Q4 2019 Earnings Call
Good day and welcome to the secret Labs fourth quarter and full year 2019 financial results conference call and webcast.
Today's conference is being recorded.
At this time I would like to turn the conference over to Chris Tyson.
Jim Director of MZ North America.
Please go ahead Sir.
Thank you and good afternoon I'd like to thank you all for taking partially join us for second a lot fourth quarter and full year 2019 is is healthy and results conference call. Your host today are Mark report executive Chairman.
John Wright, Chief Executive Officer, and Frank Worth a jockey copies Chief Financial Officer, a press release detailing these results crossed the wires is happening oral one P.M. eastern today.
Help on the company's website signal at <unk> Dot com.
Before we begin the call presentation I'd like to remind everyone that statements made on the call webcast, including those regarding future financial results and industry prospects are forward looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SCC Farley freight list of it so.
<unk> and we would also refer you to the company's website for more supporting industry information.
At this time I'd like to turn the call over to see collapse Executive Chairman Mark report Mark <unk>.
Thank you, Chris and good afternoon, everybody and thanks for joining us today.
It goes without saying these are unprecedented times of the Croda virus is affecting every aspect of both their personal and professional lives.
I hope that you on your families are safe and that we begin to see some positive signs this week, but the measures at the country is taking are beginning to slow down the spread of the virus in the number of new incidents.
As far as today's call is concerned we will be concise specific and relatively brief.
John Rice, our Chief Financial Officer will provide a review of the 2019 highlights.
Frank whereas the Koski, our CFO will review the 2019 financials.
And I will discuss our path forward, we will conclude the call with a question and answer session John.
John.
We were muted thank you okay Hello.
I want to what Echo your comments.
Okay, Yeah, Corona virus and set up to you our shareholders. Our owners that you are part of our Sigma family, We hope Youre.
We hope you are safe.
And we hope that you will sense and in <unk> and catch our optimism as we go fortress Sigma.
And in 2019, we accomplished several major objectives that laid the foundation for the company to complete three year transition that you've all been following patiently when an R&D company into one doesn't fully commercialized product that is a quick too and we believe on the verge.
Generating significant revenue an increase in valuation for our shareholders as we go into 2020 it on into the future.
In 2019, we designed and executed the Yaki program.
As many of you know this was that drives before you buy program in place or equipment tests evaluation very large companies.
Tests in 2019 laid down a platform a proven product performance also which we are now launching our selling in 2020 and beyond.
In 2019, we completed product ice in print three day.
When we released version 5.0 last May.
My point, Oh enhance your software package with a sophisticated and very user friendly.
Customer interface tools and it enables process engineers to go deep into the data analytics and on the next other build or single cards in real time is to build is taking place or at any other time to mine and evaluate data to better understand the process.
No. When it was released a this important upgrade made our product accessible at usable to both process engineers.
As well as machine operators on the floor. We're learning now in the in the Corona age that version 5.0 is even more important.
Because we don't process engineers were talking with daily.
We're working remotely and they found out that they are able to fully used spread right three D to continue to monitor their operation in process. If they were beside the machines.
And if they did not have print three day. They received an alert they'd be getting a call from a machine operator miles away asking them to come down to the plants. So this is already a big deal in 2019, we enhanced our competitive.
He.
Intellectual property mode with no patterns.
Whatever it's you know one of our principal strategies is to license or industries major Oems to sell print right three D inside their products on the model of Intel inside.
And a growing patent portfolios, our defense against companies seeking to just appropriate our technology.
<unk> as our issued patents continue to roll out, including two more that we announced yesterday, we think that it is simply easier and why is there now for Oems to seek a license of our technology rather than risk attacking our pet.
We ended the fourth quarter actually the whole year, having built strategic relationships with end user customers like Airbus and Baker Hughes Oems like materialize and additive industries and others, we cannot mention due to MD eightys.
Concurrently we continue to collaborate with R&D Institute's like frown Hopper for such as around Hopper and Nash the National Institute of standards in the U.S. and with universities, but additive manufacturing programs as part of a drives to become the industry standard for defining and testing threed.
It'll equality, any and all brands up laser out of bed able equipment.
So all of the above simply means that to us in the company.
2019 was a year in which we completed our transformation into a commercial munching [laughter] so that.
This year 2020, and beyond we can drive revenues and cash flow.
That I turn it over to Frank.
What was the Koski, our chief Financial Officer.
Thank you John.
Oh detailed financial results are contained in our form 10-K filed with the FCC today and the press release, we issued James key highlights of our financial results.
