What changed in this filing

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Item 1. Business

2021-03-24 compared with 2020-03-24 · 213 added, 380 removed, 52 unchanged (92% of the section changed)

Sigma is a 10-year-old software company that was founded by scientist-engineers

composed of physicists and metallurgists then working at Los Alamos National Labs for the entrepreneurial purpose of developing

sophisticated metallurgical products.

The public company that in 2010 completed a share exchange transaction with the shareholders

of a company that became Sigma Labs in 2010 was incorporated as Messidor Limited in Nevada on December 23, 1985 and changed its

name to Framewaves Inc.

On September 27, 2010, the name was changed from Framewaves Inc.

to Sigma Labs, Inc.

the Company developed both a dental implant technology and a munitions technology before narrowing its focus exclusively in 2016

to solving the complex and challenging problem of how to best assure the high quality of metal parts manufactured in laser powder

bed additive manufacturing (AM) machines.

Sigma and many others, then and now, believed that until this problem was solved, 3D

manufacturing of metal parts was not sufficiently scalable to grow past prototyping and mature into a major industry enjoying high

quality yields and cost-efficient production runs.

is an 11-year-old software company that was founded by scientist-engineers composed of physicists and metallurgists then working

at Los Alamos National Labs for the entrepreneurial purpose of developing sophisticated metallurgical products.

Since 2016, the

Company’s focus has been on solving the complex and challenging problem of how to best assure the high quality of metal

parts manufactured in laser powder bed additive manufacturing machines.

Sigma and many others believe that until this problem

was solved, 3D manufacturing of metal parts would not be scalable enough to grow past prototyping and mature into a major industry

enjoying high quality yields and cost-efficient production runs.

The solution that Sigma developed to solve this problem is In-Process-Quality-Assurance

(“IPQA”) software known as PrintRite3D ®

2016 through 2020 the Company and its technology co-evolved in transformation that saw the Company step up from being a small

research and development operation to reinvent itself as a technology commercialization company in 2017 deploying its alpha

technology concept with Aerojet Rocketdyne, Pratt and Whitney, Siemens, Woodward, and other companies to work as a sometimes

virtual integrated team with these customers’

R&D personnel and thus to acquire directly from major companies in

the market the definition of the specifications of what Sigma’s product would have to be in order to meet commercial

industrial standards.

Defining these standards included defining the specific product quality data information and analytics

requirements of large production manufacturers as well as determining the user-friendly form the product must have.

February 2017, Sigma completed a financing and a simultaneous up list on to the NASDAQ Capital Market, the two actions

intended to enable the Company to accelerate product development and commercialization while also having ongoing access to

By mid-2018, Sigma had doubled its software development team and in the course of the year developed and integrated

its PrintRite3D ®

Thermal Energy Density™

(TED) and Thermal Energy Planck (TEP) algorithm analytical

packages into a hardened commercial industrial product presented at Formnext in November 2018.

In 2019, the Company launched

its Rapid Test and Evaluation Program (RTE) in order to deploy its new product in a test and evaluation process explicitly

(1) to define the test outcome requirements of both end-users and Original Equipment Manufacturers (OEM) required

to meet their respective needs in a production setting;

and, (2) to be a pathway that Sigma believed would lead to sales of

equipment to end-users or of licenses to OEMs subject to the tests and evaluations meeting the upfront stated requirement of

the companies with whom tests would be run.

In the second Quarter of 2019, Sigma released version 5.0 of PrintRite3D®

with a user-friendly interface tool that enables process engineers to drill down into the data and machine operators to

better understand and control the process.

By year-end of 2019, the RTE results were consistently favorable

and we experienced no product failures, however the time required to complete an RTE was longer than expected due to operational

issues within the test sites that were beyond our control.

Baker Hughes, for whom on-site testing began in April 2019, had ordered

a Phase 2 as the final phase ahead of a potentially broader global rollout of the technology to their additive manufacturing machine

The major service provider, with whom our on-site testing began in March 2019, had also begun its second RTE to start on

a different OEM brand from the first RTE tests.

Another major OEM whose purchase order for an RTE we announced in August 2019 had

only its own brand upon which to test and agreed to complete two simultaneous test units on different models and was thus on a

Airbus was developing on schedule and expected to require a Phase 2 if and after the current RTE met their needs.

a diverse AM company and an OEM for AM control systems and software, had been Sigma’s first RTE program participant and with

whom the Company announced in June 2019 that Sigma had entered into a non-binding Memorandum of Understanding to integrate PrintRite3D®

with Materialise’s new MPC AM equipment control system.

As stated in the “Recent Events”

of this document, on

March 5, 2020 the Company announced that Sigma and Materialise have now entered a Joint Sales Agreement to commercialize the integrated

and disclosed in 2019, Sigma’s mission and challenge in 2020 and beyond is to convert the testing it conducted in 2019 into

purchase orders and OEM licenses going forward.

