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SASI is gearing up for a massive move.
SASI is going to pop big, once merger is announced and will hit double digit dollars. Currently sitting only at 3 million market cap, it has a lot of room left to run.
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The Company:
Sigma is a 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, or 3D printing, 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®.
In 2018, the Sigma team enhanced and added user features to its PrintRite3D® technology. 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 powder bed manufactured parts, notwithstanding the design, metal, or brand of equipment upon which parts are manufactured.
Additive Metal Manufacturing and the role and need for Sigma’s technology:
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.
We believe that there are several significant hurdles to be overcome for broader adoption of additive technologies for the production of industrial metal parts. Among these are lack of quality, consistency, and industry standards along with cost. The Company believes PrintRite3D® has the potential to contribute to widespread industrialization of 3D metal printing. Additionally, the disruption in complex and rigid supply chains caused by COVID-19 exposed the country’s vulnerability to shortages in times of crisis. In response, 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.
PrintRite3D® Technology and Product Family:
PrintRite3D® is an integrated hardware and software edge computing platform, or in-process quality assurance system that combines inspection, feedback, data collection and critical analysis. It is a 3D printer 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® provides a high-fidelity, accurate system that can confidently scale to multi-laser 3D metal printers. The PrintRite3D® system detects 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.
PrintRite3D was initially developed to work with industrial 3D metal printers using the Powder Bed Fusion (PBF) process, which is the most widely used process for industrial metal applications. In 2020, we announced PrintRite3D for Direct Energy Deposition, or DED, for metal parts. PrintRite3D DED opens up another segment of the industrial metal market for Sigma to sell and distribute our technology. In 2021, the Company introduced PrintRite3D Selective Laser Sintering, or (SLS) for polymer materials. The polymer market is larger and more advanced than the metal market. There is an increasing need for quality and standards within the polymer market to support mission critical parts such as those being used in aerospace, space exploration, and defense. The Company’s entry into this market was customer driven by a supplier of critical equipment to the space exploration market. The Company believes that PrintRite3D’s ability to work across a different 3D printers, processes and materials gives it a competitive advantage and will help accelerate the adoption of 3D printing for industrial applications.
Distribution Methods:
Sigma 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 2021, 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. Since 2020, the Company has moved aggressively to establish and extend relationships with 3D printer OEMs and began to generate revenue from this channel. The revenue generated by the OEMs in 2021 did not meet the Company’s projections due to several reasons, including but not limited to: (1) the ramp up time for the OEM’s sales force, (2) the ongoing impact of COVID on our European based OEM partners, and (3) the lack of OEM sales into select vertical markets (e.g., aerospace and space exploration) that require that parts conform to specific quality standards. We expect that the percentage of the Company’s revenue coming from OEMs will increase in 2022 and beyond.
The 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.
Competition:
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 has been 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 than others. 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 machines. 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®. Over the past year or so, new competitors have entered the market with monitoring technology that follows Sigma’s lead as a 3rd party agnostic system capable of working across 3D printer machine types. These systems use camera-based technology and machine learning to identify gross defects during the printing process. These solutions are useful; however, they fall short of determining root cause, and unlike PrintRite3D, are not capable of instructing the printer, through closed-loop control, to vary certain machine variables such as laser power to avoid creating the defects.
Intellectual Property:
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. The chart below summarizes our issued patents. We are currently prosecuting 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.
