IKONICS Reports Fourth Quarter and Full Year Results

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DULUTH, Minn., Feb. 19, 2009 (GLOBE NEWSWIRE) -- IKONICS Corporation (NasdaqCM:IKNX - News), a Duluth based imaging technology company, reported 2008 earnings of $814,000, or $0.40 per share, on sales of $15,854,000. Sales were up slightly over 2007, while earnings were down from $1,170,000, or $0.57 per share, in 2007. The earnings decline was primarily due to non-cash charges in 2008, principally an increase in the LIFO inventory reserve and the write off of patent application expenses.

Bill Ulland, IKONICS CEO said, ``Worldwide recession made 2008 a challenging year for IKONICS. In spite of contractions in our core markets, we were able to hold sales equal to last year, gross profit fell by only 4%, and we continued to generate healthy cash flow. The only area of our business where sales did not grow was the awards and recognition market, which is highly vulnerable to recession.

``I believe that in 2009 our core businesses of photochemical stencils for screen printing and decorative abrasive etching will remain under pressure in the domestic market. We still see good opportunity in the export market and have taken steps to increase our presence in India and Latin America.

``The most promising developments for 2009 are our new business initiatives described below, which achieved commercial acceptance in 2008; I believe they will generate significant revenue and profits in 2009.

``Our Photo Machining Process has gained acceptance by large customers, and we anticipate ramped up production in 2009, primarily to the defense industry.

IKONICS Acoustics has also gained industry acceptance. In 2008 our technology was used for sound deadening on GE, Pratt & Whitney and Rolls Royce jet engines. Although temporarily impacted by the Boeing strike and the slow down in orders for some aircraft models, we anticipate good sales in the second half of 2009. We are bringing an improved product to this market which will expand our potential customer base. I believe the time saving and quality improvements we bring to the customer are compelling.

``Digital Texturing has gained customer acceptance as we have continually improved our equipment and print quality. We hope to start selling our next generation DTX(tm) printer in the second quarter of 2009. Equipment sales bring significant ongoing sales of our proprietary substrates and inkjettable fluids. Although the initial market is automotive, we believe that the revolutionary nature of our technology will bring us sales even in this depressed industry.

``IKONICS Industrial Solutions is a new venture of creating custom products to meet the needs of specific users. We both design and manufacture the product. We currently have two such products in production and anticipate others in 2009.

``All of our (non-defense) new businesses are subject to the world economy. However, I believe that our new technologies are important enough that we will see them contributing 10-20% of our sales in the next 12 months, with growth accelerating in future years.''

Ulland also added that the Company completed construction on its new $4.4 million facility in December 2008.

This press release contains forward-looking statements regarding sales, net earnings, and new products that involve risks and uncertainties. The Company's actual results could differ materially as a result of domestic and global economic conditions, competitive market conditions, acceptance of new products, the ability to identify and make suitable acquisitions, as well as the factors described in the Company's Form s 10-K, and 10-Q, and other reports on file with the SEC.

                          IKONICS Corporation

                  CONDENSED STATEMENTS OF OPERATIONS
             For the Three Months and Twelve Months Ended
                      December 31, 2008 and 2007

                         Three Months Ended      Twelve Months Ended
                        12/31/08    12/31/07    12/31/08    12/31/07
                      ----------- ----------- ----------- -----------
 Net Sales            $ 3,910,794 $ 3,925,358 $15,854,484 $15,824,725


 Cost of Goods Sold     2,429,329   2,093,175   9,228,187   8,887,612
                      ----------- ----------- ----------- -----------

 Gross Profit           1,481,465   1,832,183   6,626,297   6,937,113

 Operating expenses     1,344,302   1,326,833   5,655,925   5,510,468
                      ----------- ----------- ----------- -----------

 Income from
  operations              137,163     505,350     970,372   1,426,645

 Gain on sale of
  investment                   --           --     24,550      55,159

 Interest income            2,950      43,724      90,212     153,971
                      ----------- ----------- ----------- -----------

 Income before income
  taxes                   140,113     549,074   1,085,134   1,635,775

 Income tax expense        27,887     203,723     271,000     466,000
                      ----------- ----------- ----------- -----------

 Net income           $   112,226 $   345,351 $   814,134 $ 1,169,775
                      =========== =========== =========== ===========

 Earnings per common
  share-diluted       $      0.06 $      0.17 $      0.40 $      0.57
                      =========== =========== =========== ===========

 Average shares
  outstanding-diluted   2,005,053   2,075,580   2,053,733   2,063,380

                                       Condensed Balance Sheets
                                    As of December 31 2008 and 2007

                                         12/31/08     12/31/07
                                       -----------  -----------
 Assets
 Current assets                        $ 5,562,130  $ 9,315,737
 Property, plant and equipment, net      5,602,063    1,320,591
 Investment in non-marketable equity
  securities                               918,951      855,201
 Intangible assets                         403,285      479,888
 Deferred income taxes                          --       11,000
                                       -----------  -----------
                                       $12,486,429  $11,982,417
                                       ===========  ===========
 Liabilities and Stockholders' Equity
 Current liabilities                   $   909,789  $   936,703
 Deferred income taxes                     143,000           --
 Long term debt                                 --           --
 Stockholders' equity                   11,433,640   11,045,714
                                       -----------  -----------
                                       $12,486,429  $11,982,417
                                       ===========  ===========

          IKONICS Corporation
          Bill Ulland, Chairman, President & CEO
          (218) 628-2217