Business context and reporting period
The supplied filing is Sigma Labs, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2021—not a Nexttrip, Inc. filing. Sigma develops and commercializes PrintRite3D manufacturing quality-assurance and process-control technology, and also earns revenue from metal additive-manufacturing contract work.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | $144,148 vs. $167,688 in 2020 | $602,288 vs. $389,418 in 2020 |
| Gross profit and margin | $27,751; 19.3% vs. $110,004; 65.6% | $357,560; 59.4% vs. $87,031; 22.3% |
| Operating expenses | $2,168,651 vs. $1,526,554 | $3,950,057 vs. $3,086,195 |
| Operating loss | $(2,140,900) vs. $(1,416,550) | $(3,592,497) vs. $(2,999,164) |
| Net loss | $(1,845,547) vs. $(909,638) | $(2,496,207) vs. $(2,493,223) |
| Net loss applicable to common stockholders | $(1,859,767) vs. $(1,601,518) | $(2,571,334) vs. $(3,500,350) |
| Basic and diluted loss per share | $(0.18) vs. $(0.49) | $(0.28) vs. $(1.48) |
Cash was $14.73 million at June 30, 2021, up from $3.70 million at December 31, 2020; working capital was $15.57 million versus $4.33 million. First-half operating cash outflow was $3.27 million, investing outflow $108,021, and financing inflow $14.40 million. Total liabilities were $694,689, including $563,436 of current liabilities. The filing reports no credit lines and no material off-balance-sheet arrangements.
Material changes versus prior periods
- Second-quarter revenue declined 14%, largely because the company had no Rapid Test and Evaluation program revenue in the quarter, compared with $29,864 a year earlier. First-half revenue rose 55%, principally due to higher PrintRite3D unit sales, partly offset by lower RTE revenue.
- First-half gross profit improved as cost of revenue fell, including from lower unit build costs and reduced legacy RTE support costs. Second-quarter gross profit and margin fell as cost of revenue increased despite lower sales.
- Operating expenses rose 42% in the quarter and 28% in the first half. Management cited higher payroll and headcount, R&D spending, and other growth-related costs; first-half R&D expense was $477,040, up from $165,335.
- Common shares outstanding increased from 5,995,320 at year-end to 10,493,598 at June 30, primarily reflecting equity offerings and warrant exercises. First-half financing included $14.87 million gross proceeds from public and private securities offerings and $1.14 million from warrant exercises; offering costs were $1.60 million.
Outlook, risks, and unusual items
- Management expected cash on hand to fund anticipated operating costs and capital expenditures through 2022, but cautioned this estimate depends on revenue and cash-burn assumptions that may prove incorrect. No quantified revenue or earnings guidance was provided.
- Management said COVID-19-related customer delays and reduced demand in aerospace and oil and gas continued to pressure revenue; purchase-order timing remained uncertain. It also identified potential longer-term benefit from broader adoption of 3D printing.
- The company planned continued PrintRite3D commercialization, development and marketing, including following the May 2021 release of version 7.0. It stated future funding could depend on revenue, partnerships, additional securities issuance or borrowing; equity financing could dilute shareholders, while debt could impose restrictive covenants and repayment obligations.
- First-half other income included a $1,092,441 gain from remeasuring warrants issued in the March offering. After shareholder approval increased authorized common shares, the warrant liability was reclassified to equity in May; the gain is not an operating revenue source. Prior-year other income included $151,657 of state incentives and $361,700 from recognition of a PPP loan as a government grant.
- The filing describes $75,455 of deferred Social Security taxes, due in two equal installments in December 2021 and December 2022. The balance sheet separately lists a $37,728 CARES Act deferred payroll tax liability; reconcile the presentation and amounts.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. Legal proceedings were reported as not applicable.
Important facts for investors to verify
- Confirm the issuer: the supplied filing identifies Sigma Labs, Inc. (ticker SGLB), whereas the request metadata names Nexttrip, Inc.
- Assess whether revenue growth, customer order conversion and gross margins can support the company’s commercialization plans and stated cash runway.
- Review potential dilution from outstanding warrants, options and preferred shares. The filing lists 3,987,931 warrants outstanding and 853,936 options at June 30, 2021.
- Reconcile the payroll-tax deferral disclosures and the quarter’s other-income figures: the statement of operations reports $295,353 total other income, while MD&A cites $295,393.