IKONICS Corporation (Nasdaq: IKNX), a Duluth-based imaging
technology company (“IKONICS” or the “Company”), announced its
second quarter 2021 earnings. Revenue for the second quarter of
2021 was $4,251,000 compared to $2,572,000 for the same period in
2020, an increase of 65%. IKONICS posted a second quarter loss of
$722,000 or $0.37 per diluted share, versus the second quarter 2020
pandemic related loss of $1,042,000, or $0.53 per diluted share.
For the six months ending June 30, 2021, the Company realized a net
loss of $0.53 per diluted share compared to a net loss of $0.82 per
diluted share for the same period in 2020.
On a Non-GAAP basis, for the second quarter of 2021, IKONICS
realized earnings of $75,000, or $0.04 per diluted share, excluding
transaction related expenses including professional service and
stock based compensation.
Glenn Sandgren, IKONICS CEO, noted, “In the second quarter we
saw improvement in both the breadth and pace of the recovery. Our
second quarter performance is incrementally improved over recent
years, even with the negative impacts of the industry-wide supply
chain shortages. Fortunately, these constraints have lessened
considerably in the last month.”
Key Highlights:
- Non-GAAP second quarter 2021 earnings were $75,000 on revenue
of $4,251,000.
- Supply chain issues caused by the 2021 Texas power crisis
triggered force majeure failure of key suppliers impacting 2021
second quarter sales but have substantially subsided.
- New product initiatives are progressing well, including:
- IKONART® sales continued to be robust at a greater than 100%
CAGR since 2019; and
- Continued favorable customer evaluations of the Dualprint™ mold
testing system.
- Entered into a definitive merger agreement with TeraWulf Inc.
(“TeraWulf”) for a business combination, which is expected to close
in the second half of 2021.
Sandgren continued, "We remain excited by the prospects for all
our constituents. The legacy business continues to perform well in
the face of near-term supply chain challenges. Additionally, the
proposed business combination with TeraWulf provides genuine
“win-wins” for our shareholders, including the opportunity to
realize a substantial upfront cash payment and continue to benefit
from the value of our legacy imaging business. Our shareholders
also gain the ability to participate in the potential upside of
TeraWulf’s compelling business – owning and operating fully
integrated environmentally clean bitcoin mining facilities in the
United States. We believe that securing the long-term viability of
our legacy business will enable us to continue to meet our
customers’ needs, offer employment opportunities for our workforce
and support the local economy.”
IKONICS
Corporation |
CONDENSED
STATEMENTS OF OPERATIONS (Unaudited) |
For the Three and
Six Months Ended June 30, 2021 and 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
Six Months
Ended |
|
|
6/30/21 |
|
|
6/30/20 |
|
|
6/30/21 |
|
|
6/30/20 |
Net sales |
$ |
4,251,348 |
|
|
$ |
2,572,439 |
|
|
$ |
7,324,756 |
|
|
$ |
6,069,631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
2,822,044 |
|
|
|
2,187,544 |
|
|
|
4,899,120 |
|
|
|
4,531,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
1,429,304 |
|
|
|
384,895 |
|
|
|
2,425,636 |
|
|
|
1,538,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
2,073,397 |
|
|
|
1,403,541 |
|
|
|
3,391,910 |
|
|
|
3,368,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
(644,093 |
) |
|
|
(1,018,646 |
) |
|
|
(966,274 |
) |
|
|
(1,830,014 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(82,498 |
) |
|
|
(24,623 |
) |
|
|
(102,340 |
) |
|
|
(46,107 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income |
|
5,138 |
|
|
|
1,766 |
|
|
|
5,175 |
|
|
|
8,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
income taxes |
|
(721,453 |
) |
|
|
(1,041,503 |
) |
|
|
(1,063,439 |
) |
|
|
(1,867,438 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit) |
|
823 |
|
|
|
0 |
|
|
|
(19,524 |
) |
|
|
(238,929 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
$ |
(722,276 |
) |
|
$ |
(1,041,503 |
) |
|
$ |
(1,043,915 |
) |
|
$ |
