þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Minnesota | 41-0730027 | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
4832 Grand Avenue Duluth, Minnesota |
55807 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
March 31 | December 31 | |||||||
2011 | 2010 | |||||||
(unaudited) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash |
$ | 752,262 | $ | 1,291,383 | ||||
Short-term investments |
2,222,538 | 2,217,990 | ||||||
Trade receivables, less allowance of $60,000 in 2011 and
2010 |
1,948,761 | 1,883,428 | ||||||
Inventories |
2,767,940 | 2,198,064 | ||||||
Prepaid expenses and other assets |
131,874 | 63,965 | ||||||
Income taxes receivable |
4,574 | | ||||||
Deferred income taxes |
157,000 | 157,000 | ||||||
Total current assets |
7,984,949 | 7,811,830 | ||||||
PROPERTY, PLANT, AND EQUIPMENT, at cost: |
||||||||
Land and building |
5,891,696 | 5,888,445 | ||||||
Machinery and equipment |
2,472,354 | 2,455,238 | ||||||
Office equipment |
688,476 | 642,100 | ||||||
Vehicles |
234,650 | 234,650 | ||||||
9,287,176 | 9,220,433 | |||||||
Less accumulated depreciation |
4,305,988 | 4,207,500 | ||||||
4,981,188 | 5,012,933 | |||||||
INTANGIBLE ASSETS, less accumulated amortization of $389,597 in
2011 and $376,983 in 2010 |
328,093 | 317,168 | ||||||
$ | 13,294,230 | $ | 13,141,931 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Accounts payable |
$ | 522,499 | $ | 441,830 | ||||
Accrued compensation |
241,824 | 282,196 | ||||||
Other accrued expenses |
73,255 | 45,868 | ||||||
Income taxes payable |
| 8,090 | ||||||
Total current liabilities |
837,578 | 777,984 | ||||||
DEFERRED INCOME TAXES |
171,000 | 171,000 | ||||||
Total liabilities |
1,008,578 | 948,984 | ||||||
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 1,981,357 shares in 2011 and 1,973,357 shares
in 2010 |
198,136 | 197,336 | ||||||
Additional paid-in capital |
2,317,739 | 2,263,176 | ||||||
Retained earnings |
9,769,777 | 9,732,435 | ||||||
Total stockholders equity |
12,285,652 | 12,192,947 | ||||||
$ | 13,294,230 | $ | 13,141,931 | |||||
3
Three Months | ||||||||
Ended March 31 | ||||||||
2011 | 2010 | |||||||
NET SALES |
$ | 3,653,099 | $ | 3,684,577 | ||||
COST OF GOODS SOLD |
2,186,256 | 2,200,782 | ||||||
GROSS PROFIT |
1,466,843 | 1,483,795 | ||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
1,343,641 | 1,200,389 | ||||||
RESEARCH AND DEVELOPMENT EXPENSES |
99,911 | 160,704 | ||||||
INCOME FROM OPERATIONS |
23,291 | 122,702 | ||||||
INTEREST INCOME |
4,562 | 3,519 | ||||||
INCOME BEFORE INCOME TAXES |
27,853 | 126,221 | ||||||
INCOME TAX BENEFIT |
9,489 | 22,120 | ||||||
NET INCOME |
$ | 37,342 | $ | 148,341 | ||||
EARNINGS PER COMMON SHARE: |
||||||||
Basic |
$ | 0.02 | $ | 0.08 | ||||
Diluted |
$ | 0.02 | $ | 0.08 | ||||
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING: |
||||||||
Basic |
1,976,523 | 1,967,057 | ||||||
Diluted |
1,981,114 | 1,969,433 | ||||||
4
Three Months | ||||||||
Ended March 31 | ||||||||
2011 | 2010 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 37,342 | $ | 148,341 | ||||
Adjustments to reconcile net income to net cash provided by (used in)
operating activities: |
||||||||
Depreciation |
98,488 | 101,147 | ||||||
Amortization |
12,614 | 13,813 | ||||||
Stock based compensation |
6,126 | 6,846 | ||||||
Changes in working capital components: |
||||||||
Trade receivables |
(65,333 | ) | (32,755 | ) | ||||
Inventories |
(569,876 | ) | 74,100 | |||||
Prepaid expenses and other assets |
(67,909 | ) | (54,576 | ) | ||||
Income taxes receivable |
(4,574 | ) | | |||||
Accounts payable |
80,669 | 93,136 | ||||||
Accrued liabilities |
(12,985 | ) | (122,075 | ) | ||||
Income taxes payable |
(14,562 | ) | (43,535 | ) | ||||
Net cash provided by (used in) operating activities |
(500,000 | ) | 184,442 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchases of property, plant and equipment |
(66,743 | ) | (68,408 | ) | ||||
Proceeds from sale of vehicles |
| 8,434 | ||||||
Purchase of intangibles |
(23,539 | ) | (9,880 | ) | ||||
Purchase of short-term investments |
(813,224 | ) | (203,402 | ) | ||||
Proceeds from maturity of short-term investments |
808,676 | 200,000 | ||||||
Net cash used in investing activities |
(94,830 | ) | (73,256 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Proceeds from exercise of stock options |
55,709 | | ||||||
NET INCREASE (DECREASE) IN CASH |
(539,121 | ) | 111,186 | |||||
