Ikonics Corporation (IKNX)
Interview with: William Ulland, Chairman, President and CEO
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photoresists for abrasive etching sold through the PhotoBrasive Systems Division and, photostencil products for screen printing, and inkjettable films for the creation of photopositives and photonegatives sold through the Chromaline Division.

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Recognizing Chromaline as a leadership brand by changing their company name to Ikonics Corporation

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Specialty Chemicals
Photo Imaging

Ikonics Corporation

4832 Grand Avenue
Duluth, MN 55807
Phone: 218-628-2217

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William Ulland
Chairman, President
and Chief Executive Officer

Interview conducted by:
Lynn Fosse

February 2003

Bio of CEO, 

Bill Ulland is Chairman, President and CEO of Ikonics Corporation (formerly The Chromaline Corporation). Ulland was named Ikonics’ CEO in February of 2000 and President in January of 2001.  He has been a member of Ikonics’ board since 1972 and served as its Chairman since 1976.  Mr. Ulland earned a degree in Geophysical Engineering from the Colorado School of Mines in 1963 and a Master of Science degree in Industrial Administration from Purdue University in 1965. Prior to becoming Ikonics’ CEO, he was involved in mineral develop and evaluation as Managing Partner of the American Shield Company and President of Geomines Inc.   He is also past chairman of the Board of Trustees of the Minnesota State Colleges and Universities system. 

Ulland is a life long Duluthian living with his wife Ann Glumac in Canosia Township.

Company Profile:
Ikonics Corporation (NASD: IKNX), formerly Chromaline Corporation, develops manufactures and markets products and systems for the transfer of images. These include a wide variety of photoresists for abrasive etching sold through the PhotoBrasive Systems Division and, photostencil products for screen printing, and inkjettable films for the creation of photopositives and photonegatives sold through the Chromaline Division. Ikonics also sells ancillary equipment and supplies. PhotoBrasive Systems’ markets have traditionally included the awards, monuments and decorative etching segments. Chromaline’s markets are; the textile, graphics compact disc and electronics screen printing segment and the digital printing industry for its inkjettable films. The company recent formed a new division, SplitRock Technologies, to extend its technologies to new markets, such as the automotive industry where IKONICS has recently developed a product to meet the specific needs of a key supplier to that industry. The company has strong intellectual property rights and is engaged in strategic alliances around the world.      The company received ISO 9001 Certification (International Organization for Standardization in Geneva, Switzerland), on March 30, 1994, and has been subsequently been recertified.

The core technology of IKONICS is the transference of images using photochemical films and emulsions.  Images can be transferred   by printing and abrasive or chemical etching using IKONICS products. IKONICS is unique in having a broad product line of both photostencil for screen printing and photoresists for abrasive etching. Many of these products are protected by patents or trade secrets and have applications outside of their traditional markets.

Products divisions include:

Abrasive Etching

Sold under the trade name of PhotoBrasive Systems®. A "total solution" supplier, they sell virtually everything a customer needs to set up their own abrasive etching business, including training, photosensitive films, art supplies, glass products and equipment.

PhotoBrasive Systems offers the only line of self adhesive films that eliminate the need for spay adhesives. 

Screen Printing

Chromaline Screen Printing Products offers a full line of stencil making films, emulsions and screen chemicals products.

Direct Emulsions:
Diazo Sensitized Emulsions includes CP2TM, an excellent choice for printers using solvent, UV or plastisol inks and CP5/WRTM, a diazo based photostencil emulsion for water-based ink users and demanding belt printers.

