What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-14 compared with 2022-08-05 · 264 added, 241 removed, 311 unchanged (62% of the section changed)

FINANCIAL STATEMENTS.

Additive Solutions, Inc.

(formerly Sigma Labs, Inc.)

Balance Sheets

June 30, 2022

September 30, 2022

December 31, 2021

28 unchanged sentences

accompanying notes to condensed financial statements.

Additive Solutions, Inc.

(formerly Sigma Labs, Inc.)

Statements of Operations

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

COST OF REVENUE

17 unchanged sentences

Interest Income

Gain on Derivative Liability

State Incentives

Exchange Rate Gain (Loss)

Exchange Rate Loss

Interest Expense

19 unchanged sentences

accompanying notes to condensed financial statements.

Additive Solutions, Inc.

(formerly Sigma Labs, Inc.)

of Stockholders’ Equity

the Three and Six Months Ended June 30, 2022 and June 30, 2021

the Three Months Ended June 30, 2022 and June 30, 2021

Preferred Stock

the Three Months Ended September 30, 2022 and September 30, 2021

Shares Outstanding

3 unchanged sentences

Accumulated Deficit

Balances, March 31, 2022

Preferred Stock

Shares Outstanding

Preferred Stock

Shares Outstanding

Accumulated Deficit

Balances, June 30, 2022

$ ( 45,076,185 )

5 unchanged sentences

Stock Options Awarded to Employees

Balances, June 30, 2022

Balances, September 30, 2022

$ ( 47,382,713 )

3 unchanged sentences

Shares Outstanding

Paid-in Capital

Accumulated Deficit

Balances, March 31, 2021

$ ( 33,816,575 )

( 1,845,547 )

Balances, June 30, 2021

$ ( 35,676,342 )

Extinguishment of Derivative Liability

Preferred Stock Dividends

Shares Securities Issued to Directors for Services

Securities Issued for Third Party Services

Stock Options Awarded to Employees

Stock Options Awarded to Directors

Balances, June 30, 2021

Stock Awarded to Employees

( 2,490,978 )

the Six Months Ended June 30, 2022 and June 30, 2021

( 2,490,978 )

Balances, September 30, 2021

$ ( 38,181,540 )

accompanying notes to condensed financial statements.

the Nine Months Ended September 30, 2022 and September 30, 2021

Preferred Stock

2 unchanged sentences

Shares Outstanding

Paid-in Capital

Accumulated Deficit

7 unchanged sentences

Stock Options Awarded to Employees

Balances, June 30, 2022

Balances, September 30, 2022

$ ( 47,382,713 )

3 unchanged sentences

Shares Outstanding

Paid-in Capital

Accumulated Deficit

1 unchanged sentence

$ ( 33,105,008 )

( 2,496,207 )

Common Shares Sold in Public Offerings

4 unchanged sentences

Common Shares Issued Upon Conversion of Preferred Shares

Common Shares Issued Upon Exercise of Warrants

Common Shares issued for Exercise of Common Warrants

Stock Options Awarded to Directors

Securities Issued for Third Party Services

Stock Options Awarded to Employees

Stock Options Awarded to Directors

Offering Costs

1 unchanged sentence

( 1,600,967 )

Balances, June 30, 2021

( 4,987,185 )

Balances, September 30, 2021

$ ( 38,181,540 )

accompanying notes to condensed financial statements.

Additive Solutions, Inc.

(formerly Sigma Labs, Inc.)

Statements of Cash Flows

Six Months Ended

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Nine Months Ended

September 30, 2022

September 30, 2021

OPERATING ACTIVITIES

39 unchanged sentences

accompanying notes to condensed financial statements.

SIGMA ADDITIVE SOLUTIONS,

(FORMERLY SIGMA LABS, INC.)

TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1 - Summary of Significant Accounting Policies

of Business -Sigma Labs, Inc., a Nevada corporation, was founded by a group of scientists, engineers and businessmen to develop and

commercialize novel and unique manufacturing and materials technologies.

Sigma believes that some of these technologies will fundamentally

redefine conventional quality assurance and process control practices by embedding them into the manufacturing processes in real time,

enabling process intervention and ultimately leading to closed loop process control.