Of course, there is no assurance that this mission will be accomplished, even

as the goal and strategy are what would be the logical outcomes of successful product demonstrations.

In order to further strengthen

itself to deliver on its mission to convert successful test and evaluation outcomes into end-user sales and OEM licenses, the

Company recruited and hired Mark K.

Ruport as of December 3, 2019 to help lead the company forward as Executive Chair.

in December, Mr.

Ruport is a skilled sales and marketing chief executive who has built three substantial software enterprises.

Currently, Sigma is focusing on four markets:

(i) end-user for deployment

of PrintRite3D®

in serial production;

(2) OEMs for purchases of licenses and generating fees and royalties thereafter;

(“IPQA®”) software known as PrintRite3D®.

2018, the Sigma team enhanced and added user features to its PrintRite3D®

In 2019, the Company began to productize

and test PrintRite3D®

on various 3D metal printers at customers’

sites through the Company’s Rapid Test and Evaluation

(“RTE”) program.

Upon receiving favorable responses from the various RTEs, in 2020 the Company began to aggressively

market PrintRite3D®.

However, the worldwide COVID-19 pandemic caused a reduction, and in some cases a freeze, in capital spending

within the Company’s targeted industries and had what the Company believes to be a short-term negative impact on the Company’s

expected timing of generating meaningful revenue.

Despite the pandemic, the Company moved forward with its plan to market PrintRite3D®

to the following industry segments:

(1) global manufacturing companies with Additive Manufacturing

(“AM”) initiatives;

(2) 3D printer Original Equipment Manufacturers (“OEMs”) for purchases of licenses

and generating fees and royalties thereafter;

(3) additive manufacturing software venders for alliances and licenses for co-sales;

and (4) research foundations, standards organizations

and universities, all in service of Sigma’s potential for setting the industry standard of measurement by providing data

and analytics as a metrics-based quality standard of metal quality for all 3D laser powderbed manufactured parts, notwithstanding

the design, metal, or brand of equipment upon which parts are manufactured.

and (4) research foundations, standards organizations and universities, all in service of Sigma’s potential for setting

the industry standard of measurement by providing data and analytics as a metrics-based quality standard of metal quality for

all 3D laser powder bed manufactured parts, notwithstanding the design, metal, or brand of equipment upon which parts are manufactured.

Metal Manufacturing and the role and need for Sigma’s technology:

laser powderbed manufacturing of metal parts is a technology that uses lasers to sculpt parts by welding powdered metals into

3-dimensional (3D) objects and, to date, the quality of these parts can vary from part to part in a single production run, as

well as from machine to machine in a production line.

Traditional quality assurance methods relying on statistically based post-process

inspection methods so well proven by “Subtractive Manufacturing”

cannot be used effectively to improve and assure

quality of parts manufactured using 3D metal printers.

The aforementioned traditional quality assurance methods are based on a

manufacturing process that is the opposite of 3D Additive Manufacturing;

Subtractive Manufacturing begins with quality-assured

already formed pieces of metal as a raw material (not powdered metal as is used as raw material in 3D) and machines it with equipment

such as lathes, milling machines, and CNC machines to subtract metal and thus form finished metal parts, or by casting molten

metal into molded parts usually to then be further machined.

Since the metal used in Subtractive Manufacturing is already of proven

quality, the quality of the metal for all parts in a production run is known to be uniform, subject to post process inspection

of a statistically determined valid sample size focused primarily on metrology to determine dimensional accuracy rather than metallurgy

to determine metal quality.

challenge presented of 3D Additive Manufacturing quality assurance is illustrated by the fact that if a 3D metal

manufacturing machine fabricates 10 parts, and quality inspectors then rigorously inspect three of them, the inspectors will

have learned about the quality of only the three parts they destroyed or CT-scanned and nothing that is sufficient to confirm

or reject the quality of the remaining seven.

Quality assurance of 3D Additive metal parts requires high quality sensitive

manufacturers to institute procedures to inspect 100% of the parts being made.

Sigma believes that the best, indeed, to

Sigma’s knowledge, the only known way to attain high yields for both manufacturing quality and cost efficiency is an

In-Process-Quality-Assurance (IPQA®) approach that examines each part in real time as it is being manufactured,

determines in real time whether it meets quality specifications and permits machine operators to act on the information if a

part is beginning to deviate from its design specifications.

As evidenced in the marketplace in 2016 and after the pent-up demand

of GE, Airbus and others to press forward into advanced 3D metal manufacturing, production took place with the assumption that highly

reliable in-process quality assurance capability would likely emerge either from their own internal efforts or be attained through

licensing, or acquisition.

