IKONICS Corporation

2015 IKONICS Annual Report

Through processes based in photochemistry, abrasive etching, chemical etching and other technologies, IKONICS participates in a diverse spectrum of markets. From traditional and high-tech screen printing, to decorative and industrial etching.

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12 PART II Item 5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's Common Stock is traded on the Nasdaq Capital Market under the symbol IKNX. The following table sets forth, for the fiscal quarters indicated, the high and low sales prices for the Company's Common Stock as reported on the Nasdaq Capital Market for the periods indicated. High Low Fiscal Year Ended December 31, 2015: First Quarter $ 20.43 $ 14.25 Second Quarter 16.00 13.75 Third Quarter 15.62 11.00 Fourth Quarter 12.00 9.76 Fiscal Year Ended December 31, 2014: First Quarter $ 31.02 $ 13.50 Second Quarter 29.00 19.90 Third Quarter 27.20 17.06 Fourth Quarter 17.82 14.03 As of February 24, 2016, the Company had 683 shareholders. The Company has not declared cash dividends in the past two years and does not currently have plans to pay any cash dividends in the future. Any future declaration and payment of dividends is within the sole discretion of the Company's board of directors. Item 6. Selected Financial Data Not applicable Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following management discussion and analysis focuses on those factors that had a material effect on the Company's financial results of operations and financial condition during 2015 and 2014 and should be read in connection with the Company's audited financial statements and notes thereto for the years ended December 31, 2015 and 2014, included herein. Critical Accounting Policies and Estimates The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America. Therefore, the Company is required to make certain estimates, judgments and assumptions that the Company believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The accounting policies and estimates which IKONICS believes are the most critical to aid in fully understanding and evaluating its reported financial results include the following: Trade Receivables. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer's current credit worthiness, as determined by review of the current credit information. The Company continuously monitors collections and payments from its customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that it will continue to experience the same collection history that has occurred in the past. The general payment terms are net 30-45 days for domestic customers and net 30-90 days for foreign customers. A small percentage of the trade receivables balance is denominated in a foreign currency with no concentration in any given country. At the end of each reporting period, the Company analyzes the receivable balance for customers paying in a foreign currency. These balances are adjusted to each quarter or year-end spot rate. The Company also maintains a

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