The Company anticipates that its core technologies

will allow its customers to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve

breakthrough product potential in many industries including aerospace, defense, oil and gas, bio-medical, and power generation.

the “Company,” “Sigma,” “we,” “us” and “our” refer to Sigma Labs, Inc.

of Business -Sigma Additive Solutions, Inc.

(formerly Sigma Labs, Inc.), a Nevada corporation (“Company,” “Sigma,”

“we,” “us” and “our”), was founded by a group of scientists, engineers and businessmen to

develop and commercialize novel and unique manufacturing and materials technologies.

Sigma believes that some of these technologies

will fundamentally redefine conventional quality assurance and process control practices by embedding them into the manufacturing

processes in real time, enabling process intervention and ultimately leading to closed loop process control.

The Company anticipates

that its core technologies will allow its customers to combine advanced manufacturing quality assurance and process control

protocols with novel materials to achieve breakthrough product potential in many industries, including aerospace, defense, oil and

gas, bio-medical, and power generation.

of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting

1 unchanged sentence

In the opinion of management, all adjustments (which include only normal

recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2022 and

2021 and for the periods then ended have been made.

recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2022

and 2021 and for the periods then ended have been made.

Certain information and footnote disclosures normally included in financial statements

2 unchanged sentences

conjunction with the December 31, 2021 audited financial statements and notes thereto included in the Company’s Annual Report on

The results of operations for the periods ended June 30, 2022 and 2021 are not necessarily indicative of the operating results

The results of operations for the period ended September 30, 2022 are not necessarily indicative of the operating results

for the full year.

6 unchanged sentences

Company does not use derivative instruments for hedging of market risk or for trading or speculative purposes.

On March 26, 2021,

the Company issued warrants to purchase an aggregate of 2,190,000

shares of common stock in a private placement concurrently with a registered direct offering of our common stock The warrants became

exercisable on May

24, 2021 , the date the Company obtained stockholder approval to increase its authorized common shares from 12,000,000

to 24,000,000 ,

and will expire on May 24, 2023 .

to ASC 815-40-25-10, because the Company did not have sufficient authorized and unissued shares of common stock available to settle the

warrants at the issue date, such warrants were accounted for as a derivative liability.

For the six months ended June 30, 2021, the Company

recorded a gain of $ 1,092,441 due to the change in the fair value of the derivative liability as measured on a recurring basis.

24, 2021, upon receiving shareholder approval to increase its authorized common shares, the Company reclassified the warrant liability

to equity pursuant to ASC 815.40.35.8.

On March 26, 2021, the

Company issued warrants to purchase an aggregate of 2,190,000 shares of common stock in a private placement concurrently with a registered

direct offering of our common stock The warrants became exercisable on May 24, 2021 , the date the Company obtained stockholder approval

to increase its authorized common shares from 12,000,000 to 24,000,000 , and will expire on May 24, 2023 .

to ASC 815.40.25.10, such warrants were accounted for as a derivative liability because the Company did not have sufficient authorized

and unissued shares of common stock available to settle the warrants at the issue date.

On May 24, 2021, upon receiving stockholder approval

to increase its authorized common shares, the Company reclassified the warrant liability to equity pursuant to ASC 815.40.35.8.

the nine months ended September 30, 2021, the Company recorded a gain of $ 1,092,441 due to the change in the fair value of the derivative

liability as measured on a recurring basis.

Per Share – The computation of loss per share is based on the weighted average number of shares outstanding during the period

2 unchanged sentences

and preferred stock were excluded due to the anti-dilutive effect they would have on the computation.

At June 30, 2022 and 2021, the

Company had the following common shares underlying these instruments:

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

At September 30, 2022 and 2021,

the Company had the following common shares underlying these instruments:

Schedule of Antidilutive Securities Excluded

from Computation of Earnings Per Share

September 30,

Stock Options

2 unchanged sentences

following table shows the amounts used in computing loss per share and the effect on net loss and the weighted average number of shares

of dilutive potential common stock for the periods ended June 30, 2022 and 2021:

of dilutive potential common stock for the periods ended September 30, 2022 and 2021:

Schedule of Computing Loss Per Share

Three Months Ended June 30

Six Months Ended June 30

Three Months Ended September 30

Nine Months Ended September 30

Net Loss per Common Share - Basic and Diluted

13 unchanged sentences

obsolescence.