(1,628,509 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per
common share-basic and diluted |
$ |
(0.37 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.82 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
diluted shares outstanding |
|
1,977,959 |
|
|
|
1,976,354 |
|
|
|
1,977,368 |
|
|
|
1,976,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
BALANCE SHEETS |
As of June 30, 2021
and December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
6/30/2021 |
|
|
12/31/2020 |
Assets |
|
(unaudited) |
|
|
|
Current assets |
$ |
5,712,916 |
|
$ |
7,803,453 |
Property, plant, and equipment, net |
|
7,084,034 |
|
|
7,388,363 |
Intangible assets, net |
|
245,832 |
|
|
243,583 |
|
|
$ |
13,042,782 |
|
$ |
15,435,399 |
Liabilities and Stockholders' Equity |
|
|
|
|
|
Current liabilities |
$ |
2,088,057 |
|
$ |
3,596,053 |
Long-term debt |
|
— |
|
|
— |
Stockholders' equity |
|
10,954,725 |
|
|
11,839,346 |
|
|
$ |
13,042,782 |
|
$ |
15,435,399 |
|
|
|
|
|
|
|
CONDENSED
STATEMENTS OF CASH FLOWS (Unaudited) |
For the Six Months
Ended June 30, 2021 and 2020 |
|
|
|
|
|
|
|
|
6/30/2021 |
|
|
6/30/2020 |
Net cash provided by (used in) operating activities |
$ |
1,339,569 |
|
|
$ |
(1,189,335 |
) |
Net cash (used in) provided by investing activities |
|
(27,014 |
) |
|
|
2,060,898 |
|
Net cash (used in) provided by financing activities |
|
(2,745,545 |
) |
|
|
1,142,897 |
|
|
|
|
|
|
|
Net (decrease) increase in cash |
|
(1,432,990 |
) |
|
|
2,014,460 |
|
Cash at beginning of period |
|
3,693,845 |
|
|
|
963,649 |
|
|
|
|
|
|
|
Cash at end of period |
$ |
2,260,855 |
|
|
$ |
2,978,109 |
|
|
|
|
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP
LOSS
We report our financial results in accordance with U.S.
generally accepted accounting principles (“GAAP”). We have provided
non-GAAP loss in this press release to assist investors in
comparing losses on a year-over-year basis and because management
believes it is a useful metric in evaluating ongoing performance of
our company. Non-GAAP adjusted income reflects the add back of
costs related to the 2021 professional services expense and
increased stock based compensation expense related to the proposed
merger which is expected to occur later this year. The presentation
of this information is not meant to be a substitute for the
corresponding financial measures prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of GAAP to
non-GAAP financials measures below.
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
|
|
|
6/30/21 |
|
|
6/30/20 |
|
% Change |
Net loss |
$ |
(722,276 |
) |
|
$ |
(1,041,503 |
) |
|
31 |
% |
|
|
|
|
|
|
|
|
Add: Second quarter transaction related professional service
expenses |
703,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Add: Second
quarter stock based compensation expense |
|
94,000 |
|
|
|
3,700 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjusted income (loss) |
$ |
74,724 |
|
|
$ |
(1,037,803 |
) |
|
107 |
% |
|
|
|
|
|
|
|
|
Non-GAAP
adjusted income (loss) per common share-basic and diluted |
$ |
0.04 |
|
|
$ |
(0.53 |
) |
|
|
|
|
|
|
|
|
|
|
Average
diluted shares outstanding |
|
1,977,959 |
|
|
|
1,976,354 |
|
|
|
|
|
|
|
|
|
|
|
Additional Information and Where to Find It;
Participants in the Solicitation
In connection with the proposed business combination between the
Company and TeraWulf Inc. (“TeraWulf”) as more fully described in
the current report on Form 8-K filed by the Company with the United
States Securities and Exchange Commission (the “SEC”) on June 25,
2021, the Company filed a combined preliminary proxy statement and
registration statement on Form S-4 with the SEC on July 30, 2021,
as amended on August 2, 2021. Following the filing of the
definitive proxy statement with the SEC, the Company will mail the
definitive proxy statement and a proxy card to each shareholder
entitled to vote at the special meeting relating to the proposed
transaction. The proxy statement, any other relevant documents, and
all other materials filed with the SEC concerning the Company are
(or, when filed, will be) available free of charge at
http://www.sec.gov and http:/www.ikonics.com/investor-relations.
