Q1 2021 Sigma Labs Inc Earnings Call
Good day and welcome to the Sigma Labs first quarter 2021 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 Executive Vice President of MZ North America. Please go ahead Sir.
Thank you and good afternoon I'd like to thank you all for taking time to join US for Sigma Labs first quarter 2021 business update and results conference call. Your hosts today are Mark report, President and Chief Executive Officer, and Frank Orzechowski, The company's Chief Financial Officer, a press release detailing these results crossed the wires. This afternoon at four <unk>.
One P M. Eastern today and is available on the company's website Sigma Labs, Inc. Dot com before we begin the formal presentation I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects are forward looking and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially.
And those described in the call. Please refer to the company's SEC filings for a list of <expletive>ociated risks and we would also refer you to the company's website for more supporting industry information at this time I would like to turn the call over to Sigma Labs, President and Chief Executive Officer, Mark Rupert Mark the floor is yours.
Thank you, Chris and thanks, everybody for joining the call today I Hope you on your families are safe and well as we get closer to the new normal.
I know that I'm closer to the new normal because I'm sitting in an airport for the first time on a year.
I'm also pleased to tell you that Sigma labs is heavily also on the right direction.
And if you hear some ambient noise here I apologize.
So Q1 was about acceleration and validation and execution.
Celebration of acceptance of the <unk> metal printing.
On the elevation of our print right three D product and execution against all aspects of our business plan.
As I mentioned in the 20th 20 year on call last month.
Well, he's a very challenging year, we were able to execute on our business plan and position ourselves for an exciting 'twenty, whether you want.
Our Q1 results clearly reinforced my belief that the company has entered a new phase focused squarely on revenue growth and securing our position.
As a leader in quality <expletive>urance for three D metal printing.
Before I go into more detail on how Frank review of the financials Frank.
Thank you Mark.
Our detailed financial results are contained in our form 10-Q filed with the SEC today and the press release, we issued contains key highlights of our financial results. So today I'll provide a brief overview for the first quarter of 2021.
Our revenue for the first quarter of 2021 totaled $458000. This compares to revenues of 222000 for the first quarter of 2020.
The increase in revenue was due to a doubling of print right three D unit sales over the first quarter of 2020.
Our gross profit for the first quarter of 2021 was three.
Which resulted in a gross margin of 72%. This compares to a gross margin of negative 23000 for the first quarter of 2020.
The improvement in our gross margin is due to a combination of manufacturing enhancements, which have reduced our cost of goods.
Nearly complete wind down of legacy rapid test and evaluation are rte programs and a customer exchange you have a preliminary three D unit during the first quarter at a lower cost.
Total operating expenses for the first quarter of 2021 were 1.78 billion, while operating expenses for the first quarter of 2020 totaled 1.5 dollars 6 million.
The increase of $222000 was primarily the result of the addition of 10 employees during the first quarter.
For application engineers, one of whom was previously a contractor with us.
So our business development staff, one software engineer and one administrative employees.
Also contributing to the increase were operating and R&D expenses, resulting from development of print right. Three D version, seven point O and restocking of labs supplies and materials.
Offsetting these increases were decreases in investor and public relations expenses as a result of lower advertising and trade show expenses as compared to the first quarter on 2020.
Our other income for the three months ended March 31, 2021 was $801000.
This income resulted from an unrealized gain on the March 31st revaluation of the derivative liability from our March 26 financing.
Generally accepted accounting principles required us to record the fair value of the warrants issued as a liability since we currently do not have enough authorized and on issue chairs available to settle the warrants are exercised.
We are seeking stockholder approval to increase our authorized common shares in our may 24th special stockholders meeting and should we receive that approval, we will be able to recl<expletive>ify the liability to permanent equity.
Cash used in operating activities for the first quarter ended March 31, 2021 totaled 1.24 million compared to 1.53 million for the first quarter ended March 31 2020.
The net loss applicable to common stockholders for the first quarter of 2021 was $712000 or nine cents per share.