Recognition – The Company’s revenue derived primarily from sales of our software and related hardware suite under perpetual

licenses and from providing engineering services under contracts.

The Company recognizes revenue in accordance with ASC Topic No.

Recognition – The Company’s revenue is derived primarily from sales of our software and related hardware

suite under perpetual licenses and from providing engineering services under contracts.

The Company recognizes revenue in accordance

with ASC Topic No.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2014-09, Revenue from Contracts

with Customers .

ASU 2014-09 is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition

guidance under prior U.S.

GAAP and replaced it with a principles-based approach for determining revenue recognition.

The core principle

of the standard is the recognition of revenue upon the transfer of promised goods or services to customers in an amount that reflects

the consideration to which the company expects to be entitled in exchange for those goods or services.

In general, we determine revenue

recognition by:

(1) identifying the contract, or contracts, with our customer;

2014-09, Revenue from Contracts with Customers .

ASU 2014-09 is a comprehensive revenue recognition standard that superseded

nearly all existing revenue recognition guidance under prior U.S.

GAAP and replaced it with a principles-based approach for

determining revenue recognition.

The core principle of the standard is the recognition of revenue upon the transfer of promised

goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange

for those goods or services.

In general, we determine revenue recognition by:

(1) identifying the contract, or contracts, with our

(2) identifying the performance obligations in the contract;

(3) determining the transaction price;

(4) allocating the transaction price to performance obligations in the contract;

and (5) recognizing

revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

In January 2022, the Company began offering a subscription

option to its customers, pursuant to which it enters into agreements to lease its PrintRite3D platform for terms between 12 and 36 months

and provide technical support and maintenance for the term of the arrangement, as well as installation and training.

The Company has determined

these are leases because they relate to discrete pieces of equipment that customers have the right to substantially all the economic benefit

from and exclusive right to use during the term of the arrangement.

These leases are classified as operating leases and the Company retains

title to the underlying equipment.

agreements may be renewed for successive one-year terms unless notice is given by either party of its intent not to renew at least 30

days before the end of the lease term.

For leases with 36-month terms, the lessee may terminate the agreement after the first 18 months

with 30-days written notice.

Some, but not all, of the arrangements provide for a lessee to purchase the asset at a stated amount

that approximates fair value and are not reasonably certain to be exercised at the inception of the arrangement.

There are no anticipated

variable lease payments at the inception of the arrangement.

There are two non-lease components in the arrangement

that consist of technical support and maintenance, and installation and training.

The Company has elected the single component practical

expedient to combine the technical support and maintenance with the lease as they have the same pattern of transfer.

The installation

and training do not have the same pattern of transfer;

therefore, this component is not eligible for the single component practical expedient.

The consideration has been allocated on a relative fair value basis of the underlying lease and non-lease components.

The Company has

estimated the residual value of the leased assets based on the life of the underlying assets, the ability to refurbish and sell the assets,

as well as the Company’s ability to componentize the hardware and utilize subassemblies in other products.

Revenue from lease payments related to these operating leases for the three and six months ended June 30, 2022 was $ 14,138 and $ 20,138 , respectively.

(4) allocating the

transaction price to performance obligations in the contract;

and (5) recognizing revenue when, or as, we satisfy performance

obligations by transferring the promised goods or services.

January 2022, the Company began offering a subscription option to its customers, pursuant to which it leases its PrintRite3D platform

for terms between 12 and 36 months and provide technical support and maintenance for the term of the arrangement, as well as installation

and training.

The Company has determined these are leases because they relate to discrete pieces of equipment to which customers have

the right to substantially all the economic benefit from and exclusive right to use during the term of the arrangement.

are classified as operating leases and the Company retains title to the underlying equipment.

leases may be renewed for successive one-year terms unless notice is given by either party of its intent not to renew at least 30 days

before the end of the lease term.

For leases with 36-month terms, the lessee may terminate the agreement after the first 18 months with

30-days written notice.

Some, but not all, of the leases permit lessees to purchase the equipment at any time at an amount that approximates

fair value and are not reasonably certain to be exercised at the inception of the lease.

There are no anticipated variable lease payments

at the inception of the lease.

are two non-lease components in the arrangement that consist of technical support and maintenance, and installation and training.