So for today I will can find myself to concise review of our financial results for the fourth quarter and the full year of 29 team.
Our revenue for the full year, 2019 totaled 402000, or which 133000 or 33%.
We started in the fourth quarter of this year.
Compared to revenues of 388000 for the full year 2018 of which 56000 was earned in the fourth quarter of last year.
Our gross profit for the full year of 29 team was negative 170000 of which support quarter contributed negative 105 cents.
The company's 2019 gross margin is primarily a function of variable additional travel and labor costs associated with the onsite and remote collaboration involved in the company's rapid test and evaluation programs.
Our operating expenses for 2019 were 6.2 million of which 1.5 million were incurred in the fourth quarter.
Total operating expenses for 2018 totaled 5.7.
Yeah, Chris or total operating expenses was primarily driven by a few factors number one increases in salaries and benefits of 525000 and occupancy and related General office expenses up 57000 related to six new hires.
Increased research and development expenses of 155000 related to the continued development of our put like Threed product suite.
An increase travel expenses at 93000 related to continue that reached a perspective Oems service bureaus and end user customers and our ongoing expansion into European market.
Partially offsetting these increases was a reduction in stock based compensation expense 348000.
Our net loss for the full year, 2019 totaled 6.3 million or $5.37 per share compared to a net loss of 5.6 million or $8. A 10 cents per share in 28 change and I will note that all of these numbers are post split adjusted.
Net loss for the fourth quarter of 29 gene totaled one point sixmillion or $1.17 cents per share compared to net loss of 1.7 billion or $2, a one cents per share in the fourth quarter of 20 chief.
Cash totaled 1 billion at December 31st 2019, as compared to 1.1 million at September Thirtyth, 2019, and 1.3 million at December 31st 2018.
Cash used in operating revenues for the full year ended December 31st 2019 totaled 5.5 million compared to 3.8 million in the full year ended December 31, 2000 age.
Subsequent to the close of the fourth quarter. The company completed two private placements consisting of shares of convertible preferred stock warrants to purchase additional shares of convertible preferred stock and warrants to purchase shares of our common stock, resulting in net cash proceeds to lots of approximately 1.7 million.
<unk>.
If all of the remaining warrants to purchase shares a preferred stock and common stock or exercise for cash by the holders. The total potential gross proceeds to us will be approximately $13.8 million.
And with that I will now turn call back over to Mark for a look into <unk> twentytwenty mm.
Thanks, Frank obviously, it's impossible to know what will happen in the coming days weeks or months, our first obligations to our employees.
The state of New Mexico has ordered all not a central bears interest at close.
Over we are a component manufacturer. So we can remain open as long as we follow the CDC recommendations and limit gatherings to under five people, which we're doing.
Fortunately as a software company, we're used to working through and supporting our customers remotely.
Since we support customers in Asia, Europe, as well as United States, We say that segment never sleeps.
The company, we're doing everything possible to keep things moving with our engineering teams and our customers. Our hope is that when we begin to return to some state of normalcy, we will be prepared to move forward without losing too much brown.
As you know we have a special shareholders meeting scheduled for this Friday.
There are two proposals on the balance the first has to approve the issuance of shares for private placement.
In the second is to increase the authorized common stock.
The votes are in progress. We're pleased that I assess has recommended that shareholders vote for both if you haven't voted please do so.
As a business for those of you that are new to Sigma I'd like to give you a brief refresher on what Sigma does how we are different and why you should care.
We developed quality assurance software for the additive manufacturing or three D printing industry.
Threed printing it seems by many to be the next revolution and manufacturing.
A few advantages of three d. metal printing, our designers can create parts that were impossible to make with other fabrication method.
Sub assemblies that would require multiple parts can be designed and manufactured as one.
Parts can be created that are later stronger and more durable and of course is extremely important for industry is like aerospace and automotive.
After innovation, a middle part of the easier with Threed printing than the traditional methods.
And there is less material way since the process is additive versus attractive in the pattern as we cycle.
What are the major obstacle holding back the broader use of threed metal printers.
Is ensuring the quality as a part being manufactured.
There's so many variables involved in the process from metal powder being used the strength of the lasers. The number of lasers, the manufacturers a printer et cetera.
Their quality assurance is done after the process often by doing a C.T. scan of the finished product. This as you can imagine this costly and time consuming and a major limiting factor to the full industrialization of additive manufacturing.
Currently there are fewer any standards for ensuring quality across industry supply chain or even a manufacturing floor.
Our product turn right three D is the only product that we know of in the market today that works on the majority of Threed metal printers monitors the manufacturing process layer by layer and is able to detect and identify defects. One anomaly is real time limiting waste inside.