As compared to a net loss of $1 9 million or $1 30 per share in the first quarter of 2020.
Our cash balance totaled $16.8 million at March 31, 2021, as compared to $3 7 million at December 31, 2020, and $631000 at March 31 2020.
Working capital total $12 6 million at March 31, 2021, as compared to $4 3 million at December 31, 2020, and 650000 at March 31 2020.
At March 31, 2021, our stockholders' equity equity was $13 4 million as compared to $5 2 million at December 31, 2020, and 1.4 million at March 31 2020.
And with that I'll now turn the call back over to Mark.
Great. Thanks, Frank as I hope you'll agree every financial metric that you can evaluate the company on who's.
It was improved significantly over a year ago, but it's not just the financial metrics that are improving we're on.
So beginning to see returns on our investments and improving results in other areas of the business, but in my experience are leading indicators for future revenue growth.
First our marketing programs have generated month over month increases in inquiries on leads the recent webinar as well as to reduce.
As well as those highlighting the industry Influencers and research organization on growth increased our profile in the industry.
We hired two our plan, adding resources in the field as a whole day deal flow through our partners, we quickly <expletive>imilated the Tet new hires into the company.
Spec them to contribute to our progress in Q2.
Our pipeline and level of engagement and sales opportunities continues to increase and our new field sales resources, who are all industry experts.
Hit the ground running.
It's also very gratifying to see that our philosophy of radical collaboration in this case with nest played a major role on the core features of print right <unk>, seven O, which I'll discuss momentarily.
Finally, we also continue to build leverage on them sales model with the addition on the addition of our remarks on the Turkish <unk> printer OEM, who gave US an initial order in Q1.
I believe that we are.
These actions to prepare us to handle the increased demand of three D metal printing accelerates around the globe.
The market acceleration is coincident with the continued validation of our technology by government agencies, such as DARPA.
International R&D organizations, such as Fraunhofer M T C northwestern EW hi.
Independent software companies.
Such a answers on materialize aerospace and defense companies, including sophisticated three D.
Printer users such as Lockheed Martin Airbus.
And the recent contract we got with the European Aerospace and Defense company.
Oil and gas industry leaders like Baker Hughes.
And private organizations that are building factories of the future like all of you in Florida to less than three day printer manufacturers, including D. M D. Hari.
Additive industries and as I mentioned earlier remarks.
So what do we need to see happen in the next few quarters as we focus on driving revenue.
First we need to begin to turn some of the single order contracts into multiple system orders.
Second we're going to continue to expand our distribution and increase the leverage on our model with new hardware and software partnerships.
We need to increase the deal flow through our existing partners, specifically T. M. G Morry additive industries materialize and I'm pleased to say, we're seeing increased activity. There also.
We're also going to continue to hire the industry's best sales and engineering talent to ensure that we can maintain our technological lead and support our partners.
And finally, we will continue to attack the market Holistically, gaining inroads with R&D organizations University's advanced additive manufacturing programs.
Global manufacturers, where the growth out of it spending.
Manufacturing the three D printing programs.
Non printer Oems and additive manufacturing software Isps.
As I've mentioned on the past, although difficult to predict the exact velocity and timing we believe that the direction on the end result is inevitable and that three D printing will play an increasing.
And vital role in manufacturing for decades to come.
The economic quality and economic and quality barriers are being broken down and we will see increased use around the globe.
Finally, I'm very excited to announce that we will be releasing print right. Three day seven now and a few weeks at the eight month conference. It is a significant re leasing has some groundbreaking features.
The industry has been waiting for for some time.
I'll, let some of the features that we'll be talking about at a book and a couple of weeks.
The first and most important is temperature monitoring and calibration.
This is the work that we did with mist.
And it's very important for machine to machine calibration, which I'm sure you can understand if you cant calibrate machine to machine, it's tough to control quality and consistency.
We will also be introducing user facing machine learning predictive models.