In the meantime, CT scans and other costly post-process inspection became an accepted cost as initially

sustainable in the startup phases of production.

However, until companies that utilize 3D production facilities like GE Aviation

are able to effectively verify that each part conforms to design specifications of attributes of shape, density, strength and consistency

in real-time during the manufacturing process, we believe that such companies will be at risk of letting some substandard parts

through and, also, be unable to improve the workflow to high quality cost-optimum yields of 3D printed metal parts.

No matter how

much acuity and at what cost a suite of post process inspection tools might provide 3D manufactured metal parts, it currently

can only assure quality yield by rejecting fully formed parts, and, over time, applying comprehensive ‘reverse engineering’

forensic analyses of each rejected part to identify repeating quality flaws attributable to constants such as location, design,

or scan strategy.

Once the locations of these repeating flaws are identified, process engineers can act to make the AM equipment

deliver better quality by adjusting the computer-based manufacturing instructions of AM equipment to offset the repeating flaws

discovered by that deep analyses of individual rejected parts in many manufacturing runs.

This prolonged post-process methodology

is very costly due to the loss of material and rejected parts as well as post-process analysis labor cost and inspection cost such

as CT scanning.

Additionally, there still lingers the question of whether or not the post-process inspections were sufficiently

granular to assure that flawed parts were not accepted and shipped.

We believe that our product, PrintRite3D ®

5.2, which is ‘agnostic’

and can be installed on all major brands of 3D metal laser powderbed printers, solves these

problems by determining if each part is being made to the metallurgical quality specifications of the product design as each part

is being made.

Our software enables 3D prototyping to evolve forward into serial or production 3D manufacturing by providing a

software suite with algorithm-based tools that address and overcome quality issues that are specific to 3D Metal Additive Manufacturing

and that are not solved using the post-production quality methods developed for subtractive manufacturing along with and newly

dependent upon CT scanning.

The PrintRite3D®

suite has the potential to substantially lower operating costs and can attain

higher yields by inspecting parts as they are made and providing machines and their operators actionable information that includes

the options of stopping manufacture of given part(s) while operations continue to complete parts that are in specification, thus

saving time and money while raising yields.

Manufacturing, or 3D printing, has been among the most heavily explored manufacturing innovations in the history of modern manufacturing.

The use of 3D printing technology dates back to the 1980s for polymer applications, but the ability to print functional parts

from metal alloys has spurred significant interest and investment into AM over recent years.

AM is now reshaping the product design

process, entire supply chains, and the vast landscape of manufacturing.

Engineers are embracing new design freedoms to realize

valuable product performance improvements and cost efficiencies with lighter weight, better thermal management capability, better

fluid mixing, customization, and/or the ability to make different structures and textures that yield better part integration.

significant hurdles still prevent the wider adoption of additive technologies.

The lack of quality, consistency and standards

are most often cited.

The Company believes that the lack of technology such as PrintRite3D®, could be the last sizable barrier

to the widespread industrialization of 3D metal printing.

Additionally, many believe that the disruption to complex and rigid

supply chains caused by COVID-19 exposed the country’s vulnerability to shortages in times of crisis.

It appears that many

manufacturers are devising strategies to be able to be more agile, increase their ability to manufacture mission critical parts

on demand, with more customization, and closer to where the end part will be needed.

anticipate that the enterprise adoption of the technology will accelerate in 2021, evolving over time as follows:

International research & development organizations and universities will establish centers of excellence for

Advanced Manufacturing and be a major resource for enterprises seeking to adopt best practices for AM.

2 - Enterprises will start with their own R&D initiatives and select a 3D printer vendor, or vendors, that meets their

requirements.

During this time, they will focus on experimenting with different metal powder alloys, part structures, design

guidelines, and in-process quality metrics.

Once R&D is complete, enterprises will select one part to test and move into production, improving the process

from design to production and confirming the economics and quality of the process.

International standards will be established by organizations such as NIST, ISO, ATSM, etc., ensuring the consistency

of components and processes.

These standards will become increasingly important as the industry moves to full industrialization.

As the adoption of AM accelerates, enterprises will utilize multiple 3D printers from multiple manufacturers due

to printer innovations and advancements, varying production requirements, divisional preferences, etc.

Independent standards-based, IPQA systems, such as PrintRite3D®, will be required to assure consistent quality

in heterogeneous factories.

PrintRite3D®

also gives operators information from run-to-run

that enables them to ‘learn up’

quality for a given machine by using PrintRite3D®

data about machine behaviors

that can then be offset by making adjustments to power settings directed at a given sector.