Company has elected the single component practical expedient to combine the technical support and maintenance with the lease as they

have the same pattern of transfer.

The installation and training component does not have the same pattern of transfer;

therefore, this

component is not eligible for the single component practical expedient.

The consideration has been allocated on a relative fair value

basis of the underlying lease and non-lease components.

The Company has estimated the residual value of the leased equipment based on

its useful life, and the ability to refurbish and sell the equipment, as well as the Company’s ability to componentize the hardware

and utilize subassemblies in other products.

from these operating leases for the three and nine months ended September 30, 2022 was $ 2,834 and $ 17,006 , respectively.

Lease Payments Receivable

lease payments receivable for each of the succeeding years ending December 31 are as follows:

Schedule of Minimum

Lease Payments Receivable

3 unchanged sentences

Underlying Operating Leases:

under operating leases are comprised of the following:

underlying operating leases

June 30, 2022

under operating leases as of September 30, 2022 were comprised of the following:

Schedule of Assets underlying Operating Leases

September 30,

PrintRite 3D Hardware

1 unchanged sentence

Net Book Value

Company is depreciating assets over their useful life of 7 years, but certain subassemblies and components may have a longer economic

Company is depreciating the underlying equipment over its useful life of

7 years, but certain subassemblies and components may have a longer economic life.

2 – Inventory

June 30, 2022 and December 31, 2021, the Company’s inventory was comprised of:

September 30, 2022 and December 31, 2021, the Company’s inventory was comprised of the following:

Schedule of Inventory

June 30, 2022

December 31, 2021

September 30,

Raw Materials

2 unchanged sentences

Total Inventory

3 – Intangible Assets

Company’s intangible assets consist of patents and patent applications.

patent applications are not amortized until a patent has been granted.

Once a patent is granted, the Company will amortize the related

costs over the estimated useful life of the patent.

If a patent application is denied, then the costs will be expensed at that time.

2022, $ 126,231 of costs related to patents issued to us during 2022 were reclassified from provisional patent application to patents and began to be amortized as of the date of issue.

following is a summary of definite-life intangible assets less accumulated amortization as of September 30, 2022 and December 31, 2021,

respectively:

Summary of Definite-life Intangible Assets and Accumulated Amortization

September 30,

Provisional Patent Applications

Accumulated Amortization

Net Intangible Assets

expense on intangible assets was $ 17,010 and $ 22,998 for the nine months ended September 30, 2022 and 2021, respectively.

estimated aggregate amortization expense for each of the following years ending December 31 is as follows:

Schedule of Aggregate Amortization Expense

2022 (Remaining)

asset and amortization expense

4 – Deferral of Social Security Tax Payments

1 unchanged sentence

during the “payroll tax deferral period.” The payroll tax deferral period began on March 27, 2020 and ended on December 31,

At June 30, 2022, the total remaining amount of the deferral was $ 37,728 .

Per the terms of the deferral program, such amount is

due by December 31, 2022 , at 0 % interest.

At September 30, 2022, the total remaining amount of the deferral was $ 37,728 .

Per the terms of the deferral program, such amount

is due by December 31, 2022 , without interest.

5 - Stockholders’ Equity

4 unchanged sentences

payable by the Company.

Pursuant to the Underwriting Agreement, the Company also issued to the Underwriter or its designee warrants to

purchase 136,943 shares of common stock.

Pursuant to the Underwriting Agreement, the Company also issued to the Underwriter and its designees warrants

to purchase 136,943 shares of common stock.

Such warrants have a term of five years and an exercise price of $ 3.75 per share.

16 unchanged sentences

The Company also issued to designees of the Placement Agent warrants to purchase up to 175,200 shares of Common Stock (the “Placement

Agent Warrants”) constituting 8 % of the aggregate number of shares of Common Stock sold in the public offering, The Placement Agent

Agent Warrants”) constituting 8 % of the aggregate number of shares of Common Stock sold in the public offering.

The Placement Agent

Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants have an exercise price equal to

4 unchanged sentences

the Company as partial compensation for services rendered.

Company is authorized to issue 10,000,000 shares of preferred stock, $ 0.001 par value.

465 shares of preferred stock were issued and

outstanding at June 30, 2022 and December 31, 2021.