Dual Cure Sensitized Emulsions includes Magna/Cure® UDC-HV, which has high viscosity for easy coating on low or high mesh counts, Magna/Cure® UDC-2 that has a superior exposure speed and latitude and moderate water resistance and Ikonics NEW! Magna/Cure® UDC-ACE and their NEW! Spike UDC-420D, which was designed to optimize at the 420 nanometer spectral point, allowing fast, accurate exposure.
Photopolymer Sensitized Emulsions includes Chroma/Tech® PL, a "textile emulsion" for plastisol ink users. High solids gives good buildups with fewer coats, saving time and providing more screens per gallon, Chroma/Tech® PL-2 - this new photopolymer emulsion is ideal for textile printers seeking accuracy when doing fine detail work, halftones and four color process work and Chroma/Tech® SR. NEW! Spike CT-420D – was designed to optimize at the 420 nanometer spectral point, Spike CT-420D photopolymer emulsion allows for fast, accurate exposures.
Indirect Film:
Reflex® - is a photopolymer-based, non-developing indirect process film that incorporates A.S.M.® Imaging Technology for easier handling and better line edge definition. Reflex is a presensitized, diazo-free, multi-layer film coated on a 50 micron, ultra high clarity polyester base.

Screen Preparation Chemicals: specially formulated for consistent results to maximize stencil performance includes Chroma/StripTM Screen Reclaimer, Chroma/CleanTM Mesh Degreaser, Chroma/BradeTM Mesh Abrader/degreaser, Chroma/WetTM Wetting Agent, Chroma/SetTM Emulsion Hardener, Chroma/HazeTM Haze Remover and Chroma/FillTM Red Screen Blockout.

Digital Pre-Press Products for Inkjet Printers:
Ikonics offers three different grades of inkjet media designed to accommodate nearly any job and budget. Whether you’re printing positives, negatives, 4-color separations (up to 65 lpi) or display materials, AccuArt™ Premium Waterproof Inkjet Film, AccuBlack™ Waterproof Inkjet Film for Positives and Negatives and AccuMark™ Inkjet Film for Positives and Negatives

Chroma/Glo Specialty Inks:
NEW! Chroma/Glo™ - Choose from Glow-in-the-Dark (GID), PhotoChromatic and ThermoChromatic plastisol inks. A great choice whether you're trying to give added "pop" to your next T-shirt print or going for function in identification, safety or security applications.

CEOCFOinterviews: Mr. Ulland, why did you recently change your company name to IKONICS?

Mr. Ulland: “We had been known as The Chromaline Corporation for many years, and Chromaline is also the name of our strongest brand. This led to some internal and external confusion about what we meant when we talked about Chromaline; sometimes we were talking about the brand and those products and sometimes we were talking about the corporation. We often wound up confusing customers, dealers and ourselves. The other reason we changed was for investors. Before the change, when investors did a web-search on Chromaline, they would end up on a web page selling our Chromaline brand products, which is not where we wanted the investor to be. Now, with the name IKONICS for the corporation, Chromaline is a division associated with the Chromaline brand, PhotoBrasive Systems® now became a division that pursues and entirely different market, and SplitRock Technologies is a new division.”

CEOCFOinterviews: What is the derivation of the name IKONICS?

Mr. Ulland: “It is very difficult to get a new name for a corporation now days; we wanted something that was memorable, that meant something to our business and was ‘dot.comable.’ We went to an English/ancient Greek dictionary and it turns out that ‘Eikon’ means ‘image’ in Greek. IKONICS is an extension of that; we got the dot.com and trademarked the name. I think it reflects what we do and it is a memorable name.”

CEOCFOinterviews: What is your core technology and how is your company structured with its various products and divisions?

Mr. Ulland: “Our core technology is photosensitive films and emulsions and inkjettable substrates for  transferring images by printing, etching or engraving. We are ISO9000 certified; and we have a number of patents and licenses. IKONICS is now organized into three divisions: Chromaline Screen Print Products; PhotoBrasive Systems division and SplitRock technology, which is our new division designed to take some of our unique technologies into different markets.”

CEOCFOinterviews: Can you explain how you transfer images and onto what are they transferred?

