Filing summary
Entity discrepancy: The request identifies Nexttrip, Inc., but the supplied Form 10-Q is for Sigma Labs, Inc. This summary reflects the filing provided, not Nexttrip.
Business context and reporting period
Sigma Labs develops and commercializes in-process quality assurance and process-control technology for additive manufacturing, including its PrintRite3D products, and provides related services and contract manufacturing. This unaudited Form 10-Q covers the quarter and six months ended June 30, 2018; it was signed August 14, 2018. Management said it had shifted away from research-and-development application sales and installations toward customers manufacturing 3D metal parts for production, contributing to lower revenue.
Financial performance and liquidity
| Metric | Three months ended June 30, 2018 | Three months ended June 30, 2017 | Six months ended June 30, 2018 | Six months ended June 30, 2017 |
|---|---|---|---|---|
| Revenue | $98,663 | $290,553 | $202,078 | $405,076 |
| Gross profit / margin | $30,095 / 30.5% | $179,141 / 61.7% | $59,715 / 29.5% | $219,130 / 54.1% |
| Operating expenses | $1,422,511 | $1,108,234 | $2,599,641 | $2,114,717 |
| Net loss | $(1,388,804) | $(988,741) | $(2,559,680) | $(1,815,373) |
| Basic and diluted loss per share | $(0.25) | $(0.22) | $(0.48) | $(0.43) |
- For the six months, operating cash use was $1,472,519, versus $1,291,060 in 2017. Investing activities provided $530,082, mainly reflecting collections on notes receivable; financing activities provided $2,946,400. Cash increased by $2,003,963 to $3,519,637.
- At June 30, cash was $3,519,637, current assets were $3,911,807, current liabilities were $591,305, and working capital was $3,320,502. Total liabilities were $591,305, including a $50,000 convertible note due October 18, 2018; the filing reports no credit line.
- Stockholders’ equity was $4,127,814, compared with $3,011,916 at year-end 2017. Common shares outstanding were 8,248,729 as of August 13, 2018.
Material changes and management commentary
- Second-quarter revenue fell $191,890 year over year; six-month revenue fell $202,998. Management attributed the declines principally to lower DARPA and Aerojet program revenue and fewer new system sales. Contract additive-manufacturing service revenue partly offset the decreases.
- Six-month net loss increased by $744,307. Higher operating expenses, including stock-based compensation and personnel costs, were the main operating pressures. Six-month stock-based compensation was $584,589, compared with $306,405 in 2017.
- The company raised equity capital through April and June 2018 offerings. The cash flow statement reports $3,390,100 gross proceeds and $443,700 of offering costs. Series B preferred stock converted into 1,000,000 common shares; the June offering also included common and preferred shares and warrants.
- Management stated that available funds were expected to cover administrative and operating expenses through at least the first quarter of 2019, assuming anticipated revenues and other funding sources. It expected increased commercialization and marketing spending, and said it anticipated sales contracts could close in the second half of 2018. These are expectations, not guaranteed outcomes; no numerical revenue or earnings guidance was provided.
- Management reported a Nasdaq notice concerning minimum equity compliance received in May; it believed the company had regained compliance based on June 30 equity of $4,127,814. The filing also reports a June 2018 patent issuance and a demonstration of closed-loop process control. Management identified customer adoption, commercialization, and access to additional funding as important uncertainties.
Investor verification points
- Confirm the intended issuer: the supplied filing is for Sigma Labs, Inc., not Nexttrip, Inc.
- Check the revenue and order pipeline underlying management’s expectation of second-half 2018 contracts and its cash-runway estimate.
- Verify the collectability and timing of the remaining Jaguar note receivable, reported at $118,164 net on the balance sheet, and the note’s amended due date of August 1, 2018.
- Review dilution from the 2018 equity offerings, outstanding warrants and options, and preferred-stock conversions.
- Reconcile offering-proceeds disclosures: the cash flow statement reports $3,390,100 gross proceeds and $443,700 costs, while the MD&A cites different net-proceeds amounts than the notes and business discussion.