January 2020, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain institutional investors (the

“Institutional Private Placement”).

Pursuant to the SPA, the Company issued and sold 1,640 shares of the Company’s

newly created Series D Convertible Preferred Stock (the “Series D Preferred Stock”) at an initial stated value of $ 1,000

Dividends accrue at a rate of 9 % per annum (subject to increase upon the occurrence (and during the continuance) of certain

triggering events described therein) and are payable monthly in kind by the increase of the stated value of the Series D Preferred Shares

by said amount.

The holders of the Series D Preferred Shares have the right at any time to convert all or a portion of the Series D Preferred

Shares (including, without limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing

date) into shares of the Company’s Common Stock at the conversion price then in effect, which is $ 2.50 (subject to adjustment for

stock splits, dividends, recapitalizations and similar events and full ratchet price protection).

Alternatively, a holder may at any

time convert all, or any part, of its Series D Preferred Shares at an alternative conversion price equal to the lower of the applicable

conversion price then in effect, and the greater of (x) $1.80 and (y) 85% of the average volume weighted average price (“VWAP”)

of the Common Stock for a five trading day period prior to such conversion.

Upon the occurrence of certain triggering events, described

in the Certificate of Designations, including, but not limited to payment defaults, breaches of transaction documents, failure to maintain

listing on the Nasdaq Capital Market, and other defaults set forth therein, the Series D Preferred Shares would become subject to redemption,

at the option of a holder, at a 125% premium to the underlying value of the Series D Preferred Stock being redeemed.

June 30, 2022, there were 132 shares of Series D Preferred Stock outstanding, which if converted as of June 30, 2022, including the make-whole

dividends, would result in the issuance of 87,267 shares of common stock.

Company is authorized to issue 10,000,000 shares of preferred stock, $ 0.001 par value, of which 465 shares were issued and outstanding

at September 30, 2022 and December 31, 2021.

January 2020, the Company entered into a Securities Purchase Agreement with certain institutional investors (the “Institutional

Private Placement”), pursuant to which the Company issued and sold 1,640 shares of the Company’s newly created Series D Convertible

Preferred Stock (the “Series D Preferred Stock”) at an initial stated value of $ 1,000 per share.

Dividends accrue at a rate

of 9 % per annum (subject to increase upon the occurrence (and during the continuance) of certain triggering events described therein)

and are payable monthly in kind by the increase of the stated value of the Series D Preferred Shares by said amount.

The holders of the

Series D Preferred Shares have the right at any time to convert all or a portion of the Series D Preferred Shares (including, without

limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing date) into shares of the

Company’s Common Stock at the conversion price then in effect, which is $ 2.50 (subject to adjustment for stock splits, dividends,

recapitalizations and similar events and full ratchet price protection in the event the Company issues or sells, or is deemed to have

issued or sold, shares of Common Stock for a consideration per share less than a price equal to the conversion price then in effect).

Alternatively, a holder may at any time convert all, or any part, of its Series D Preferred Shares at an alternative conversion price

equal to the lower of the applicable conversion price then in effect, and the greater of (x) $1.80 and (y) 85% of the average volume

weighted average price (“VWAP”) of the Common Stock for a five-trading day period prior to such conversion.

Upon the occurrence

of certain triggering events, described in the Certificate of Designations, including, but not limited to payment defaults, breaches

of transaction documents, failure to maintain listing on the Nasdaq Capital Market, and other defaults set forth therein, the Series

D Preferred Shares would become subject to redemption, at the option of a holder, at a 125% premium to the underlying value of the Series

D Preferred Stock being redeemed .

September 30, 2022, there were 132 shares of Series D Preferred Stock outstanding, which if converted as of September 30, 2022, including

the make-whole dividends, would result in the issuance of 87,267 shares of common stock.

with the Institutional Private Placement, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued

and sold to certain of its directors and the Company’s largest shareholder 333 shares of the Company’s newly created Series

E Convertible Preferred Stock (the “Series E Preferred Stock”) at an initial stated value of $ 1,000 per share.

and sold to certain of its directors and the Company’s then largest stockholder 333 shares of the Company’s newly created

Series E Convertible Preferred Stock (the “Series E Preferred Stock”) at an initial stated value of $ 1,000 per share.

accrue at a dividend rate of 9 % per annum and are payable monthly in kind by the increase of the stated value of the Series E Preferred

2 unchanged sentences

for stock splits, dividends, recapitalizations and similar events).

