NextTrip, Inc. (NTRP) Q3 2016 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to the Sigma Labs Third Quarter 2016 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Chris Witty. Please go ahead.

Good day, ladies and gentlemen, and welcome to the Sigma Labs’ third quarter conference call. Following management's prepared remarks, we'll hold a Q&A session. With me today is Mark Cola, the company's President and CEO. I would now like to provide a brief Safe Harbor statement, which is also shown on Slide 2 of our second quarter presentation, which is being webcast. This conference call may include forward-looking statements that represent the company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the company's actual performance to be materially different from the performance indicated or implied by such statements. All statements other than statements of historical facts included in this conference call are forward-looking statements. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the company's expectations are disclosed in this conference call and in the company's Annual Report and Form 10-K for the fiscal year ended December 31, 2015. All subsequent written and oral forward-looking statements attributable to the company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements. Unless otherwise required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise after the date of this conference call. Please now turn to Slide 3 of the presentation. And I would now like to turn the call over to CEO, Mark Cola. Mark?

Thank you, Chris, and good morning, ladies and gentlemen, and thank you very much for joining us today. I’d like to talk a few moments and walk you through some highlights for the past quarter, sort of an outlook for the business going forward and then sort of update and outlook on the financial position of the company. So if you turn to Slide 3, I’d like to bring to your attention some highlights. We are delighted to talk to you about today, the first being that we recently completed financing raising $900,000 before offering expenses that helps the company strengthen its balance sheet and meet its goals and objectives as we look forward to 2017. Really delighted to talk to you today about the second bullet item there, a recent contract award from Siemens, their Industrial Turbomachinery group out of Finspång, Sweden and we’ve quite excited to be working with a leading producer for components for gas turbines. Siemens has been quite a leader in this area for 3D printing, in terms some other overhaul and repair activities and some other future activities they look forward to incorporating 3D printing technology into their products offering. And so, the opportunity there is quite exciting for us and we are looking forward to a very close relationship with Siemens. Regarding our R&D efforts, we continue to propel forward our activities in that area. We’re – this week – represented at the Formnext show in Frankfurt, Germany, and there we will be showcasing release of our web-based INSPECT 2.0. So we expect the audience there to receive quite a bit of information about what’s coming with INSPECT 2.0. Additionally, over the quarter, we were successful in receiving additional contracts from Honeywell for some of their America Makes work. We continue to keep a close and strong relationship with Honeywell Aerospace and we are delighted to participate in that program. And, of course, over the quarter we continue to get request to be invited speakers at the industrial events such as some of the ones you listed on our – on the first page of the slide deck here. We presented at Smartindustry, which is a industrial Internet of Things conference. We basically showcased our efforts in at least burgeoning efforts in that area to work in the Industrial Internet of Things as we continue to bring our products to the market. So with that, I think let’s move on to slide four. Let me talk a little bit more about some of our customer development activities for the quarter. Of course I already mentioned Siemens, we are delighted to be working with Siemens and looking forward to a very close relationship with Siemens. Woodward, I believe, we’ve previously announced that but it was over the past quarter that we were able to deploy our system with Woodward and again working with a Tier 1 supplier such as Woodward, we are very pleased to begin down a path which we believe will be quite fruitful with Woodward. In general, our pipeline for opportunities has been quite active. We received a request for quotes, we continue to respond to those request for proposals as additional federally funded programs become available. We continue to be sort out and as to participate as a potential team member. And so we are delighted with our leadership position there. And just in general, I think it’s important to reemphasis that Sigma Labs is principally focused on three types of users of our technology and that would basically be the OEMs that manufacture the 3D printing machines. The end users that ultimately use the products produced by those types of machines such as Siemens and Honeywell and Aerojet Rocketdyne, as you see listed there. And then of course lastly is the service bureau or service providers that are continuing to grow and meet the demand of the end users as they begin to bring on second and third generation components for printing opportunities. And so, we stay specifically focused in those three areas. In terms of the industry overall and the demand for 3D printing, it remains very strong as you can see by some of the numbers listed there. The forecasts are really quite exciting. And of course the recent news in the press about the election here, we are looking forward to increased opportunities with aerospace and defense companies as we move forward into the New Year. So Sigma Labs, again, is staying focused on the long term, developing those relationships with those major industry players and I believe the third quarter has shown that persistence wins the day for us and we are quite pleased to announce a couple of new names here, and we are looking forward to growing that as we move forward. If you would turn now to slide 5, I’ll just give you a quick financial update and outlook. We ended the third quarter with about $0.1 million in cash and equivalents; $1.2 million in stockholder equity on the books. As I mentioned, we already raised the $900,000 so that strengthens our balance sheet beyond the numbers you see here. Our cash position has improved as a result of that and we are looking to use that to continue to fuel the growth both in our R&D and our customer centric focus activities regarding marketing and sales opportunities. And then regarding current bidding, I’ve already touched on this a little bit. We continue to get quite an active pipeline for request for proposals and teaming arrangements and so we are quite delighted with maintaining that leadership position. And lastly, when you look at the balance sheet and the statement of operations, our margins remain strong. We feel that’s reflected principally due to our Software as a Service model that we are utilizing as we go forward, and we are looking forward to quite a good future quarters coming up. So with that, I think slide 6 and just like to thank everyone again for their belief in Sigma Labs and their continued investments, and I’m looking forward to answering any questions you might have right now. So with that, I’d like to turn it over to Q&A session and thank you very much.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question today is David Verman [ph], a Private Investor. Please go ahead.