Mr. Ulland: “Our core technology is photochemistry. We primarily sell film. You can take the film, which is analogous to 35 millimeter camera film. Expose it, and develop it and you have a stencil, which you can use to make images. On the Chromaline Screen Print Products this creates a printing plate or a stencil that can be used to print anything from a circuit board to T-shirts and CDs.

On the PhotoBrasive side, we take a similar chemistry and create a stencil or printing plate that is very robust and stands up to abrasive etching. One of our large markets is the glass awards and trophies. We are making a significant effort into the monument or tombstone business, where rather than do it the old fashioned way, with a hammer and chisel, it can be done using our technology to image a   granite or marble substrate. You can also do halftones and images of people on a substrate; we think that is a very good market for us.”

CEOCFOinterviews: What other new applications are you currently looking at for your technologies?

Mr. Ulland: “We are in the process of applying for patents on three new technologies. The unique ‘bag of tricks’ that we have is combining abrasive etching and photochemistry with  different sub-screens or surfaces. We are looking at a number of different applications where this technology allows us to do some things that other people can’t do. For example, recently a customer in the automobile industry found us and asked us if we could modify one of our films for a special need they had. Because of the unique combinations of technologies and our unique manufacturing ability, we were able to make a product for them, which substantially increased their productivity. That was a case where the customer found us. We are now being more aggressive about that in taking our technologies to different customers where we think we have some nifty applications.”

CEOCFOinterviews: Where are you getting most of your revenue from now?

Mr. Ulland: “We get most of our revenue from photochemical films and emulsions. This  business is divided between screen-printing and abrasive etching. We also sell and make inkjet substrates, which allow you to take this  film,  run it through your inkjet printer, and come out with a black and white image that is as good, in most cases, as a photo-positive or photo-negative. This is a way to bypass the photographic or thermal  imaging process, and make inexpensive photo-positives and negatives, off your inkjet printer.    The other way to look at our business is geographically; our largest customer is in Bombay. We have a very large business in China. We are finding that some of the technologies that are a little  ‘long in the tooth’ in North America,   are very robust technologies in Asia. We are pursuing areas where our technological mix fits the local economy; we are also taking our SplitRock division technologies and introducing them into more sophisticated economies for North America and Europe.”

CEOCFOinterviews: It sound like the best of both worlds!

Mr. Ulland: “We are small and nimble enough to take our technologies to markets that are growing very rapidly, like India and China. We are also finding that the technology mix that we have is unique. I am very excited about some of the things we are looking at in North America, taking our photochemistry and abrasive etching abilities and introducing them to people that have never thought of this particular application.”

CEOCFOinterviews: Are most of your sales import or export?

Mr. Ulland: About  a third of our sales are export.”

CEOCFOinterviews: How many employees do you have?

Mr. Ulland: “We have seventy-five employees and are culturally very diverse. Our executive V.P. is Swiss, our head of R&D is Japanese, and our Chief Scientist is Russian. We have a contract employee of Chinese extraction in Singapore, and we have an Indian employee in Bombay. All of our operations are in Duluth, Minnesota. By the way, this is our 50th anniversary.

CEOCFOinterviews: How much effort is there for you in research and development?

Mr. Ulland: “Of our seventy-five employee, it is fair to say that we have 10% in R&D with our chemists and engineers working the various projects. So, we are heavily committed to R&D. We have the luxury of having a strong financial base. We have no long-term debt; our current ratio is seven and the last two quarters we have been growing at 18%. We have become leaner and our margins are improving. Hence, we are able to put resources into product development and new business development. One of the things we are looking at in the SplitRock division is as much new business development as product development.”

CEOCFOinterviews: Is there much competition?

Mr. Ulland: “It depends on which division. With our Chromaline Screen Print products, there is  competition. In the photostencil business, we rank third worldwide. On the PhotoBrasive side, we have only one competitor; I think it is fair to say that we are the sales and technology leader in that industry. With some of our new technologies, we are going places where there is no competition because nobody has the same technology we have and we have strong patent protection in those areas.”