Saving time and money.
Our goal as John had mentioned has become the de facto standards for quality assurance for three D printing and metal parts.
And our opportunity is very large we estimate that the addressable market to be approximately $2 billion between 2021 2027.
Which translates to approximately $100 million revenue to Sigma for every 5% of the market that we can claim.
We got off to a very fast start in January due to the success and feedback to the our to ease that John mentioned in the stability in features a print ritrievi, we have transitioned from selling evaluation to selling commercially off the shelf software systems, if a customer wants to do it.
The valuation we will jointly established a success criteria as part of the contract.
We've recently entered into these more typical software agreements with several customers.
This as you can imagine as a major milestone for the company in that it streamline for sale it actually take less resources to sell them to do an evaluation and its repeatable and scale. It also allows us to incorporate resellers intra sales model in certain parts of the world that we.
Don't have direct sale.
Something that we could not do with the RT. He is.
We're doing this at the same time as we see a convergence of three factors that will drive the growth of the business.
First the industry continues to mature and it's getting to the point, where its mature enough where end users are making plans to move towards serial production with multiple threed metal printers from different manufacturers.
Second thing that we see happening, it's clearly that trend right three d. five though has been proven to work a multiple printers from different manufacturers single dual in quad laser configurations, and consistently correlates to see t. scans and accurately identify.
And classifies defects.
Finally, there is almost universal agreement that the industry needs a third party in process quality assurance solution.
Sigmas technology as soon as we only viable product that works across machine types and supply chains.
Our strategy is to attack all segments of the market and worked with scams organizations to position trend right three D as that defacto standard.
I do not see any major market barriers to us achieving that goal.
Our relationship with materialize opens up a retrofit market opportunity for us of over 2500 printers.
10% of that market would translate the millions of dollars of revenue for segment.
We are actively making progress with several hardware Oems to certify our technology with their threed printers.
Based on the manufacturers forecast each opportunity represents a multi million dollar multiyear revenue stream to Sigma.
And we continue to make significant progress with end users as they move towards serial production. Each one of those interactions confirms our value and moves us closer to your to our goal.
As you saw from the recent announcements with Mississippi State Northwestern University, we intend to help educate and influence tomorrow's manufacturing leaders by collaborating with such innovative organizations that focus on additive manufacturing.
As you lay these revenue streams on top of each other the effect is a slow but steady ramp to increasing revenue quarter over quarter.
In addition, as a revenue mix change is front end user in R&D organizations to software only OEM, our gross margin shifts dramatically.
The question was you know and several of you have asked me on the last conference call.
Have been one of timing as of todays additional challenges that becomes impossible to predict.
However, based on our ability to continue to develop our software and supporting calibrate our customers remotely I believe that we will see the business recover quickly on the crisis subsides.
When that happens based on what we know today, we're positioned to increase our revenue quarter over quarter for the fear foreseeable future.
I'd like to leave you with a couple additional thoughts about our market opportunity for the coming years.
There are two very significant factors that are relevant in today's world and I believe will become increasingly important two or three years out.
The first is the movement towards sustainable technologies and processes that are environmentally friendly and socially responsible.
The second is the effect of the pandemic on the future of manufacturing.
Regarding the former Threed printing reduces waste save energy from reductions in warehouses and transportation the powder as I mentioned earlier is recyclable and the process is cleaner than traditional processes.
Trends towards sustainability is gaining momentum around the world and <unk> will become increasingly important to consumers companies and investors.
The pandemic that we are experiencing today will change many aspects of our lives going forward I was watching Tom Friedman of New York Times, an interview the other day.
If you recall he wrote the book the World is flat, which happened to have an influence on my career and strategy is when I was running other public and private companies.
He wants to ask what will be different when we get through this and we will get through this is first answer was E learning will explode due to people being exposed as a substitute to going to traditional schools.
Just second answer to the question was three D printing will explode.
Supply chains are too long and complex traditional manufacturing processes are too rigid.
Threed printing moves the main your manufacturing process closer to where the end product as needed greatly enhancing the agility and responsiveness of the supply chain.
So when I sit back and taken into account the maturity of the industry. The advances in technology. The functionality instability of our product today, the increased focus on investing in companies and technologies that are socially responsible.
And the potential changes in the manufacturing process.
I see an industry that is truly ready to take off and Sigma is positioned to do the same.
Right three d. is the only technology that we know of that can provide in process quality assurance in a heterogeneous serial manufacturing production facility.
