SANTA FE, N.M., April 06, 2018 (GLOBE NEWSWIRE) -- Sigma Labs, Inc. (NASDAQ:SGLB) (“Sigma Labs” or the “Company”), a provider of quality assurance software under the PrintRite3D® brand, today announced financial results for the three and twelve months ended December 31, 2017.

Highlights for 2017

• Sigma Labs announced a commercial agreement with Pratt & Whitney, a unit of United Technologies Corp. (NYSE:UTX), for its PrintRite3D® software along with participation in the Company’s Early Adopter Program.
  
  
• Sigma Labs entered into a long term non-exclusive commercial agreement with Additive Industries B. V. of The Netherlands. Additive Industries now embeds PrintRite3D® software within its additive manufacturing (AM) equipment.
  
  
• The Company received a contract from Solar Turbines Incorporated, a subsidiary of Caterpillar Inc. (NYSE:CAT). Solar Turbines now implements Sigma Labs’ In-Process Quality Assurance™ (IPQA®) technology for the production of gas turbine components.
  
  
• In May of 2017, Sigma Labs unveiled its PrintRite3D® INSPECT™ V.2.0 quality assurance software at RAPID + TCT 2017 ( www.rapid3devent.com), North America's preeminent event for discovery, innovation, and networking in 3D manufacturing.
  
  
• The Company installed its PrintRite3D® INSPECT® software Version 2.0 at Honeywell Aerospace Advanced Manufacturing Engineering Center in Phoenix, AZ.
  
  
• In July of 2017, John Rice, Chairman of the Board, was appointed as interim CEO of Sigma Labs.
  
  
• Sigma Labs installed its cloud-based PrintRite3D® INSPECT® software Version 2.0 at Woodward Inc. (NASDAQ:WWD) Aircraft Turbine Systems group. The PrintRite3D® software is now part of Woodward's additive manufacturing strategies to ensure that their aerospace and industrial customers receive quality product.
  
  
• Sigma Labs introduced its cloud-based PrintRite3D® INSPECT® software Version 3.0 in November 2017.

“The central theme of 2017 has been change: change in the market, change in our product, change in our culture, change in our management team, and change in our operational strategies,” said John Rice, CEO of Sigma Labs. “We believe that the changes we made inside Sigma have positioned our company to take advantage of the expanded opportunities that were created by changes in our markets,” added Mr. Rice. “In 2017 we signed contracts with Caterpillar subsidiary Solar Turbines, Woodward, Siemens Corp. who manufacture a wide range of industrial equipment as well as renowned control system control technologies, and esteemed aerospace and defense manufacturer Pratt and Whitney. These agreements are in addition to the continuation of established contracts with Honeywell, DARPA (Defense Advanced Research Project Agency) Open Manufacturing (OM) program and with private space exploration company Aerojet Rocketdyne. Yet, I would say, that our most important accomplishment as a company is that we have succeeded in converting our company culture from R&D technology development into a Technology Commercialization Enterprise. We are confident in our people, our products, and in the markets’ need for them.”

2017 Full Year Financial Results
Revenue for the year ended December 31, 2017 was approximately $641,000 versus approximately $942,000 for 2016. The Company reported a net loss for the year of approximately $4,600,000, or ($1.04) per diluted share, versus a loss of approximately $2,200,000, or ($0.71) per diluted share, for 2016.

The reduction in revenue was primarily due to a shift in customer base in keeping with the Company’s shift in business plan and strategy. As we moved from an R&D to a commercialization focus, the primarily programmatic sales of 2016 were replaced by Early Adapter Program (EAP) and Original Equipment Manufacturer (OEM) sales with their correspondent incentivized pricing.

Cost of revenues for 2017 were $272,372 as compared to $228,902 in 2016, an increase of $43,470 or 19%.  This increase is associated with the equipment costs of the initial EAP and OEM installations made in the second half of the year.