Technology and Product Family

PrintRite3D®

(“TED”) feature supersedes and truncates the “reverse engineering”

process of post process inspection described

above by providing process engineers the data required to optimize individual machines as well as machines in series in days or

weeks and before serial production is launched rather than months after production and rejection rates have accrued in costly quantities.

an interactive in-process quality assurance system that combines inspection, feedback, data collection and critical analysis.

is a platform-independent solution that can be installed as a retrofit to an existing 3D printer or requested as a factory option

from select 3D printer OEMs.

PrintRite3D®

’s (“TEP”) feature provides machine operators and engineers with in-process real-time

identification of signatures of quality anomalies as they begin to develop and permits terminating or curing a part in process

and provides them with alerts that enable the operators to use the anomalies’

signature information to know how to adjust

the machine controls to cure the problem, or in rare instances, to terminate the part if its cause is reversable.

emergence of the 3D Metal Printing Market and Sigma’s place in it

3D printing (3DP) or additive manufacturing (AM) is challenging

the manufacturing world with the breadth of its technological abilities from rapid design through cost efficient manufacturing

to produce complex and unique metal parts.

3D AM technology total industry sales, including all raw materials used reached $1 billion

in 2007, jumped to nearly $7.3 billion in 2017, and were expected by Wohlers to hit $26.5 billion by 2021.

Sectors of the industry

have tended so far to grow in step functions as new methods, processes, and materials have entered the market.

Worldwide revenues

attributable to 3D manufacturing for metal products were reported at $88.1 million in 2015 (Wohlers Report 2016, 3D Printing and

Additive Manufacturing State of the Industry –

Annual Worldwide Progress Report).

By 2017, Wohlers Report stopped estimating

annual 3D metal parts revenue, stating that too much of the revenue is proprietary information and unavailable from aerospace and

similar high-tech sectors.

Powdered metal suppliers to the AM metal industry surveyed by Wohlers for their growth forecasts for

2017 for the raw materials used in metal AM parts manufactured averaged expectations of a 59% increase for 2017.

According to Sigma’s

experience in costing and pricing the manufacturing of AM metal parts, as confirmed by consultation with other service providers,

the total powdered metal sales forecast for 2017 is enough raw material to produce a “retail value”

of the metal parts

of ~$800 million in 2017.

Wohler estimates that the fastest growing sector of the total 3D market into the 2020s is and will be

3D metal printing at a CAGR averaging 30%.

vector, according to Wohlers, an estimated 1,768 metal AM machines were sold in 2017, an increase of 79% over 2016, and the 2,297

AM Metal machines sold in 2018, an CAGR of 30% over 2017.

As large established companies including Toshiba, HP, Lenovo, Canon

and Ricoh in the course of 2016-2017 announced products or intents of entry in AM manufacturing, Electro Optical Systems (“EOS”),

a well-established vendor of AM manufacturing equipment opened a new plant in January 2018 that, according to EOS, doubled its

2017 capacity to 1,000 units per year.

SLM Solutions AG also reportedly expanded into a new factory during this period.

same period, over $1 billion growth capital and consolidation capital was invested in the metal sector.

General Electric spent

>$1.4 Billion in 2016-2017 acquiring Arcam and Concept Laser thus securing a source of supply for itself as well as a new OEM

capital equipment business.

In the same period GE also invested >$100 Million in in Desktop Metal.

In October 2018 General

Electric announced that it had manufactured and shipped its 30,000th 3D manufactured fuel nozzle, while Airbus was targeted to

grow to taking delivery of up to ~30 tons of metal parts per month by December 2018.

3D metal printers are seeing rapid adoption,

with an installed base of 11,000 globally, with 2,297 sold in 2018 alone at an ASP of $413,000.

Extending data and trends reported

by Wohlers above, Sigma’s possible addressable market 2021-2027 is approximately $2 billion –

or a potential $100m

revenue for every 5% of market share.

The figures in this paragraph are extrapolations from Wohlers and SmarTech data and forecasts

of the total available market for Sigma products;

the calculation that 5% of that total available market is $100m is intended

as metric to make the scale of market opportunity more understandable, and it is not a forecast.

We believe there is potential

for our PrintRite3D®

software to be incorporated into a significant percentage of 3D metal printing devices made by companies

like Additive Industries, ARCAM, Concept Laser, DMG Mori, Electro-Optical Systems (“EOS”), SLM, Trumpf Industries,

Farsoon, Renishaw, Sodick, and others.

Party Competition and Sigma’s Intellectual Property Safeguards

is engaged with large companies in several industries including aerospace, defense, oil and gas, bio-medical, and power generation

because both we, and they, agree that they need a common quality standard and third party quality assurance tools for 3D metal printing

that applies to all laser powderbed-made parts regardless of which machine, design, or metal was employed.