This allows the user to look at past history and begin to predict based on the in process recording that we're doing in the.
Analytics that we've developed to predict.
Potential defect or anomaly.
Multi laser quality metrics. This is used to monitor alert users when lasers are coming into close contact and interacting which is also a quality and consistency issue.
We'll be introducing a production framework for visualizing of reference data and enabling more statistical analysis anomalies.
Well also be introducing some three D visualization diagnostics, which provide usable usability enhancements in rapid cross section analysis, an easy comparison on the C T data.
Of course, the Holy Grill for.
Enduring qualities doing a C T posts process, but it's extremely expensive.
So this is a major step for users.
And finally enhance user security, which is becoming more and more important for the industry.
As you can see we are aggressively introducing new features that we believe will continue to increase our competitive advantage.
As I mentioned at the outset on my comments Q1 was about acceleration validation and execution I expect to see more of the same on the coming quarters with that Frank and I will be glad to answer any questions you might have.
Operator.
At this time, we'll be conducting a question and answer session.
Like to ask a question. Please press star one on your telephone keypad.
Formation tone will indicate your line is on the question Kim You May Press Star two.
Yeah.
Speaker equipment it may be necessary.
I'm sorry to pick up your handset before pressing the star one.
One moment please poll for questions.
Okay.
Our first question is from Barry sine of Spartan capital.
Charities.
Please state your question.
Hey, good afternoon folks.
Hello, Barry.
I wanted to do you just kind of get a big picture sense of when.
When we might see the significant turn in revenue if I look back end and this year has been no exception.
<unk> been selling more stock than you've been selling you know three D printing equipment and I get you need to fund the company and capitals available maybe you could talk about some of the impediments is it that just three D. Printing is not being metal printing is not being accepted as quickly as you had hoped your technology seems like it's really.
State of the art best in the industry you seem to be accepted by.
By the major players in the industry, but we're just not seeing yet.
The revenue on the top line you've added a lot of resources I think 10, new employees and I listened to that they all seem to be around generating revenue. So.
At what point do you think we might get to a quarter or a year, where we see more revenue on the top line than we see.
Sales of stock of the company. Thank you.
Oh sure and that's a very fair question, we'd ask them first of all I'd say that I'm selling stock was important and getting the company funded at a level, where we can take advantage of what we believe the opportunity will be will be was very important to us and without that we wouldn't have an opportunity to pursue.
And the answer to the second part of the question on who do we expect to see some material increase in revenue.
I believe in the second half of the year, we'll begin to see multi unit sales.
As far as the question relative to what's the impediment.
The first is the company on the number of companies going into production using three D metal printing.
We're seeing more and more hit that production level, where they have multiple printers from different manufacturers and that's what's required for our.
Software to have the value proposition that makes somebody moving forward.
So I will say the answer to your second question material revenue from second half of the year driven by a multi.
Multi system sales.
Does that answer your question.
That's very helpful and if you don't mind, a follow up on that and this is kind of on I need your question. So forgive me.
What are the companies that are doing <unk> metal printing now that are not using your product what are they doing are they just accepting a high error rates are just taking a chance that the product may have a lot of faults in it and going ahead with that anyway, I don't understand how you can be doing pre D metal printing without Sigma.
Labs product in the process.
Well, obviously, that's what we're.
We're trying to fulfill there, but if your question is when they acquire a printer or theyre in prototyping, our R&D day.
Probably are not that worried about the quality and consistency because they start with a relatively low value component.
Something happens to it.
Traffic is it.
Go up that competency curve and moving to more complex mission critical parts.
And as they build those parts more volume on the risk of catastrophe it goes up.
Exponentially and so what we have to see happen as companies go through that competency curve from R&D to prototyping to doing a low value part, it's not mission critical to doing a high value product that is mission critical but getting it into production levels.
And as they get more mission critical illness, and the production levels go up risk goes up and that's when we'll begin to see the real inflection point in our revenue.
And if you don't mind one last question. Please.