Sigma Lab’s operating expenses for 2017, were $4,420,667 as compared to $3,211,258 for 2016, a $1,209,409 or 38% increase. Operating expenses principally included internal operating and sales expenses, outside service fees, and research & development costs. These three operating expense areas are responsible for $1,133,513 or 94% of the increased costs in 2017 and are each addressed separately below.

The biggest contributor to internal operating expenses was personnel costs. Our payroll expenses for the twelve months ended December 31, 2017 were $1,269,476 as compared to $1,027,306 for the same period in 2016, a $242,170 or 24% increase. This increase in payroll was primarily due to the increased salaries associated with our strategic new hires and reorganization of the management team made to achieve the goal of doubling down on technology advancement. The other significant contributor to internal operations costs was stock-based compensation. Expenses relating to stock-based compensation for 2017 were $719,796 as compared to $341,55 for the same period in 2016. This 111% increase in stock-based compensation costs are due to two primary factors. The first is that the majority of stock options were granted after September 30, 2016, thus significantly more stock option vesting amortization was recorded in the four quarters of 2017 than in the same periods of 2016. The second factor contributing to the increased amortization cost was the grant of a significant number of options with shorter than standard vesting periods as part of the strategic realignment of key personnel.  Utilizing stock and stock options to pay for services is one of the mechanisms Sigma Labs has put into place to incentivize and reward contributors while preserving cash.

The second biggest contributor to both total operating expense and the increase in operating costs between 2017 and 2016, was Outside Service Fees. In 2017, we paid $1,229,304 in Outside Services Fees compared to $934,728, an increase of $294,576 or 31%.  In each year, services in connection with our obligations as an SEC reporting company cost us slightly over $550,000. Legal Fees of $333,046 were paid in 2017 compared to $126,992 in 2016, an increase of $206,054 or 162%. The increase in these fees resulted primarily from our February 2017 public offering that resulted in net proceeds of approximately $5,225,650. The other outside service fee expenditures that increased materially in 2017 were those related to advertising and trade show activities. These amounted to $154,224 in 2017 compared to $94,931 in 2016, a $59,294 or 62% increase. This increase resulted from the shift in strategic focus toward scalable commercial rather than programmatic business development.

Expenditures for Research and Development were $302,043 in 2017 compared to $120,638 in 2016. This $181,405 or 150% increase resulted primarily from the incurrence of additional R& D consulting costs in 2017 in an effort to accelerate technology development.

The combination of lower sales revenue, higher cost of product and increased operations costs, discussed above, resulted in the operating loss of $4,051,990 in 2017 compared to $2,497,938 in 2016.

In 2017, our Net Other Income & Expense was a net expense of $525,526 compared to Net Other Income of $276,904 in 2016.  The largest contributor to the 2017 loss was a $545,188 of revaluations of derivatives and write-offs of debt discounts required as a result of the closing of the public offering in February 2017, the restructuring of debt in October 2017, and the December 2017 conversions of debt instruments by debt instrument holders. This compares to a $354,644 positive contribution from revaluation of derivatives in 2016.   While there was positive contribution in 2017 from an increase in the amount of cash incentives received from the State of New Mexico of $102,865 and $40,107 of interest income from notes issued out of funds from the February 2017 public offering, these were largely offset by a $121,623 increase in interest expense on the $1,000,000 note originated in October of 2016.

As of December 31, 2017, we had $1,515,674 in cash and had a working capital surplus of $2,656,695, as compared with $398,391 in cash and a working capital surplus of $37,799 as of December 31, 2016.

Investor Conference Call
The Company will host a conference call to discuss its 2017 full year financial results today, April 6, 2018, at 11:00am eastern time to review financial results and corporate highlights. Following management’s formal remarks, there will be a question and answer session.

To listen to the call by phone, interested parties within the U.S. should call 1-844-802-2441 and International callers should call 1-412-317-5134. All callers should ask for the Sigma Labs conference call. The conference call will also be available through a live webcast at www.sigmalabsinc.com. Details for the webcast may be found on the Company’s IR events page at: http://client.irwebkit.com/sigmalabsinc/events.