And version six which we are actively working I was several of our customers will enhance the use of our technology and serial production environments and move that closer to a true closed loop solution.
The timing as I mentioned earlier is unpredictable, but the trajectory is unquestionable as a company, we'll be ready to embrace and meet the challenge of the opportunity in front of us.
Putting current difficulties aside which I know it's difficult. It is a very exciting time for Cigna, and we're anxious to get back to work and see our vision become reality.
Thanks for taking their time today I know, we're all consumed with personal issues and thank you for your support a signal lives at this time, we'll open up the call for questions from listeners operator.
Thank you well now be conducting a question answer session have you like to ask a question. Please press star one from your telephone keypad and a confirmation tonal indicate your line is and the question Q.
You mean fresh start to feel like term if your question from the Q.
Participants are using speaker equipment, and maybe necessary to pick up your handset before pressing the star Keith.
One moment, please hold me poll for questions.
Once again start one to ask a question.
My first question will be coming from the line of George Carrara Count with <unk> private Investor. Please your with your question.
Oh.
Hi, guys. Thanks for taking my call can you hear me okay.
Yes, yes.
[laughter], Oh, hi, Mark as a drone rice will tell you I'm, a very long standing long shareholder I'm, sorry, if I. Thank you for the Colin Thank you for taking my call.
Obviously, there are many questions I'll try to be brief and if I have more questions. Maybe I can come in later after other callers a couple of strategic questions in there and and a couple of tactical questions. If I may mock John.
Everybody.
You mentioned them, but here you mentioned materialize in your prepared remarks, which excited many of us.
And you mentioned some numbers some revenue numbers.
Can you refresh us again, I I wasn't clear on that what is the expected.
If any revenue projection in the immediate or near term from the materialized steel.
No I'm George Thanks for the question, let me give you.
Let me frame the opportunity and what we're doing with materialize right now.
As you know we are integrating print right three d. with their emcp the control platform, they're targeting that platform to several markets. The first is the retrofit market from printers that are already out in the news in the second our new Oems that are coming in on the hardware.
Her size.
The opportunity that I talked about earlier is on the retrofit side.
We estimate that there are 2500 printers in place today that are our [laughter] provide an opportunity for materialize and segment a come in with our joint solution.
If we get 10% of that market, what I mentioned was that many millions of dollars of revenue to Sigma. So thats what the opportunity is we don't have a forecast on that yet, but the opportunities clearly there.
The upper second opportunity with new Oems coming into the market. We've already jointly called on a couple of hardware Oems that are looking at combinations of control platforms and monitoring software.
And that yet is another opportunity that we haven't quantified, but as you can imagine if we become embedded in a new hardware Oems platform.
We get revenue for years to comment that hardware OEM ramps up their production.
That's very encouraging and I appreciate that [noise].
As you know clearly the three D.A.M. world.
Has been threatening to go into serial production for a while.
We all believe.
Well, let me rephrase, many believe that it's because of the uncertainty or the quality of the output, but it's not yet a ubiquitous serial production and that.
And in process QHC solution is the tipping point that's required now well I appreciate our technology is evolving and we're talking about version 6.0, we are plenty good enough. If we were if it were true.
But we provide the solution. So yet we have this huge market opportunity, which will go to the billions in terms of a three D.A.M. business the whole industry.
We had the gates Sigma is the gating factor by all accounts, if we believe you.
I believe you, but then I asked myself the market cap.
Sigma is $4 million.
It's difficult to convince somebody.
But we all the Holy Grail, if I'm market that was 4 million Bucks right.
I can.
You know maybe it was the financing deal that's driven us down here, but even at 10 million Bucks or 20 million Bucks and our value is way too low for the value for the true for the true value proposition, we bring to the table for the three D.A.M. industry.
That is a conundrum I'm struggling to deal with and communicate with some fellow investors.
Can you comment on George sure sure George.
When it comes down to the stark much stock market and our valuation that's.
Not within our control I think that the thing within our control is generating revenue getting the product to be commercially available as we have done so today.
Beginning to generate revenue in the first quarter and increasing that revenue quarter over quarter and in the end we have to prove our value.
And we expect to do that this year, we expect the do it I'm starting this quarter and we expect to see the valuation increase with our ability to deliver so net net is results count and this is the year results for the company.
And when you combine that with the maturity of the industry in the things that are pushing the industry forward I think you're going to see evaluation increase pretty dramatically overtime.
Okay I'll jump in the.
Oh, I should say in the line, depending where everybody's from and I'll come back I've got several more questions maybe I'll give some other people opportunities to ask thank you for taking my questions.