You've expressed optimism about the second half of the year Youll start to ship multiple on machine shipments what end verticals are you seeing the most optimism in as an aerospace medical devices consumer products, where were you seeing that interest and what is driving that enthusiasm.
On what what broad industries. Thank you.
Sure right now and just so I can draw you guys a visual I'm sitting on a parking lot on at airport. That's why your cargo by.
Right now the most activity, we see as coming from aerospace space exploration on teeth.
And department of Defense.
And the reason is because all of those are creating the high value mission critical parts that I talked about earlier.
And as the increase in the usage of those parts and the number of parts. They produce goes up the economics of putting in a system like ours become much more.
Reasonable and acceptable to the end users so aerospace defense space exploration and department of defense initiatives around like a logo, we're seeing the most activity.
Okay. Thank you for fielding all my questions.
Quite welcome.
Okay.
Yeah.
From.
Okay.
Okay.
Hi, How're you doing.
So first I want to I want to tell.
Seth Thanks to Frank because.
It seems like most companies your size ended up reporting sort of at the very last minute and it's refreshing to Abbvie reported early so you must be doing something right and staying on top of things to report early and its refreshing just that's just a personal accounts.
So mark one of the things that I guess I've always sort of looked at.
As maybe a metric we should be considering.
Considering in terms of.
Your progress is this notion of.
Of being able to take the value proposition from the.
Manufacturer down to the OEM and you know I think we just have always kind of felt like while there was.
You know some opportunity certainly and in business that could be done by you going directly to those manufacturers that ultimately for you to be successful you really would have to drive this down to the Oems and get them to adopt it in it.
To me that's that's one of the things that's going to measure the success of this and that.
How long do you feel about the progress on that because it seems to me like you're making pretty good progress on the OEM side in that that that to me is kind of critical.
Well, if I understand the complete nature of your question when.
When I talk about attacking the market Holistically, what creates demand for our product or end users like an Airbus or Lockheed Martin who are well up the competency curve for three D metal printing and <unk>.
Have multiple printers from multiple vendors that have multiple generations as we create them.
The demand from those end users that put pressure on the Oems.
As I've mentioned in the past most of the <unk> printer manufacturers have their own monitoring system, but what they don't have is a consistent monitoring system that standard space that works on other People's printers.
So as we put a pressure as we create the demand.
And have success with the end users like the ones I mentioned earlier.
Put pressure on the Oems and our approach to the Oems is one of cooperation we would like to not compete with their monitoring system, but begin to use data from their monitoring system and combine it with our analytics.
So it's kind of a.
Symbiotic relationship between the end users creating demand.
People are manufacturers.
We are seeing to that demand on opening up opportunities for us.
So.
Can you tell us where most of those new salespeople are focused on are they just focused on both.
The focus on growth and so they're focused on both Oems and when they are divided by vertical.
So are you are you happy with the progress you've made on the OEM side.
Yes, we're very happy.
From two that are selling actively now that are built on a good.
Good pipeline for US one coming on line and then we have several other initiatives.
We're working with one of the early stages. So OEM deals take time and as I said most of them have their own monitoring system.
We need to create demand from the end users up first but yeah, we're doing as well as we can and we're happy with our progress targets.
Okay. So 7.0, if it sounds to me like you know that's kind of progress towards what we've always sort of referred to as the closed system on the closed loop if.
As a nine inning game.
How far and how far east is 7.0.
In the game towards the closed loop Holy Grail.
And David I'll answer the question and then we'll move on to another questioner, but I would say is it's a nine inning game or on the bottom of the seventh top of the eighth well.
Wow, great. Thank you.
Thank you David.
Our next question is from shareholder Bill Chapman. Please state your question.
Good afternoon guys.
On BARDA, you keep them on Hey, Eddie you keep or do you think you'll keep momentum from Q1 to go into Q2.
Yes, we already see the momentum going into Q2, and that's why I mentioned the other metrics that we track such as the marketing inquiries and leads and that's why we brought on industry veterans into the field organization.
