What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-24 compared with 2020-03-24 · 190 added, 122 removed, 66 unchanged (83% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

common stock was quoted for trading on the OTCQB under the symbol “SGLB”

prior to February 15, 2017, when our common

stock began trading on The NASDAQ Capital Market under the symbol “SGLB.”

common stock trades on The NASDAQ Capital Market under the symbol “SGLB.”

of March 23, 2021, there were approximately 554 holders of record of our common stock based on information provided

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

is a leading provider of in-process quality assurance (IPQA®) software to the additive manufacturing industry.

Sigma specializes

in the development and commercialization of real-time monitoring solutions known as PrintRite3D®

for 3D metal advanced

manufacturing technologies.

PrintRite3D detects and classifies defects and anomalies real-time during the manufacturing process,

enabling significant cost-savings and production efficiencies.

We are dedicated to setting the quality standard for Additive Manufacturing

and accelerating the worldwide adoption of 3D metal printing.

We work closely with international standards organizations, renowned

universities, research organizations, advanced manufacturers, and leading design and simulation software companies.

is printer agnostic and works with most of the leading 3D metal printers.

Business Update

stated earlier, 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.

Further, the future impact of the outbreak, including variations of the virus,

is highly uncertain and cannot be predicted so that no assurance can be given that the outbreak will not have a material adverse

impact on the future results of the Company.

It is also uncertain as to any further disruption of the global financial markets,

which may reduce our ability to access capital, either at all, or on favorable terms.

February 27, 2020, we effected a reverse split of our common stock on a 1-for-10 basis.

Accordingly, all common shares, stock

options, warrants, and per share amounts contained in this Annual Report have been retroactively adjusted to reflect the reverse

split for all periods presented.

Accounting Policies

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Ended December 31, 2020 Compared to the Year Ended December 31, 2019.

expect to generate revenue primarily by selling and licensing our IPQA technologies, selling technical support services, and selling

specialty parts and studies to businesses that seek to improve their manufacturing production processes and production-run quality

Our ability to generate revenues in the future will depend on our ability to further commercialize and increase market

presence of our PrintRite3D®

technologies, and it will depend on if key prospective customers continue to move from AM metal

prototyping to production.

During the fiscal year ended December 31, 2019 (“fiscal 2019”),

we generated an aggregate of $402,446 in revenues, as compared to an aggregate of $388,574 in revenues generated by us in the fiscal

year ended December 31, 2018 (“fiscal 2018”).

The primary contributor to the $13,872 increase was an increase in new

PrintRite3D®

5.0 system sales of $145,097 partially offset by decreases in contract AM service sales and government program

work of $78,387 and $51,000, respectively.

generate revenues through PrintRite3D®

hardware and CAI 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 in metal AM.

Our ability to generate revenues in the future will depend on our ability to further commercialize and increase market presence

of our PrintRite3D®

technologies, and it will depend on whether key prospective customers continue to move from AM

metal prototyping to production.

the fiscal year ended December 31, 2020 (“fiscal 2020”), we generated an aggregate of $807,488 in revenues, as compared

to an aggregate of $402,446 in revenues generated by us in the fiscal year ended December 31, 2019 (“fiscal 2019”).

The contributors to the $405,042 increase were increases in new PrintRite3D®

6.0 system sales of $394,959,

increased revenues from our Rapid Test and Evaluation (“RTE”) program of $37,064, increased annual maintenance revenues

of $11,240, and increased revenue from contract AM jobs of $8,651, partially offset by decreases in on-site engineering

and installation revenues of $47,872.

Our cost of revenue for fiscal 2020 was $591,957 compared to $574,301 during the same

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The increase is primarily due to increased PrintRite3D®

5.0 system sales, and additional

travel and labor costs associated with the on-site and remote collaboration involved in the Company’s Rapid Test and Evaluation

6.0 system sales, and parts

and materials upgrades for certain customers.

Sigma’s

total operating expenses for fiscal 2019 were $6,211,830 as compared to $5,687,271 for fiscal 2018, a $524,559 increase.

total operating expenses for fiscal 2020 were $5,914,299 as compared to $6,211,830 for fiscal 2019, a $297.531 decrease.

fiscal 2020, salaries and benefits costs were $2,622,162 as compared to $2,354,329 for the same period in 2019.

