Business context and reporting period
The filing is Sigma Additive Solutions, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2023, filed August 14, 2023. The request metadata names Nexttrip, Inc.; that does not match the registrant identified in the filing. Sigma develops additive-manufacturing quality assurance and process-control technology, including its PrintRite3D products.
After the quarter, Sigma reduced its workforce to five, stopped product development, and ceased pursuing new customers while evaluating a sale, reverse merger, asset sale, or other strategic alternatives.
Financial performance and position
| Metric | Three months ended June 30, 2023 | Six months ended June 30, 2023 |
|---|---|---|
| Revenue | $97,043, down 59% year over year | $227,202, down 21% |
| Gross profit / margin | $60,552 / 62.4%; prior-year margin 18.4% | $127,047 / 55.9%; prior-year margin 19.2% |
| Operating expenses | $1,364,571, down 40% | $3,212,715, down 30% |
| Operating loss | $(1,304,019) | $(3,085,668) |
| Net loss | $(1,308,094); common-stockholder loss $(1,318,782) | $(3,059,794); common-stockholder loss $(3,082,229) |
| Loss per common share | $(0.12) | $(0.29) |
| Operating cash flow | Not separately reported for the quarter | $(2,414,881), compared with $(4,314,503) in 2022 |
Cash was $368,443 at June 30, 2023, versus $2,845,931 at December 31, 2022. Working capital was $948,091, down from $3,644,522. Total liabilities were $542,945, all current; the balance sheet reports no debt. Total assets were $2,934,234 and stockholders’ equity was $2,391,289.
Six-month investing cash outflow was $62,607; financing cash flow was zero. Cash declined by $2,477,488 during the six months. The filing reports a $115,600 allowance for doubtful accounts and associated bad-debt expense.
Material changes versus the prior comparable period
- Second-quarter revenue fell 59%, principally from lower PrintRite3D sales and lower maintenance, RTE, and on-site development/support revenue. Six-month revenue declined 21% for similar reasons.
- Gross margin improved substantially year over year, while gross profit increased in both reported comparisons despite lower revenue, reflecting lower cost of revenue and fewer unit sales and installations.
- Operating expenses fell with reduced salaries, headcount, travel, marketing, and office costs. The lower operating loss narrowed second-quarter common-stockholder loss 42% and six-month common-stockholder loss 31%.
- Bad-debt expense of $115,600 increased other operating expenses. Six-month other income was lower than in 2022, partly because the prior period included a $76,628 New Mexico tax credit.
- Common shares outstanding were 10,772,713 at June 30, up from 10,498,802 at year-end, primarily reflecting preferred-stock conversions and related in-kind dividends. The company reported 10,772,713 shares outstanding on August 11.
Outlook, risks, and unusual items
- Going concern: Management states there is substantial doubt about Sigma’s ability to continue as a going concern. It estimated that cash and working capital would fund scaled-back operations only through August 2023. As of July 31, cash was approximately $365,489, including about $135,000 from an equipment sale. Failure to secure a transaction or financing could lead to dissolution, liquidation, or bankruptcy.
- Strategic alternatives: Sigma reported multiple written, non-binding proposals to buy assets or acquire the company, but had not signed a definitive agreement. Completion, timing, and terms were uncertain.
- Potential financing: On August 14, 2023, Sigma entered an at-the-market sales agreement permitting up to $1.5 million of common-stock sales. Sales are not assured and would dilute existing holders; the sales agent commission is 3% of gross proceeds.
- NASDAQ compliance: The company had until October 9, 2023 to regain the $1.00 minimum bid-price requirement, potentially through a reverse split. Equity of $2.39 million was below NASDAQ’s $2.5 million continued-listing standard; delisting could impair trading and access to capital.
- Other risks and developments: Sigma cited uncertainty in protecting its intellectual property and said it had notified two companies of alleged use of patented technology without a constructive response. It also disclosed no material effect from inflation or interest-rate changes to date.
- The filing provides no conventional operating forecast. Its stated near-term outlook is limited to maintaining scaled-back operations while pursuing strategic alternatives and possible financing.
Important facts for investors to verify
- Confirm the issuer: this filing is for Sigma Additive Solutions, Inc. (NASDAQ: SASI), not Nexttrip, Inc.
- Check whether a definitive merger, sale, asset transaction, or other strategic agreement was reached and on what terms.
- Verify subsequent cash balances, ATM sales and proceeds, and whether funding extended operations beyond the disclosed August 2023 runway.
- Check NASDAQ bid-price and stockholders’ equity compliance, including any reverse split or delisting developments.
- Assess collectability of the customer receivable behind the $115,600 allowance and the recoverability of inventory and intangible assets.
- Consider potential dilution from the ATM offering, outstanding warrants, options, and preferred stock; the filing lists 4,860,080 underlying common shares from warrants, options, and preferred stock at June 30.