Sigma Labs, Inc.
Q1 2017 Earnings Call Transcript

Published: 16 May 2017

[Operator:]

Good afternoon and welcome to the Sigma Labs Earnings Conference Call for the First Quarter ended March 31, 2017. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of the call will be available approximately 1 hour after the end of the call through June 15, 2017. I would now like to turn the conference over to Scott Gordon, President of Core IR the company’s Investor Relations Firm. Please go ahead sir.

[Scott Gordon:]

Thank you, Gary and thank you everyone for joining today’s conference call to discuss Sigma Labs’ corporate developments and financial results for the first quarter ended March 31, 2017. With us today are Mark Cola, the company’s CEO and Murray Williams, the company’s CFO. At 4

[Mark Cola:]

Thank you, Scott and good afternoon everyone. Welcome to our first quarter 2017 earnings call and corporate update and thank you for joining us. I will comment on our first quarter and then hand off to Murray Williams, our CFO, who will be discussing our financial results for the quarter ended March 31, 2017. Once we conclude, we will open the call for questions. We have accomplished a great deal in the first quarter and that positioned Sigma Labs as unique and highly valuable solutions provider in 3D advanced manufacturing space. With version 2.0 of our PrintRite3D INSPECT quality assurance software, a new OEM Developer’s Kit increased customer wins, stronger synergistic alliances and possible M&A activities, which set the stage for future strong growth potential. The Sigma Labs of today is stronger, better positioned company with tremendous promise. Most notably, we recently entered into a nonbinding LOI with Morf3D to commence negotiations on a mutually acceptable M&A agreement with respect to proposed merger of Morf by Sigma Labs. It is anticipated that this transaction, if consummated, would help us achieve our goal of becoming a fully integrated business able to charge for material selection, design and manufacturing and in-process quality assurance. It has furthered the goal that the combined entity would emerge as a fully integrated additive manufacturing company poised to serve the aerospace and defense industry, which is rapidly transitioning to 3D metal additive manufacturing and which could provide the kind of cost savings required to meet the $56 billion increase slated for that defense industry 2017 budget. The closing of the transaction is subject to definitive documentation and closing conditions some of which are beyond the company’s control. Before I discuss the developments we achieved in our first quarter 2017 in more depth, I would like to take a few moments to discuss the full breadth of who Sigma Labs is our offerings, business model, market opportunities and growth strategies. Sigma Labs is a software company and have developed quality assurance software known as PrintRite3D, which we believe solved some of the major problems that have prevented large scale metal production using 3D printers, namely real-time computer-aided inspection. To frame our solutions in context, Sigma’s client, GE Aviation, for example, has stated that it plans to commit $3.5 billion by 2022 among other things build a metal 3D production facility for its LEAP engine and other engines to produce the applicable 3D printed parts. We have client relationships with Aerojet Rocketdyne for the United States Air Force booster propulsion program and Honeywell Aerospace for the DARPA Period III efforts as well that are focused on leveraging our software in the manufacturing and production of highly advanced parts for a variety of industrial and specialized needs. However, without companies like GE Aviation and our clients like Honeywell, Pratt & Whitney, Siemens and Solar Turbines among many others effectively being able to check each part for shape, density strength and consistency in real-time during the manufacturing process. We believe that such companies will not be able to adequately address the major problems currently preventing large scale metal 3D production. Thus when we announced last week, the commercial availability of our updated PrintRite3D INSPECT version 2.0 software, which pairs our sensor pack, multi-sensor and hardware with contour and analytic software modules for comprehensive management of additive manufacturing processes. We took another convincing step along the path to not only resolving this gating QA issue, it presents the first-to-market end-to-end 3D advanced component manufacturing solution capabilities with web, industrial, Internet of Things and Cloud-based integration, which include computer-aided design, engineering, manufacturing and inspection. We have finally arrived at the realization of our vision with the delivery of a true market in solutions innovation, ground-breaking advancements in process control and real-time quality. Our version 2.0 release is now both web and IIoT enabled and features statistical process control and visualization providing a real-time snapshot of the entire manufacturing process part by part multi-varied analysis and allows for machine floor to Cloud data communication with multiple machine system integration capability. Current methods for providing quality are cost prohibitive, because approximately 25% of parts produced by 3D printing need to be destroyed in the postproduction quality control process. Additional costs are incurred by using nontraditional X-Ray scanning technologies on these parts. We offer our clients the ability to use in-process centers to track each production layer and our software continuously analyzes the part, so that when it is finished, our software can certify production quality in accordance with the customer’s quality specifications. We believe our PrintRite3D software could reduce inspection cost by a factor of 10 in development time for new parts by 50% or more. By using PrintRite3D software, a high precision manufacturer would have the ability to offer its customers on an exclusive basis, product guarantees and assurances that its product was produced in compliance with stringent quality requirements. We have received initial orders from GE Aviation, Honeywell Aerospace, Aerojet Rocketdyne, Woodward and Siemens, Pratt & Whitney and Solar Turbines to name several. Our PrintRite3D web based software is being designed to reside in the cloud of the Industrial Internet of Things. We enable manufacturing engineers to assure the part quality layer by layer provide for manufacturing statistical process control and harvest aggregate and analyze big data from the manufacturing in process data we collect from our SENSORPAK as well as post process manufacturing data collected by our customers. Our specialized suite known as SENSORPAK is an IIoT enabled computing device, it contains