Because they clearly have the background both from a sales and then from an additive manufacturing to come up to speed quickly and add value to those companies that are making inquiries relative to our technology. So yes, so I see the momentum continuing.
Okay. Good.
You had mentioned the second half of the fiscal year. So I appreciate hearing that let me ask you too on did you did you get any revenues from P&G Morry our attitude.
The deal with a European Aerospace company was added as a.
Directly Oems through them.
There right now <expletive>embling the printer in our system and their headquarters and they'll be delivering it from there from that factory floor directly to the end user, but we also have.
One one trial going on with additive.
With a customer prospect is paying a engineering fee to evaluate our technology.
<unk> got a sale last quarter, but didn't get one this quarter, but we hope to get one or two this coming quarter in Q2.
Okay good to hear.
So you had a gross margin of 72% and how does how's that looking for the future.
Well it wont stay at 72 per cent I'll ask Frank to comment on this after I finish on them.
But it won't stay at 72 per cent of our target of 60 to 65 per cent and then as we drive more revenue and system is true DMG and additive and materialize our remarks on the new Turkish <unk> metal printer manufacturer will.
We will be able to have a consistent 60% to 65%, it's inflated a little bit the 72% because of some history and some from winding down of some old deals and Frank do you want to comment any more on that.
Yeah.
I would say that.
A couple of things one is the.
The engineering group has gone through and.
Really looked at the product top to bottom and made a number on enhancements, which has allowed allowed us to reduce the cost of a number of the components. So are our cost of goods is has come down quite a bit.
From from what it was in 2019 and early 2020.
And we really did receive a benefit for that in the first quarter of 2021, we had a system that shipped at the end of 'twenty 'twenty and it was one of our older systems at a higher cost.
And that system the customer decided they wanted they wanted a new system. They didnt want the older system and so effectively what happened is we took that older system back into inventory ship from one of our new systems at a much lower cost and that gave us a onetime credit on our cost of sales of about 45000.
So theres about 10 percentage points in there for the first quarter related to that.
But that puts us squarely in Mark's range of about 62%. So you know, we're we're pretty comfortable that the number ongoing is going to be in that 60% to 65% range, which is our target.
Okay. Yeah, that's great. Thanks, guys well go ahead Margaret.
On one of the thing to add to that as I've mentioned before we expect the Oems would take over some provisioning of the hardware.
And today, when we do a deal that the DMG morey or materialize, we have a lower cost of goods because they provide some of the components that we utilize in our solution.
As they take over the provisioning of the hardware and.
Multiple stages, we expect the gross margin for the OEM deals to go up on approach 90 per cent.
Okay, great. Thank you very much youre welcome.
Yeah.
Our next question comes from Anthony.
Great.
State your question.
Yeah.
Hey, Mark Great quarter, Congratulations I have just a quick.
Question one of my questions was answered already where do you see the increased sales activity is coming from and why do you believe it would be in those areas and when do you believe those sectors will pick up.
Sure.
I mentioned earlier, Anthony the aerospace space escalation on defense and the department of Defense.
That's where we're seeing the most pick up and the reason is because the demand for them to create parts on demand and in critical parts on demand and then increase the production.
It is growing and as you.
<unk> one mission critical parts at a higher production level your risk goes up.
So I think that that's where that's what they're seeing they're also expert users of <unk> metal printing. So they have multiple printers. So they have all of those things going on direction of reducing risk and addressing the economics of a printing by producing those mission critical.
High value production, that's good color.
So that's where we see the most activity.
Second area, where we're beginning to see more activity as an electronic vehicles and automotive and again for the same reason the competition is tough.
Have to get lighter stronger more durable parts and get their production costs down and get their range up. So there's a lot of activity. There that we're beginning to get involved with those are the two major areas that we see.
Excellent well.
Full steam ahead, great quarter and looking forward to.
Tremendous growth.
Thanks, Matt Thanks, Anthony Congratulating Seth Yeah. Thank you.