You're welcome George.
Thank you.
Our next question is coming on line of Mark for pay with private Investor. Please proceed with your question.
Good afternoon, gentlemen, a I recall, what these calls used to sound like back in their early days of segment labs, and things sound a considerably better nowadays so I commend you guys on that I know everybody is working hard I just wanted to confirm isn't it in fact, the case that freight right three.
D. is now a capable of oh in process quality assurance operations on a printer that isn't running multiple lasers.
Hi, Yes, we are running on a single and dual and we're working with one OEM on a quad.
[noise] any.
Indications that.
That is going to propel they.
Acceptability of print right three d. in the industry has that.
I mean that we have a except for a few.
And direct response or indirect a indications that that was the case you know I've seen nothing that specific way touted that and.
<unk>, if that's something that you guys are putting out to everybody and ER.
It does best a metal am world know that that is the case now.
Yeah, Mark again, a good good question.
I put that specifically in my remarks today that we're running on a single dual and acquire them and we're also running on multiple manufacturing printers.
Dual and only one quad, but multiple manufacturing versions of doing single.
And we will continue to highlight that.
Part of the R. T E two's for several companies was to run on different platforms, both single and dual laser, which we completed and we will make more here that as we go forward.
Okay.
Back to materialize and the concept of close loop I mean, I know from talking to a lot of people that are close loop is is a dices situation, but yeah, something very much desired in the industry is segment labs, so close loop effort.
Going to reside entirely with materialize or is closed loop bank pursued.
On your own and in addition to the work that's being done with materialize.
It'll be pursued between ourselves and the hardware manufacturer in the platform.
Troll system. So if we worked with another heart was a hardware OEM and they don't have materializes control platform, we will be integrating print right with theirs.
To the objective in the end result of getting close loop. Okay. Perfect. That's what I wanted to know if it if I if ER and user was not using materialize platform, where you're still going to be able to provide close loop capabilities to them wasn't a more precise way for me to ask my question or what you're saying is indeed that is the case right.
If we're working with the manufacturer of that printer or the right maybe developer of the <unk> of the control platform. The answer is yes. Okay.
So one last question and the again, it's our our attempt to.
You know yet I better feel for.
How much of the industry is truly.
Leaning toward incorporating Sigma labs on Prem right three D., we still only have you know the marquee names of Airbus and Baker Hughes touted out there.
I understand the ace or an issue, but can you tell us are there in fact, more oh and possibly many more.
Large corporations that are in fact looking at print right three d. right now or in fact, using print right three day right now.
As there are several more large corporations that have completed our T E and there are several that when negotiating with for a follow on contracts. Both for end users systems and as Oems and there are several other newer ones that are just recently come in.
The play where as I mentioned earlier, we switched from doing and they are t. each moving towards selling the commercial off the shelf software than we have several of those that we've already signed contracts with.
We are beginning to go through their 90 day evaluation or test phase with our with our solution.
Thank you.
Your next question will be coming from the line. If we offer was how many investors. Please proceed with your question. Good afternoon, a couple of questions.
One.
Can you give an estimate of how much of the cost of a product is in the back end of it.
[noise] when you say floors. There there are testing to see if the product is were working.
I'm not sure I understand the question could you say one more time sure. So.
Where I understand what you all do is that if something's not work and you can stop the print.
And then the wind up starting up a new piece.
So how much can you save them.
By doing that.
Yeah. That's a good question and honestly, we don't have a specific answer the question because we don't have enough data yet.
But as our users become more comfortable using our product.
And set tolerances that they're comfortable with for particular de Sac, Some particular parts and particular areas that that part.
They will begin to stop those processes.
Earlier, and every time they stop a process.
As opposed to finishing it and finding out they have a bad result, they save money and time, we don't have a good quantification of what that is yet.
That is one of the things that we're working to validate but what we're saying is the more they use it the more comfortable they get the smaller the tolerances, they get and they're able to stop the build more quickly than ever before.
Okay.
And you spoke a lot about the patents have.
You are ahead of third party come in and evaluate.
Yes, the measured at fair value of your patterns.
I'm going ask John that because he has a better horrible my history than I, John you want to answer that question.
No we have not had a third party evaluation of the that conducted.
Our our sense of there's strong value is based on two things one the from we have used just kilpatrick towns and but I think one of the tough but that in terms of the world.
To we are aware that we are protecting a technology.
Faster and sooner than competitors seem to a vendor darn well so so.
We are very proud and secure with it.
Well have you consider bringing it a party into doing I mean, considering what your market value is now I'm going to assume.