CASH AT BEGINNING OF PERIOD |
1,291,383 | 1,304,586 | ||||||
CASH AT END OF PERIOD |
$ | 752,262 | $ | 1,415,772 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes, net of refunds received of $74,156 in 2010 |
$ | 9,647 | $ | 56,415 | ||||
5
1. | Basis of Presentation | |
The balance sheet of IKONICS Corporation (the Company) as of March 31, 2011, and the related statements of income and cash flows for the three months ended March 31, 2011 and 2010 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 March 31, 2011, 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 Companys Annual Report on Form 10-K for the year ended December 31, 2010. | ||
The results of operations for interim periods are not necessarily indicative of results that will be realized for the full fiscal year. |
2. | Short Term Investments | |
The Companys $2,223,000 of short-term investments is comprised of fully insured certificates of deposit with maturities ranging from six to twelve months and interest rates ranging from 0.3% to 1.7%. |
3. | Inventories | |
The major components of inventory are as follows: |
Mar 31, 2011 | Dec 31, 2010 | |||||||
Raw materials |
$ | 1,886,335 | $ | 1,403,875 | ||||
Work-in-progress |
340,526 | 294,006 | ||||||
Finished goods |
1,560,767 | 1,493,226 | ||||||
Reduction to LIFO cost |
(1,019,688 | ) | (993,043 | ) | ||||
Total Inventory |
$ | 2,767,940 | $ | 2,198,064 | ||||
6
4. | Earnings Per Common Share (EPS) | |
Basic EPS is calculated using net income 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 | ||||||||
Mar 31, 2011 | Mar 31, 2010 | |||||||
Weighted average common shares outstanding |
1,976,523 | 1,967,057 | ||||||
Dilutive effect of stock options |
4,591 | 2,376 | ||||||
Weighted average common and common equivalent shares outstanding |
1,981,114 | 1,969,433 | ||||||
Options to purchase 7,250 shares of common stock with a weighted average price of $8.22 were outstanding during the quarter ended March 31, 2011, but were excluded from the computation of common share equivalents because they were anti-dilutive. For the quarter ended March 31, 2010, options to purchase 17,500 shares of common stock with a weighted average price of $7.65 were outstanding, but were excluded from the computation of common share equivalents because they were anti-dilutive. |
5. | Stock-based Compensation |
The Company has a stock incentive plan for the issuance of up to 442,750 shares of common stock. 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 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. A total of 125,573 shares of common stock are reserved for additional grants of options under the plan at March 31, 2011. |
The Company charged compensation cost of approximately $6,100 and $6,800 against income for the three months ended March 31, 2011 and 2010, respectively. As of March 31, 2011 there was approximately $30,000 of unrecognized compensation cost related to unvested share-based compensation awards granted. 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 increased the APIC pool, which is the amount that represents the pool of excess tax benefits available to absorb tax shortages. There were no excess tax benefits recognized during the three month period ending March 31, 2011 and 2010, respectively. The Companys APIC pool totaled approximately $111,000 at March 31, 2011 and December 31, 2010, respectively. |
Proceeds from the exercise of stock options were $56,000 for the three months ended March 31, 2011. There were no options exercised during the three months ended March 31, 2010. |
7
Stock option activity during the three months ended March 31, 2011 was as follows: |
Weighted | ||||||||
Average | ||||||||
Exercise | ||||||||
Shares | Price | |||||||
Outstanding at beginning of period |
40,500 | $ | 6.38 | |||||
Granted |
| | ||||||
Exercised |
(8,000 | ) | 6.96 | |||||
Expired and forfeited |
| | ||||||
Outstanding at March 31, 2011 |
32,500 | 6.24 | ||||||
Exercisable at March 31, 2011 |
11,583 | 6.94 | ||||||
The aggregate intrinsic value of all options outstanding and for those exercisable at March 31, 2011 was approximately $53,000 and $13,000, respectively. |