The $297,745 increase

resulted primarily from the addition of six employees between the third quarter of 2018 and December of 2019.

increase resulted primarily from salary increases and related employer payroll taxes of $148,270, employee bonuses of $127,250,

and increased sales commissions of $8,800, partially offset by lower benefits costs of $23,578.

compensation for fiscal 2020 was $596,842 compared to $497,240 for the same period in 2019.

This $348,292 decrease resulted

primarily due to the vesting of options granted to our former CEO in connection with his amended employment agreement in 2018.

This $99,602 increase

resulted primarily from stock grants made to employees of $23,610 and additional stock options granted to employees of

fiscal 2020, Sigma incurred research and development expenditures of $351,404 compared to $647,994 in the same period of

The $154,584 increase resulted from an increase in purchases of component parts, upgraded servers and specialized equipment plus

an increase in software and algorithm consultant costs as part of our continued concentrated acceleration of technology development

and enhancements to our PrintRite3D®

5.0 product suite.

The $296,590 decrease is primarily the result of completed product development, as well as the reduced use of consultants

during the year.

Sigma’s

public company and investor relation fees incurred in fiscal 2019 were $703,710 compared to $633,035 in fiscal 2018.

in the comparative expenditures results primarily from shares of common stock issued to our new investor relations firm

of $17,110 and an increase in advertising expenses of $80,450, due to enhancements to marketing programs and materials, website

redesign and upgrades, and advertisements in trade publications

and professional service fees paid in fiscal 2019 were $664,403 compared to $564,854 paid in fiscal 2018.

investor and public relation fees incurred in fiscal 2020 were $434,852, compared to $417,750 in fiscal 2019.

The increase in the comparative expenditures results primarily from an additional investor relations consultant of $90,369,

increased investor conferences and virtual shareholder meetings of approximately $20,000, partially offset by decreased advertising

and trade show expenses of $100,000.

costs for fiscal 2020 were 425,847, compared to $530,958 for the same period in 2020.

The decrease of $105,111 is primarily attributable

to lower directors’

compensation in 2020 of $135,944 and investment bank consulting fees of $31,500, partially offset by

increased shareholder services costs of $49,149 as a result of a special shareholders meeting held in March 2020 and costs incurred

for the conversion of Series D Preferred Stock throughout 2020.

and professional service fees in fiscal 2020 were $676,142 compared to $664,403 paid in fiscal 2019.

The increase of $11,739

$99,549 is primarily attributable to an increase in consulting fees due to the addition of an engineering consultant and an

investor relations consultant in 2019.

is primarily attributable to an increase in legal fees of $128,010 related to a special shareholders meeting, Nasdaq

compliance related matters, and our 2020 financings, and an increase in IT services fees of $17,101, partially offset by reduced

utilization of recruiting firms of $49,851 and consultants of $86,574.

fiscal 2020, Sigma’s office expenses were $416,580 compared to $747,881 in the same period of 2019.

The $226,224 increase

in these expenditures resulted primarily from $57,039 in additional office space rent and supplies costs related to the aforementioned

addition of six employees, and from $92,679 of additional travel expenses in 2019 related to both a more aggressive outreach to

prospective OEM, service bureau and end user customers and our continued expansion into the European market.

Further contributing

to this increase is the amortization of our prepaid three-year membership in the UK’s National Center for Additive Manufacturing

(“NCAM”) of $52,000 during fiscal 2019.

fiscal 2019, our net other income & expense was net income of $62,836 compared to net expense of $5,359 in 2018.

2019 net income was comprised of incentives from the State of New Mexico of $51,887 and net interest income of $18,761, partially

offset by interest expense of $8,865.

The 2018 expense was comprised of a $36,733 loss on disposal of assets, partially offset

by interest income of $35,178.

decrease in these expenditures resulted primarily from reduced travel costs of $309,451 as a result of COVID-19 restrictions,

and lower office supplies expense of $56,371 due to employees working remotely for most of the year, partially offset by an increase

in postage and shipping costs of $18,446 related to PrintRite 3D returns from expired RTE programs.

and amortization expense in 2020 was $105,175, as compared to $192,569 in 2019.

The decrease of $87,394 is primarily the result

of our fully depreciated 3D printer in 2020, partially offset by an increase in patent amortization expense during the year.

operating expenses for fiscal 2020 totaled $285,295, compared to $158,706 for fiscal 2019.

