Segment Information

6 Months Ended

Jun. 30, 2017

Segment Information

Segment Information

6.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, 2016.

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, 2017:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	1,816,956	$	1,372,092	$	943,055	$	471,244	$	82,014	$	—	$	4,685,361
Cost of goods sold		1,034,059		1,096,279		453,213		358,937		299,609		—		3,242,097
Gross profit (loss)		782,897		275,813		489,842		112,307		(217,595)		—		1,443,264
Selling, general and administrative*		334,071		189,741		253,746		50,861		104,325		460,892		1,393,636
Research and development*		—		—		—		—		—		184,704		184,704
Income (loss) from operations	$	448,826	$	86,072	$	236,096	$	61,446	$	(321,920)	$	(645,596)	$	(135,076)

For the three months ended June 30, 2016:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	1,943,516	$	953,585	$	999,596	$	33,476	$	266,405	$	—	$	4,196,578
Cost of goods sold		1,105,206		735,169		425,120		35,062		373,810		—		2,674,367
Gross profit (loss)		838,310		218,416		574,476		(1,586)		(107,405)		—		1,522,211
Selling, general and administrative*		345,000		159,621		247,682		39,630		123,286		409,951		1,325,170
Research and development*		—		—		—		—		—		147,125		147,125
Income (loss) from operations	$	493,310	$	58,795	$	326,794	$	(41,216)	$	(230,691)	$	(557,076)	$	49,916

For the six months ended June 30, 2017:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	3,120,525	$	2,427,097	$	1,933,041	$	586,475	$	247,215	$	—	$	8,314,353
Cost of goods sold		1,860,800		1,935,643		976,793		394,419		613,206		—		5,780,861
Gross profit (loss)		1,259,725		491,454		956,248		192,056		(365,991)		—		2,533,492
Selling, general and administrative*		685,493		385,858		537,605		85,496		201,120		1,008,678		2,904,250
Research and development*		—		—		—		—		—		350,474		350,474
Income (loss) from operations	$	574,232	$	105,596	$	418,643	$	106,560	$	(567,111)	$	(1,359,152)	$	(721,232)

For the six months ended June 30, 2016:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	3,297,244	$	2,196,770	$	2,117,294	$	110,356	$	488,124	$	—	$	8,209,788
Cost of goods sold		1,951,605		1,697,658		964,902		70,486		706,252		—		5,390,903
Gross profit (loss)		1,345,639		499,112		1,152,392		39,870		(218,128)		—		2,818,885
Selling, general and administrative*		704,397		302,652		499,053		74,373		227,189		956,622		2,764,286
Research and development*		—		—		—		—		—		324,989		324,989
Income (loss) from operations	$	641,242	$	196,460	$	653,339	$	(34,503)	$	(445,317)	$	(1,281,611)	$	(270,390)

*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, 2017 and December 31, 2016 were as follows:

	Jun 30, 2017		Dec 31, 2016
Domestic	$	863,407	$	1,206,866
Export		773,376		551,803
IKONICS Imaging		268,345		363,602
DTX		142,013		52,935
AMS		36,366		177,374
Unallocated		(16,771)		(16,079)
Total	$	2,066,736	$	2,336,501