Hi, Mark, congratulations on the Siemens win this morning.

Thank you, David.

I have several questions here. So the burn rate right now as far as expenses appears to be about $800,000 per quarter and we may be selling one, two systems booking 0.2 million, 0.3 million. Aside from this loan what do you see changing for FY17 where we’re going to be at La Salle? Are you predicting that you’re going to be at La Salle, five, 10 systems in FY17? Because if we keep only for an one or two per quarter, that’s really not going to cut it.

Sure. So just to clarify a bit, our burn rate is about 180 a month right now, so it’s a bit shy of your $800,000 a quarter number. But nonetheless to your point about, what our forecast look like, we are expecting to build upon this early adopter program that we started a year or so back, the likes of which now see companies like Siemens and Woodward, and we anticipate others joining as we move forward. So without putting a fine point on and given you an exact number, you’re absolutely correct, we are anticipating increase in the number of sales regarding our early adapter program. But I also want to point your back to something I said without being quite specific about it is, in terms of - the use of those terms, early adopter program and OEM program, we have those two programs still active and interesting in both of those. And so, why we are able to announce Siemens and Woodward, I think, it’s best to just leave it that. We are actively in discussions and negotiations with others regarding both of those programs.

Okay. And a follow-up to this, it seems like a lot of what we’re doing even announcing, it’s all testing and evaluation. And even with GE, I’m not sure how much win with Honeywell and others. But when do we move from testing and evaluation to preproduction or production, whatever you want to call it.

Right. That’s a great question. It really be better as of the Honeywells and GEs, and Siemens are the world and then some respects there. They are all at preproduction stage. You have put it in perspective of where the industry was in the excitement a year or two ago, and it was all around the hype of 3D printing and that ones that settle down a bit, I think what’ve you and it’s been reflected in valuations for a lot of these companies is, the growth opportunities are quite promising. It’s been a slow maturation. And as generally the case with aerospace and defense companies, they are right now there in the front and they were the earlier adopters but they’re slow to mature the technology, and bring them into production because they don’t want to stumble as they bring these new products to market and get a black guy because that will certainly sent them back. So everyone is really cautious about their production timelines. And so I think to answer your question, it’s looking like we’ve got another 12 months or 18 months before people are really companies that is really into the throws of production. And at that point, what you’re going to see probably there is a bit of settling of the dust if you will and companies just opposing and trying to decide whether that’s a make buy decision. And do they make it internally? Do they buy it and sum it up, in which case the service provider sector will come along quite strongly. And ether case whether it’s a make they keep it internally or it’s a buying as it goes up to service providers. We see that as the tipping point for Sigma in our technology as Dave and they’d be in the service providers. Need to be complaint to the end user requirements and therein lies the real technology behind Sigma Labs PrintRite3D showcasing itself. I hope that helps.

No, it did. I mean 12 to 18 months, the burn rate that you mentioned, I guess more than one system, more than 2 systems. It really need to be sold per quarter. While things are ramping up, I mean do you kind of see that happening or do you feel there will still be a pretty high barrier to entry over the next 12 to 18 months.

I think the best way I can put it is, we continue to respond to quite an active request for quotes. So I expect that we’ll be able to benefit from that in the very near future.