Yeah. Your patents are worth more than the market cap with the company now will not be Oh phone for TV.
World to see Rep, you're absolutely right.
We sell your assumption.
As the <unk>, our point and develop but.
Where it is understood that that the value of the patents.
To a third party.
Would be more than cost value that we report them that and in the event that.
There was a discussion of acquisition or some other topic I'm sure that.
They would they would pay a third party the normally when a company does this for its own benefit it is perceived as the.
Salt in your own mine, so it hasn't not seem to us the a good investment for us to make.
Okay.
And one final one or you're pretty far into the quarter.
You have any or color on what the first quarter revenues were second quarter revenues will be.
No as you might be aware were limited and our ability to disclose nonpublic information and provide specific guidance. So we don't have any comment about the quarter.
Only comment that I've made publicly that I repeated today is that you will see revenue generation in the first quarter and it will increase in subsequent quarters.
Because of the pipeline that we're building getting back to the patents I just wanted to add one more thing because I've had several questions about what the patent means that the company and what they protect and the first patent is more broaden generally protects their future path is for advance metrics design.
The second patent is very specific to the way our product works today and that's very important for us in the protection of that product and also our quest to become the defacto standard.
Mark if I may be the.
Right just described the two patents that that we've published had been issued this week.
Actually have 11 patents issued and those are just two more big breaks in the wall.
Thanks, John.
Okay. Thanks.
Our next question I was trying to line of Steven Laski was as a private investor. Please proceed with your question.
Hey, guys can you hear me.
Hi, Yes, I can.
Excellent. Thank you for taking my call. So my question I Kinda, one and I know, what Georgia, saying and ask more about financing and actually the boat and you know why yes votes recommended and why should feel good about.
Oh, yes.
I'm going to ask John to respond to that if you're able to John.
You bet.
Yes, the vote is important to the company because of it has to specific.
Needs one is.
Two.
Make us able to comply with the the or wave, let's say, 20% rule.
The other is to increase the number of shares available for issuance. If we if we were to lose that vote.
Which at this point does not appear to be the case, but if we were to lose the boat the that would in effect critical.
The company from being able to go forward with the financing that commenced.
January <unk> and.
Affords the company to be seeking to create new relationships and new financing in the middle of the historically are unpredictable negative market places the corona bias.
Turns around so the.
Yeah, if you don't feel good about voting for it I can assure you feel pretty terrible if it lost.
Okay. Thank you for that and then one of my other questions was around financing and.
No other avenues, because obviously I think like ages your coin.
Hi.
Yeah, I don't know how to describe them out nicely I guess, but I.
I feel like they ultimately short our stock and you know we're getting dangerously close to the dollar 80, Mark at this point, which to me and Ah why holdings, Cheryl, although I feel that.
Catastrophic right.
So I [noise].
I got my question is.
You are we gonna have some other financing here in the future that kind of get these off our back and.
You know moved things forward yet.
<unk>.
Oh, we're looking at.
Okay go ahead John.
I would put it this way the.
We have devolve.
Into.
More difficult financings as well as as we were late stage startup trying to get to the point, where we are today people were saying you know we need more.
Tangible results then the company has been delivering in the past three years or because of where we are today.
Hey to get here.
My perception is that our options into the future grow and improve based on the fact that we going forward are are based in all of our prospect of success on getting on selling stuff on make in a license agreements on on.
Deploying our product into the market.
Went bad is your problem rather than getting test going.
The results are more visible to the world and so we expect that the company will begin to look more like the complete package that we've been building, we expect that with the prospect of but the reality of revenues and and the prospect of cash flow that our finance ability improves that per.
Georges observation or what the Hell is the market cap doing down there so.
We think that all of these things change when as we fulfill our destiny and taking product into the market improve in the customers, but and with that come the opportunities for strategic investors.
More rewarding up up rounds, and so on and so forth we have to succeed our way from here.
All right do you feel like we have enough cash at this point are we looking out further dilution or they're going to try to exercise all these options to create the cash for us.
You are you know that you can never have too much cash and therefore, it never had enough so and I can't go speculating into.
Where the say go with them I will say that a lot of the agreements made but micro cap companies are structured so that the company really does well, it's somewhat uncomplicated for the investors to do well if the company begins to run and difficulties. The investors have defense mechanisms that Youve desert Bert.
The and the battle that we have to fight is too.
Maintain the high visibility of what we think are good prospects to avoid the adjustments.
Thank you.
Your next question is from Atlanta, I see any charge offs with symmetry. Please proceed with your question.