the modular hardware and software necessary to connect cyber physical objects living on the manufacturing floor. It allows for bidirectional information flow between the manufacturing flow and the cloud. It stars a million flow of data reduction that finishes with our PrintRite3D software, which provides customers with product guarantees and assurance that the parts are produced in compliance with stringent quality standards. It can collect, analyze, aggregate, filter and then further communicate data from the manufacturing floor to the cloud and enable links to other areas of the IIoT. In addition to unveiling our commercially available PrintRite3D version 2.0 software, we also announced the release of our OEM Developer’s Kit for PrintRite3D Inspect quality assurance software version 2.0. We placed and alpha version with an OEM – European OEM partner for testing, evaluation and incorporation into its additive manufacturing 3D printers. The Developer’s Kit allows an OEM to seamlessly and quickly embed PrintRite3D technology directly into their OEM solution allowing for rapid entry of their products into the market space. Given this backdrop, I would like to address our developments during the first quarter in the context of both the market opportunity and our business model and share with you how we are achieving our mission and our vision to become the market leader in the 3D advanced manufacturing space. According to Wohlers report 2016, 3D printing and additive manufacturing state-of-the-industry annual worldwide progress report, revenues attributable to 3D manufacturing for metal products were $88 million in 2015, up 81% while Sigma Labs focuses on metal 3D printing and products and services sales totaled nearly $5.2 billion in 2015, Wohlers forecast AM products and services sales to grow to approximately $26.5 billion by 2021. As we stated in our quarterly report, the application of 3D printing to a high tolerance precision manufacturing metal parts has only recently emerged. 3D printing of metal parts today represents only a minor percentage of all 3D manufacturing. However, we believe the greatest future growth for 3D printing appears to be in metal parts given the interest and investment being made by Fortune 100 companies, Federal government laboratories and agencies as well as university based institutions. Emphasis from these high end manufacturers and technology leaders is strongly focused on quality and precision manufacturing for high tolerance parts. We believe the ongoing success of 3D printing for metal parts will be highly dependent upon the quality assurance procedure used such as our PrintRite3D’s methodology. Sigma Labs operates in three business verticals; Item 1, software sales to OEMs making 3D printers also known as our OEM partner program, Item 2, software sales to end users using their install base of 3D printers to make components, it’s also known as our early adopter program and Item 3, our contract AM service provider business, which makes 3D printing components for advance manufacturers in aerospace and defense, power generation, medical and transportation industries. We generate revenues through PrintRite3D hardware and sensor sales and computer aided inspection software licensing of our PrintRite3D technology to customers that seek to improve their manufacturing production processes and through ongoing annual software upgrades and maintenance fees. Additionally, we generate revenues from our contract manufacturing activities of metal AM. By running our contract AM service operation we are able to understand the current needs of our customers and where they are going with their next generation product development efforts. Contract AM further allows us a means for continuing and self funding of our IPQA enabled R&D and product development activities for PrintRite3D computer aided inspection software. We provide our AM contract manufacturing services to customers in the form of quality as a service starting with our PrintRite3D cloud based software as a service model customers who will contract with us for computer aided engineering, computer aided manufacturing and computer aided inspection services to generate and establish a digital quality record for AM built parts. Each digital quality record is cloud based and allows for archiving and storage of quality data access to our big data analytics software app for continuous quality monitoring and improvement and automatic industry benchmarking while maintaining firewalls between company specific data. In 2015, we launched two programs, an Early Adopter Program and an original equipment manufacturer or OEM partner program designed to broaden our market presence and speed adoption of PrintRite3D technology. The early adopter program was designed to attract end user customer who have an existing installed base of 3D printers and to offer them icentivized pricing in return for feedback on initial and beta releases of our PrintRite3D software apps. Our OEM partner program was specifically designed for AM machine manufacturers seeking to embed our PrintRite3D quality assurance software apps directly into their machines for customers purchasing a turnkey solution for their new AM machine purchases. We have evolved, innovated, refined and enhanced our software over recent years to meet the evolving industry needs and we have done well at that. However, we have realized that in order to fully capitalize on the enormous market opportunity, we envisioned forging an ecosystem of leading emerging highly complementary market players which together could become as a whole far greater than some of its parts driving the benefits of true synergy and to this young and fast growing market. We announced numerous significant strategic alliances as well as client and OEM partner additions during the quarter, which we envision will drive sustainable revenue over the coming quarters and years. In an effort to bring enhanced solutions for additive manufacturing to the aerospace and defense sector and capitalize on growth and demand for 3D printed metal components within the A&D industry. We entered into a strategic alliance with Morf3D, a California based company that specializes an additive engineering and manufacturing with metals providing high level consulting and manufacturing services including conceptualization, optimization metallurgical examination, certification and data analysis and technology adoption road mapping. By leveraging our PrintRite3D quality assurance software, we believe that Morf3D will be able to provide a means for its customers to increase AM production rates while ensuring consistent part quality. Thereby better meeting the high quality demand of its aerospace customers. We also plan to work together with Morf3D to manufacture certain 3D printed parts. We believe that