Filing identity and reporting period
The supplied filing is Sigma Labs, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2019, filed November 14, 2019—not a Nexttrip, Inc. filing. Sigma develops and commercializes PrintRite3D real-time quality assurance and process-control technology for metal additive manufacturing.
Financial performance and liquidity
- Third quarter: Revenue was $171,003, up 33% from $128,593 a year earlier. Cost of revenue rose to $178,760 from $56,309, producing a gross loss of $7,757 versus gross profit of $72,284. Operating expenses were $1.601 million, up $200,000; net loss widened to $1.601 million from $1.321 million. Basic and diluted loss per share was $0.12 versus $0.16.
- Nine months: Revenue was $269,035, down 19% from $330,671. Gross loss was $66,904 versus gross profit of $131,999. Operating expenses increased 17% to $4.677 million, and net loss widened to $4.678 million from $3.881 million. Loss per share was $0.43 versus $0.62.
- Cash flow: Operating cash use was $4.499 million for the nine months, compared with $2.696 million. Investing activities used $70,887; financing provided $4.401 million, mainly from securities offerings. Cash declined $168,352 from year-end to $1.111 million.
- Balance sheet at September 30: Working capital was $1.379 million, compared with $1.052 million at December 31, 2018. Current assets were $2.152 million and current liabilities $772,240. Total liabilities were $772,240; these included a $50,000 convertible note. Stockholders’ equity was $2.104 million, versus $1.735 million at year-end.
- Other changes: Inventory rose to $712,587 from $240,086. Common shares outstanding increased to 14,037,590 from 8,776,629 at year-end, principally reflecting equity issuance. The company had 3,620,610 warrants and 1,251,030 options outstanding at quarter-end.
Material changes and management commentary
Management attributed third-quarter revenue growth to a commercial PrintRite3D unit sale, partly offset by no government program work and lower additive-manufacturing revenue while its printer was used for internal R&D. For the first nine months, revenue declined due to the absence of government work, lower additive-manufacturing activity, and reduced commercial unit sales and maintenance programs.
Cost of revenue increased with the unit sale, inventory write-offs and expenses, and additional labor and travel for the Rapid Test and Evaluation (RTE) program. Operating expense growth reflected higher staffing, research and development, marketing, travel, and office costs. Management reported favorable RTE progress, including a customer advancing to Phase 2 testing, while noting that expanded, sequential testing may lengthen engagements and defer revenue.
Outlook, risks and unusual items
- Management expected continued losses in 2019 and said it believed available funds and anticipated receipts would cover operating and administrative expenses through year-end. It also said ongoing funding needs depend on commercialization, follow-on contracts, manufacturing orders, and potentially additional securities or borrowing; no assurance of funding was given.
- The filing provides no quantified revenue or earnings guidance. Management expected revenue to increase as PrintRite3D commercialization and market presence expand, but stated that higher salaries and related costs would offset some anticipated revenue growth.
- Nasdaq had notified the company of noncompliance with the $1 minimum bid-price requirement, with an initial cure period through March 10, 2020. Nasdaq had also warned that continued compliance with the $2.5 million stockholders’ equity requirement must be demonstrated as of December 31, 2019, or the stock could face delisting. Delisting could reduce liquidity and hinder capital raising.
- The $50,000 convertible note, originally due October 18, 2019, was extended to January 3, 2020. Jaguar Precision Machine repaid its note receivable in full, including accrued interest, on September 5, 2019.
- The company reported no material legal proceedings, no off-balance-sheet arrangements, and no material changes to internal control during the quarter. Management assessed disclosure controls as effective at a reasonable assurance level.
Investor verification checklist
- Confirm the filing identity: the supplied document is Sigma Labs’ 10-Q, despite the request metadata naming Nexttrip, Inc.
- Reconcile the September 30 reported stockholders’ equity of $2.104 million with the filing’s discussion of Nasdaq’s $2.5 million equity requirement and its stated compliance status and December 31 deadline.
- Assess cash consumption, funding dependence, and whether commercial RTE activity converts into recurring licenses and follow-on revenue.
- Review dilution from 2019 share issuances and the potential effect of outstanding warrants, options, and the convertible note.
- Track Nasdaq bid-price and equity compliance deadlines and any resulting listing action.