Okay. My next question is specific to GE and Honeywell. You’ve mentioned lockstep in the past and such. Obviously they are moving ahead. They had a big announcement. They are purchasing Arcam and one other company I think was approved and they are purchasing more and more printers. But they still only have a few systems installed right?

Few PrintRite systems?

Yes, PrintRite systems, yes.

Correct, yes.

So my question is, I mean, if we are still in lockstep and we’re going to be the chosen salute, I know that there is lot of efforts for American made projects that everybody is evolved in. But why haven’t they purchased more systems? Are we still unlock step?

Yes. So, we are in lockstep with GE Aviation. We continue to perform in accordance with but work we put in with them for America Makes. And so that sort of the guiding program if you will. So as that program draws to an end over the next few months, we anticipate that being the check box if you will for Sigma Labs in terms of its technology, validation and relevant environment. So if you remember that program had three elements to it, it has three aerospace providers, GE Aviation, Honeywell Aerospace and Aerojet Rocketdyne. And already as a result of the adapt program over the last year and a half, it result in additional context of the likes I mentioned, Aerojet and Honeywell. So they are themselves all still I’m testing evaluation and they’re trying to sort out, what’s the best approach for them. And at the moment, they’ve taken our belt and braces approach to their inspection requirements, and they’re doing at the old fashion way and they are inspecting – they continue to inspect every article they produce because there are absolutely concerned about an inspection scenario occurring which meaning that that something did occur during the printing as they could have caught with our PrintRite system, and they are continuing to evaluate those different scenarios, because they don’t want an inspector situation. That again goes back to my point of they would then end up with a black eye and nobody wants that in the industry right now.

So I mean are there indicators that Print array, the sweater products, will be chosen going forward. Do you see indicators of that or they just going to with the current different methods.

So I can’t speak for GE, I can only report what they do in terms of what they are currently doing. I can’t project a future for them. They are evaluating our technology and the milestones along the way are being validated as we work through this program with them of record with America Makes. So that’s the milestones that we are checking off and marching against.

And any sense of when that will be – when those projects would be finished, is that also kind of 12 to 18 months out.

No, that program with the America makes in GE & Aviation should be finishing up in the first quarter next year on.

Okay. Great. I just have two more questions. So we have a line of JTDAs some for a while and with Burke Porter creates Medtronic materialize during I think first the first data one. What’s the status of those? I mean they are still active and as far as like the ones that exposed to provide sales channels, are they active and reaping any rewards from those relationships?

Yes, so great question. And so we put these JTDAs in place for two things, one to protect us and the company that we are partnering with because we have IP that we need to protect and of course they do as well and if there is an opportunity to jointly develop IP, we certainly open to that. And so that’s the premise and the guiding principle under which we put these programs, these JTDAs and TDAs in place if you will. With respect to some of the specific names you mentioned, those were early opportunities for us to reach out to companies with existing technologies that were perhaps doing today what we wanted to be doing tomorrow. And Medtronic system does a good win that you mentioned. They had a very interesting laser scanning technology that we were evaluating for our PrintRite3D Contour technologies and so we brought that JTDA to fruition and hopes of evaluating technology that of course led to some of our current offerings Contour. I’m trying to pick up some of the other names you’ve mentioned. JTDA is quite a few, materialize is another one, we continue to as appropriate evaluate opportunities with materialize and others – and we even put together I think you mentioned Burke Porter, and that one specifically was done under the auspices of the GE America Makes program. Burke Porter is part of that program and as a commercial outset, that on a daily basis is delivering and installing in the drive line components for the principal auto manufacturers. We saw them as a partner opportunity to help us finalize the commercialization of our entire product offering and work with them such that when our products are delivered, we have everything in place that we need to satisfy customer requirements and specifications, and we saw that and so to GE actually is a great opportunity to work with someone doing just that today. So I hope that I’ve shed a little light on them.

Yes, a little bit. I mean so Burke can create Medtronics and even materialize and the new one, MetalFAB1, I mean, aren’t sales channels an opportunity to sell the product?

