Business context and reporting period
Filing identity: The supplied filing is Sigma Additive Solutions, Inc.’s Form 10-Q, not a filing for Nexttrip, Inc. It covers the quarter and nine months ended September 30, 2022; the company changed its name from Sigma Labs, Inc. in August 2022. Sigma develops and commercializes additive-manufacturing quality-assurance and process-control technology, including PrintRite3D.
Financial performance and position
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | 2022: $188,245; 2021: $700,237 | 2022: $476,749; 2021: $1,302,525 |
| Gross profit / margin | 2022: $108,532 / 57.7%; 2021: $535,471 / 76.5% | 2022: $163,870 / 34.4%; 2021: $893,032 / 68.6% |
| Operating expenses | 2022: $2,392,956; 2021: $3,026,888 | 2022: $6,968,079; 2021: $6,976,944 |
| Net loss applicable to common stockholders | 2022: $2,306,528; 2021: $2,505,198 | 2022: $6,789,533; 2021: $5,076,532 |
| Loss per common share, basic and diluted | 2022: $0.22; 2021: $0.24 | 2022: $0.65; 2021: $0.53 |
At September 30, 2022, cash was $4.80 million, working capital was $5.49 million, total assets were $7.64 million, and total liabilities were $0.82 million. The filing reports no lines of credit or other financing arrangements; it does not show conventional debt on the balance sheet. Nine-month operating cash use was $6.39 million and investing cash use was $0.26 million; no financing cash was raised in the period. Cash declined $6.65 million from year-end 2021. Management said existing cash and expected revenue should fund anticipated costs through at least the first quarter of 2023.
Material changes versus prior comparable periods
- Revenue fell 72.7% in the quarter and 63.4% for the nine months, mainly due to lower PrintRite3D unit sales amid a shift toward subscription pricing.
- Quarterly common-stockholder loss narrowed 7.9%, as lower operating expenses more than offset reduced gross profit. Nine-month loss widened, reflecting a higher operating loss and the absence of the prior-year $1.09 million derivative-liability gain.
- Nine-month operating cash use increased 33% year over year.
- Cash and working capital fell substantially from December 31, 2021. The company reported a net reduction of five employees in the third quarter and a further reduction of two in October.
Outlook, commentary, risks and unusual items
- The company is moving toward subscription offerings, software-only products and OEM/strategic partnerships. Management said subscription pricing lowers initial customer cost from over $100,000 to approximately $3,000–$5,000 per month, and expects headcount to remain stable for 12–18 months. These are plans and expectations, not quantified revenue guidance.
- Management believes its cash and expected revenue will cover anticipated costs through at least Q1 2023, but is seeking additional equity or debt financing and gives no assurance it will be available on acceptable terms. Failure to obtain funding could require the company to delay, scale back or eliminate activities.
- Management said the business-model transition has adversely affected revenue and near-term growth. Risks cited include customer delays or cancellations in a recession, component shortages and other COVID-19 effects, uncertain capital-market access, competition and commercialization challenges.
- Nasdaq notified the company on October 14, 2022 that its share price had failed the $1.00 minimum bid-price requirement. The stated compliance deadline was April 12, 2023, with a possible additional 180 days; management believed it would regain compliance.
- Series D and E preferred stock accrue 9% dividends and have conversion terms; certain defaults can trigger redemption at a 125% premium. Warrants, options and preferred stock represented 5.76 million potential common shares excluded from diluted loss per share as anti-dilutive.
- The company reported a $37,728 deferred Social Security tax balance due by December 31, 2022. No legal proceedings were reported as applicable. The filing reports disclosure controls effective at a reasonable-assurance level.
Important facts for investors to verify
- Confirm issuer identity: the filing is for Sigma Additive Solutions, Inc., whereas the request metadata names Nexttrip, Inc.
- Track cash burn, revenue conversion under the subscription model, and whether additional financing is secured before the stated cash runway expires.
- Check progress toward Nasdaq minimum-bid-price compliance and any resulting listing action.
- Review preferred-stock conversion/redemption terms and potential dilution from warrants, options and stock appreciation rights.
- Reconcile operating expenses: the financial statements report quarterly 2022 expenses of $2,392,956, while the MD&A text gives $2,392,596 and describes a $633,932 decrease; the filing text is inconsistent on these figures.