by working together with Morf we will be in a position to design, manufacture and assure the quality of AM components across a number of important aerospace applications, which could lead to the generation of a meaningful amount of additional revenue for our company. In addition in March, we completed funding alone in the principal amount of $500,000 to Morf3D pursuant to a secured convertible promissory note dated March 27, 2017. The purpose of the loan is to provide working capital to Morf3D to among other things lease an EOS M400 system for Morf3D to expand production for contracts related to AM of high precision aerospace and defense components in furtherance of our strategic alliance and in contemplation of a possible merger with Morf. Also in March, we announced signing a commercial alliance with Jaguar Precision Machine LLC to expand its suite of integrated advanced manufacturing services recently strengthened by the commercial alliance with Morf3D of El Segundo, California. The addition of Jaguar allows Sigma Labs to provide end-to-end 3D advanced component manufacturing capabilities, including computer-aided design, engineering, manufacturing and inspection. Jaguar is a precision prototype manufacturing facility located in Albuquerque, New Mexico. We will also work together to manufacture 3D printed parts requiring exacting precision to demanding specifications, which could lead to contracts in 2017. On May 1, 2017 we completed funding a secured loan in the principal amount of $250,000 to Jaguar to provide working capital to Jaguar to, among other things, become AS9100 certified for contracts related to AM of high precision aerospace and defense components in furtherance of our strategic alliance. Sigma will receive from Jaguar priority for use of certain machines and services of Jaguar. On the client side, we announced the contract from Solar Turbines Incorporated, a subsidiary of Caterpillar Inc. New York Stock Exchange, CAT, is their symbol. Solar Turbines will implement Sigma Labs’ In-Process Quality Assurance technology for the production of gas turbine components using metal additive manufacturing. The division makes midsized industrial turbines for use in electric power generation, gas compression and pumping systems. Sigma Labs will initially install its PrintRite3D software on a 3D Systems’ ProX300 machine, with the potential for multiple system orders as the company ramps up to full serial production. We also announced a contract from Aerojet Rocketdyne, a subsidiary of Aerojet Rocketdyne Holdings, New York Stock Exchange symbol, AJRD, as a follow-on to last year’s award tied to a U.S. Air Force propulsion initiative. Sigma Labs technology is being evaluated by Aerojet Rocketdyne for its contract with the Air Force for liquid fueled rocket engine applications, part of a plan to transition away from the Russian made, RD-180 engines currently used on the Atlas 5 launch vehicle. We also announced the signing of a commercial agreement with Pratt & Whitney, a unit of United Technologies, for our PrintRite3D software along with participation by Pratt & Whitney in our Early Adopter program, along with Solar Turbines who joined the program in April 2017. We added two additional OEMs into the OEM program. We entered into a long-term nonexclusive multiyear commercial OEM agreement with Additive Industries of The Netherlands, embedding and reselling our PrintRite3D software within its AM equipment. We also announced that we entered into a long-term nonexclusive multi-year commercial OEM agreement with a leading European provider of cutting-edge products for additive manufacturing. This undisclosed OEM will embed and resell Sigma’s PrintRite3D software within its AM equipments. On February 21, 2017, we closed an underwritten public offering of 1,410,000 units, with each unit consisting of one share of our common stock and one warrant to purchase one share of common stock. The underwriter exercised the over-allotment option covering additional warrants to purchase up to 211,500 additional shares of common stock. Gross proceeds to us from the offering, including the exercise of the over-allotment option were approximately $5.8 million before deducting underwriting discounts and commissions and other operating expenses payable by us. The addition of two new end-users joining our Early Adopter program, Pratt & Whitney and Solar Turbines, our alliance partnership agreements with Morf and Jaguar Precision Machine and signing a non-binding LOI with Morf3D, our goal is furthered with respect to establishing a 3D advanced manufacturing ecosystem capable of delivering high precision components to advanced manufacturers worldwide. The developments and accomplishments we have achieved in the first quarter further our goals and strengthen our foundation as a growing market force in the 3D AM space. Our vision was to develop a comprehensive revolutionary software solution for their burgeoning industry that overcame the inherent limitations and potential dramatic losses associated with end of process quality assurance testing. Our expertise in this realm has evolved over the years in the trenches engineering, consulting and our practical insights have delivered our market changing solution. We believe that our software, which is positioned inside the 3D metal printer, solves these critical problems by assuring each part is being made to the specifications of the computer file as it is being made. We enabled 3D prototyping to become 3D manufacturing and we do it within an ecosystem that we believe now includes market-leading end-to-end 3D advanced component manufacturing capabilities with web, IoT and Cloud-based integration, including computer-aided design, engineering, manufacturing and inspection. Our first quarter marks the continuation of our efforts to integrate the entire lifecycle of advanced component manufacturing from prototyping to finished product representing groundbreaking advancements in process control and real-time quality assurance. Instead of performing quality assurance post-process or post-production, our PrintRite3D software could fundamentally redefine conventional quality assurance by embedding quality assurance and process control into the manufacturing process in real-time. We are also pleased to report the addition of new members of the Board of Directors of Sigma Labs during the quarter. Sigma Labs appointed Sam Bell, Frank Garofalo and John Rice to serve as independent directors and appointed John Rice as Chairman in April 2017. We are especially pleased to welcome our new directors who will serve to steward Sigma Labs in its future growth and market leadership. With that, I now turn the call over to Murray to discuss our financial results for the quarter ended March 31, 2017 and then we will open the call for questions. Murray?

