Segment Information

9 Months Ended

Sep. 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 September 30, 2016:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	1,981,212	$	1,273,923	$	879,712	$	195,890	$	276,764	$	—	$	4,607,501
Cost of goods sold		1,115,507		956,953		413,385		49,924		404,258		—		2,940,027
Gross profit (loss)		865,705		316,970		466,327		145,966		(127,494)		—		1,667,474
Selling, general and administrative*		330,578		169,858		260,810		35,595		94,993		465,771		1,357,605
Research and development*		—		—		—		—		—		150,176		150,176
Income (loss) from operations	$	535,127	$	147,112	$	205,517	$	110,371	$	(222,487)	$	(615,947)	$	159,693

For the three months ended September 30, 2015:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	1,924,930	$	1,367,780	$	892,811	$	188,074	$	169,135	$	—	$	4,542,730
Cost of goods sold		1,115,154		1,038,354		398,520		71,986		301,048		—		2,925,062
Gross profit (loss)		809,776		329,426		494,291		116,088		(131,913)		—		1,617,668
Selling, general and administrative*		321,810		147,370		259,976		44,649		78,986		417,675		1,270,466
Research and development*		—		—		—		—		—		157,814		157,814
Income (loss) from operations	$	487,966	$	182,056	$	234,315	$	71,439	$	(210,899)	$	(575,489)	$	189,388

For the nine months ended September 30, 2016:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	5,278,456	$	3,470,693	$	2,997,006	$	306,246	$	764,888	$	—	$	12,817,289
Cost of goods sold		3,067,112		2,654,611		1,378,287		120,410		1,110,510		—		8,330,930
Gross profit (loss)		2,211,344		816,082		1,618,719		185,836		(345,622)		—		4,486,359
Selling, general and administrative*		1,034,975		472,510		759,863		109,968		322,182		1,422,393		4,121,891
Research and development*		—		—		—		—		—		475,165		475,165
Income (loss) from operations	$	1,176,369	$	343,572	$	858,856	$	75,868	$	(667,804)	$	(1,897,558)	$	(110,697)

For the nine months ended September 30, 2015:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	5,414,229	$	3,823,195	$	2,777,684	$	385,130	$	393,929	$	—	$	12,794,167
Cost of goods sold		3,163,486		2,940,707		1,308,007		214,080		809,802		—		8,436,082
Gross profit (loss)		2,250,743		882,488		1,469,677		171,050		(415,873)		—		4,358,085
Selling, general and administrative*		961,707		439,361		758,399		134,892		256,645		1,387,580		3,938,584
Research and development*		—		—		—		—		—		506,197		506,197
Income (loss) from operations	$	1,289,036	$	443,127	$	711,278	$	36,158	$	(672,518)	$	(1,893,777)	$	(86,696)

*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 September 30, 2016 and December 31, 2015 were as follows:

	Sep 30, 2016		Dec 31, 2015
Domestic	$	1,094,858	$	1,206,077
Export		467,452		528,372
IKONICS Imaging		327,855		341,980
DTX		52,039		26,314
AMS		242,749		164,639
Unallocated		(30,721)		(102,188)
Total	$	2,154,232	$	2,165,194