The increase of $126,589 is primarily

due to an increase in insurance premiums, in particular our Director’s & Officer’s policy premium which increased

fiscal 2020, our net other income & expense was net income of $498,629 compared to net income of $62,836 in

The increase of $435,793 is primarily due to increased incentives from the State of New Mexico of $99,780 and income

from the Company’s Payroll Protection Plan loan of $361,700, partially offset by a decrease in interest income of $17,702

and an increase in interest expense of $5,223.

Sigma’s

net loss for fiscal 2019 increased $746,686 overall and totaled $6,320,849, as compared to a net loss of $5,574,163

for fiscal 2018.

The 2019 net operating loss component of the overall loss being $814,881 higher than in 2018 and the other

income and expenses component being a $68,195 lower loss.

net loss before preferred dividends for fiscal 2020 decreased $1,120,710 overall and totaled $5,200,139,

as compared to a net loss before preferred dividends of $6,320,849 for fiscal 2019.

Net loss applicable to common stockholders

for fiscal 2020 was $7,009,414, as compared to $6,320,849 for fiscal 2019.

The 2020 net operating loss component of the overall

loss being $684,917 lower than in 2019 and the other income component being a $435,793 higher.

Preferred stock dividends

were $1,809,275 in 2020 and $0 in 2019.

and Capital Resources

of December 31, 2019, we had $86,919 in cash and a working capital deficit of $98,315, as compared to $1,279,782 in cash

and a working capital surplus of $1,052,017 as of December 31, 2018.

On January 27, 2020, the Company closed a private

offering of equity securities resulting in net proceeds of approximately $1,711,124 after deducting commissions and other offering

expenses payable by the Company.

of December 31, 2020, we had $3,700,814 in cash and working capital of $4,332,053, as compared to $86,919 in cash

and a working capital deficit of $98,315 as of December 31, 2019.

On January 12, 2021, the Company closed a public

offering of common stock resulting in net proceeds of approximately $4,532,444 after deducting commissions and other

offering expenses payable by the Company.

In February and March

of 2021, the Company received net cash proceeds of $1,136,010 from the exercise of outstanding warrants.

believe that our existing cash on hand will be sufficient to fund our anticipated operating costs and capital expenditure requirements

through 2021.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our capital resources

sooner than we expect.

of the numerous risks and uncertainties associated with the research, development, and commercialization of our products, we are

unable to estimate the exact amount of our working capital requirements.

Our future capital requirements will depend on many factors,

cost of expending, maintaining, and enforcing our intellectual property portfolio, including filing, prosecuting, defending

and enforcing our patent claims and other intellectual property rights;

effect of competing technological and market developments;

revenue from the sales of our existing and future products;

cost of operating as a public company;

other factors listed under Item 1A “Risk Factors.”

major sources of funding have been proceeds from public and private offerings of our equity securities (both common stock and

preferred stock), and from warrant exercises.

On April 6, 2018, the Company closed a private placement of equity securities resulting

On March 15, 2019, the Company closed a public offering of equity securities resulting

in net proceeds of approximately $1,679,230 after deducting commissions and other offering expenses payable by the Company.

June 26, 2018, the Company closed a public offering of equity securities resulting in net proceeds of approximately $2,139,000,

after deducting commissions and other offering expenses payable by the Company.

On March 15, 2019, the Company closed a public

offering of equity securities resulting in net proceeds of approximately $1,679,230 after deducting commissions and other offering

expenses payable by the Company.

In May 2019, the Company closed a private placement of equity securities resulting in net proceeds

of approximately $515,000, after deducting placement agent commissions and other offering expenses payable by the Company.

August 2019, the Company closed a public offering of equity securities resulting in net proceeds of approximately $1,971,000,

after deducting placement agent commissions and other offering expenses payable by the Company.

In September 2019, Aegis Capital

partially exercised its over-allotment option granted by the Company in the foregoing August 2019 public offering,

resulting in net proceeds of $148,800 after deducting placement agent commissions.

In January 2020, we completed two private

placements consisting of shares of our newly created Series D and Series E Preferred Stock, warrants to purchase additional shares

of Series D Preferred Stock and warrants to purchase shares of our Common Stock resulting in net cash proceeds to us of approximately

Subject to the satisfaction of certain equity conditions, we have the right to force the exercise of a portion of

the warrants to purchase our Series D Preferred Stock which will result in gross cash proceeds of $500,000.

Additionally, if all

of the remaining warrants to purchase shares of Series D Preferred Stock and Common Stock are exercised by the holders thereof,

the potential gross cash proceeds to us will be $13,298,100.