To date, we are unaware

of any meltpool monitoring products that compete with PrintRite3D that can meet those criteria.

Sigma’s thermal data gathering,

and analytical tools provide quality information metrics that correlate to measures of internal metal part design, conformity,

uniformity, and characteristics such as porosity, unsintered material etc.

The primary competition to PrintRite 3D is varying

iterations of Optical Tomography (OT).

Optical Tomography develops optical data and computer analysis thereof sometimes linked

to simulation tools to predict quality.

OT technology does not provide universal thermal-data based metrics of metal quality that

Sigma’s thermal data provides, and which are fundamental to confirming or rejecting parts based on measurable consistency

of material properties.

Sigma began its investigation and research into optical and thermal

data collection and measurement for quality assurance and intervention approximately 5 years ago and began to develop its intellectual

property protection at that time also.

The international IP law firm, Kilpatrick Townsend & Stockton LLP, has advised the Company

on building the nets and walls of its patent portfolio, trade secrets, trademarks, etc.

and filed and prosecuted patents as the

Company has grown its body of intellectual property.

Patent Portfolio

Based upon the evidence of competitors’

product claims and

features reviewed by Sigma to date, it appears to us that Sigma’s solution to the quality problems of 3D metal printing is

a significantly different technological approach than that of our principal known competition.

It continues to appear to us that

the intellectual property protection of PrintRite3D’s acuity, meaningful metrics of thermal data correlated to part quality,

and usability of its software accord Sigma freedom to operate with its technology, and may be a significant barrier to entry to

competitors switching over to try to pursue the technology path traveled by Sigma.

Notwithstanding the foregoing, we do understand

that technology development is fraught with cases of new approaches and new technologies emerging and surpassing existing intellectual

property protections that looked and were powerful until a form of competition materialized;

there is no assurance that such an

event will not take place adversely for Sigma.

March 23, 2020, we announced that we were awarded two new U.S.

Application No.:

16/234,333 Titled:

Systems and Methods for Additive Manufacturing Operations;

Application No.:

16/282/004 Titled:

Systems and Methods for Measuring Radiated Thermal

Energy During an Additive Manufacturing Operation.

the addition of these new patents, our intellectual property portfolio is now comprised of eleven issued and twenty-four pending

On March 5, 2020, we

announced that we have agreed to evolve our previously announced memorandum of understanding (MOU) to cooperate on the integration

of the Materialise MCP Controller with our PrintRite3D®

technology and have agreed to enter into a binding joint sales

agreement to begin beta customer commercialization of the integrated PrintRite3D®

and Materialise Control Platform (MCP)

On March 2, 2020, we

gave notice that a Special Meeting of Stockholders will be held at 3900 Paseo del Sol, Santa Fe, New Mexico 87507, at 10:00 AM,

local time, on March 27, 2020 for the purposes set forth in the proxy statement filed by the Company with the Securities and Exchange

Commission on March 2, 2020.

On February 26, 2020, we

filed a Certificate of Change to its amended and restated articles of incorporation with the Nevada Secretary of State.

effected a 1-for-10 reverse stock split (the “Reverse Split”) of the Company’s Common Stock and a corresponding

decrease in the number of shares of the Company’s Common Stock that the Company is authorized to issue, effective as of

11:59 pm on February 27, 2020.

The Reverse Split combined each ten shares of the Company’s issued and outstanding Common

Stock into one share of Common Stock.

No fractional shares were issued in connection with the Reverse Split, and any fractional

shares resulting from the Reverse Split were rounded up to the nearest whole share.

All stock options, warrants, shares issuable

upon conversion of the Company’s preferred stock and stock awards of the Company outstanding immediately prior to the Reverse

Split will be adjusted in accordance with their terms.

On February 19, 2020,

we were informed by Frank Garofalo that he has resigned as a director of the Company, effective February 19, 2020.

has advised the Company that he resigned in order to cause the Company to regain compliance with Nasdaq’s majority of independent

director requirement as set forth in Nasdaq Listing Rule 5605(b)(1), and not due to a disagreement with the Company on any matter

regarding its operations, policies or practices.

On January 27, 2020, we entered into a Securities Purchase Agreement

(the “Institutional SPA”) with certain institutional investors (the “Institutional Investors”).

to the Institutional SPA, the Company issued and sold to each Institutional Investor shares of the Company’s Series D Convertible

Preferred Stock (the “Series D Preferred Stock”), warrants to purchase the Company’s Common Stock (the “Institutional

Common Warrants”) and warrants to purchase the Series D Preferred Stock (the “Preferred Warrants”) for a total

gross purchase price of $1,600,000.