So what we are using there is an opportunity to sell product is not necessarily through these groups. We do see them as having of course larger and more global reaching sales and marketing efforts than we have. And so it’s one way to keep our name in front of potential customers as to your point as they move from their prototyping activities today and low rate production small badge or we like to say it towards production. A lot of folks are again the lead groups here all tend to be in the aerospace and defense, and their maturation times are bit longer than I think most people realize how long it takes to get programs of record into and actual sort of playbook if you will in this case for the FAA. And I want to mention something there. The FAA even to date hasn’t yet issued any draft guidance for 3D printing. And part of the slow maturation here is, a lot of folks are waiting for that draft guidance to come out so that when they want to move into 3D printing, they know how to do it and an in process manner or approach. Right now, the only folks that are really able to bring products to market in terms of 3D printing in the aerospace are the ones that you read upon in the press, Frank Witney, GV Aviation. And of course they all bring their own data packages and that’s long time to generate them, quite costly. And so patience wins the day in this race here.

Yes, patience wins the day but I mean my concern is that some point you need to start turning the process. So – but it will be nice to see this – I expect this announced since 2014 I think, the pharma has been announced since 2015. It’s been a while. At least from my standpoint, one last question...

They’ve been out but yet you continue to see articles like in Bloomberg back in March, where GE continues to announce that they are moving towards becoming a software company. And they’ve put billions and dollars in the business, and while they’re doing it and answer is because they are all moving towards the Industrial Internet of Things or as they call it really big things. And why is that important, it’s all important because it’s all about the software and the data analytics. And so as they begin to understand, the opportunity there, that’s when Sigma Lab software is really going to play an important role for them. Because it’s not just about 3D Printing for Sigma Labs, right, you got to remember where Sigma Labs started some six years ago or so. We came out of an industrial group that basically has incredible domain expertise in areas other than just 3D printing and so a line of that legacy technology that’s out there right now which at the time was advanced technology now needs to be upgraded to the Internet of Things. And there, they are going to require basically connectivity to machines and an understanding of the domain space and the ability to extract the big data and makes sense of it. And that’s where Sigma Labs model is focused. At the moment, we are still a small collection of highly scaled technology folks that are bringing something new to the market. And companies like the one I just mentioned GE Aviation in particular, even IBM with their Watson and Bluemix, it’s all about what you’re doing with the data. So Sigma Labs has stayed true to that in terms of our ability not just to collect data and store it, but make it actionable for the end operator. And so that’s the tipping point we’re waiting for is that, when these technologies are at a point where people really understand what they can do with the data, that’s where software like Inspect and Contour and eventually Analytics, and new software that we’ll be developing are really going to take hold.

Okay.

[Operator Instructions] Our next questionnaire is Doug Rude [ph], a Private Investor. Please go ahead.

Hello, Mark.

Hi, it was Dell?

Doug.

Hi, Doug.

Hi, thanks for the call. Let’s talk about my investment, given the reverse quite some time ago and I think lot of us long term investor assume that was for a reason at the time of event [ph] because there is coming up like significant income stream and that didn’t happen. And so now we have to get financing from an external source and put up collateral. So given you current story of 12 months or 18 months until production, I have questions like how long until we need another round of financing? I think most of us long-term investors are down well more than 50%, do we need to a contract soon to pay off our recent loan, why the reverse split, what changed since then, and what do you expect to change given your future to make a history not repeat past? And just generally, what are you doing for our investment?

So it’s a great question, I appreciate you asking, Doug. And the intention as year ago as we forecasted from 2015 into 2016, the intention there was to be able to enact our forecast and growth plan in two areas basically our Software-as-a-Service related activities and those are all associated with the products of PrintRite3D and the second side of it was on the capitalizing on the opportunity to produce 3D articles. Of course, we don’t have but one machine and so there the opportunity was more quality as a service to demonstrate what’s possible with the technology like PrintRite3D. And so, as we moved into 2016 and began to enact upon that forecast, it was envisioned that we would require additional working capital and began to set in motion the steps to get us there. Of course, what didn’t happen was the underpinning news that we anticipated early on the year just moved to the right and was out of our control. And so why we did what we needed to do and put the wheels in motion, we unfortunately didn’t have the underpinning news to support that. And so, yes, at the moment right now, we are all in the same boat and looking for the news that we are able to release that you saw this morning as part of what we have hoped have happened earlier in the year. Things are also taking longer than expected and they are out of our control. We continue to stay active with our sales and marketing opportunities and we are looking forward to better quarters coming up. With that said, in terms of being able to predict the future, we are of course forecasting our revenue projections for next year, internally going through that exercise and anticipating how we might react to that if things might slide to ride again and take a bit longer than expected. We’re looking at those sort of internal controls in order to manage what we have in order to meet our goals and objectives. And they haven’t changed, they are all the same, as I’ve been talking earlier with David and you’ve probably heard, we continue to stay out there as a leader in this year, we are recognized as such, we are sought out, we are making progress, it’s just a little slower than I think we’d all like to see.

