6.	Segment Information

The Company’s reportable segments are strategic business units that offer different products and have varied customer bases. There are

four

reportable segments: Chromaline, IKONICS Imaging, Digital Texturing (DTX) and Advanced Material Solutions (AMS). Chromaline sells screen printing film, emulsions, and inkjet receptive film primarily to distributors and some end users. IKONICS Imaging sells photo resistant film, art supplies, glass, and related abrasive etching equipment to both end users and distributors. 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. Prior to

2019,

the Company had

one

additional business segment called Export. Export was primarily responsible for both Chromaline and IKONICS Imaging sales outside of the United States and Canada. Chromaline products sold within the United States and Canada prior to

2019

were included in a segment called Domestic. To better reflect how the Company manages these businesses, beginning in

2019,

the Export segment was eliminated. Sales previously recorded in the Export segment are now included in either the Chromaline or IKONICS Imaging segments, respectively. Both the

2019

and

2018

financial information reflect the new reportable segments. The accounting policies applied to determine the segment information are the same as those described in the Company’s Annual Report on Form

-K for the year ended

December 31, 2018.

Management evaluates the performance of each segment based on the components of divisional income (loss). 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

September 30, 2019:

	IKONICS
			IKONICS
	Chromaline		Imaging		DTX		AMS		Unalloc.			Total
Net sales	$	2,869,664	$	1,117,209	$	84,661	$	458,827	$	—		$	4,530,361
Cost of goods sold		2,115,702		628,325		31,217		343,055		—			3,118,299
Gross profit		753,962		488,884		53,444		115,772		—			1,412,062
Selling general and administrative*		452,592		248,780		41,866		89,597		514,569			1,347,404
Research and development*		—		—		—		—		218,467			218,467
Income (loss) from operations	$	301,370	$	240,104	$	11,578	$	26,175	$	(733,036	)	$	(153,809	)

For the

three

months ended

September 30, 2018:

	IKONICS
			IKONICS
	Chromaline		Imaging		DTX		AMS			Unalloc.			Total
Net sales	$	3,048,495	$	975,852	$	158,862	$	468,149		$	—		$	4,651,358
Cost of goods sold		2,113,448		560,337		30,279		420,475			—			3,124,539
Gross profit		935,047		415,515		128,583		47,674			—			1,526,819
Selling general and administrative*		469,854		260,025		42,922		91,876			504,168			1,368,845
Research and development*		—		—		—		—			179,915			179,915
Income (loss) from operations	$	465,193	$	155,490	$	85,661	$	(44,202	)	$	(684,083	)	$	(21,941	)

For the

nine

months ended

September 30, 2019:

	IKONICS
			IKONICS
	Chromaline		Imaging		DTX		AMS			Unalloc.			Total
Net sales	$	8,006,121	$	3,164,143	$	290,022	$	1,195,177		$	—		$	12,655,463
Cost of goods sold		5,949,536		1,714,835		116,810		1,024,672			—			8,805,853
Gross profit		2,056,585		1,449,308		173,212		170,505			—			3,849,610
Selling general and administrative*		1,364,685		819,284		111,232		266,107			1,506,922			4,068,230
Research and development*		—		—		—		—			667,774			667,774
Income (loss) from operations	$	691,900	$	630,024	$	61,980	$	(95,602	)	$	(2,174,696	)	$	(886,394	)

For the

nine

months ended

September 30, 2018:

	IKONICS
			IKONICS
	Chromaline		Imaging		DTX		AMS			Unalloc.			Total
Net sales	$	8,489,197	$	3,164,133	$	341,850	$	1,361,833		$	—		$	13,357,013
Cost of goods sold		5,816,275		1,693,561		89,283		1,206,341			—			8,805,460
Gross profit		2,672,922		1,470,572		252,567		155,492			—			4,551,553
Selling general and administrative*		1,336,575		789,683		110,370		274,136			1,516,027			4,026,791
Research and development*		—		—		—		—			490,463			490,463
Income (loss) from operations	$	1,336,347	$	680,889	$	142,197	$	(118,644	)	$	(2,006,490	)	$	34,299

*The Company does

not

allocate all selling, general and administrative expenses or any research and development expenses to its operating segments for internal reporting.

Trade receivables by segment as of

September 30, 2019

and

December 31, 2018

were as follows:

	Sep 30, 2019			Dec 31, 2018

Chromaline	$	1,450,035		$	1,550,411
IKONICS Imaging		461,897			360,551
DTX		50,100			15,692
AMS		302,080			331,708
Unallocated		(52,672	)		(43,147	)

Total	$	2,211,440		$	2,215,215