | 4,500 | 7,250 |
Exercised (in shares) | (500) | 0 |
Outstanding at end of period (in shares) | 16,168 | |
Exercisable at end of period (in shares) | 6,417 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of period (in dollars per shares) | $ 15.47 | |
Granted (in dollars per share) | 10.75 | |
Exercised (in dollars per share) | 7.53 | |
Outstanding at end of period (in dollars per share) | 14.40 | |
Exercisable at end of period (in dollars per share) | $ 15.41 |
Long-Term Debt (Details)
Long-Term Debt (Details) | Jun. 30, 2016USD ($) | Apr. 29, 2016USD ($)ft² | Jun. 30, 2016USD ($) | Apr. 01, 2016USD ($) |
Remaining principal payments | ||||
2,016 | $ 69,000 | $ 69,000 | ||
2,017 | 140,000 | 140,000 | ||
2,018 | 143,000 | 143,000 | ||
2,019 | 146,000 | 146,000 | ||
2,020 | 149,000 | 149,000 | ||
Thereafter | 2,757,000 | 2,757,000 | ||
Total Principal | 3,404,000 | 3,404,000 | ||
Less: Current Portion | 137,000 | 137,000 | ||
Long-term portion | 3,267,000 | 3,267,000 | ||
Loan | ||||
Financing agreement | ||||
Monthly payments including interest | $ 18,000 | |||
Interest rate | 2.14% | |||
Deferred debt issuance costs, gross | $ 139,000 | |||
Loan’s effective interest rate | 2.77% | |||
Debt service coverage ratio | 1.25 | |||
Debt Issuance Costs | ||||
Amortization of debt costs | 2,000 | |||
Deferred debt issuance costs, noncurrent, net | 124,000 | 124,000 | ||
Deferred debt issuance costs, current, net | 13,000 | 13,000 | ||
Amortization of debt costs expected in current year | 9,000 | 9,000 | ||
Annual expected amortization expense over the next four years | $ 12,000 | 12,000 | ||
Remaining amortization period | 4 years | |||
Loan | Building | ||||
Financing agreement | ||||
Area of building | ft² | 27,300 | |||
Line Of Credit. | ||||
Debt Issuance Costs | ||||
Maximum borrowings | $ 2,050,000 | $ 2,050,000 | ||
Line Of Credit. | 30-day LIBOR | ||||
Debt Issuance Costs | ||||
Line of credit basis spread (as a percent) | 1.80% | |||
Duluth Economic Development Authority | ||||
Financing agreement | ||||
Bonds issued to the Bank | $ 3,415,000 | |||
Purchase price of the bond (as a percent) | 100.00% |
Segment Information (Details)
Segment Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Financial information with respect to the reportable segments | |||||
Net sales | $ 4,196,578 | $ 4,653,548 | $ 8,209,788 | $ 8,251,437 | |
Cost of goods sold | 2,674,367 | 3,013,806 | 5,390,903 | 5,511,020 | |
GROSS PROFIT | 1,522,211 | 1,639,742 | 2,818,885 | 2,740,417 | |
Selling general and administrative | 1,325,170 | 1,252,521 | 2,764,286 | 2,668,118 | |
Research and development | 147,125 | 192,539 | 324,989 | 348,383 | |
Income (loss) from operations | 49,916 | 194,682 | (270,390) | (276,084) | |
Trade receivables by segment | |||||
Trade receivables | 1,811,231 | 1,811,231 | $ 2,165,194 | ||
Unalloc. | |||||
Financial information with respect to the reportable segments | |||||
Selling general and administrative | 409,951 | 424,085 | 956,622 | 969,905 | |
Research and development | 147,125 | 192,539 | 324,989 | 348,383 | |
Income (loss) from operations | (557,076) | (616,624) | (1,281,611) | (1,318,288) | |
Trade receivables by segment | |||||
Trade receivables | (34,942) | (34,942) | (102,188) | ||
Domestic | |||||
Financial information with respect to the reportable segments | |||||
Net sales | 1,943,516 | 2,111,510 | 3,297,244 | 3,489,299 | |
Cost of goods sold | 1,105,206 | 1,207,376 | 1,951,605 | 2,048,332 | |
GROSS PROFIT | 838,310 | 904,134 | 1,345,639 | 1,440,967 | |
Selling general and administrative | 345,000 | 323,730 | 704,397 | 639,897 | |
Income (loss) from operations | 493,310 | 580,404 | 641,242 | 801,070 | |
Trade receivables by segment | |||||
Trade receivables | 914,249 | 914,249 | 1,206,077 | ||
Export | |||||
Financial information with respect to the reportable segments | |||||
Net sales | 953,585 | 1,337,121 | 2,196,770 | 2,455,415 | |
Cost of goods sold | 735,169 | 1,018,025 | 1,697,658 | 1,902,353 | |
GROSS PROFIT | 218,416 | 319,096 | 499,112 | 553,062 | |
Selling general and administrative | 159,621 | 137,271 | 302,652 | 291,991 | |
Income (loss) from operations | 58,795 | 181,825 | 196,460 | 261,071 | |
Trade receivables by segment | |||||
Trade receivables | 512,699 | 512,699 | 528,372 | ||
IKONICS Imaging | |||||
Financial information with respect to the reportable segments | |||||
Net sales | 999,596 | 991,108 | 2,117,294 | 1,884,873 | |
Cost of goods sold | 425,120 | 449,116 | 964,902 | 909,487 | |
GROSS PROFIT | 574,476 | 541,992 | 1,152,392 | 975,386 | |
Selling general and administrative | 247,682 | 237,167 | 499,053 | 498,423 | |
Income (loss) from operations | 326,794 | 304,825 | 653,339 | 476,963 | |
Trade receivables by segment | |||||
Trade receivables | 240,468 | 240,468 | 341,980 | ||
DTX | |||||
Financial information with respect to the reportable segments | |||||
Net sales | 33,476 | 101,662 | 110,356 | 197,056 | |
Cost of goods sold | 35,062 | 69,003 | 70,486 | 142,094 | |
GROSS PROFIT | (1,586) | 32,659 | 39,870 | 54,962 | |
Selling general and administrative | 39,630 | 54,711 | 74,373 | 90,243 | |
Income (loss) from operations | (41,216) | (22,052) | (34,503) | (35,281) | |
Trade receivables by segment | |||||
Trade receivables | 16,664 | 16,664 | 26,314 | ||
Micro-Machining | |||||
Financial information with respect to the reportable segments | |||||
Net sales | 266,405 | 112,147 | 488,124 | 224,794 | |
Cost of goods sold | 373,810 | 270,286 | 706,252 | 508,754 | |
GROSS PROFIT | (107,405) | (158,139) | (218,128) | (283,960) | |
Selling general and administrative | 123,286 | 75,557 | 227,189 | 177,659 | |
Income (loss) from operations | (230,691) | $ (233,696) | (445,317) | $ (461,619) | |
Trade receivables by segment | |||||
Trade receivables | $ 162,093 | $ 162,093 | $ 164,639 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Deferred tax amounts included in balance sheet | ||
Unrecognized tax benefits | $ 0 | $ 0 |