| Sigma Labs, Inc. Patent Portfolio as of December 31, 2021 | ||||||||||||
| Jurisdiction | Granted | In Process | Total | |||||||||
| US | 13 | 16 | 29 | |||||||||
| PCT | - | 3 | 3 | |||||||||
| EP | - | 4 | 4 | |||||||||
| Germany | 1 | 7 | 8 | |||||||||
| China | 1 | 4 | 5 | |||||||||
| Japan | - | 2 | 2 | |||||||||
| Korea | - | 1 | 1 | |||||||||
| Total | 15 | 37 | 52 | |||||||||
| Title | Type | Patent No. or Application No. | Expiration Date | |||||
| Methods and Systems for Monitoring Additive Manufacturing Processes | US Utility | 9,999,924 | 5/11/36 | |||||
| Systems and Methods for Additive Manufacturing Operations | US Utility | 10,207,489 | 6/20/37 | |||||
| Material Qualification System and Methodology | US Utility | 10,226,817 | 4/26/37 | |||||
| Material Qualification System and Methodology | China Utility | ZL201680010333.X | 1/13/26 | |||||
| Optical Manufacturing Process Sensing and Status Indication System | US Utility | 10,317,294 | 5/2/35 | |||||
| Systems and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing Operation | US Utility | 10,479,020 | 8/1/38 | |||||
| Optical Manufacturing Process Sensing and Status Indication System | US Utility | 10,520,372 | 3/25/35 | |||||
| Systems and Methods for Additive Manufacturing Operations | US Utility | 10,717,264 | 12/28/38 | |||||
| Systems and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing Operation | US Utility | 10,639,745 | 2/21/39 | |||||
| Photodetector Array for Additive Manufacturing Operations | US Utility | 10,786,850 | 2/21/39 | |||||
| Multi-Sensor Quality Inference and Control for Additive Manufacturing Processes | US Utility | 10,786,948 | 4/24/37 | |||||
| Optical Manufacturing Process Sensing and Status Indication System | US Utility | 11,073,431 | 3/25/35 | |||||
| Method and System for Monitoring Additive Manufacturing Process | US Utility | 11,135,654 | 8/11/35 | |||||
| Layer-Based Defect Detection Using Normalized Sensor Data | US Utility | 11,072,043 | 1/26/40 | |||||
| Systems and Methods for Measuring Radiated Thermal Energy During an Additive Manufacturing Operation | Germany Utility | 112,018,001,597 | 8/1/38 | |||||
Recent Developments
In January 2022, we announced the foundational elements of a three-year plan that we believe will increase the Company’s ability to achieve its mission of setting the quality standard for additive manufacturing. The combined strategies are geared at making our technology more consumable in terms of ease of use and cost by end users, both for initial purchases and expansion opportunities, making it easier for original equipment manufacturers (“OEMs”) to embed our technology and generate attractive revenue streams for the OEM, and finally increasing the Company’s gross margins by moving towards a software-only solution.
To lower the barrier for initial users and for expansion opportunities within end users with a large number of printers, we began offering our current PrintRite3D integrated hardware and software solution on a subscription basis. The impact of the change will currently reduce the initial upfront cost to a new user from over $100,000 to approximately $3,000-$4,000 per month. In addition, we believe the subscription model will smooth out the Company’s revenue and cash receipts while making them more predictable.
In order to expand the number of OEMs distributing our technology, we launched a three-tiered OEM program directed to: (1) new OEMs without their own quality assurance or monitoring solution; (2) established OEMs with a quality monitoring offering, but who have customers with multiple printers from multiple OEMs and want a single 3rd party quality and analytics solution with consistent quality metrics across printers, processes and materials; and (3) OEMs building open APIs to integrate components of Sigma’s proprietary technology with their current offerings. We are now working with OEMs on their next generation printers to offer a software-only solution that will utilize the printer’s computing infrastructure and dramatically reduce the overall cost of its technology, enabling the opportunity to move towards a software only embedded solution on every printer sold by partner OEMs.
The combination of subscription pricing and the software-only embedded OEM offerings are intended to make our technology more affordable to acquire and easier for OEM’s to bundle, distribute and support in an effort to become the industry standard. The shift in our business model has had an impact on our near-term revenue growth as we increase our focus on building strategic partnerships, expanding our partner ecosystem, and ensuring the success of our existing customers as they move into production. However, we believe these changes will contribute to faster adoption of our product by end users and will result in more predictable and profitable revenues over the longer term.
Key Second Quarter and Subsequent 2022 Highlights and Business Update