At the closing on January 28, 2020, the Company issued to the Institutional Investors an aggregate

of 1,640 shares of the Series D Preferred Stock (the “Series D Preferred Shares”), Institutional Common Warrants to

purchase up to an aggregate of 779,600 shares of Common Stock and warrants to purchase an aggregate of 6,156 of additional Series

D Preferred Stock.

Concurrently with the foregoing private placement, we also sold 333.33 shares of our Series E Preferred Stock

and warrants to purchase 48,544 shares of our common stock for a total gross purchase price of $500,000.

The Series E Preferred

Stock is initially convertible into 48,544 shares of Common Stock.

On December 3, 2019,

we entered into an employment letter agreement with Mark Ruport, effective as of December 3, 2019, pursuant to which Mr.

has agreed to serve as our Executive Chairman on an “at-will”

Additionally, Mr.

Ruport was appointed to serve

as a member of our Board of Directors, effective as of December 3, 2019, with a term expiring at the 2021 annual meeting of stockholders.

On November 19-22,

2019, we demonstrated the latest version of our proprietary PrintRite3D®

Real-Time Melt Pool Analytics software platform in

conjunction with Materialise NV at the Formnext 2019 conference in Frankfurt, Germany.

Materialise invited our Chief Technology

Officer to present on “Integration of PrintRite3D Melt Pool Monitoring Software with Materialise’s Machine Control

Platform (MCP) for Advanced Process Control”

at Materialise’s booth.

November 5, 2019, we announced that we have partnered with a Japanese high-end manufacturer of state-of-the-art machine tools,

electrical discharge machines (EDM) and 3D printing products, for a test and evaluation program of Sigma Labs’

provides a high-fidelity, accurate system that can confidently scale to multi-laser

3D metal printers.

The PrintRite3D®

system discovers potential anomalies and incorporates machine learning in conjunction

with developed metrics to map those metrics to the post-process data.

This provides the ability to reduce post-production testing

and costs, while creating a certification framework that serves the needs of end-users, printer manufacturers, and standards organizations.

Company currently offers three versions of PrintRite3D®

for Laser Bed Fusion Systems:

(1) PrintRite3D®

real time melt pool analytics.

October 23, 2019, we announced that we have been awarded a contract by VTT Technical Research Centre of Finland Ltd, an impartial,

state-owned non-profit research and technology organization with the mission to support economic competitiveness, societal development

and innovation in Finland, to install our proprietary PrintRite3D®

Real-Time Melt Pool Analytics software platform at the

VTT 3D metal printing facility.

August 13, 2019, we announced that we have been selected by a major international OEM machine manufacturer to install our proprietary

Lite which has

a smaller footprint and is geared towards single-laser machines for Research and Development, or small production lots.

(2) PrintRite3D®

As part of the agreement, the OEM will complete our Rapid Test and Evaluation program and will install

the PrintRite3D®

in two different countries for analysis and proof-of-performance purposes.

On August 2, 2019,

we closed a public offering of equity securities in which we issued 287,500 shares of common stock resulting in net proceeds of

July 30, 2019, we announced that we will work with Airbus to complete a Test and Evaluation Program of our new PrintRite3D®

version 5.0 hardware and software followed by a validation phase on a powderbed fusion printer.

June 18, 2019, we announced that we signed a non-binding Memorandum of Understanding with Materialise NV to cooperate in the integration

of their MCP Controller with our PrintRite3D®

Combining the sophisticated control technology with in-situ process

monitoring for metal additive manufacturing will give customers maximal control on the production process, allowing them to become

even more productive.

On May 21-23, 2019,

we launched Version 5.0 of our PrintRite3D®

platform at the RAPID+TCT 2019 Additive Manufacturing Conference in Detroit.

April 30, 2019, we announced that the Company’s PrintRite3D®

software has been shown to ensure process consistency and

product quality in metal additive manufacturing, according to a research study sponsored by the Defense Advanced Research Project

Agency (DARPA) Open Manufacturing Program and conducted in tandem with Honeywell Aerospace at Honeywell’s Advanced Manufacturing

Engineering Center.

The paper, titled “LPBF [Laser Powder Bed Fusion] Right the First Time-the Right Mix Between Modeling

and Experiments,”

discusses the validation involved in manufacturing a challenging metal component.

On March 26, 2019, we announced the appointment of the Company’s

new Business Development Manager, America’s, who will be responsible for developing key accounts through the Company’s

Rapid Test and Evaluation Program and for bringing PrintRite3D Inspect®

into deployment across serial production operations

in North and South America.

We regard our patents, trademarks, domain names, trade secrets,

know-how, and other intellectual property as critical to our success.

We rely on a combination of patent, trademark, trade secret,

other intellectual property law, confidentiality procedures, and contractual provisions with employees, partners, and others to

protect the technology and other proprietary rights, information and know-how that comprise the core of our business.

below summarizes our issued patents.

