Borislav Tonev

Sigma Labs Inc (OTCMKTS:SGLB) Picking Up The Pieces

by Borislav Tonev August 22, 2013
SGLB.pngOn June 26 Gary Anderson, an analyst of 3D printing companies, published an article on Sigma Labs Inc (OTCMKTS:SGLB, SGLB message board). It appeared on his website 3dprintingstock [dot] com as well as a few other portals and reading through his coverage, we can see that Mr. Anderson does seem genuinely excited about the opportunities presented by SGLB. This, in turn, created quite a lot of buzz among investors and a newsletter called Tomorrow in Review sent out an email on July 8 just to make sure that the word is properly spread around.

Truth be told, the ticker needed some awareness since, before Mr. Anderson's coverage, it was standing around $0.03 per share and trading was pretty uneventful. When people learned about SGLB and their In Process Quality Assurance (IPQA) technology, however, everything changed.

The volumes picked up and so did the price. SGLB broke through the $0.10 per share barrier with ease and reached its 52-week high of $0.135 on July 19. Unfortunately, it didn't manage to withstand the pressure and soon it started sliding heavily. On August 2, it plummeted below $0.04 and while it has managed to recover somewhat over the past couple of weeks, people who jumped in while the excitement was at its peak are still looking at some considerable losses. The million-dollar question now is: "What does the future hold for SGLB?".

Well, they published their financial report covering the second quarter of 2013 and if you have just a quick look at it, you'll see that it looks a lot better when compared to the filings of lots of other small cap ventures. Here are the most important figures found in the 10-Q:

  • cash: $463 thousand
  • current assets: $634 thousand
  • current liabilities: $470 thousand
  • revenue: $307 thousand
  • net loss: $122 thousand

While it's not huge, there is some working capital (and it has improved, as we'll explain in a minute) and the net loss is not that scary but when you compare the current 10-Q with the one covering the same period of 2012, you'll see that things really are looking good. The expenses year-over-year have decreased by a whopping 67% and this is particularly impressive when you consider that the revenues for the second quarter of 2012 amounted to around a third of the current figures. All great stuff, but is it all good news?

Well, we mentioned that the working capital has improved and they did it through a private placement executed in July. The problem is, 120,000,000 shares were sold at just $0.01 and we can't imagine that the shareholders were particularly amused.

Still, you're thinking, with the increasing revenues and the shrinking net loss, the company is on its way to making it big time, which means that dilution shouldn't be too much of a bother in the long run. Not to mention the fact that the addition of $1.2 million to the balance sheet will make it look even better. Indeed, we are seeing some progress but, as always, there's a catch.

As Mr. Gary Anderson says in his coverage on SGLB, so far, the company has managed to generate revenues only through consulting services. They aren't actually ready with the IPQA and the rest of the 3D printing-related technology, and, as Mr. Anderson also mentions, when they were publishing the 10-Q for the first quarter of 2013, SGLB thought that they'll be ready with the commercialization process by the end of the year. Unfortunately, things seem to have changed since then.

The latest filing says that the technology will not be ready before 2014, which puts things into a rather different perspective. It also suggests that not everything is going quite according to plan at the moment, which is definitely something you should have in mind while making your investment decision.

3ETEK.pngIf SGLB manage to carry out their business plan eventually, they will probably be able to make an impact. At the moment, however, it's still uncertain how long it will take them to do it and, in the meantime, it's obvious that a potential surge of increased interest like the one witnessed in July could, once again wreak havoc with the price. Which, by the way is valid for virtually every penny stock out there, as demonstrated by Eco-Tek Group Inc (OTCMKTS:ETEK)'s chart.

Comments 3

1. Guest
January 12, 2014, 06:59PM

Quotes http://www.leagle.com/decision/20071194479F3d715_11188

This is interesting, but unsure is this Gary Anderson is same as Zolp. Worth looking into to avoid a pump and dump scam.

2. Guest
August 29, 2013, 07:49AM

Quotes Hello Borislav,

I appreciate your balanced article on Sigma Labs Inc.

HotStocked.com performs a valuable service to investors in microcap and penny stocks by keeping them aware of unfortunate pump & dump schemes that are too often used, which burn many retail investors.

Sigma Labs does not fall into that category in my opinion, and I'm happy to see you point out some of the improvements made in their Q2 filing. Sigma Labs has some work to do as you mention- commercialization of PrintRite3D has been pushed back to 2014, and the private placement was ill-timed and frankly a disaster for the short term. But raising cash as you know can be difficult for R&D microcaps, and I think they did what they had to do to raise funds needed for commercialization of their system.

I remain a SGLB shareholder and added shares more recently.

Thank you again for your balanced look at Sigma Labs.

Gary Anderson
3DPrintingStocks.com

3. Guest
August 29, 2013, 07:47AM

Quotes Hello Borislav,

I appreciate your balanced article on Sigma Labs Inc.

HotStocked.com performs a valuable service to investors in microcap and penny stocks by keeping them aware of unfortunate pump & dump schemes that are too often used, which burn many retail investors.

Sigma Labs does not fall into that category in my opinion, and I'm happy to see you point out some of the improvements made in their Q2 filing. Sigma Labs has some work to do as you mention- commercialization of PrintRite3D has been pushed back to 2014, and the private placement was ill-timed and frankly a disaster for the short term. But raising cash as you know can be difficult for R&D microcaps, and I think they did what they had to do to raise funds needed for commercialization of their system.

I remain a SGLB shareholder and added shares more recently.

Thank you again for your balanced look at Sigma Labs.

Gary Anderson
3DPrintingStocks.com

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