CEOCFOinterviews: With your newer technologies, are they doing things that haven’t been done before or focused on being more cost effective than what is out there now?

Mr. Ulland: “I think all of those. One of the areas   we are aiming for with our new technologies is in industrial markets where we will sell direct to the industrial user. We are giving that customer the ability to solve problems in some new and unique ways. One of the applications we are looking at right now gives the customer the ability to do something at a much lower capital cost, much lower operating cost, with a much lower environmental impact.”

CEOCFOinterviews: How do you market your products?

Mr. Ulland: “Chromaline Screen Print Products sells through dealers  and most of our export sales are also through distribution. PhotoBrasive Systems sells directly  to the end-user. We do that through technical service, trade shows, over the telephone and visits to end-users. That has been an effective model for both sides of the business.

CEOCFOinterviews: How much of your sales are from consumables?

Mr. Ulland: “Over 90% of our sales are in consumables.

CEOCFOinterviews: How do you reach the new areas; how do you get on the radar screen and get to the people you need to?

Mr. Ulland: “We find that trade shows are an effective way to introduce new people to out existing product line. The new SplitRock  technologies that we are developing are in conjunction with industry partners where we can gain market information and product feedback. This model  shortens  cycle time and help us get quickly to the best product.”

CEOCFOinterviews: Can you tell us about your manufacturing facilities?

Mr. Ulland: “All of our manufacturing is in Duluth. Our primary manufacturing technology is coating of film and we do all of our coating out of water. We would call ourselves a thick filled water-based coater of photochemical films. We have a number of engineers on staff and one of the things that we do is design as much of our own equipment as possible because our market has unique needs. Because of our ability to design our own production equipment, we have been able to meet those needs.”

CEOCFOinterviews: What do you see as some of the biggest challenges ahead for you, and how are you ready?

Mr. Ulland: “I think that one our  biggest challenges is to find the right industry partners for our new businesses. I am very conscious of  forming alliance and partnerships with people who can help advance our technologies and at the same time not limit our growth potential.  I think as we get into some of these new applications and product development, it is important to find people whether they are industry partners or consultants, who can help us fill in the gaps of our technology base.

CEOCFOinterviews: I believe you are selling under book value now, is that correct?

Mr. Ulland: “Yes. we are,  The year ‘2001’ was sort of a perfect storm for us; we had a patent litigation issue with a Japanese company and as a part of that, we pulled some of our key products off the market. That had  serious consequences to us in 2000-2001. This coincided with the recession that hit the screen print industry along with the rest of the country. The down turn in the screen printing industry caused us to write off some goodwill associated with a small acquisition.

We have subsequently settled our patent litigation suit with the Japanese and they are now one of the companies with whom we have a strategic alliance. They distribute for us and we are testing some of their products for our distribution;  we have gone from being mortal enemies to good friends. In the process, that business has recovered very strongly. The screen print industry  is back and in particular we are seeing very strong demand for our Inkjettable films. We have weathered the perfect storm and through that process, we have become leaner and more efficient; we have lowered our manufacturing costs and overhead. I think we have come out of that, from the product development aspect, with some new products and ideas that are going to take us into some exciting areas.”

We have very talented upper management, which has much international experience with a wonderful workforce. I am extremely optimistic about the company and I don’t see any gloomy clouds on the horizon. We are growing, profitable and our balance sheet is superb.

CEOCFOinterviews: In closing, what would you tell shareholders and potential investors, and why should they be interested in you, particularly now?

Mr. Ulland: “In the first place, our core business is making money. We have a very strong financial statement. We are heavily committed to R&D. We have a very strong intellectual property position and we have alliances with companies around the world. We are in a position of not only growing our core business, which in the last two quarters has been growing at 18%, but to introduce our technologies to new markets where we bring novel solutions.  I think we are a very strong and solid company. We are growing at a nice rate. Further, I think we have significant opportunities in important new markets with our core technologies.”


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