[Murray Williams:]

Thank you, Mark. Very well said. Good testament to lots of good stuff going on here at Sigma. It took a while for Mark to relay that information. So, I will try to go through the numbers quickly to leave more time for questions at the end of the call. During the three months ended March 31, 2017, we recognized revenue of $150,000 as compared to $358,000 in revenue during the same period in 2016. The decrease in revenue was primarily due to the completion of the GEA America Makes Program in 2016, which provide three months of revenue in Q1 2016, but no revenue in Q1 2017 as well as the completion of the DARPA Phase 2 project in 2016, which also provided three months of revenue in 2016, but no revenue in Q1 2017. Our general and administrative expenses for the three months ended March 31, 2017 were $644,000 as compared to $395,000 for the same period in 2016. Our payroll expenses for the three months ended March 31, 2017 were $377,000 as compared to $216,000 for the same period in 2016. Our expenses relating to stock based compensation for the three months ended March 31, 2017 were $140,000 as compared to $78,000 for the same period in 2016. And finally our research and development expenses for the three months ended March 31, 2017 were $50,000 as compared to $39,000 for the same period in 2016. This resulted in an increase in our net loss for the three months ended March 31 over the prior year. Our net loss was $943,965 in Q1 2017 as compared to $470,667 for the same period in 2016. As noted in our financial statements, our revenue decreased and we experienced a larger increase in expenses, mostly and largely attributable to the cost of our February 2017 public offering that generated proceeds of $5.25 million for us. And that left us with a little over $4.6 million in cash as of March 31, 2017 with the working capital surplus of $4.1 million as compared with $398,000 in cash and a working capital surplus of $111,000 as of March 31, 2016. So I believe now it’s the perfect time to open the call to questions. Operator, please do so.

[Operator:]

[Operator Instructions] The first question comes from Aaron Bond [ph] a private investor. Please go ahead.