We are currently prosecuting twenty-four foreign and U.S.

patent applications related to our

technology and rapid qualification of additive manufacturing for metal parts.

There is no guarantee that the patent applications

we have submitted will issue or that if issued, they will offer adequate protection under applicable law.

or Application

Expiration Date

Controlled Weld Pool Volume Control of Welding Processes

Structurally Sound Reactive Materials

Composite Projectile

Methods and Systems for Monitoring Additive Manufacturing Processes

Systems and Methods for Additive Manufacturing Operations

Material Qualification System and Methodology

Optical Manufacturing Process Sensing and Status Indication System

Systems and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing Operation

Optical Manufacturing Process Sensing and Status Indication System

Systems and Methods for Additive Manufacturing Operations*

Systems and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing

however, patent numbers have not yet been issued.

Expiration dates are therefore estimated.

Pro, for single, dual and quad laser machines and is suited well for environments with less than 10 machines, and (3) PrintRite3D®

Enterprise for plant-wide networks.

PrintRite3D®

Lite expands the Company’s addressable market to mid-range 3D printer

manufacturers for potential OEM opportunities.

Company announced in late 2020 PrintRite3D®

for Direct Energy Deposition (“DED”), opening up another segment of

the market for Sigma to sell and distribute its technology.

DED is based on a laser process in which a laser beam generates a

melt pool on a substrate.

An additional metallic powder material is transported to the melt pool, where it becomes molten.

to a feed movement, the molten material cools down and welding tracks are formed.

By placing weld tracks side-by-side and on top

of one another, a build-up is obtained.

Three-dimensional structures can then be generated by depositing one layer or track at

the top of another previously welded layer or track.

Labs employs a multi-channel distribution model for its IPQA products including a direct sales force, value added resellers (VARs)

and 3D printer Original Equipment Manufacturers (OEMs).

In 2020, the majority of the Company’s revenue was generated by

direct sales in North America and Europe.

VARs are currently used in Japan and India.

The Company plans to extend its VAR channel

outside of North America and Europe.

In 2020 the Company moved aggressively to establish and extend relationships with 3D printer

OEMs and expects that the percentage of the Company’s revenue coming from OEMs will increase in 2021 and beyond.

Company markets its products through webinars, email and social media campaigns, and participation, both in person and virtually,

in industry events and tradeshows.

In addition, the Company collaborates with international standards organizations in the establishment

of standards for AM.

and Availability of Parts and Materials

have important relationships with several suppliers for critical components of our PrintRite3D®

systems, in particular optics

and data acquisition components, and development of our user interface.

To-date, we have not experienced shortages of components,

however, in some cases COVID-19 has resulted in increased lead times for certain parts.

We manage the risk of component shortages

by sourcing backup suppliers, and in the case of our user interface, hiring engineers in-house to support the ongoing development

and maintenance.

with Original Equipment Manufacturers (“OEMs”)

Company entered into distribution agreements with two international 3D printer OEMs.

The Company supports the OEMs with joint

marketing programs and field sales and technical support personnel to assist in the sale of its technology.

It is the Company’s

intent to continue to build the OEM channel through distribution relationships with other 3D printer OEMs in the future.

and Sigma’s Intellectual Property Safeguards

PrintRite3D®

is a third-party, agnostic In-Process Quality Assurance system designed to provide a consistent, standards-based measurement and

prediction of quality across a heterogeneous collection of 3D printers.

Competition is primarily from the printer OEMs who offer

their own monitoring system, usually as a separately priced option to its printers.

Sigma believes that the future of AM will

consist of factories with various generations of printers from various manufacturers.

The primary reasons that global manufacturers

will have machines from various vendors is that certain machines and technologies are better suited for different applications

Additionally, as the industry progresses, innovation will accelerate, and new leaders will emerge.

Finally, many

believe that there will be a consolidation of 3D metal manufacturers and the number of vendors will decrease from approximately

50 to a much small number over the next decade.

Although standards for monitoring are slowly being set by various international

standards organizations, it is highly unlikely that printer OEMs will modify their monitoring systems to work with other OEMs

Therefore, we believe that the only way to produce parts with a consistent level of quality is with a third-party, agnostic,

standards based IPQA system, such as PrintRite3D®.

To the Company’s knowledge, there is no competitor currently offering

an IPQA system with similar functionality which has been validated to operate across as many 3D metal printers as PrintRite3D®.

began its investigation and research into optical and thermal data collection and measurement for quality assurance and intervention

approximately 7 years ago and began to develop its intellectual property protection at that time.

The international IP law firm,

Kilpatrick Townsend, has advised the Company on building a patent portfolio, trade secrets, trademarks, etc.

and filed and prosecuted

patents as the Company has grown its body of intellectual property.