June 30, 2022, 333 shares of Series E Preferred Stock were outstanding, which if converted as of June 30, 2022, including the make-whole

dividends, would result in the issuance of 61,651 shares of common stock.

of June 30, 2022, an aggregate of 201,861 shares of common stock were reserved for future issuance under the 2013 Equity Incentive Plan.

September 30, 2022, 333 shares of Series E Preferred Stock were outstanding, which if converted as of September 30, 2022, including the

make-whole dividends, would result in the issuance of 61,651 shares of common stock.

of September 30, 2022, an aggregate of 450,617 shares of common stock were reserved for future issuance under the Company’s 2013

Equity Incentive Plan.

March 2022, the Company granted options to its non-employee directors to purchase up to an aggregate of 56,000 shares of common stock

at a strike price of $ 2.50 .

As of June 30, 2022, 50 % of such grants were fully vested and exercisable, and the remaining 50 % will vest

in equal installments at the end of each of the next two quarters.

the six months ended June 30, 2022, the Company granted four employees options to purchase up to an aggregate of 22,000 shares of common

stock in connection with their employment.

The options have a strike price of $ 2.50 and will vest in equal annual installments on the

first through third anniversaries of the grant dates, provided that the employees remain employed by the Company on such dates.

in February 2022, the Company granted its President and CEO an option to purchase up to 70,000 shares of common stock in connection with

his employment.

The option has a strike price of $ 2.50 and will vest in equal monthly installments over 36 months beginning March 2022,

provided that the President and CEO remains employed by the Company on such dates.

in March 2022, the Company granted two consultants options to purchase up to an aggregate of 14,000 shares of common stock for services

to be rendered.

As of September 30, 2022, 75 % of such grants were fully vested and exercisable, and the remaining 25 % will

vest on December 31, 2022 subject to the directors remaining in our service through such date.

the nine months ended September 30, 2022, the Company granted twelve employees options to purchase up to an aggregate of 228,973 shares

of common stock in connection with their employment.

The options have a strike price of $ 2.50 with vesting periods ranging from immediately

upon issuance to three years beginning July 1, 2022, provided that the employees remain employed by the Company on such dates.

the Company granted its President and CEO options to purchase up to 135,000 shares of common stock in connection with his employment.

The options have a strike price of $ 2.50 and will vest in equal monthly installments over 36 months beginning March 2022, provided that

the President and CEO remains employed by the Company on such dates.

during the nine months ended September 30, 2022, the Company granted two consultants options to purchase up to an aggregate of 14,000

shares of common stock for services to be rendered.

The options have a strike price of $ 2.50 and are fully vested.

Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s

stock on the grant date.

Stock options are typically granted throughout the year and generally vest over a period from one to three years

of service and expire five years from the grant date, unless otherwise specified.

The Company recognizes compensation expense for the

fair value of the stock options over the requisite service period for each stock option award.

stock-based compensation expense included in the statements of operations for the six months ended June 30, 2022 and 2021 was $ 338,415

Company generally grants stock options to employees and directors at exercise

prices equal to the fair market value of the Company’s stock on the grant date, The exercise prices will not be less than 100% of

the fair market value of a share on the date of grant of the option.

Stock options are typically granted throughout the year and

generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified.

The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

stock-based compensation expense included in the statements of operations for the nine months ended September 30, 2022 and 2021 was $ 613,833

and $ 893,431 respectively, all of which is related to stock options.

fair value of stock-based awards was estimated using the Black-Scholes model with the following weighted average assumptions for the

six months ended June 30, 2022 and 2021:

Schedule of Share Based Payments Award Stock Options Valuation Assumptions

Dividend yield

Risk-free interest rate

0.95 - 1.65 %

0.19 - 0.32 %

Expected volatility

106.4 - 110.0 %

nine months ended September 30, 2022 and 2021:

Schedule of Share Based Payments Award Stock

Options Valuation Assumptions

interest rate

116.8 - 123.8

Expected life (in years)

activity for the six months ended June 30, 2022 and the year ended December 31, 2021 was as follows:

life (in years)

activity for the nine months ended September 30, 2022 and the year ended December 31, 2021 was as follows:

Schedule of Stock Option Activity

Weighted Average Exercise Price ($)

Weighted Average Remaining Contractual Life (Yrs.)

