Good morning and welcome to the Sigma Labs Earnings Conference Call for the Year Ended December 31, 2018. All participants will be in listen-only mode. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of this call will be available approximately one hour after the call through May 1, 2019. I would now like to turn the conference over to Scott Gordon, President of CORE IR, the Company’s Investor Relations firm. Mr. Gordon, please go ahead.

Thank you, Annette, and thank you all for joining today’s conference call to discuss Sigma Labs’ corporate developments and financial results for the year ended December 31, 2018. With us today are John Rice, the Company’s Chairman and CEO; and Nannette Toups, the Company’s CFO. At 8 a.m. Eastern Time today, Sigma Labs released financial results for the quarter and year ended December 31, 2018. If you have not received Sigma Labs’ earnings release, please visit the Investors page at www.sigmalabsinc.com. During the course of this conference call, the Company will be making forward-looking statements. The Company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. This includes any projections of earnings, revenues, cash or other statements relating to the Company’s future financial results, any statements about plans, strategies or objectives of management for future operations, any statements concerning proposed new products, any statements regarding anticipated new relationships or agreements, any statements regarding expectations for the success of the Company’s products in the U.S. and international markets, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the forgoing. These statements are based on expectations and assumptions as of the date of this conference call and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the section of today’s press release titled cautionary note on forward-looking statements and in the public periodic reports the Company files with the Securities and Exchange Commission. Investors or potential investors should read these risks. Sigma Labs assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. It is now my pleasure to turn the call over to John Rice, Chairman and CEO of Sigma Labs. John?

Good morning and welcome everyone. I’m pleased to join you today from the Spring Investor Summit Conference in New York City, where it is pretty, but not as pretty as New Mexico. To report on Sigma Labs results for last fiscal year ended December 31, as well as the final quarter of the year. And I will just dedicate my remarks and pretty much entirely to corporate developments because there's a lot of content in the year. So starting out, as many of you know the principal challenges that Sigma Labs faced when I took the helm in August 2017 was to transform the company from an R&D company with a very high potential R&D product into a company capable of commercializing, hardened, reliable, high-performance market-ready products, and then go into market. So the success or failure of most software companies is directly proportionate to the proximity that it maintains with end-user customers prior to and as the software has been architected and while it is being written and until it is tested by customers and released. Great software is great when it meets customer-specific, self perceived requirements, and when it does so in a fashion that is smooth and intuitive to their industries’ end users. That makes the businesses flow and perform better. So as you may recall following our exit from the R&D mode in September 2017, we focused our technology developments and marketing personnel on the model of functioning as much as possible as or as if we were integrated teams with the technologists and manufacturing experts in a small number of high-tech, high-end customer companies with whom we have been working. We teamed with them because we needed to learn their cutting-edge customer requirements in order to rapidly evolve and fashion our architecture capabilities, our performance,…

Thank you, John, and good morning, everyone else on the phone. I will now discuss the financial results for the full-year of 2018. During the fiscal year 2018, we generated in aggregate $388,574 in revenue as compared to an aggregate of $641,049 in fiscal 2017. The primary contributors to the $252,475 reduction were revenue decreases of $149,929 from government program work and a 900,208 -- I’m sorry, $198,289 reduction in new system sales. These were partially offset by increased contract AM service sales in 2018 of $101,712. This is an anticipated result of the shift we made from an emphasis on government and private industry funded research and development sales to our Rapid Test and Evaluation focus in 2018 that John discussed earlier. Our cost of revenue for the fiscal year ended 2018 was $270,107 compared to $272,372 during the same period in 2017, a decrease of $2,265. The lack of reduction in cost of revenue corresponding to the revenue reduction is attributable to the different product mix resulting from the shift in sales focus. Sigma's total operating expenses for fiscal 2018 were $5,687,271 as compared to $4,267,654 for fiscal 2017. That’s a $1,419,617 increase. The increase was primarily due to higher salaries and benefit costs associated with the hiring of six employees between September of 2017 and July of 2018, and the accrual of severance costs provided on the employment agreement of our former CTO and President. Also contributing was higher stock-based compensation in 2018. In fiscal 2018, our net other income and expense was a net expense of $5,358 compared to a net expense of $525,526 in 2017. The 2018 net expense was comprised of net interest income of $31,213, which was offset by a $36,733 write-off of patent. The fiscal 2017 net expense number was primarily comprised of noncash adjustments we had to make for the reevaluation of derivatives and amortization of debt discounts related to debt and equity financing activities in 2017. Sigma's total net loss for fiscal 2018 increased by $1,149,660 overall. Operations contributed $1,669,827 to that loss, but that was slightly offset by the other income and expenses component being a $520,000 -- $167,000 lower loss. As of December 31, 2018, we had $1,279,782 in cash and a working capital surplus of $1,052,015 as compared to $1,515,674 in cash and a working capital surplus of $2,273,801 as of December 31, 2017. In addition, on March 15, 2019, the company closed a public offering of equity securities resulting in net proceeds of approximately $1,679,230 after deducting commissions and other operating expenses paid -- payable by the company as part of the transaction. With that, I will turn the call back to John.