I think what makes me really nervous is the fact that we put our IT as collateral and given the outlook as you say it, it’s $180,000 a month burn rate and what we ended up with the loan that won’t go too far until we are in need of actually being on the positive side…?

Sure. I can understand and I appreciate that. But we are doing everything we can to manage our cash internally, manage our contracts and contacts. We are – we have a lot of things going on, some of which I’m delighted that we are able to report on here. Other stuff, I just – we have to be patient as these programs evolve and we are able to engage new customers, that why we are pleased to report some new names here Woodward and Siemens and hope to mode more so in the future.

All right. Thank you.

Sure.

And our next questioner today is Patrick Greedy [ph], a Private Investor. Please go ahead.

Hi, Mark.

Hi, Patrick.

I think we all have the same concerns around sales.

Yes.

You were doing contract – we opened up for contract manufacturing, have we done any contract manufacturing?

Yeah, sure.

[Indiscernible] at all?

Yeah, of course, we – our machine is booked from now to the end of the year and it has been booked for the last couple of months. These again when you say contract manufacturing, let me be specific, one machine limits the throughput on us, but nonetheless we continue to mostly do prototyping for folks, small batch sort of lots. And that all gets reflected in the revenue numbers you see.

Okay. So that does have the contract manufacturing in it, the $190,000 for the quarter?

Correct.

Okay. And then on the financing arrangement, there were warrants that they have, what were the warrants priced at?

I don’t have that number in front of me. I think that’s all reported, so we – add up.

I didn’t see it.

Well, the idea here was a convertible note as we mentioned on the call and the opportunity to up list to a broader exchange, we continue to seek that opportunity and we continue to work with financing groups to affect that and the idea here was the $900,000 reported herein was a convertible note that would convert – is convertible into a financing, so we keep an eye to that. We are not just – we are not – I guess we are putting our best foot forward in terms of the opportunities available to Sigma right now.

So the problem is a market problem, the market is not ready for it?

The problem is the scale in the market. I mean think about it right. I mean, GE Aviation, right, I mean, they got – what? 20 machines, installed down in Auburn, Alabama, right? And so, once they certify those machines for production with what they have available with them today, very difficult to change that certification approach. And so, to affect the change is a slow process and you have to remember what people do today, right? I mean, generally, they inspect things after they make them. They are not really accustomed to inspecting them while they are making them. And so, they like to use other people’s money to evaluate these technologies. That’s why you hear us routinely talk about DARPA and Honeywell’s DARPA program that is and GE’s America Makes program and Honeywell’s America Makes program and the upcoming program call from office-enabled research and they are all very methodical. I mean, the old saying is true, In God we Trust, all others bring data, and so we are there to help them bring the data right now and mature this technology and that’s what this is at.

Okay. Thanks. Good luck.

Yeah, thank you, Patrick.

Our next questioner today is Paul Tamarkin, a Private Investor. Please go ahead.

Good morning, Mark. I’ve got some questions that go to any information you might have regarding the Aerojet Rocketdyne-Air Force collaboration that they bought the license for a few months ago – 10 months ago. Are you aware of any progress they are making on that? Any kind of timeframe under which information may be revealed or if that information is going to be readily revealed?

Yeah, so, great question, right. So that’s an ITAR program and so it falls under the ITAR tariff and so that would be Aerojet and the Air Force to release information about that program. It is – what I can tell you, it is active, we are currently working on it, we continue to receive praise for our technology and they are not just evaluating internally at Aerojet Rocketdyne, but they also have it deployed at one of their service providers. And so, the program is active, we will just have to see what kind of news we can release about that because of the ITAR restrictions put up on it.

That also dovetails into my question about the America Makes project, you say that’s going to wrap up in a couple of months. Is there any timeframe following the wrap up – I’m assume that’s wrap up of data collection or demonstration before some kind of final report will be available and if that report is going to be available to the public because I have some difficulty finding some of the America Makes information.

Yeah, so, the answer is, the program will wrap up and final reports will be out again in the first quarter. But here again that’s a membership based organization and so that goes out to a member companies. You might find a summary wrap up about it on the America Makes website.