Aggregate Intrinsic Value ($)

Options outstanding at December 31, 2020

2 unchanged sentences

Forfeited or cancelled

Options outstanding June 30, 2022

Options expected to vest in the future as of June 30, 2022

Options exercisable at June 30, 2022

Options vested, exercisable, and options expected to vest at June 30, 2022

Options outstanding September 30, 2022

Options expected to vest in the future as of September 30, 2022

Options exercisable at September 30, 2022

Options vested, exercisable, and options expected to vest at September 30, 2022

aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of

our common stock for those awards that have an exercise price below the $ 1.28 closing price of our Common Stock on June 30, 2022.

June 30, 2022, no option grants had an exercise price below $ 1.28 .

June 30, 2022, there was $ 990,838 of unrecognized stock-based compensation expense related to unvested stock options with a weighted

our common stock for those awards that have an exercise price below the market price of our common stock.

30, 2022, no option had an exercise price below the $ 0.815

closing price of our common stock as reported on The Nasdaq Capital Market.

September 30, 2022, there was $ 908,588 of unrecognized stock-based compensation expense related to unvested stock options with a weighted

average remaining recognition period of 2.0 years.

Appreciation Rights

June 23, 2020, the board of directors (the “Board”) of the Company adopted the Sigma Labs, Inc.

2020 Stock Appreciation Rights

Plan (the “Plan”).

June 23, 2020, the board of directors (the “Board”) of the Company adopted the 2020 Stock

Appreciation Rights Plan (the “Plan”).

The purposes of the Plan are to:

(i) enable the Company to attract and retain the types of employees,

consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success;

(ii) provide incentives that align the interests of Service Providers with those of the shareholders of the Company;

and (iii) promote

the success of the Company’s business.

The Plan provides for incentive awards only in the form of stock appreciation rights payable

in cash (“SARs”) and no shares of common stock are reserved or will be issued pursuant to the Plan.

(i) enable the Company to attract and retain the

types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s

long-range success;

(ii) provide incentives that align the interests of Service Providers with those of the stockholders of the Company;

and (iii) promote the success of the Company’s business.

The Plan provides for incentive awards only in the form of stock appreciation

rights payable in cash (“SARs”) and no shares of common stock are reserved or will be issued pursuant to the Plan.

may be granted to any Service Provider.

7 unchanged sentences

the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant.

January 3, 2022, the Company granted a total of 12,033 SARs to eleven employees at an exercise price of $ 1.87 , the closing price of the

Company’s common stock on the date of grant.

The SARs expire on the fifth anniversary of the grant date and were fully vested and

exercisable on the date of the grant.

February 16, 2022, the Company granted 30,000

SARs to our President and Chief Executive Officer at an exercise price of $ 2.50 ,

the closing price of the Company’s common stock on the date of grant.

The SARs will expire on the fifth anniversary of the

grant date and will vest equally over 36 months beginning March 2022, provided that the President and Chief Executive Officer remains an employee of the Company on

March 31, 2022, the Company granted 3,000 SARs to a consultant as partial compensation for services pursuant to a consulting agreement.at

an exercise price of $ 2.50 , The SARs expire on the fifth anniversary of the grant date and are fully vested and exercisable.

the nine months ended September 30, 2022, the Company granted a total of 404,975 SARs to fifteen employees at exercise prices ranging

from $ 1.30 to $ 2.50 with vesting periods ranging from immediately upon issuance to three years, beginning January 3, 2022, provided that

the employees remain employed by the Company on such dates.

The SARs expire on the fifth anniversary of the grant date.

during the nine months ended September 30, 2022, the Company granted 406,887 SARs to our President and Chief Executive Officer at exercise

prices ranging from $ 1.30 to $ 2.50 .

Of the SARs, 30,000 will vest equally over 36 months beginning March 2022, 194,940 will vest over

36 months beginning July 1, 2022, and 181,947 will vest on March 15, 2025, in each case provided that the President and Chief Executive

Officer remains an employee of the Company on such dates.