Welcome.
Our next question is from Martin Roth.
On management.
Mark.
Hello can you hear me, yes, yes, yes.
Pardon.
I can hear you. Okay. Good first question on one to US is your ability or the ability of the three D printers to do things that are made of metal is there a metal that hasn't been used yet and three D.
That will make the demand for three D printing literally explode.
Well youre seeing more and more on metals come on on the market. So it's one of the most active parts of the industry right. Now is the intention of innovation, that's coming from metal powders and alloys.
On allowed the designer to design things like cutting in the past I am not an expert when it comes to the powders and the materials, but.
Given the progress that's been made over the last 18 months I expect to see that progress continue.
And the metal science for the materials continue to drive more innovation and allows designers to do things as I said before they could never imagine doing in the past and so it's a thriving part of the industry that right now a lot of people are innovating and drilling bring into market metals that well.
As I said earlier allows designers to do things they couldn't have done in the past.
Oh, Thank you with regard to your relationship with walk eat Martin.
I think there were two events that turned me on one was the fact that you were able to win a contract from them, who I regard is certainly in the top five as a repository of technology and it may be higher than that from a line out and the second thing that is the validation is your.
Performance in this quarter, where you were able to book a significant order.
My question is if you look at the various conversations that you are having with potential customers. Let me cl<expletive>ified on this way something that's on the stove that is hot it's not made yet something thats on a back burner and something that may be still on.
On a refrigerator a could you characterize what youre looking at and and how that shapes up.
If you Wanna be places like guys like that.
Yes, well it's.
It's hard because it's across the spectrum. It all depends on where the prospect is on the curve and on their journey relative to their additive manufacturing initiatives. If you look at a Lockheed Martin or a Baker Hughes on there.
Clearly upfront and the people in that category, we have several conversations that I would put on your first categories being very hot.
We have a lot of conversations with people in the middle category, who are trying to decide the value of a third party agnostic in process quality <expletive>urance system and then of course, you have the new users that come up.
Don't really know what they need yet.
One of the things we've talked about in the past is you have to know whether you're selling religion or selling bibles.
So the people.
Debt or hot or selling bibles, because they already know they need a third party standard based system.
To the people that are cold, where I'm preaching religion educating them and that's why you see our marketing efforts address both of those issues we have there.
Specific.
Events, and seminars and Webinars for the very advanced users.
Who are able to challenge our engineers and then we have industry ones that really educate the whole industry and that goes back to a radical collaboration strategy.
Yeah.
Okay.
Yeah.
Does that answer your question.
Hmm.
Hello.
Hello.
I think he dropped off.
Our next question.
Yeah.
On a capital.
State your question.
Hello, Mark.
Hello Harold.
Are you doing nice to sit that good.
Good good improvement.
I hope the momentum continues to build.
In relation to some of the comments about these momentum that you will make any question I don't know if you're familiar with.
Company called the Pyro Genesis in Canada.
Guys I'm, making these.
On metals, a whole new story came out recently I'm wondering.
These new types of metal and day, they're there they've been they're making this disappointing at two tier one aerospace guys what day.
Is this sort of an overlap of what we're doing.
Is this agnostic regardless of the type of materials or.
Whatever they put in there it's a usable it too we can do our thing with whatever new materials are put into these printers I'm <expletive>uming debt is sort of the idea is it would not.
Yes for the most part is it we're agnostic to the type of metal is a new metal comes out of course, we have to build the knowledge base on how that metal reacts during the process. So there's an example, where the customer just recently.
It was dusting apart with a titanium powder 90 per cent through its production and so we see people beginning to experiment with different types of metals and different combinations of metals.
We can we're agnostic to that except for the fact that we have to have enough knowledge on our knowledge base and have seen it enough to be able to begin to predict and use our machine learning. So each one is a little bit of a learning curve for us, but it's it's a repeatable process that we do relatively quickly.
So.
I would like to think that we're conscious of the season.
Those coming on and trying to build that database to supply a proper.