The Companys reportable segments are strategic business units that offer different products and have varied customer bases. In previous years there were three reportable segments: Domestic, Export, and IKONICS Imaging. 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. The IKONICS Imagining segment also included products and customers for etched composites, ceramics, glass and silicon wafers along with sound deadening technology to the aerospace industry, which beginning in 2011 the Company now defines as Micromachining. In addition IKONICS Imaging included products and customers related to proprietary inkjet technology used for mold texturing and referred to by the Company as Digital Texturing (DTX). Export sells primarily the same products as Domestic and the IKONICS Imaging products not related to Micromachining or DTX. Beginning in 2011, the Company no longer includes Micromaching and DTX financial information under the IKONICS Imaging segment. The financial information for Micromaching and DTX are combined into a new segment called Other. As the Company is unable to provide comparable 2010 financial information for the newly defined segments, the Company will disclose in 2011 both the new basis and old basis of segment reporting. The accounting policies applied to determine the segment information are the same as those described in the summary of significant accounting policies included in the Companys Annual Report on Form 10-K for the year ended December 31, 2010. |
Management evaluates the performance of each segment based on the components of divisional income, and does not allocate assets and liabilities to segments except for accounts receivables which is allocated based on the old segmentation. Financial information with respect to the reportable segments follows: |
8
For the three months ended March 31, 2011 (old segment method): |
IKONICS | ||||||||||||||||||||
Domestic | Export | Imaging | Unalloc. | Total | ||||||||||||||||
Net sales |
$ | 1,331,049 | $ | 1,196,213 | $ | 1,125,837 | $ | | $ | 3,653,099 | ||||||||||
Cost of goods sold |
746,008 | 881,726 | 558,522 | | 2,186,256 | |||||||||||||||
Gross profit |
585,041 | 314,487 | 567,315 | | 1,466,843 | |||||||||||||||
Selling, general and
administrative* |
276,505 | 132,474 | 495,730 | 438,932 | 1,343,641 | |||||||||||||||
Research and
development* |
| | | 99,911 | 99,911 | |||||||||||||||
Income from operations |
$ | 308,536 | $ | 182,013 | $ | 71,585 | $ | (538,843 | ) | $ | 23,291 | |||||||||
For the three months ended March 31, 2010 (old segment method): |
Domestic | Export | IKONICS Imaging |
Unalloc. | Total | ||||||||||||||||
Net sales |
$ | 1,500,171 | $ | 1,156,790 | $ | 1,027,616 | $ | | $ | 3,684,577 | ||||||||||
Cost of goods sold |
798,205 | 801,008 | 601,569 | | 2,200,782 | |||||||||||||||
Gross profit |
701,966 | 355,782 | 426,047 | | 1,483,795 | |||||||||||||||
Selling, general and
administrative* |
230,855 | 158,659 | 284,661 | 526,214 | 1,200,389 | |||||||||||||||
Research and
development* |
| | | 160,704 | 160,704 | |||||||||||||||
Income from operations |
$ | 471,111 | $ | 197,123 | $ | 141,386 | $ | (686,918 | ) | $ | 122,702 | |||||||||
For the three months ended March 31, 2011 (new segment method): |
IKONICS | ||||||||||||||||||||||||
Domestic | Export | Imagining | Other | Unalloc. | Total | |||||||||||||||||||
Net sales |
$ | 1,331,049 | $ | 1,196,213 | $ | 890,919 | $ | 234,918 | $ | | $ | 3,653,099 | ||||||||||||
Cost of goods sold |
746,008 | 881,726 | 456,267 | 102,255 | | 2,186,256 | ||||||||||||||||||
Gross profit |
585,041 | 314,487 | 434,652 | 132,663 | | 1,466,843 | ||||||||||||||||||
Selling general and
adminstrative* |
276,505 | 132,474 | 297,240 | 198,490 | 438,932 | 1,343,641 | ||||||||||||||||||
Research and
development* |
99,911 | 99,911 | ||||||||||||||||||||||
Income from operations |
$ | 308,536 | $ | 182,013 | $ | 137,412 | $ | (65,827 | ) | $ | (538,843 | ) | $ | 23,291 | ||||||||||
* | The Company does not allocate all general and administrative expenses or any research and development expenses to its operating segments for internal reporting. |
Accounts receivable related to the Other segment are included in IKONICS Imaging. Accounts receivable by segment as of March 31, 2011 and December 31, 2010 were as follows: |
Mar 31, 2011 | Dec 31, 2010 | |||||||
Domestic |
$ | 832,639 | $ | 874,535 | ||||
Export |
751,464 | 725,007 | ||||||
IKONICS Imaging |
378,625 | 325,334 | ||||||
Unallocated |
(13,967 | ) | (41,448 | ) | ||||
Total |
$ | 1,948,761 | $ | 1,883,428 | ||||
9
7. | Income Taxes |
