Segment Information

9 Months Ended

Sep. 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 September 30, 2017:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	1,790,331	$	1,083,594	$	731,289	$	121,255	$	257,631	$	—	$	3,984,100
Cost of goods sold		1,026,311		819,728		417,882		59,293		336,935		—		2,660,149
Gross profit (loss)		764,020		263,866		313,407		61,962		(79,304)		—		1,323,951
Selling, general and administrative*		315,941		131,100		287,087		44,805		91,442		435,080		1,305,455
Research and development*		—		—		—		—		—		168,686		168,686
Income (loss) from operations	$	448,079	$	132,766	$	26,320	$	17,157	$	(170,746)	$	(603,766)	$	(150,190)

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 nine months ended September 30, 2017:

	IKONICS
						IKONICS
	Domestic		Export		Imaging		DTX		AMS		Unalloc.		Total
Net sales	$	4,910,856	$	3,510,691	$	2,664,330	$	707,730	$	504,846	$	—	$	12,298,453
Cost of goods sold		2,887,111		2,755,371		1,394,675		453,712		950,141		—		8,441,010
Gross profit (loss)		2,023,745		755,320		1,269,655		254,018		(445,295)		—		3,857,443
Selling, general and administrative*		1,001,434		516,958		824,692		130,301		292,562		1,443,758		4,209,705
Research and development*		—		—		—		—		—		519,160		519,160
Income (loss) from operations	$	1,022,311	$	238,362	$	444,963	$	123,717	$	(737,857)	$	(1,962,918)	$	(871,422)

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)

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

	Sep 30, 2017		Dec 31, 2016
Domestic	$	817,124	$	1,206,866
Export		374,744		551,803
IKONICS Imaging		223,990		363,602
DTX		88,151		52,935
AMS		190,113		177,374
Unallocated		(49,890)		(16,079)
Total	$	1,644,232	$	2,336,501