Sigma Labs Inc (SASI)

[HIIGUY]

WARNING: A very LONG read BUT A good read for new investors and potential investors. This was posted about two months ago which provides excellent background into SIGMA and even some companies who are trying to compete with us.

Sigma Labs Review V2.0 0 comments
Dec 7, 2015 2:20 AM | about stocks: SGLB
Dear investors,

I would like to talk to you about Sigma Labs, everything I currently know about it, as well as what I am forecasting for the near future. Sigma Labs is a technology company which operates in the Additive Manufacturing industry. It evolved from the "B6 Sigma" startup, however the focus of this article is not on its history, but rather on where the company stands now and where it is heading.

Sigma Labs' main produce, or more specifically, its primary focus is on the development of a quality assurance methodology for printed parts in-process, also known as IPQA®, or "In Process Quality Assurance®"

N.B. I want to clarify - in this topic we will talk about printers which produce parts made of metal for industrial and high-precision / high-tech needs.

Currently, parts which are produced by conventional methods use a post process quality assurance methodology, which:

is labor intensive, since it requires x-ray analysis for identifying any internal deformation occurred during production

is subject to "human factor", i.e. human errors

makes the production most expensive

prolongs the lead time from order to delivery since the post manufacturing quality inspection can take as long as 10 times longer than the production

The integration of IPQA® into Additive Manufacturing aims to solve all of the above problems, since the quality inspection is conducted during the manufacturing process. This means that if the manufacturing machine identifies any deviation in quality in real-time during the manufacturing process it is able to pause the production altogether or, in the case of small deviations from quality, it can send the parts subject to the deviation for a post-process quality assurance in order to prevent resource waste.

The main question

All of this is what appears on the surface. Hidden behind this issue is something much more important. Critically important for the entire industry. So important that it will be a paradigm shift for production. A breakthrough in technology and methods is awaiting humanity! The first machine was a Ford. The next will IPQA®.

Any 3D printer these days can print children toys and trinkets, but a significantly smaller amount of 3D printers can make high-quality high-precision metal products, and their cost is much higher. However, they also exist amongst all the key players of 3D printing industry. To make a high precision 3D printer is only a question of money. Nethertheless, all of this is not sufficient to change the paradigm, and we clearly saw this with the fall of companies in the likes of "Stratosys" and "3D-Systems", which in 2013 lost 90% and 75% of their value, respectively.

You may be asking now, so what is required?

Confirmation.

Confirmation from the regulatory and certification bodies of the fact that the item being printed, is ALREADY suitable for use in the assembly of the unit, or by itself! Now this is impossible, since there are no certified IPQA® methods. Manufacturers attach to their devices various "inspectors," but it is nothing more than an internally created method which is not recognized nor standardized.

Anyone who develops and certifies the method of checking the quality of parts in the manufacturing process, will be the winner. And it is extremely important not only to develop the method, but also to get in touch with the relevant organizations and companies that need such technologies. These include all the manufacturers of high-precision and high-tech products, as well as their customers, for example the Department of Defense. The manufacturers in this case are, for example, General Electric, DARPA, Honeywell, Boeing, Dymler-Chrysler, medical device manufacturers, etc.

I highly recommend you read the article "One of the most serious hurdles to the broad adoption of additive manufacturing of metals is the qualification of additively manufactured parts", published at dupress.com/articles/3d-printing-quality... -in-manufacturing/?icid=hp:ft:05 The author of it describes with a high and detailed precision everything that I briefly mention in this article.

About Sigma Labs itself

My "analysis" of Sigma Labs is split into several parts in which I explore the following topics:

a) Method of IPQA® realization and the final products of the company;

b) peers and challenges.

c) partners and future;

I immediately want to highlight that I will not touch upon the Financial Statements, which you can view on your own on the following website: http://sigmalabsinc.com/index.php?page=investor. However, everything in them is very common to a "penny stock" technological company - growing expenses, which significantly outweigh the revenues (and earnings), positive future forecasts, and a note of gratitude for "being with us". This might look trivial and bring a smile to someone's face, however one cannot ignore the fact that in the last 2 years sigma Labs made good steps toward commercialisation of their products.