The Company reports a liability for unrecognized tax benefits taken or expected to be taken when they are uncertain. During the first quarter of 2010, the statute of limitations for the relevant taxing authority to examine and challenge the tax position for an open year expired, resulting in decreases in income tax expense of $27,000 for the first quarter of 2010. As of March 31, 2011 and 2010, 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, for tax years 2007, 2008, 2009, and 2010. |
10
ITEM 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
| The Companys expectation that its effective tax rate will return to 35% to 36% of pretax income for the remainder of 2011 compared to the tax benefit recorded in the first three months of 2011The effective tax rate for the final nine months of 2011 may be affected by changes in federal and state tax law, unanticipated changes in the Companys financial position or the Companys operating activities and/or management decisions could increase or decrease its effective tax rate. |
| The Companys belief that the quality of its trade receivables is high and that strong internal controls are in place to maintain proper collectionsThis belief may be impacted by domestic economic conditions, by economic, political, regulatory or social conditions in foreign markets, or by the failure of the Company to properly implement or maintain internal controls. |
| The Companys expectation that it will obtain a new line of credit similar to its current line of credit when the current line of credit expires on October 30, 2011This expectation may be impacted by factors such as changes in credit markets, the interest rate environment, general economic conditions, the Companys financial results and condition, and the Companys anticipated need for capital to fund business operations and capital expenditures. |
| The belief that the Companys current financial resources, cash generated from operations and the Companys capacity for debt and/or equity financing will be sufficient to fund current and anticipated business operations and capital expenditures. The belief that the Companys low debt levels and available line of credit make it unlikely that a decrease in product demand would impair the Companys ability to fund operationsChanges in anticipated operating results, credit availability, equity market conditions or the Companys debt levels may further enhance or inhibit the Companys ability to maintain or raise appropriate levels of cash. |
| The Companys expectations as to the level and use of planned capital expenditures and that capital expenditures will be funded with cash on hand and cash generated from operating activitiesThis expectation may be affected by changes in the Companys anticipated capital expenditure requirements resulting from unforeseen required maintenance, repairs, or capital asset additions. The funding of planned or unforeseen expenditures may also be affected by changes in anticipated operating results resulting from decreased sales, lack of acceptance of new products or increased operating expenses or by other unexpected events affecting the Companys financial position. |
| The Companys belief that its vulnerability to foreign currency fluctuations and general economic conditions in foreign countries is not significantThis belief may be impacted by economic, political and social conditions in foreign markets, changes in regulatory and competitive conditions, a change in |
11
the amount or geographic focus of the Companys international sales, or changes in purchase or sales terms. |
| The Companys expectation that research and development spending will grow and return to historic levelsThese plans and expectations may be impacted by the Companys ability to identify, hire and retain qualified personnel, unexpected changes to resource requirements for other areas of the Companys business and the overall performance of the Company. |
| The Companys beliefs as to the future performance of its new technologies or particular segmentsActual performance may be impacted by general market conditions or conditions in particular industries in which the Companys products are used (including the aerospace and automotive industries), changes to the competitive landscape in the industries in which the Company competes (including pricing pressures from existing or future competitors), lack of acceptance of new products or technologies or increases to raw materials costs used to produce the Companys products. |