Statistical Haynesville as we do it to these customers about these new products coming on line coming down the road.
Do you see that kind of what the market is going to expand like you say about new metals on the materials for new purposes, new applications and so forth.
So that would give us some additional first mover advantage I'm, hoping.
Sure.
On a case right now, we let the user drive which ones we focus on.
We don't look at all the ones that are coming out and pick and choose and qualify all of them, but instead of example, I used earlier on the combination of the testing as part of the titanium.
If that becomes more and more.
Our standard process and has value to the end user they won't bill's knowledge base around that.
So basically youre doing it based on requests from your.
On the customers.
Yes.
They're driving a prioritization because the amount of activity in the whole material sector.
We could not predict the winter on or keep up with it but it's a Lockheed Martin's comes on says we have a new metal we'd like to try we're going to be all over it.
Okay.
In regards to the new.
Light that you announced a little while back.
What type of responses have you seen in regard to net I guess less.
Unless heavy industrial uses I'm wondering because either you know about expanding our customer base to other potential.
Industry applications and things of that nature.
What have you seen on that yeah.
Yeah, we're seeing more activity from the Oems relative to light product than we are from the end users.
And I think the Oems want a lighter product less expensive.
They can sell it before they go after the print rate <unk> system.
So more activity from a new from Oems and end users and are.
To be honest with you not a lot of activity on.
Amongst the end users yet.
And I think that's an educational thing and a marketing thing so.
So we still think it's an important product to our portfolio and we think it'll help on the OEM side more.
So it is it reasonable to say that we are.
Looking more to the Oems for a customer ventures customer applications.
Well.
Yes, I mean as I talked earlier, our philosophy on our strategy is to attack the market Holistically.
So at the end users great demanded.
Oems to provide leverage to our model and if we can get a print right three D light into the OEM and go after the mid market.
They can then take a tremendous amount of the.
The sales burden off of the company and that's where we get the leverage so.
Yes, it's through the Oems for latest the primary distribution.
In general do we see that the take up.
Having effect.
We have activity I can't tell you that to use. The example earlier that matter for nothing Hot right now, it's all kind of in the mid stage on the back burner, but moving forward.
Okay and in regards to our mainline products.
Yeah.
Yeah.
I'm, sorry, I'm, sorry in regard to the main product.
In regards to light.
Okay.
The take up on the other stuff has that gone.
As I said earlier the activity is very good and I expect to see continued momentum.
Is that globally going on how do you see reactions based on you know we're opening up maybe earlier than other places I know you're doing international stuff.
And at this point.
Definitely global.
Two of the four deals we got were in Europe. This quarter am I believe the forecast for the coming quarter Q2. It was about the same so Europe continues to dominate.
As far as our customers in the U S is quickly coming behind and we have some activity going on in Japan.
So Harold Thank you very much for your questions. Thank you.
Our final question is from Martin.
On management.
Hello.
Yes, Mark I got cut off so I missed a couple of questions that were asked let me ask you. This do you have any indications that Lockheed is considering any additional units from you.
No we do not at all I can tell you is that we are heavily engaged with them. They challenge our engineers and our engineers, who I believe are the best from the industry.
On have stood up.
We have responded to the challenges so we're still in that phase, where they're going through all their testing and analysis.
So right now, they're just they're a new customer with one system that has a lot of potential.
Do you see any additional things that you could do to make the product even more versatile.
Of course, they're most they're one of the most sophisticated users in the world and so they have more ideas than we could possibly accommodate them, but the great thing about the collaboration that we have with our customers is that it's very deep and they understand that we can only do so much so that help us prioritize.
The functions and features that are most important to them. So.
To date, it's been a very fruitful and beneficial relationship for us.
Thank you I my about my own calculation I'm guessing that the doubling of sales was primarily due to the sale to Lockheed Martin would you comment on that.
No it wasn't primarily due to it.
Was one of the force systems that we sold in the quarter.