The financial performance and any attempt to analyze it will only distract us from the most important thing that can be in the penny stock - its prospects.

Ok, it's time to dive into some deeper insight.

a) Methods and mechanisms

The main Sigma Labs product is called PrintRide 3D.

PrintRide3D is a combination of specific software and hardware that lets you monitor in real-time a machine while it is building a metal component.

Donald Godgrey, from Honewell Aerospace, wrote with a lot of detail about this process in his blog. Honewell Aerospace cooperates closely with Sigma Labs Inc. not only in the production process, but also in the adaptation and usage of IPQA® methods.

PrintRite3D® INSPECT TM

Allow me to quote Donald:

«PrintRite3D® INSPECT TM generates an electronic signature of each slice of the part. That signature becomes a slice by slice comparison to an already established baseline for what a quality part would look like when looking at the part from an electronic perspective».

Full article can be found here: https://aerospace.honeywell.com/blog/how-a-3d-printer-can-identify-its-own-mistakes-part-ii

PrintRite3D® CONTOUR TM

The second component of IPQA® - PrintRite3D® CONTOUR TM

And again allow me to quote Donald Godfrey from his article:

«At a high level, a part to be printed is sliced into thousands of digital layers. For this example, we will print a cube and that cube will be divided into 3,000 equal slices (in the vertical direction) with each slice being the same thickness. To print the cube, the 3D printer will make 3,000 passes to build the part from the bottom to the top moving in the vertical direction (referred to as the Z Direction). With each pass or slice completed, the PrintRite3D® CONTOUR TM System will take a digital photograph of the slice just printed. When the entire cube is printed the system will have taken 3,000 digital images.

With each image, the computer compares the image of the printed slice to the digital slice of the CAD model (file) at the same height in the part. For example, if the system takes a digital image at slice 1,870 then it will compare that image to the CAD file at slice number 1,870».

Source: https://aerospace.honeywell.com/blog/how-a-3d-printer-can-identify-its-own-mistakes

There are three other methods / technologies ( in total - five), but they are still being developed and may not be called ready (except for the tests):

PrintRite3D® SENSORPAK™ - the auxiliary hardware kit that sits on every AM machine to collect the data to drive the software.

PrintRite3D® ANALYTICS™ - (in development) software for AM Big Data management.

PrintRite3D® THERMAL™ - (concept) software which predicts the thermal profile in the part.

Source: http://sigmalabsinc.com/index.php?page=product-services

b) Peers and challenges

SGLB competitors are manufacturers of 3D printers who are interested in the fact that their product would not just produce parts, but accurate and reliable elements of different designs / devices.

1. EOS with its product - EOSTATE

EOS is launching EOSTATE MeltPool Monitoring, a new process monitoring and analysis system. An add-on to the EOS M 290 DMLS (direct metal laser sintering) system, the innovative tool paves the way for complete part traceability as well as automated surveillance and analysis of the melt pool during the DMLS build process for every spot, layer and part. With EOSTATE MeltPool, EOS expands its existing comprehensive portfolio of monitoring solutions for AM by adding high performance online monitoring, ensuring even greater transparency of the complex build process. The technology therefore targets R&D and manufacturing customers with demanding quality requirements. Dr Tobias Abeln, Chief Technology Officer at EOS stated, "We developed this powerful, intelligent monitoring solution jointly with plasmo Industrietechnik GmbH, a global supplier of automated, high technology quality assurance systems. Our goal is to set a benchmark for high-end, in-process monitoring for AM. With EOSTATE MeltPool Monitoring, we offer a powerful, expert tool to those who need to improve their quality assurance procedures during AM and who want to build up deep insights into the DMLS process to, for example, support further process development."

Source: 1.http://www.tctmagazine.com/tct-show-3D-printing-exhibition/eos-launches-additive-manufacturing-monitoring-analysis-system/

2.http://www.eos.info/systems_solutions/plastic/part_property_management

2. Stratasys with Stratasys Direct Manufacturing

Stratasys Direct Manufacturing is committed to Quality Assurance through delivering the best parts on the market and ensuring complete data security with every project. We are ITAR registered and carry both ISO 9001 and AS9100 certifications.