Thanks, Nannette. So in conclusion, I would reiterate that we believe that we have transformed the company into a state-of-the-art innovator with a powerful tool that people can use now and we believe that next steps in the technology will sustain their hunger and need for the product, once we have proved out our initial sales effort. So our challenges in the coming year are very different from what they were over the past two years. We have created value and our task is to demonstrate its proof and make sales of it. That said, thank all of you and let's do the questions. Operator?

[Operator Instructions] The first question today comes from George Grifka, a Private Investor. Please go ahead.

Thanks for taking my call. Can you hear me, John?

Yes. George, how are you?

Great. Being good. Thank you. Just a couple of questions. I understand the comment we have to be impatient being patient. But we have five RTE contracts, the last was announced in January, I believe. How do you guys think about the timing of some of those or all of those to convert to real licensing with multiple units.

Yes, we have no bad news on all five in terms of outcomes. We do have in each case, there seem to be internal issues in the customers in terms of, okay, hold off on that machine because we need to finish something before we put you on that type of thing. So there are no health issues on any of those relationships, and there's nothing that I am aware of that is negative. Therefore, the answer to your question is we expect them to move slowly and efficiently, and if things go as they have so far, I would expect good outcomes.

Okay. And the last question is how do you see -- how do you guys think about the pipeline for more RTEs, and how -- and what kind of visibility do you think the shareholders can get on that?

Well, my personal hope is that we’d be able to average having in selling one of -- sort of one of those a month for the balance of the year. Things never work that way, but it -- but in terms of an average that may very well be spot on. And if that is the case, what that would mean is that we have continued -- remember we have rigid criteria for this. We don't want these to be tire kicking experiments. This is a major commitment of intensity and resources. So we are charging our sales folks to qualify these customers very carefully. Be sure these people are manufacturing enough parts already or buying enough AM manufactured parts already, that is a sensible commitment to mount our equipment on the machines. Be sure that they are aware enough of their quality issues and concerned enough about them that they have a level of urgency that would keep the product -- project going and so forth. So that is not everybody. That's a restricted highly qualified group, and if that -- if those criteria continue to be met as well as they have so far, those -- that's a really sound customer base from my point of view for the expansion that we hope to take place. So, I describe to you the inverse funnel effect of this program. When they dealt with one, they advanced to three and then they have to make a decision do we mount this on 10, 20 or 30 machines.

Right. Okay. Very good. Thank you. And is that also applicable in the same way for OEM potential relationships?

Thank you for asking that because I was remiss in not speaking more to not -- as you know, as all shareholders know, our principal market ultimately is going to be met with and through OEMs in our opinion. So those negotiations are very important. Our job in terms of those negotiations, my job became much easier in November with the clarity of the 4.0 release. And so, we’re not doing an RTE with the OEMs in the same way that we are with the end users, but we are following the same guidelines and same principles and we expect the same outcomes.

Okay. So we take -- should we take it that there are ongoing OEM negotiations taking place?

We’ve stated that publicly and that is correct.

Okay. Thank you.

You bet, thank you.

[Operator Instructions] Since there appears to be no further questions, I would like to turn the conference back over to John Rice for any closing remarks.

Well, I thank all of you for taking the time on this bright and early morning to be with us. I appreciate the support you and interest you are showing for Sigma, and we hope to justify your curiosity and those of you who have the faith as we take the company forward. Have wonderful days and goodbye.

This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.