It was at the higher end, but it wasn't primarily to Lockheed Martin.
Got it.
An increase across the board.
Now with regard to our a scan.
You're going to be on added option, where materialize who's going to make the sale to the Turks is that right.
No on that particular case.
Our remarks and uses materializes M C P, which is their materialized control platform, we've integrated our technology with materializes. So.
I went to Turkey last January was the last trip I did prior to the trip on them on right now and we did a joint sales or box and they use our technology is integrated together.
And then install that on their machine on the factory and deliver it to the end user so let's say a joint sale cooperative integrated.
System debt.
Oxygen is using and selling and we expect them to sell.
Couple more hopefully one or two more this quarter.
No.
Materialise is taking you along you didn't have to make a.
Special sales to our marksman is that right.
No we made a joint sales call, we don't I understand that but.
Materialize is really the one that's doing the heavy lifting.
Well I think it was a joint effort, but yes, I mean, there clearly the bigger customer a bigger company they have much broader reach than us right.
They brought us into that particular opportunity, okay with regard to that.
It will be earning a profit.
Over and above your profit is that for every day.
No they sell their product and we sell our product okay. Good.
So there's no and matter of fact, our gross margin when we sell integrated with Materialise is much higher because they provide some of the hardware that we traditionally provide if it wasn't a materialized control platform.
Thank you.
Yeah.
Our final question is from Paul Berger.
Please state your question.
Hi, Mark.
Can you.
Drill down a little bit more on what you think your estimate revenues will be in the second quarter on throughout the year and also.
Some indication of cash burn.
Sure sure as far as our guidance.
We're not giving guidance other than I believe what I said earlier, we will continue to see increasing revenue and the momentum is there to provide debt increasing revenue.
A lot of that depends on timing.
And when we get the first multiple system sale, but I'll say relative to revenue is that you should see increasing revenue quarter over quarter.
And I'm sorry, Paul what was your second question can you give us some indication on cash burn.
Sure.
Uh huh.
Cash being.
Sure.
Yeah.
Sure. So as you heard from Frank and also the press release, we've got about $6 million in cash on cash burn went down from one five to one two in the first quarter.
We're going to build the business based on demand.
So I would expect our cash burn to remain about where it is maybe go down a little bit.
It just depends on how quickly we build the company and that depends on the demand for the product and as companies go up that competency curve.
So as far as the runway you can do the calculation yourself, but were funded so that I'm not worried about funding the company now I'm worried about driving the company and building it.
So I hope that answers somewhat your question.
And also can you give a little more color on too.
I mean, one of the big areas that you want to hit our machines that are already out there not just new machines.
Yeah are you, making any progress in that area.
Okay.
Get there yeah and matter of fact of Lockheed Martin who was an existing machine that they have.
Airbus was a general electric.
Concept laser machine.
So.
We are getting more and more activity in the retrofit market.
We expect that the heat up as our relationship with Materialise begins to generate more opportunities for us because we can take materializes control platform and our technology put it on the old printer and have a state of the art system that as we mentioned earlier on that part on the seventh top of the eighth tour.
The net closed loop type of an environment. So he can take a second generation system and make it a third generation system with our technology.
Okay and.
Are you looking at I'm trying to get any analysts to follow you I mean, I'm surprised that Wainwright hasn't put a reported out on you.
We are actively looking to and having several conversations that I expect that we will have an analyst or two.
In addition to trickle research from all of us in the future.
And hopefully not but not too.
Too distant future.
So I appreciate your questions.
And as.
As I mentioned earlier this quarter was that acceleration of the industry validation of our technology and execution.
And those are the three things that we expect to see in the coming quarters.
If we do that the answers to a lot of these questions will become because you'll see a revenue begin to accelerate and at some point in time, beginning to get that leverage debt from the model that we've built and the multiple system sales. So with that thank you for your time, if you have any more follow up questions. Please don't hesitate.
To contact N Z or Steve on Air Sir.
And we'll be glad to get back to you. Thank you operator.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.