Stratasys Direct Manufacturing doesn't sacrifice quality for speed. Each part undergoes quality inspections during the incoming, in-process and final production stages to ensure our customers receive high-quality parts within your order specifications. We have the ability to test both destructively and non-destructively, as well as the ability to perform AS9102 FAI's utilizing CMM technology.

As part of our commitment to quality and customer service, we solicit feedback on each order with a survey. More importantly, this customer feedback is used to guide our Continuous Process Improvement programs which include programs such as 5S, Lean and Kaizen.

We have also gone to great lengths to protect the privacy of our customers, guaranteeing total data security with every project. We are constantly working with highly classified projects and are sensitive to the privacy of each order no matter the size. From quality tests to secure privacy, Stratasys Direct Manufacturing gives you peace-of-mind knowing that your entire product development process will be

Source: www.stratasysdirect.com/quality-assurance/

3. 3D-Systems with its Geomagic® Control™

Geomagic Control (formerly known as Geomagic Qualify®) is the industry's most comprehensive, robust and accurate 3D metrology solution and automation platform.

Geomagic Control delivers the highest accuracy, speed and comprehensive, automated reporting on the quality of as-built parts for first-article inspection, production inspection, and supplier management using CMM and laser scanning tools. The software delivers CAD importer tools and airfoil analysis at no charge to help manufacturers rapidly increase product and manufacturing quality, identify process issues and build productivity. Advanced GD&T, probing and dimensional inspection functions enable fast and precise measurement of parts, and Geomagic Control includes intelligent creation of reports in 3D PDF. The Geomagic Control Automation Platform delivers the power to streamline almost every process, reduce human interaction in measurements and recording, decrease measuring time, and markedly enhance R&R results. Geomagic Control customers can dramatically cut production line downtime, increase accuracy and improve part quality during and after manufacturing.

As we can see from the description, it's not a certified method of Quality Assurance. Yes, this technology can help reduce the time for post process quality assurance, but its application does not allow for skipping this step. On their website there are also no examples of companies which are using Geomagic.

Source: www.geomagic.com/en/products/qualify/overview

4. Materialise with its Quality Management, as part of "Streamics".

I will not insert a quote from the website here about "Materealise", instead I will only add that they do not offer an autonomous process. Quality Management - a semi-automatic, adjustable and engineer controlled technique, which is a two-step process. In the first stage by using an empirical approach you find a suitable setting, the second - you set up their automatic execution.

It is important to note that Materialise works as a partner with Sigma Labs - Additive Industries, suggesting possible collaboration between Materialise and Sigma Labs, rather than competition, but more on that below.

Source: software.materialise.com/quality-management

5. GeonX's Virtual Factory

A software designed to provide engineers with the ability to analyse the influence of process parameters before making prototypes, allowing the economic assessment of the what-if-scenario.

It's not exactly IPQA®, but more of an analogy - you predict possible deviations in the manufacturing of parts before the production starts. Is it possible to replace a real quality assurance test with a forecast? I am not sure about that, but I think this method is suitable as an extra step when designing parts, but as not as a replacement for the post-process or In-Process Quality Assurance®.

Source: http://www.geonx.com/

c) Partners and future

All of the methodologies analysed above are proprietary, meaning that they will operate solely on the equipment of the manufacturer. Sigma Labs, on the other hand, focuses on developing methods which can be integrated into any 3D printer. Any company that wants to improve their production capacity, can choose any 3D printer and their products will be "automatically certified" because the quality control will be carried out by Sigma Labs. It's like Microsoft - if you like Asus, but not Lenovo, you can choose any laptop you want, and it will still be equipped with Windows. In addition, developers of proprietary IPQA® methodologies often don't talk of what Sigma Labs are doing. Quality Assurance should be split into it:

Checking that the manufactured parts conform with the original specifications, that is, whether we get what we originally wanted;

Checking the quality of the produced part, i.e. not only the conformity with the original specifications, but also whether the part meets the quality standards of the industry, where the part will be utilised.