Depending on the amount, if anything, we receive from such exercises

and the timing thereof, and the amount of revenues we are able to generate, we may need to raise additional amounts to fund our

operations, maintain compliance with the NASDAQ listing requirements and implement our business plan.

There is no assurance as

to the amount and availability of any required future financing or the terms thereof.

Such financing, if in the form of equity,

may be highly dilutive to our existing stockholders and may otherwise include onerous terms.

If in the form of debt, such financing

may include covenants and repayment obligations which may be difficult to meet and that could adversely affect our business operations.

There is also significant uncertainty from the affect that the novel coronavirus may have on the availability and type of financing.

To the extent that funds are not available to us, we may be required to delay, limit or terminate our business operations and

lose our NASDAQ listing.

During 2020, we expect

to sustain our operations and our commercialization and marketing efforts without material increase in our cash burn rate.

expect that enhancements of our IPQA®-enabled PrintRite3D®

technology that were developed in fiscal 2018 and 2019

and brought to market tests and evaluations, commencing in January 2019 and then enhanced with version 5.0 in

May 2019 will enable us to commercialize this technology into the AM metal market in 2020.

To support the commercialization

of our PrintRite3D®

technology, we plan to continue funding our development activities and operating expenses by licensing

our PrintRite3D®

systems and supporting field services, as applicable, and providing PrintRite3D®-enabled engineering

consulting services concerning our areas of expertise (materials and manufacturing quality assurance and process control technologies)

and through the use of proceeds from sales of our securities.

May 2019, the Company closed a private placement of equity securities resulting in net proceeds of approximately $515,000, after

deducting placement agent commissions and other offering expenses payable by the Company.

In August 2019, the Company closed a

public offering of equity securities resulting in net proceeds of approximately $1,971,000, after deducting placement agent commissions

and other offering expenses payable by the Company.

In September 2019, Aegis Capital Corp.

partially exercised its over-allotment

option granted by the Company in the foregoing August 2019 public offering, resulting in net proceeds of $148,800 after deducting

placement agent commissions.

In January 2020, we completed two private placements consisting of shares of our newly created Series

D and Series E Preferred Stock, warrants to purchase additional shares of Series D Preferred Stock and warrants to purchase shares

of our Common Stock resulting in net cash proceeds to us of approximately $1,711,124.

During 2020, institutional holders of

the Series D Preferred Warrants exercised 6,146 of 6,156 such warrants resulting in net proceeds to the Company of $5,820,998.

As of March 23, 2021, if all of the remaining common warrants to purchase our common stock are exercised by the holders thereof,

the potential net proceeds to us will be $1,291,000.

On April 6, 2020, we closed an offering of equity securities in which the

Company sold and issued to certain institutional investors (a) shares of the Company’s common stock and pre-funded warrants,

and (b) Series A Warrants (the “Private Warrants”) to purchase shares of the Company’s common stock pursuant

to a private placement resulting in net proceeds of approximately $1,230,000.

As of March 23, 2021, if all of the Series A Warrants

are exercised by the holders thereof for cash, the potential gross cash proceeds to us will be $956,015.

On January 12, 2021,

the Company closed a public offering of equity securities resulting in net proceeds of approximately $4,532,444 after deducting

commissions and other offering expenses payable by the Company.

need to raise additional amounts to fund our operations, maintain compliance with the NASDAQ listing

requirements and implement our business plan.

There is no assurance as to the amount and availability of any required future financing

or the terms thereof.

Such financing, if in the form of equity, may be highly dilutive to our existing stockholders and may otherwise

include onerous terms.

If in the form of debt, such financing may include covenants and repayment obligations which may be difficult

to meet and that could adversely affect our business operations.

There is also significant uncertainty from the affect that the

novel coronavirus may have on the availability and type of financing.

To the extent that funds are not available to us, we may

be required to delay, limit, or terminate our business operations and lose our NASDAQ listing.

2021, we expect to sustain our operations and our commercialization and marketing efforts with our cash reserves and revenues

generated from sales of our PrintRite 3D®

We expect that continued enhancements of our IPQA®-enabled

PrintRite3D®

technology will enable us to further commercialize this technology into the AM metal market in 2021.