[Aaron Bond:]

Hello Mark.

[Mark Cola:]

Yes. Hi Aaron, how are you?

[Aaron Bond:]

Doing fine. Thank you. I just wanted to congratulate you on the contract wins this quarter. I appreciate your hard work in that regard.

[Mark Cola:]

Thank you.

[Aaron Bond:]

My question is are you guys still working with materialize and 3D film, I was wondering what the status was on those?

[Mark Cola:]

We are working with both still, yes and without divulging any other details.

[Aaron Bond:]

Got it, okay. And I guess my next question is [Technical Difficulty] contracts with your premier customers Honeywell and GE and about how far would you estimate that?

[Mark Cola:]

I am sorry, ask me that again please, Aaron.

[Aaron Bond:]

Yes. I was wondering are you still anticipating having the production run contracts with GE and Honeywell in the future?

[Mark Cola:]

We are, yes.

[Aaron Bond:]

Okay. Do you have any estimate on how far that might be?

[Mark Cola:]

I do not.

[Aaron Bond:]

Okay. And just another quick question on I guess with the FAA, they are supposed to be coming on with some more AM guidance, do you foresee any guidance as far as third-party certifications necessary for fully advanced metal volume?

[Mark Cola:]

Our understanding is the FAA is still on schedule to produce guidance for the industry, yes.

[Aaron Bond:]

Okay, alright. Thanks Mark.

[Mark Cola:]

Yes. Thanks Aaron.

[Operator:]

[Operator Instructions] The next question comes from Kevin Mayer [ph] a private investor. Please go ahead.

[Kevin Mayer:]

Hi, Mark. How is it going?

[Mark Cola:]

Hi Kevin, well, how are you?

[Kevin Mayer:]

Doing great, the show in Rapid was fantastic, it was nice to see you out there. You guys had a great showcase there.

[Mark Cola:]

Thank you. Nice to see you there.

[Kevin Mayer:]

The buzz around the booth was very exciting, is with the Shareholder Meeting that was scheduled for June 7, is that going to be rescheduled?

[Mark Cola:]

It is going to be rescheduled, yes.

[Kevin Mayer:]

Is that contingent on anything that’s happening or…?

[Mark Cola:]

It certainly is.

[Kevin Mayer:]

Okay. So no outlook on when that may happen at this point?

[Mark Cola:]

I don’t have any guidance at this time, no.

[Kevin Mayer:]

Okay, that was my only real question. You did a fantastic job explaining everything that’s going in the industry and I appreciate that.

[Mark Cola:]

Yes, no worries. Thank you. I appreciate your question. Have a great day.

[Kevin Mayer:]

You too.

[Mark Cola:]

Thanks.

[Operator:]

The next question comes from Tao Smith [ph] a private investor. Please go ahead.

[Tao Smith:]

Thank you. Mark, thank you for the overview. I have two questions, do you know have the OEMs had yet sold any printers with PrintRite3D involved or included…?

[Mark Cola:]

I do know, it may have not.

[Tao Smith:]

They have not, okay. Secondly, can you comment on the relationship with GE and the effect that they are – the fact that they have a deal with materialize to use their software, how does that affect PrintRite’s future from a standpoint of quality assurance contracts with GE?

[Mark Cola:]

I think it probably enhances it quite honestly. It sort of makes final, but more why I say that. So the software that materializes is offering is complementary, not competitive product to Sigma Labs. And so that’s why I believe it’s going to be a good thing that they are strengthening their relationship.

[Tao Smith:]

Okay. I appreciate that earlier in conjunction with the secondary offering, I believe there were comments that you planned to add a couple of printers in-house is that still your plan or vision?

[Mark Cola:]

We are evaluating the current demand and then we will decide accordingly, yes.

[Tao Smith:]

Alright. One other question, can you tell us how many employees you have at the moment roughly?

[Mark Cola:]

Approximately a dozen and that includes both full-time, part-time and contractors.

[Tao Smith:]

Okay. Thank you.

[Mark Cola:]

Yes. You bet. Thanks for calling.

[Operator:]

The next question comes from David Robinson a private investor. Please go ahead.

[David Robinson:]

Hi Mark. I wanted to ask you and you have been clear about the fact that there you don’t have anything solid to report as far as the Morf3D potential merger at this point, but in terms of general discussions and in a broad stroke sense, if things do come together with Morf3D are you amendable to the idea of a co-CEO role or some significant managerial executive participation from Ivan Madera?