Almost all manufacturers prioritise the first case (except for 3D Systems), while Sigma Labs is working on the second case, the significantly more important one, and as I mentioned above, the critical transition moment from robotic machine production to fully autonomous production. From the moment the 3D model is loaded into the computer, to the moment it is sold, will be fully independent from human interaction. Yes this sounds very futuristic, but this "future" is actually much closer to us than it might seem!

We now turn to the most important part in analysing this company.

"America Makes" and GE Aviations

- 01/16 2015. GE will use the technology of Sigma Labs in the production of the 3D printing of the fuel injectors for LEAP aircraft engines.

http://3dprint.com/37649/sigma-labs-contract-ge-am/

- The talk of the new engine from GE - CFM LEAP-1A is causing a lot of excitement amongst people interested in the topic. Recently it became known that the engine went through "double certification". For those who are unaware - usually an engine receives a certification from one (for example, European Aviation Safety Agency) company, and the other (for example, U.S. Federal Aviation Administration) verifies the certificate. In this case, the engine received two certifications. We know, that some of the parts produced for that engine will be produced by 3D printers, i.e. this now is a common practice in large companies, and it is only a matter of time before 3D printing will be used more widely. And a very important question to ask - can the parts produced using this methodology be certified immediately post-production? Sigma Labs are working precisely on that http://bikeshop.geaviation.com/cfm-leap-1a-achieves-dual-certification/

- Participation in America Makes Sigma Labs brought the company a contract with GE Aviation for $500,000: "Sigma Labs, Inc. (OTCQB: OTCQB:SGLB) ("Sigma Labs" or the "Company"), a developer of advanced, in process, non-destructive quality inspection systems for metal-based additive manufacturing and other advanced manufacturing technologies, today announced that it has been granted its first contract, worth approximately $500,000, from GE Aviation as a member of the winning team, previously announced, of companies and universities awarded an "America Makes" additive manufacturing (NYSE:AM) research project. This project is funded by the National Additive Manufacturing Innovation Institute (NAMII) and covers Sigma Labs' proprietary In-Process Quality Assurance® (IPQA®) software for advanced AM monitoring".

Source: www.prnewswire.com/news-releases/sigma-l...

- It is not superfluous to mention the fact that the America Makes event was sponsored by the Department of Defense in order to identify interesting and promising players whose technology will serve the good of the country. Needless to say that a company with microscopic capitalization ($ 35.5M on 21/11/2015) can only dream of a customer and "sponsor" such as as DoD (or at least his protection / attention).

- Even earlier, in 2013, GE announced its collaboration with Sigma Labs:

"GE Aviation said it will speed up the process of 3D printing jet engine parts by 25 percent to support an ambitious production schedule with the help of in-process inspection technologies as part of a new agreement with Sigma Labs, Inc. Sigma Labs signs deal to implement in-process inspection technology for additive manufactured metal jet engine components, called PrintRite3D".

Source: http://www.sparpointgroup.com/news/ge-aviation-speeds-up-production-of-3d-printed-jet-engine-parts-by-25

"FormNext" and Additive Industires

Recently there was an exhibition in Europe: «Form Next», where Sigma Labs strengthened its relations with the European developer of industrial 3D printers working with metal.

We should expect a fresh report from last Formnext, in any case, this was the answer I got from Chris Witty, Managing Director of Investor Relations, Darrow Associates (PR company, hired by Sigma Labs)



Sigma Labs' main European partner is a Danish company called Additive Industries. This month, Additive Industries' team is launching its own integrated metal additive manufacturing system, the MetalFAB1. Equipped with automated build plate handling and in-line heat treatment, MetalFAB1 will allow Additive Industries to redefine the metal 3D metal printing industry.