To support the commercialization of our PrintRite3D®

technology, we plan to continue funding our development activities

and operating expenses by licensing our PrintRite3D®

systems and supporting field services, as applicable, and providing PrintRite3D®-enabled

engineering consulting services concerning our areas of expertise (materials and manufacturing quality assurance and process control

technologies) and through the use of proceeds from sales of our securities.

Cash Used in Operating Activities

cash used in operating activities in 2019 increased to $5,514,805 from $3,762,971 in 2018 which is an increase in cash

used of $1,751,834.

This increase is primarily attributable to:

(1) an increase in our net loss of $747,686;

stock-based compensation expense of $348,292 due to the vesting of options granted to our previous CEO in 2018;

(3) an increase

in prepaid expenses of $184,472 primarily as a result of our three-year membership in the UK’s National Centre for

Additive Manufacturing (“NCAM”), and (4) an increase in inventory of $333,788 due to the growth of our RTE program

Cash Used/Provided by Investing Activities

cash used by investing activities during fiscal 2019 was $85,798, which compares to cash provided by investing activities during

the same period of 2018 totaling $403,672.

The decrease is primarily due to the receipt of cash from loan repayments in 2018 from

loans made in 2017.

Cash Used/Provided by Financing Activities

cash used in operating activities in 2020 decreased to $4,809,868 from $5,514,805 in 2019, which is a decrease

in cash used of $704,937.

This decrease is primarily attributable to:

(1) a decrease in our net loss

before preferred dividends of $1,120,710;

(2) higher equity-based compensation expenses of $150,644

(a) increased options and common share grants awarded to employees of $99,602;

(b) increased stock options granted

to consultants in lieu of cash of $70,096, partially offset by (c) lower equity based compensation for directors of $60,117;

an increase in accounts receivable of $259,282 due to increased sales;

(4) a decrease in inventory growth in 2020 from 2019

(5) a decrease in current and long-term prepaid expenses of $319,463 primarily due to the release of

collateral for a letter of credit and amortization of our three-year membership in the UK’s National Centre for Additive

Manufacturing (“NCAM”);

(6) a decrease in accounts payable and accrued expenses of $732,471 due to

payments in 2020 related to 2019 payables as well as lower accounts payable in 2020 resulting from our improved cash position;

(7) a decrease in deferred revenue of $149,439;

(8) long-term Stock Appreciation Rights granted to employees and consultants of

(9) long-term deferral of Payroll Taxes under the CARES Act of $37,728;

and (10) a decrease in depreciation expense of

Cash Used by Investing Activities

cash used by investing activities during fiscal 2020 was $298,359, which compares to cash used by investing activities

during the same period of 2019 totaling $85,798.

The increase is primarily due to increased purchases of fixed assets

of $54,587, additional costs incurred for patents of $36,561 and the receipt of cash from loan repayments of $121,913

Cash Provided by Financing Activities

provided by financing activities during fiscal 2020 increased to $8,722,122 from $4,407,740 during the same period in 2019,

an increase of $1,284,333 as a result of increased net proceeds from our 2019 private and public offerings over 2018.

an increase of $4,314,382 primarily as a result of the exercise of Series D Preferred warrants from our January 2020

private offering, which resulted in net proceeds to the Company of $5,820,998, partially offset by lower net proceeds from

our 2020 private and public offerings over 2019.

have no credit lines as of March 24, 2021, nor have we ever had a credit line since our inception.

Our ability to continue

to fund our liquidity and working capital needs will be dependent upon the success of our efforts to generate revenues

from existing and future PrintRite3D®-proof-of-concept contracts, follow-on contracts resulting from successful proof-of-concept

ability to continue to fund our liquidity and working capital needs will be dependent upon the success of our efforts to generate

revenues from existing and future PrintRite3D®-proof-of-concept contracts, follow-on contracts resulting from successful proof-of-concept

engagements, possible strategic partnerships, and by obtaining additional capital from the sale of securities or by borrowing

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There is no assurance that we will be successful in obtaining additional funding.

The Company is unable

to predict the effect, if any, that the novel coronavirus outbreak may have on its access to the financing markets.

fail to obtain sufficient funding when needed, we may be forced to delay, scale back or eliminate all or a portion of our commercialization

The Company is unable to

predict the effect, if any, that the novel coronavirus outbreak may have on its access to the financing markets.

If we fail to

obtain sufficient funding when needed, we may be forced to delay, scale back or eliminate all or a portion of our commercialization

efforts and operations.

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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 5. Market for Registrant’s Common Equity