Right.

But the final report and any details would be available to members only. And so we see that as – and we continue to use America Makes as a marketing and sales opportunity for us to promote the technology, seek and work with new customers. I hope that helps.

Yeah. In terms of other kinds of market penetration for quite some time, almost as long as I’ve been aware of you guys, you’ve been in collaboration with Materialise. Materialise is going to be announcing their new suite of software at Formnext this week. Do you know if PrintRite has been integrated at this point that a customer might see PrintRite is one of the options within the suite?

It has not been incorporated and it fully and not yet available, no, you won’t see it at Formnext, at least not through Materialise yet.

Do you have any idea of how long it might be before it does get integrated with in Materialise?

No, I don’t.

Okay.

I mean I would be quite the prognosticator there. Software development is always interesting animal.

Yeah, understood, but I just thought with your involvement you might have some better estimate and I was trying to read tea leaves out here in the dark?

No, no, I’m not going to make you read tea leaves. I don’t have any better estimates. We are always looking for opportunities and to move along faster.

I asked these questions because I too concerned about the financing and my quick back of the napkin analysis of the numbers here is that, within the next quarter to two quarters, there’s have to be another round of financing. Is that accurate or do you anticipate the money on hand carrying Sigma forward for two, three, four quarters on estimate there?

So, we are certainly managing our cash flow as best we can to extend the runway as far as we can. And with new contracts such as Siemens and we hope to be announcing others, we believe we will have the necessary cash on hand to propel us forward. Now regarding capital raise opportunities, we’ve mentioned and have kept prized what we are trying to do with up list opportunities and as we see them, make themselves available, we prepared as best we can to take advantage of those. I mean, we filed an S-1, we notified the public about that. We’ve mentioned in there who – some of the financing partners are we are working with and so we continue to look for opportunities to strengthen that balance sheet and we will continue to do so.

Right. I fully understand that.

Sure.

I think my concern is driven by the fact that we had to collateralize the IP for this current loan and I would anticipate that any kind of future raising of capital, these qualified investors might have some kind of impact upon your ability to raise capital or the terms or whatever if they are owning this IP, if you can’t come back with the money to them from the loan.

Well, I can appreciate your concern, but we are on the boat and hoping to affect a different outcome.

Very much so. Thank you.

Yeah, thank you.

Our next questioner today is Robert Green, a Private Investor. Please go ahead.

Thank you. I too, I’m a long-term investor and share the same concerns that Doug and some of the others have had. Now I understand completely that Mark you said some things are out of control and I’m aware that giant companies like Siemens and IBM, they move at a snail’s pace, we are just a pimple on the back of theirs [indiscernible] and really have no control over what decisions they are going to make, but some things are under our control. So I’m a number’s guy, if you’ve got $900,000 in the bank or so and you are telling us that your burn rate is $180,000 that means we’ve got five months left we are flat out of cash. So the first question I have is can you just briefly – not exactly, but briefly, can you break that amount of $180,000 a month, I’m curious, how much of that is kind of salaries, how much of that is travel, how much of that is for R&D? Because the next question after you tell us how you are spending the $180,000 a month, I’m going to ask you to tell us what you’d consider if Kush Comes to Shove and things really get desperate that would you take a cut in salary, would you do less travel? That we can control. We can control our burn rate. We can’t control how fast we are going to get contracts and how fast IBM and all the other big guys are going to give us money, but we can control how we are spending our cash.

Yeah, of course, we can, Bob. And that’s for the questions. And the fact of the matter is not only what I consider, I have taken a cut in pay in the past and so have my stuff because they believe in this technology and they believe in the company and they believe it’s going to be successful. And so, that Sigma Labs is not frivolous with their finance and if you do the math and you go back and you look at the capital we’ve raised in 2014 and how we used those proceeds, I mean, quite honestly, I’m not surprised – I’m surprised you did so well with that capital over the last – what is that? Almost three years now and how we spent that capital. And so we continue to watch how we spend the money, we continue to recruit top talent to the extend we can given that we are a startup and a lot of people have foregone. As a matter, raises, there has been no raises here and there’s been limited opportunity for people to do much other than just take some stock in lieu of some other compensation. And so, I’m not going to get too specific about how we break that down. You don’t have to read [indiscernible] you can look at the numbers and see what we are spending on salaries and the expectations for the company is that people will continue to perform and bring in new contracts and new opportunities and exciting opportunities. Sadly they are slower than we’d expect and we greatly appreciate your patients Bob and I know you’ve been in this for quite some time now. And that’s what we know right now.