The MetalFAB1, which has been in development since 2012, is Additive Industries' first truly industrial 3D metal printing system and offers substantially improved performance over typical midrange systems. In fact the company claims the MetalFAB1 software delivers 10x better reproducibility, productivity and flexibility of similar current systems. In 2014, Daan Kersten (Additive Industries CEO) said:

«For Additive Industries, the collaboration is an important step forward in fulfilling our objective to develop a predictable and reproducible process. Sigma Labs has years of experience in the field of quality in high quality industries such as aerospace». https://translate.google.com/translate?sl=auto&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.made-in-europe.nu%2F2014%2F12%2Fadditive-industries-gaat-samenwerken-met-sigma-labs%2F&edit-text=&act=url

And here's a photograph from the event published in Sigma Labs' Twitter account. The smiling man on right of the reception -Sigma Labs CEO, Mark Cola, on the left - Daan Kersten, CEO of Additive Industries.

(click to enlarge)

I will not restrict myself with mentioning only Additive Industries, therefore I will also talk about Materialise. As I mentioned above, Additive Industries acted as the "glue" while working with Sigma Labs and Materialise. Both of these companies have two very common features. They are the backbone in 3D printing. Materialise do not produce 3D, instead they create additional services for manufacturers. Sigma Labs is engaged in a similar task, however in a much narrower scope. I believe that Sigma Labs and Materialise will not only cooperate, but potentially merge via a friendly acquisition, whereby the larger entity (Materialise, whose capitalise is $700m) acquires the smaller one (Sigma Labs, with a current capitalisation of $35.5m). The purpose of this acquisition would be the methodologies and technologies owned by Sigma Lags, as well as the partnerships with larger companies. This friendly acquisition is very likely because I do not believe that the grants received by Sigma Labs are sufficient for its growth and generally not enough to keep the company afloat. At the same time their technology is unique, and I am sure that it generates genuine interest amongst people and companies working in this industry.

Interactive Machines, Inc.

In 14/03/2013 Sigma Labs, Inc. announced, that it has signed a Memorandum of Understanding (NASDAQ:MOU) with Interactive Machines, Inc. (NASDAQ:IMI) of Southwick, Massachusetts. The MOU sets forth the parties' intent to explore the formation of a joint venture or other arrangement for the purpose of developing and commercializing next-generation 3D Printing devices designed to produce an increased output of up to 10X over currently available 3D metal printing machines.

Interactive Machines is an innovator in advanced manufacturing technology and has designed and built custom manufacturing solutions for Fortune 50 defense, aerospace, and semiconductor clients around the world.

Yeah, "news" a little bit old, but we get what we get!

Honeywell

I've told about it earlier, so let me just post some relevant links here:

10/01/2015. Sigma Labs To Deliver New PrintRite3D Module, DEFORM, to Honeywell for 3D Beta Testing. http://3dprint.com/98491/sigma-labs-printrite3d-deform/

11/05/2015. Sigma Labs Awarded Phase II DARPA Contract with Honeywell Aerospace for Metal 3D Printing Technologies. http://3dprint.com/23061/sigma-labs-drapa-3d-printing/

Arete Innovative Solutions, LLC.

07/01/2015. Sigma Labs and Arete Innovative Solutions Sign Joint Venture Agreement.

Sigma Labs announced a deal that will see them form a joint venture company with Cincinnati-based Arete Innovative Solutions LLC. To be called Arete-Sigma LLC, the JV will see the companies join forces in an effort they say will make them providers of a comprehensive metal solution for the additive manufacturing market. The venture will offer a complete suite of services which range from design to prototyping and manufacturing of high-precision metal components.

Bogue Machine

Bogue Machine Company has formed a strategic partnership with Sigma Labs, a Santa Fe, NM-based thought leader in additive manufacturing. Sigma Labs offers state-of-the-art metal additive manufacturing, design and process consulting, and proprietary in-process quality control systems to customers seeking both proven reliability and quality for their demanding applications. BMC and Sigma Labs share a number of common customers, and are eager to expand their collective customer-base.