| The Companys efforts to grow its international businessThese efforts may be impacted by economic, political and social conditions in current and anticipated foreign markets, regulatory conditions in such markets, unanticipated changes in expenses or sales, changes in competitive conditions or other barriers to entry or expansion. |
| The Companys belief as to future activities that may be undertaken to expand the Companys businessActual activities undertaken may be impacted by general market conditions, competitive conditions in the industries in which the Company sells products, unanticipated changes in the Companys financial position, lack of acceptance of new products or the inability to identify attractive acquisition targets or other business opportunities. |
12
(a) | persuasive evidence of an arrangement (principally in the form of customer sales orders and the Companys sales invoices) |
(b) | delivery and performance (evidenced by proof of delivery, e.g. the shipment of film and substrates with bill of lading used for proof of delivery for FOB shipping point terms, and the carrier booking confirmation report used for FOB destination terms). Once the finished product is shipped and physically delivered under the terms of the invoice and sales order, the Company has no additional performance or service obligations to complete |
(c) | a fixed and determinable sales price (the Companys pricing is established and is not based on variable terms, as evidenced in either the Companys invoices or the limited number of distribution agreements; the Company rarely grants extended payment terms and has no history of concessions) |
(d) | a reasonable likelihood of payment (the Companys terms are standard, and the Company does not have a substantial history of customer defaults or non-payment) |
13
14
15
16
ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk |
ITEM 4. | Controls and Procedures |
17
ITEM 1. | Legal Proceedings |
ITEM 1A. | Risk Factors |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
ITEM 3. | Defaults upon Senior Securities |
ITEM 4. | [Removed and Reserved] |
ITEM 5. | Other Information |
ITEM 6. | Exhibits |
Exhibit | Description | |
3.1
|
Restated Articles of Incorporation of Company, as amended.1 | |
3.2
|
By-Laws of the Company, as amended.2 | |
31.1
|
Rule 13a-14(a)/15d-14(a) Certifications of CEO | |
31.2
|
Rule 13a-14(a)/15d-14(a) Certifications of CFO | |
32
|
Section 1350 Certifications |
1 | Incorporated by reference to the like numbered Exhibit to the Companys Registration Statement on Form 10-SB (File No. 000-25727). | |
2 | Incorporated by reference to the like numbered Exhibit to the Companys Current Report on Form 8-K filed with the Commission on February 22, 2007 (File No. 000-25727). |
18
IKONICS CORPORATION |
||||
DATE: May 12, 2011 | By: | /s/ Jon Gerlach | ||
Jon Gerlach, | ||||
Chief Financial Officer, and Vice President of Finance |
19
Exhibit | Description | Page | ||
3.1
|
Restated Articles of Incorporation of Company, as amended | Incorporated by reference | ||
3.2
|
By-Laws of the Company, as amended. | Incorporated by reference | ||
31.1
|
Rule 13a-14(a)/15d-14(a) Certifications of CEO. | Filed Electronically | ||
31.2
|
Rule 13a-14(a)/15d-14(a) Certifications of CFO. | Filed Electronically | ||
32
|
Section 1350 Certifications. | Filed Electronically |
1. | I have reviewed this quarterly report on Form 10-Q of IKONICS Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15f and 15d-15(f)) for the registrant and we have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrants internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 12, 2011 | /s/ William C. Ulland | |||
William C. Ulland | ||||
Chairman, Chief Executive Officer and President |
1. | I have reviewed this quarterly report on Form 10-Q of IKONICS Corporation; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15f and 15d-15(f)) for the registrant and we have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrants internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: May 12, 2011 | /s/ Jon Gerlach | |||
Jon Gerlach | ||||
Chief Financial Officer and Vice President of Finance |
Date: May 12, 2011 | /s/ William C. Ulland | |||
William C. Ulland | ||||
Chairman, Chief Executive Officer and President | ||||
Date: May 12, 2011 | /s/ Jon Gerlach | |||
Jon Gerlach | ||||
Chief Financial Officer and Vice President of Finance |
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