Why Sigma Labs Inc (OTCMKTS:SGLB) Shares Are Tumbling This Week

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Sigma Labs Inc (OTCMKTS:SGLB) shares were down 43.75% on Monday to $1.26 and an additional 0.79% in after-hours trading. Share prices have been trading in a 52-week range of $1.25 to $7.00. The company has a market cap of $8.46 million at 6.27 million shares outstanding.

Sigma Labs Inc is a technology company that specializes in the development and commercialization of manufacturing and materials technologies. Its  principal business activities include the development of its In-Process Quality Assurance suite of technologies and the commercialization of both its IPQA and materials-related suite of technologies, with its focus on three-dimensional printing industry. It is engaged in a range of activities in which it seeks to commercialize technologies and products in various industry sectors, such as aerospace and defense manufacturing, bio-medical manufacturing, automotive manufacturing, and other markets.

The company offers PrintRite3D SENSORPAK, which is an auxiliary sensor and hardware kit; PrintRite3D INSPECT, which is a software that verifies quality layer by layer, and PrintRite3D CONTOUR, which is a software that assures the as-built geometry. Its other software modules include PrintRite3D THERMAL and PrintRite3D ANALYTICS.

In its latest earnings conference call Sigma Labs Inc President and CEO Mark Cola started off by sharing that the company completed financing raising $900,000 before offering expenses that helps it strengthen its balance sheet and meet its goals and objectives. Next, he shared a recent contract award from Siemens in producing components for gas turbines. He added that the company was successful in receiving additional contracts from Honeywell in the quarter for some of their America Makes work.

We’ll provide statistical process control and assure part quality for burner repairs as well as set the stage for productivity optimization. Siemens plays a leading role in applying additive manufacturing across its highly-demanding gas turbine operations. We are proud to assist them in providing the highest quality 3D printed components for such technology applications, where Siemens is continuously working on further process improvements. We look forward to a close and beneficial partnership together,” remarked CEO Mark Cola.

In terms of numbers, Sigma Labs Inc ended the third quarter with about $0.1 million in cash and equivalents, as well as $1.2 million in stockholder equity on the books. In response to a question from an analyst, Cola clarified that the company’s burn rate is about $180,000 a month right now but they are anticipating an increase in the number of sales regarding their early adopter program. In a follow-up question, he responded that they are looking at 12-18 months before 3D printing hits the mainstream, which could be a tipping point for the company.

One roadblock that Cola mentioned is that the FAA hasn’t any issued any draft guidance on 3D printing, which could be a delay factor in their partnerships with aviation companies and aircraft manufacturers.

And part of the slow maturation here is, a lot of folks are waiting for that draft guidance to come out so that when they want to move into 3D printing, they know how to do it and an in process manner or approach. Right now, the only folks that are really able to bring products to market in terms of 3D printing in the aerospace are the ones that you read upon in the press, Frank Witney, GV Aviation. And of course they all bring their own data packages and that’s long time to generate them, quite costly,” Cola explained.

In a nutshell, Sigma Labs Inc has quite a long way to go before things take off, and there are plenty of risk factors involved in their outlook. With their current burn rate, it’s hard to imagine that the company could stay afloat with their current capitalization, even with their completed financing.

DISCLAIMER: There is a substantial risk of loss with any speculative asset, especially small cap stocks. The opinions expressed are those of the author, and do not constitute recommendations to buy or sell a stock. Do your own research before committing capital.