Shareholders should read carefully the proxy statement and any
other relevant documents that the Company files with the SEC when
they become available before making any voting decision because
they will contain important information.
This communication does not constitute a solicitation of proxy,
an offer to purchase, or a solicitation of an offer to sell any
securities. The Company and its directors and executive officers
are deemed to be participants in the solicitation of proxies from
shareholders in connection with the proposed transaction.
Information regarding the names of such persons and their
respective interests in the transaction, by securities holdings or
otherwise, will be set forth in the definitive proxy statement when
it is filed with the SEC. Additional information regarding these
individuals is set forth in its annual report on Form 10-K for the
fiscal year ended December 31, 2020, its definitive proxy
statement for the annual meeting held on April 29, 2021, and
the revised definitive proxy statement for the same meeting, which
were filed with the SEC on March 3, 2021, March 23, 2021,
and April 6, 2021, respectively. To the extent the Company’s
directors and executive officers or their holdings of the Company’s
securities have changed from the amounts disclosed in those
filings, to the Company’s knowledge, such changes have been
reflected on initial statements of beneficial ownership on Form 3
or statements of change in ownership on Form 4 on file with the
SEC. These materials are (or, when filed, will be) available free
of charge at http://www.Ikonics.com/investor-relations.
Forward Looking Statements
This communication contains “forward-looking statements” within
the meaning of the U.S. federal securities laws. Such statements
include statements concerning anticipated future events and
expectations that are not historical facts. All statements other
than statements of historical fact are statements that could be
deemed forward-looking statements. Actual results may vary
materially from those expressed or implied by forward-looking
statements based on a number of factors, including, without
limitation: (1) risks related to the consummation of the mergers,
including the risks that (a) the mergers may not be consummated
within the anticipated time period, or at all, (b) the parties may
fail to obtain shareholder approval of the merger agreement, (c)
other conditions to the consummation of the mergers under the
merger agreement may not be satisfied, (d) all or part of
TeraWulf’s contemplated financing may not become available, and (e)
the significant limitations on remedies contained in the merger
agreement may limit or entirely prevent a party from specifically
enforcing another party’s obligations under the merger agreement or
recovering damages for any breach; (2) approval of the combined
company’s application to list its shares on The Nasdaq Stock Market
LLC, (3) the effects that any termination of the merger agreement
may have on a party or its business, including the risks that (a)
the price of the Company’s common stock may decline significantly
if the mergers are not completed, (b) the merger agreement may be
terminated in circumstances requiring the Company to pay TeraWulf a
termination fee of $1.2 million, or (c) the circumstances of
the termination, may have a chilling effect on alternatives to the
mergers; (4) the effects that the announcement or pendency of the
mergers may have on the Company and its business, including the
risks that as a result (a) the business, operating results or stock
price of the Company’s common stock may suffer, (b) its current
plans and operations may be disrupted, (c) the ability of the
Company to retain or recruit key employees may be adversely
affected, (d) its business relationships (including, customers,
franchisees and suppliers) may be adversely affected, or (e)
management and employee attention may be diverted from other
important matters; (5) the effect of limitations that the merger
agreement places on the Company’s ability to operate its business,
return capital to shareholders or engage in alternative
transactions; (6) the nature, cost and outcome of pending and
future litigation and other legal proceedings, including any such
proceedings related to the transactions and instituted against the
Company and others; (7) the risk that the transaction may involve
unexpected costs, liabilities or delays; (8) other economic,
business, competitive, legal, regulatory, and/or tax factors; (9)
the possibility that less than all or none of the Company’s
historical business will be sold prior to the expiration of the
CVRs; and (10) other factors described under the heading “Risk
Factors” in Part I, Item 1A of the Company’s annual report on Form
10-K for the fiscal year ended December 31, 2020, as updated or
supplemented by subsequent reports that the Company has filed or
files with the SEC. Potential investors, shareholders and other
readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they are made. Neither TeraWulf nor the Company assumes any
obligation to publicly update any forward-looking statement after
it is made, whether as a result of new information, future events
or otherwise, except as required by law.
News
Contact: |
|
Glenn
Sandgren |
|
|
Chief Executive Officer |
|
|
(218) 628-2217 |
Grafico Azioni Ikonics (NASDAQ:IKNX)
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