Hey, guys I'm, a firm for those of us or a little bit new to the opportunity would you speak about print right treaty, becoming the industry standard can you be viewed the path you were taking to get there and explain why it's so significant.
I'm sure.
So the way we see the market is that there were four segments you have the hardware manufacturers that are producing the printers.
Software manufacturers like materialize or developers that are developing additive manufacturing software.
End users.
Fetches Airbus that we've talked about before and research and development and universities.
And the underlying those four segments, there's a set of standards groups.
Our strategy is to go after oral all four of those segments.
If we're able to do that we're able to provide an end user that's using multiple trenchers from multiple manufacturers.
Single view, a single look and evaluation of the quality of the parts being developed.
That's very important thing for the cereal manufacturer to have on their production floor.
Where are the only technology that we know of today that is capable of key of achieving that that being in process.
Standards driven.
And the cross agnostic to the hardware manufacturer in the software manufacturer.
Given that we're the only one who is capable of becoming a defacto standard today if were successful in going after each one of those markets. We believe that companies will then let us.
Printers, and not look for another solution because now the manufacturers are going to develop a solution for other manufacturers printers. None of the software developers are going to develop a solution for that will run with other monitoring software. So.
We become by definition, the best and the only game in town.
And that's good for the hardware manufacturers because it allows them to.
Certify a standard level of quality, it's good for the end users because it simplifies the process of managing quality in their own operations in across their supply chain and it's good for the whole industry.
Interesting, so you're really Switzerland in some respects and you're not going to have any exclusive arrangements most likely with any particular Oems and is that correct.
That's 100% correcting Smuts owns a good example area good analogy for us because.
Our goal is to accelerate the adoption of threed metal printing, regardless of manufacturer regardless of industry, regardless of the software that they're running and to be able to be the again the single point of quality assurance across all those variables.
I understand so as if in fact this is the case, where you do become the industries.
Standard I mean, you're really at that point negotiating from a position of strength with these lysonix licensing agreements I would assume correct.
No. That's that's the case in the first thing is the you know it's a it's a market share ground game and that's why we're attacking all four segments and working with the standards organizations. If we can broaden our footprint and if we can magnify and leverage our footprint through relations.
Chips with companies like Mr realized or some of the hardware vendors were working with.
We get a one for many type of inflows into the market. So ER for one relationship we get hundreds of customers through those OEM agreements.
So I, so I would think too to achieve that goal of being in the industry standard you know your patent portfolio and intellectual property as it stands right now is absolutely significant.
To your success and I don't know to me I do you have any kind of subject and valuation if you had to take.
A stab at what you feel the monetary value of that portfolio would be.
Oh, we do not always now is that we believe it's substantial and as John said that and if we get into a situation where it has to be value we will do so.
Right now we're focused on driving results generating revenue and getting that footprint across all those segments that I mentioned.
Terrific I appreciate the question and answer thank you so much.
Thank you.
Your next question is from the line of Air until then with private Investor. Please proceed with your question.
Hey, good afternoon, everybody are done and Mark.
Belong to 'em up there are plenty protein.
On the spend a minute challenging environment.
Lately.
And on this and the herbal marked at about <unk> revenue quarter over quarter.
And I just want to work through Oh last year or Oh. This letter to shareholders. On you said it was optimistic over your line is quite the break even operations for early 2020.
Given our current environment or is there a new frame for breakeven operations and that's great.
Yeah, I'll answer that and I'm not quite sure about.
The what John said back down because I wasn't around but right now I can tell you we're focused on three things as our goal in our plan.
The first I've mentioned several times, increasing revenue every quarter and I believe that we can achieve that the second is keeping expenses relatively flat for the time being as we introduced a product in the market. So we can minimize our cash burn and that leads us to a plan where we.
Crossover breakeven somewhere in 2021.
So that's our current plan today, it's one that I believe is achievable and I'm not quite sure about the statement, but might have been made in the past.
Thank you.
Our next question comes from Telsmith private Investor. Please proceed with your question.
Yeah.
I have two questions. One can you share with us the number of Archie He set were entered into and how many of those graduated to phase two.
And how many expired without any subsequent business.
Yeah, Let me take a stab at that John if I Miss something you know please jump in.
So Airbus, which we've talked about is that.
In processing moving towards Phase two Baker Hughes, which we've talked about is then phase two.
We have a Japanese may hardware manufacturer that we are under and they with who's in phase one.
We have a contract manufacturer that's completed phase one phase two that were very successful on we have another hardware OEM. That's completed both phases matters that is right now in final certification of phase two so those five of all move forward and been successful.
