Sigma Labs Continues to Disappoint Investors
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.
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.
Here at Nanalyze, we write about tech stocks a lot, but most of our money goes into a dividend growth strategy. Our 30 dividend stocks provide an income which increases every year. Find out how to build your own growing income streams with dividend growth stocks - Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.