Sigma Labs Continues to Disappoint Investors
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Our readers know how we feel about over the counter (OTC) companies. Countless OTC companies have lost investors’ money over the years and while there may be the rare exception, you won’t find the next Microsoft on the OTC exchange. We will continue to call out companies that are long on promises and press releases and short on delivery and you’ll never find us on the long or short side of any OTC company.
Take Sigma Labs (OTCMKTS:SGLB) for instance. Since our first article in July of 2013, SGLB has seen some volatile trading with shares up +23% since our first article. In November of 2013, the shares would have been up +400% and just last month down -16%.
Speculators may have made some money through this volatile trading but investors are left scratching their heads after last week’s 2014 yearly financials. Let’s take a look why.
In fiscal 2014, B6 Sigma along with Sumner Associates generated an aggregate of $548,723 in revenues from consulting and other contracts.
Sigma Labs promised investors that they would commercialize their IPQA® technology in 2014 but they haven’t. For the past 3 years, investors have been given promises of commercialization and still, we see no product revenues. In 2013, Sigma realized $1,071,439 in consulting revenues and this year saw a -51% decline in revenues. Forgetting about the lack of product revenues for a second, this doesn’t bode well for this 4 employee company with a current market cap of over $50 million.
Mr. Cola, President and CEO of Sigma Labs, may not be acting maliciously and may truly believe in his company, but he seems to be making out quite well regardless of what returns investors may be experiencing. With a 2014 salary of $172,000 and a bonus of $175,000, Mr. Cola cleared $347,000 in 2014 along with his shares currently valued at $2.8 million.
Mr. Cola also seems to want to distribute the wealth to his family as well. As of July 25, 2014, the Company granted to Amanda Cola, the Company’s Business Operations Manager, 2,000,000 shares of common stock (valued at $258,000) and an annual salary of $90,000. So the Cola family has managed to clear just over a half a million dollars in 2014 and investors are left with nothing but more promises.
In 2014, SGLB spent over $1 million in general and administrative expenses. An additional $400 thousand was spent on salaries. $582 thousand was spent on non-cash stock compensation. Lastly, a whopping $1.2 million was spent on warrant expenses. That’s $3.5 million in expenses for just $500 thousand in revenues. Additionally, shareholders were diluted by over 10% with over 60 million shares issued for services and cash during 2014.
We all work hard for our money. We expect that the firms we decide to contribute our hard-earned capital to should demonstrate integrity and work as equally hard to put our capital to good use as we did to earn it.
Conclusion
If you currently hold shares in Sigma Labs, you should be asking some serious questions about management’s ability to make good on promises. We anticipate the usual accusations that will follow this article. “You’re short SGLB”. “You have ulterior motives”. “You’re sorry you missed the boat”. It’s the same thing we hear whenever we present facts about OTC companies which paint a much different picture than the one management wants investors to believe. We’ll preempt these accusations by saying we’ve never been long or short SGLB. We just believe 3D printing investors deserve better.
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I just came across your few articles on SGLB. I was going to post them on the SGLB board on iHub because they were engaging, but in the end I found them to be slim pickings. I’ve been pointing out the weaknesses on the business, management, and Board side of the company on iHub for quite some time. Your articles add nothing to the discussion … except for the mention of Amanda Cola.
In fact why would I take you seriously without in-depth research into the technology being developed? I’m not saying you’re wrong, though I believe you are, but such a shallow investigation is not in the least persuasive.
Thank you for the feedback George. Regarding Sigma Labs’ technology, it started out as a hardware device with a very dubious spec sheet. Now it seems to have evolved into a software package. Currently it seems to be vaporware. Regarding your comment about “slim pickings”, that’s about how we would describe the Company’s prospects at this point in time. We’re not users of iHub so we don’t know what is commonly known and discussed. We only hope that the content we publish helps investors make better investment decisions.
Thanks for this article. I am very concerned when a ceo of a startup pays big bucks and bonuses when there is no appreciable rev. I’ve been in and out for 2 years and am actually up right now. I am intrigued by the tech. I love disruptive tech and bio. I’ve been doing this a long time now and appreciate the truism that falling in love with a stock runs a high risk of a messy divorce. Not betting the farm on this one. Your article helps clarify the high high risk here. Keeping my eyes wide open
I hold 57,000 shares of SGLB and I am in for the long haul. Not worried at all.
Hi Gary. “In for the long haul” is unfortunately what leads most investors in OTC stocks to lose all their capital. The CEO, Mr. Cola, has and continues to be paid handsomely. Make sure he earns every dime of that salary. Hold him accountable to statements such as the one below:
We also expect that our continued development of our “In Process Quality Assurance™” or “IPQA® technology will enable us to commercialize this technology for the AM metal market in the remainder of 2015 and 2016.
Make sure to challenge him on past statements made which promised product revenues but that never came to fruition. You work too hard for your money to let someone else just take it from you and give you nothing to show for it. As with any investment, it pays to always be worried!