[Mark Cola:]

We are absolutely looking for a full participation by Ivan and his group. So the construct of a management team has been put forward and is currently being discussed.

[David Robinson:]

And then I have another one as far as Dr. Dave is concerned because – does he maintained any kind of financial interest remaining financial interest in the company?

[Mark Cola:]

I believe Dr. Dave is still a shareholder, yes.

[David Robinson:]

And any discussions with him as far as if things are going to be heating up and picking up as we would all like to believe and as you think to indicate any discussions with him about the potential of his becoming more meaningfully involved again?

[Mark Cola:]

Dr. Dave is and has been a contract employer of Sigma Labs’ now for some time. And so we again evaluate the needs periodically and have routine assistance from Dr. Dave as needed.

[David Robinson:]

But he – it’s our understanding at least that he continues to have his other focuses and to be involved with other endeavors and there is no – can you tell us if there is any discussion of his coming back in a closer to full-time energy and time commitment basis with the company.

[Mark Cola:]

I don’t think there is anything further I can add at this time.

[David Robinson:]

I see. Okay, thank you.

[Mark Cola:]

Yes. Thank you, David.

[Operator:]

The next question comes from Paul Tourkin [ph] another Private Investor. Please go ahead.

[Paul Tourkin:]

Good afternoon Mark.

[Mark Cola:]

Hi Paul.

[Paul Tourkin:]

I would like to refer back to the conference call in November when you indicated that the printer was fully booked through the end of the year, we have seen a drop in revenues this quarter, what is the status of the booking for the printer that is in-house at this time?

[Mark Cola:]

So the machine is currently booked and is actually printing as we speak.

[Paul Tourkin:]

We gave a fully booked through the end of the year, I mean are we talking about being fully booked now or half the times 70%, my question goes to if you are looking is becoming more of a – could not be coming more, but adding a printing shop aspect, trying to get some sense of what the demand is at this time for those services so I can drill to other I think it’s a such a great idea to continue on this path with the funds we have at this point in time?

[Mark Cola:]

So let me try and put this in context for you Paul. The last week at the Rapid 2017 Show there were announcements by entities there to stand up large scale manufacturing facilities to do 3D metal printing for principally aerospace and defense. And so that’s to us a good sign that the market is expanding and the opportunity and the timing is now and so that’s why we are continuing down the vertical of can’t providing services on the contract AM side, that’s why we believe the opportunity is now to strengthen our alliance and relationship with Morf3D and their printing expertise and capabilities. So we believe the – what you are seeing now is a shift and a trend away from finally the prototyping that a lot of folks have been doing and the service providers if you will are starting to expand their capability and we believe the opportunity is before us, so that’s why that vertical exists for us.

[Paul Tourkin:]

Okay. Referring back to something else from that November conference call, you offered a time estimate of 12 months to 18 months that you thought would be necessary before sales of PrintRite started to get some real traction, are you still comfortable with that same timeframe, but you know its 6 months to 12 months from now or do you see this further out?

[Mark Cola:]

No I think we are still comfortable with that.

[Operator:]

The next question comes from Doug Root [ph], a private investor. Please go ahead.

[Doug Root:]

Yes. Hi guys. Thanks for the updates on like lot of exciting things going on in the industry and it sounds like you been very busy group.

[Mark Cola:]

Hi Doug.

[Doug Root:]

I would like to ask you clarified couple of questions I have in my mind on financial side of things in the use of funds, so I have been a shareholder for many years, continue to see a decline in value and when I look at the use of – so you issue more shares and then turnaround and borrow money to couple of other companies I guess I don’t fully understand how that’s a good idea and are you in a position right now to have enough money operating capital needed through the rest of the year and what if you don’t?

[Mark Cola:]

It’s a great question, I appreciate that. We of course are – have thought and grow the capital, so that we can do exactly that grow and expand the business. And so we think it’s the right thing to do to take on the equity investments from the public markets to further our abilities and to accomplish the dozen or so activities we did in the first quarter this year, which was almost one a week if do the math and so that sets the stage very nicely for us for the remainder of 2017 and the out years. So we absolutely believe it’s the right thing to do.

[Operator:]

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Cola for any closing remarks.

[Mark Cola:]

I would like to thank everyone today for calling in and spending time with us. We are excited about the future and focused on achieving the promise that Sigma Labs represents and to delivering lasting shareholder value to you our loyal shareholders. Thank you again for your time and continued support and we look forward to continuing to report on our achievements in the coming months.

[Operator:]

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.