The SARs will expire on the fifth anniversary of each of the grant dates.

March 31, 2022, the Company granted 3,000 SARs to a consultant as partial compensation for services pursuant to a consulting agreement

at an exercise price of $ 2.50 .

The SARs expire on the fifth anniversary of the grant date and are fully vested and exercisable.

Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the requisite service period

2 unchanged sentences

and any changes in fair value are reflected in the Statement of Operations as of the applicable reporting date.

fair value of SAR awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the six months

ended June 30, 2022 and the year ended December 31, 2021:

Schedule of Share Based Payments Award Stock Options Valuation Assumptions

Dividend yield

Risk-free interest rate

0.82 - 1.65 %

0.39 - 0.40 %

Expected volatility

fair value of SAR awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the nine months

ended September 30, 2022 and the year ended December 31, 2021:

Schedule of Share Based Payments Award Stock

Options Valuation Assumptions

interest rate

108.38 - 119.02

Expected life (in years)

activity for the six months ended June 30, 2022 and the year ended December 31, 2021 was as follows:

life (in years)

activity for the nine months ended September 30, 2022 and the year ended December 31, 2021 was as follows:

Schedule of Stock Option Activity

Weighted Average Exercise Price ($)

Weighted Average Remaining Contractual Life (Yrs.)

Aggregate Intrinsic Value ($)

SARs outstanding at December 31, 2020

2 unchanged sentences

Forfeited or cancelled

SARs outstanding June 30, 2022

SARs expected to vest in the future as of June 30, 2022

SARs exercisable at June 30, 2022

SARs vested, exercisable, and SARs expected to vest at June 30, 2022

aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of

our common stock for those awards that have an exercise price currently below the $ 1.28 closing price of our common stock on June 30,

No SARs grants have an exercise price below $ 1.28 .

June 30, 2022, there was $ 577,981 of unrecognized stock-based compensation expense related to unvested SARs with a weighted average remaining

recognition period of 2.0 years.

activity for the six months ended June 30, 2022 and the year ended December 31, 2021 was as follows:

of Warranty Activity

Weighted Average Exercise Price ($)

Weighted Average Remaining Contractual Life (Yrs.)

SARs outstanding September 30, 2022

SARs expected to vest in the future as of September 30, 2022

SARs exercisable at September 30, 2022

SARs vested, exercisable, and SARs expected to vest at September 30, 2022

aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price

of our common stock for those awards that have an exercise price below the market price of our common stock.

At September 30,

2022, no SAR had an exercise price below the $ 0.815

closing price of our common stock as reported on The Nasdaq Capital Market .

September 30, 2022, there was $ 1,128,615 of unrecognized stock-based compensation expense related to unvested SARs with a weighted average

remaining recognition period of 2.38 years.

activity for the nine months ended September 30, 2022 and the year ended December 31, 2021 was as follows:

Schedule of Warranty Activity

Warrants outstanding at December 31, 2020

2 unchanged sentences

Forfeited or cancelled

Warrants outstanding at June 30, 2022

Warrants outstanding at September 30, 2022

6 - Subsequent Events

July 1, 2022, our Board of Directors (the “Board”), based upon determinations and recommendations of the Compensation Committee

of the Board, approved the Company’s 2022 executive compensation program.

The program includes targeted cash incentive bonuses

and long-term equity incentive awards to Jacob Brunsberg, our Chief Executive Officer, Frank Orzechowski, our Chief Financial Officer,

Darren Beckett, our Chief Technology Officer, and Mark Ruport, our other named executive officer as of December 31, 2021, whom we collectively

refer to as the “Participating Persons.” Also, on July 1, 2022, the Board, upon the recommendation of the Compensation Committee,

adopted retention bonus and change in control plans for certain of the Participating Persons.

October 14, 2022, the Company received notice from The Nasdaq Stock Market (“Nasdaq”) that the closing bid price for our

common stock had been below $ 1.00 per share for 30 consecutive business days, and that the Company therefore is not in compliance with

the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2).

indicates that the Company has 180 calendar days, or until April 12, 2023, to regain compliance with this requirement.

The Company may also be eligible for an additional 180 calendar days to regain compliance.

Company believes that it will regain compliance with the $ 1.00

minimum bid price requirement.

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-Q

Item 1. Financial Statements