Patent Portfolio

upon the evidence of competitors’

claims received by Sigma to-date, it appears to us that Sigma’s solution to the

quality problems of 3D metal printing is a significantly different technological approach than that of our principal known competition.

It continues to appear to the Company that the intellectual property protection of PrintRite3D®’s acuity, meaningful

metrics of thermal data correlated to part quality, and usability of its software accord Sigma freedom to operate with its technology

and will be a significant barrier to entry to competitors attempts to pursue the technology path traveled by Sigma.

regard our patents, trademarks, domain names, trade secrets, know-how, and other intellectual property as critical to our success.

We rely on a combination of patent, trademark, trade secret, other intellectual property law, confidentiality procedures, and

contractual provisions with employees, partners, and others to protect the technology and other proprietary rights, information

and know-how that comprise the core of our business.

The chart below summarizes our issued patents.

We are currently prosecuting

thirty foreign and U.S.

patent applications related to our IPQA®

technology and rapid qualification of additive manufacturing

for metal parts.

There is no guarantee that the patent applications we have submitted will issue or that if issued, they will

offer adequate protection under applicable law.

or Application No.

Weld Pool Volume Control of Welding Processes

Sound Reactive Materials

and Systems for Monitoring Additive Manufacturing Processes

and Methods for Additive Manufacturing Operations

Qualification System and Methodology

ZL201680010333.X

Manufacturing Process Sensing and Status Indication System

and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing Operation

Manufacturing Process Sensing and Status Indication System

and Methods for Additive Manufacturing Operations

and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing Operation

Photodetector

Array for Additive Manufacturing Operations

Quality Inference and Control for Additive Manufacturing Processes

contracts that we enter into with governmental agencies will be subject to a variety of federal, state and local laws and regulations.

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compensation, and information systems.

As of March 20,

2020, we do not have any active contracts with government agencies.

During fiscal year 2019, we did not enter into any

contracts with government agencies, nor do we seek to do so in the future.

of March 24, 2021, we do not have any active contracts with government agencies.

During fiscal year 2020, we did not enter

into any contracts with government agencies, nor do we seek to do so in the future.

and Human Capital Resources

of December 31, 2020, we had 20 full-time employees.

1 unchanged sentence

expanding operations in the area of IPQA®

that our future success largely depends upon our continued ability to attract and retain highly skilled employees, as well as

highly qualified management and technical personnel.

Employee engagement is important to us and we focus on continuously enhancing

our corporate culture.

lease approximately 3,700 square feet of space at 3900 Paseo del Sol, Santa Fe, New Mexico 87507, including 1,772 square feet

of office space at units, C-14, C-15, C-16, C-17, C-18, C-20, C-21 and D-34 for a total monthly rent expense of approximately

$4,240 under the lease, and 1,927 square feet of warehouse / production space at units E-38, E-40 and E-42, for a total monthly

rent expense of approximately $2,275 under the lease, which expire between May 31, 2020 and July 31, 2020.

of office space at units, C-14, C-15, C-16, C-17, C-20, C-21 and D-34 for a total monthly rent expense of approximately $3,840

under the lease, and 1,928 square feet of warehouse / production space at units E-38, E-40 and E-42, for a total monthly rent

expense of approximately $2,275 under the lease, which expire on July 31, 2021.

believe that our facilities are suitable for our current needs.

10 unchanged sentences

into this Annual Report on Form 10-K.

March 15, 2021, we announced that we were awarded a contract for an initial system of our PrintRite3D in-process quality assurance

solution by Lockheed Martin Space Additive Design & Manufacturing Center based in Sunnyvale, California.

The Additive Design

& Manufacturing Center supports the entire Space portfolio and integrates key materials research and manufacturing processes

to streamline the affordable delivery of satellite components.

As a part of this initial contract, the Lockheed Martin team will

assess the viability and performance of PrintRite3D technology for the Space division in support of a variety of defense and civil

space programs.

January 12, 2021, the Company closed a public offering of equity securities in which it issued 1,711,783 shares of common stock

(including the exercise in full of the underwriters’

over-allotment option of 223,276 shares).

Net proceeds to the Company

after deducting offering expenses were approximately $4,532,444.

December 18, 2020, we announced that we were selected by DMG MORI as the preferred melt pool monitoring system for their LASERTEC

SLM machines.

Engineering teams from both companies worked extensively to test the integrated solution to ensure that it meets

the demanding needs of industrial manufacturers utilizing DMG MORI’s family of metal 3D printers.

DMG MORI will be providing

an interface with its printers to accommodate our optics, ensuring that the systems are PrintRite3D®

incorporated as Messidor Limited in Nevada on December 23, 1985 and changed our name to Framewaves Inc.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business