And John Am I missing one that we have mentioned on the call in the past.
Actually yes, the very first our GE, where we were prototype you know what is of course Hello.
And they they of course became.
The.
Relationship, we announced a couple of weeks ago.
Right. So the direct answer to your question is all of our Artesia proven favorable all of them have reinforced our belief in our product and Thats why we were translation transitioning off the Archie to a commercially off the shelf product and as I mentioned earlier, it's much easier to sell.
I commercially off the shelf product then it is to convince somebody to do a test and evaluation of software that they can validate through a reference work so as documented.
I understand what a one other quick question on the relationship with materialize.
His print right three d. is that embedded and all of their software or is that an option.
So it was not in budgeted.
Yeah, I'm, sorry, it's not embedded it is not invented.
Right now we signed a joint sales agreement, where we will work salesmen, who will go into an account together.
And we will sell the joint solution. So it does not embedded it is not an option that they offer it's a joint sales, where we go in and sell with them.
We hope that the relationship really evolved from there in some shape or form but right now it's truly a joint sales.
Okay. Thank you very much appreciate it good.
Our next question comes from Georgia, <unk> private Investor. Please proceed with your question Sir.
Hi, Thank you for allowing me to come back in with a couple more questions.
It wasn't that long a goes at the company was very excited about.
And I'll see with an international OEM manufacturer. We cited they were testing how our product into different geographies Asia Latin America for two different metal parts from two different metal powders.
How is that going east they still excitement there is that still progressing.
Hi, Yes, I had mentioned a hardware OEM that's completed their TV in certifying the second RT and.
And it's gone very well and we hope that we're able to put together a relationship with them in the near future, but it it's gone well, but it's still under India.
Okay, but it's still progressing there that okay all right.
Can I, just ask about Siemens Siemens or on our website, we made on and off references to Siemens over the years.
Are they still an active partner <unk> or potential customer of ours.
Oh again ask John to answer that because it goes back a little bit for my time.
The assignments has been a so too.
The two around issue.
They.
Well one of our first 2017 technology integration program. So we really did a lot of tested with them on a dollar.
What was then.
More of an R. and D. tool and it was with their assistance that we helped to the fine.
What our product needed to be in the eyes of Siemens and the other six folks who are working with so.
In the event.
About the same kind that we completed the development of but T P, which is our ability to to detect signatures and products and so forth.
The group, we are working with Siemens ran out of budget for the work for that program.
So we went into a a hiatus with them.
And my hope is that that will come back and work something out to go back in for another test. The problem is we are no longer in the test and evaluation mode. We've done enough of that successfully that.
Or folks like seems to come back they would have to enter.
More highly priced program.
When you have helped someone develop a product do you ever lucked out sometimes to do that so well see how that works out.
Okay very good thank you for that.
[music].
I know, there's talk about valuing the patents or not it's very difficult, but certainly there been a a few sources for the size of the three D.A.M. industry.
In the begins a 20 billion. These one source I think everyone. So somewhere.
40 billion is that he has the potential market as of 2030 I think.
He certainly you huge.
Typically patent the APAC dependent on driving that and we seem to be the critical missing link.
I would be would represent 1% of as a minimum so.
[laughter] that gives out valuations of pounds in the hundreds of millions definitely in the 150 to 300 million dollar Mark.
You know.
I'm, just shocked that materialized them to say, Hey, Mark Hey, John. Thank you very much is 100 million and Oh, Yeah, you know by you and I see.
By you and I Spiriva lunch you know.
So that's one observation, but one specific question about the deal.
And Iroquois.
Is there a maximum they can own of the company after the steel that's happening.
For example during.
During the same.
Yeah, George I will let John answer that question that I I think we're going to cut it off and I have a couple of closing remarks, John Okay.
5%.
But that's really kind of.
It's four point, it's 44.99%.
Very good. Thank you. Thank Frank Thank you John Thank George and George Thanks, George Thanks for the questions.
I mentioned earlier it is a difficult time to be excited given what's going on but we are excited as a company to make the transition to take our product into a full sales and marketing initiative around the world and we have many dedicated and hardworking people throughout the company that it's made that possible.
And a sincere thanks to them from all the management lastly, if you weren't able to answer your question to ask a question or you have a follow on question.
Please feel free to contact us.
Or MZ group, who would be happy to answer them I know there were some confusion in the past on the last call and I want to personally make sure that we answer everyone's question.
So with that we look forward to speaking with you again under next conference call.
I hope everybody.
Remain safe and.
Well talk to you in about three months. Thank you very much.
This concludes today's conference. Thank you for your participation.