Okay. You mentioned the revenue was about 190,000 for the third quarter and I’d like to know – can you just refresh my aging memory? What was our revenue for the second quarter of 2016?

Revenue for the second quarter…

Just ballpark.

Sorry, I don’t have those numbers in front of me.

Okay, okay.

But for the year – I mean, look at the numbers for the year, Bob, we got – we are within $6,000 of what we did last year, so we are…

Okay. Well, the reason I wanted to ask about the second quarter was one of the callers – one of the investors asked where did you get the $190,000 from. And I heard someone – I heard you say some of it’s from contract manufacturing. Was all of it from contract manufacturing, most of it of that $190,000 for the third quarter?

Well, the $190,000 basically breaks down into three principal areas. It’s programmatic activities we have with some of the contracts like the Honeywell DARPA’s and the GE America Makes and the Honeywell America Makes, so there is programmatic funds that – engineering funds that come in. There is revenue from sales of systems. In this case, Woodward is a good example. Next quarter you will see the Siemens numbers in there. And then the last part of it is the contract AM. So it’s principally broken up into those three components.

Okay. Can you – do you have that information right off the top of the head, can you tell us of the $190,000, how much was contract manufacturing?

No, I don’t have that on top of my head.

Okay. Because in my simple mind that’s something you can go out and expand quite easily by basically just making more phone calls and telling them that we are your contract manufacturer and we will basically bend over backwards to satisfy you.

Yeah, of course.

The big guys, again – the big guys, they move at their own pace, we can’t control that.

I understand that.

But since we are such a squeaky little startup basically, we have to hustle. And we got to get out there and beat the bushes and get more business for contract manufacturing while we are waiting for the big boys to give us the big tails.

It’s a good point and we are not – we are not up to that thought and we are active in doing so. And we continue to come back from these tradeshows with opportunities and we follow up on them and we get out there and we do hustle and it’s a full-contact sport for us and we appreciate that.

Okay.

That the sales guys are doing.

Okay.

It’s not as easy as just making a phone call because this is not casting or forging, Bob, as you know, and so people generally are really interested in this technology and then when you get down to brass tacks at them, you find out they don’t really know much about it and they are going to give you a part that they cast or they forge or they formed it in some other way and it really wasn’t designed for 3D printing. So you spend a bit of time educating customers on the engineering side of it before you even get an order out of them. And it’s just [indiscernible].

I know that, but right now it seems that that’s the only way we are really going to keep the light on at Sigma with the contract manufacturing until and unless some of the big boys finally get off their [indiscernible] and decide to do something with us.

Sure. Understood and we are keen to increase that in future quarters. So appreciate that.

Now, lastly, you mentioned IoT, which is great because everybody seems to be going to the Internet of Things. Are we going to utilize the services or the expertise of Evan Davey [ph] who was much more – working with us much closer years ago, but then went off on its own because I know he’s into Internet of Things and things like that. Can you we get some use out of perhaps forming some kind of relationship with him?

Well, there’s certainly an opportunity there, isn’t there? As you’ve keenly pointed out and so we are aware of it. And thanks for asking, but back to the first slide that I showed earlier, the Smartindustry event, we coauthored a paper and a presentation with Dr. Davey [ph] he is, as you say, very active in this space and we are keenly aware of it and looking for opportunities to work with them.

Okay. Because I too have concern that we are going to run out of cash and when you go to do another financing, if you’ve already put our IP up as collateral for this last round on the $900,000 or the $1 million convertible note, we are struggling.

Yeah, we all share the concerns and we are all in here every day making things happen.

Okay.

So that next time on the call there is more than less.

Okay. Because as my wife said this morning, where is the money? Where’s the beef? Thank you very much I appreciate your help.

I appreciate your long-term position in Sigma. Thank you, Bob.

This concludes our question-and-answer session. I’d like to turn the conference back over to Mr. Cola for any closing remarks.

Well, I think, I really appreciate everyone’s questions and we are looking forward to speaking to you next quarter with some exciting news. So thank you again and have a great day.

This concludes the conference. Thank you all for attending today’s presentation. You may now disconnect your lines.