Betatron

Betatron Electronics, top-tier distributor of electrical components and provider of contract manufacturing services. Betaron Electronics are expert builders for process automation systems. In addition to being International Traffic in Arms Regulations (ITAR) compliant, they are also ISO 9001:2008 and UL508 certified in the manufacturing of instruments and control and panel assemblies. Betatron Electronics is the principal provider of Siemens automation control. The strategic partnership between Sigma Labs and Betatron Electronis is quite interesting as no cancerous margin is spared in the either party for technological precision.

Taken from: http://sigmalabs3dam.blogspot.ru/

Price Forecast

Which limit will the share price seek? Difficult to predict, like any other share price on the market. However, here it really is difficult. Last week (23/11 - 25/11) the price tested support level of $0.05 and then showed a weak gain. Technically possible (however, very unlikely) the share price could head to $0.043, historically after testing the specified support level, the share price rises to $0.09-$0.011. Actually, these numbers are beyond my expectations at this point, although in the long term I expect much more significant growth.

In any case, the price forecast of these companies - is pure guesswork, and investment - a game of lottery, unless you believe in the success of the company, and that the market will eventually appreciate its true value. News of a major contract; approved or testing of new technology; friendly acquisitions - all of this can make the price skyrocket and even a price of $0.8 is not fantasy - the SGLB market already saw this price on 13/10/2015. What was it? A mystery, Chris Wittey declined to comment, even though I asked a question this question in one of my letters to him.

(click to enlarge)

Conclusion

As can be seen, Sigma Labs is actively and successfully looking for new partners among manufacturers of 3D printers and more. Due to the versatility of the quality control method developed by Sigma Labs, as I see it, it significantly simplifies the process of its integration into the equipment from any manufacturer, anyone who is interested in ensuring their devices output high-quality certified parts and products. In addition, those companies that are interested in increasing their volume of production, reducing the production cycle and introducing new technologies to improve the quality of their products.

I believe that such an extensive collaboration with the manufacturers of 3D printers, end-users and developers of additional services - is the right policy of top management. The more companies support Sigma Labs, hence more abundant findings on the compatibility of products and work, the higher the chances to get the required permits, patents and certificates that allow for the implementation of new methodologies and technologies certified by IPQA®, including government regulators.

The scope of 3D printing in this case is truly enormous - it is not only a manufacturer of components for engines (which is a great achievement, because of ultra-high requirements for precision and quality of the parts), but also applications in medicine, biotechnology, and electronics. Even in the more mundane areas it can make a revolution! Imagine a world in which there are no identical cars. Anyone who wants to get a vehicle: buys the chassis (wheels, steering wheel, electric motor, a large battery), draws its body and interior, prints it in the garage on the 3D printer, or in any tuning studio and gets a unique look! Of course, there will be safety requirements, which are expressed in the fact that the parts and materials which make up the body and interior should be of a certain quality. And with IPQA®, approved by all regulators, it will be possible!

We must assume that Marc Cola has a strategic vision and an understanding of how to develop his company - where it belongs in the field of 3D printing and the means by which it will generate the money - the installation of its hardware for IPQA® and its service support. Will Sigma Labs produce and sell their own 3D printers? I do not think they are planning it in the foreseeable future. Why burden yourself with a new product, create a market entry for it and bear the costs when you can make a product that is truly needed by the printer manufacturers? It's like gasoline for cars. Oil companies do not build their own cars. They pump their oil, which is needed and used by all.

P.S. I express my deep gratitude to all enthusiasts and fans of Sigma Labs, who are involved in the discussions on investorshub and stockhouse. Writing this article was made possible in part thanks to you and the information you provide. I wish all of us success and believe in the bright future of the company.

I know, there is lack of some new information, and it's in case of long praparations to post.

The most interesting news - confirmed partnership with Additive Manufactoring; new anonymus partner from German (EOS expected).

Disclaimer: I'm long on this stock, and this article was written due to a lack of information about Sigma Labs, and not to provide the market with advertising. I do not encourage you to make investment decisions based on the information set out by me in this article and I will not be liable whatsoever for your decisions concerning the investment in this company.

Article relates to a Penny stock company, which is trading at a price <$ 1 / per share.

Disclosure: I am/we are long SGLB.

Stocks: SGLB
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