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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 001-38015

 

SIGMA ADDITIVE SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 

nevada   27-1865814

(State or other jurisdiction of

incorporation or organization)

  

(IRS Employer

Identification No.)

 

3900 Paseo del Sol

Santa Fe, NM 87507

(Address of principal executive offices)

 

(505) 438-2576

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading symbol   Name of each exchange on which registered
Common Stock, par value $0.001 per share   SASI   The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer ☐ Accelerated Filer ☐
  Non-accelerated filer ☒ Smaller reporting company ☒
  Emerging growth company ☐    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of November 10, 2023, the issuer had 780,423 shares of common stock outstanding.

 

 

 

 
 

 

SIGMA ADDITIVE SOLUTIONS, INC.

 

FORM 10-Q

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION  
   
ITEM 1. FINANCIAL STATEMENTS 3
   
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18
   
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 26
   
ITEM 4. CONTROLS AND PROCEDURES 26
   
PART II - OTHER INFORMATION  
   
ITEM 1. LEGAL PROCEEDINGS 27
   
ITEM 1A. RISK FACTORS 27
   
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 27
   
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 28
   
ITEM 4. MINE SAFETY DISCLOSURES 28
   
ITEM 5. OTHER INFORMATION 28
   
ITEM 6. EXHIBITS 28
   
SIGNATURES 29

 

2
 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

Sigma Additive Solutions, Inc.

Condensed Balance Sheets

 

  

September 30,

2023

  

December 31,

2022

 
   (Unaudited)     
         
ASSETS          
Current Assets:          
Cash  $556,087   $2,845,931 
Accounts Receivable, net   59,000    371,620 
Inventory   775,066    950,943 
Prepaid Assets   37,833    105,226 
Total Current Assets   1,427,986    4,273,720 
           
Other Assets:          
Property and Equipment, net   161,971    304,903 
Intangible Assets, net   1,247,697    1,125,285 
Total Other Assets   1,409,668    1,430,188 
           
TOTAL ASSETS  $2,837,654   $5,703,908 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current Liabilities:          
Accounts Payable  $607,212   $277,492 
Deferred Revenue   111,082    120,073 
Accrued Expenses   145,306    231,633 
Total Current Liabilities   863,600    629,198 
           
TOTAL LIABILITIES   863,600    629,198 
           
Commitments & Contingencies   

 -

    - 
           
Stockholders’ Equity          
Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 316 and 465 shares issued and outstanding, respectively   1    1 
Common Stock, $ 0.001 par value; 1,200,000 shares authorized; 651,536 and 524,940 shares issued and outstanding, respectively   652    525 
Additional Paid-In Capital   55,380,026    54,416,668 
Accumulated Deficit   (53,406,625)   (49,342,484)
Total Stockholders’ Equity   1,974,054    5,074,710 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $2,837,654   $5,703,908 

 

See accompanying notes to condensed financial statements.

 

3
 

 

Sigma Additive Solutions, Inc.

Condensed Statements of Operations

(Unaudited)

 

   2023   2022   2023   2022 
   Three Months Ended
September 30,		   Nine Months Ended
September 30,		 
   2023   2022   2023   2022 
                 
REVENUES  $141,988   $188,245   $369,188   $476,749 
                     
COST OF REVENUE   176,116    79,713    276,270    312,879 
                     
GROSS PROFIT   (34,128)   108,532    92,918    163,870 
                     
OPERATING EXPENSES:                    
Salaries & Benefits   288,894    1,227,805    1,774,658    3,704,633 
Stock-Based Compensation   84,078    275,418    447,417    613,833 
Operations and R&D Costs   245    152,245    232,216    442,548 
Investor, Public Relations and Marketing   15,797    46,832    128,565    293,458 
Organization Costs   47,580    140,522    137,017    260,088 
Legal & Professional Service Fees   251,265    252,886    587,541    608,830 
Office Expenses   61,077    183,608    309,765    692,640 
Depreciation & Amortization   24,554    26,857    74,151    88,302 
Other Operating Expenses   92,709    86,783    387,582    263,747 
Total Operating Expenses   866,199    2,392,956    4,078,912    6,968,079 
                     
LOSS FROM OPERATIONS   (900,327)   (2,284,424)   (3,985,994)   (6,804,209)
                     
OTHER INCOME (EXPENSE)                    
Interest Income   -    278    17    3,025 
State Incentives   -    -    -    76,628 
Exchange Rate Gain (Loss)   (4)   (6,184)   (3,356)   (16,950)
Interest Expense   (3,235)   (1,978)   (9,706)   (5,367)
Other Income   31,905    -    67,584    - 
Total Other Income (Expense)   28,666    (7,884)   54,539    57,336 
                     
LOSS BEFORE PROVISION FOR INCOME TAXES   (871,661)   (2,292,308)   (3,931,455)   (6,746,873)
                     
Provision for income Taxes   -    -    -    - 
                     
Net Loss  $(871,661)  $(2,292,308)  $(3,931,455)  $(6,746,873)
                     
Preferred Dividends   (10,687)   (14,220)   (33,122)   (42,660)
                     
Net Loss Applicable to Common Stockholders  $(882,348)  $(2,306,528)  $(3,964,577)  $(6,789,533)
                     
Net Loss per Common Share – Basic and Diluted  $(1.57)  $(4.39)  $(7.28)  $(12.93)
                     
Weighted Average Number of Shares Outstanding – Basic and Diluted   560,310    524,940    544,587    524,940 

 

See accompanying notes to condensed financial statements.

 

4
 

 

Sigma Additive Solutions, Inc.

Statement of Stockholders’ Equity

For the Three Months and Nine Months Ended September 30, 2023 and September 30, 2022

(Unaudited)

 

For the Three Months Ended September 30, 2023 and September 30, 2022

 

   Shares Outstanding   Preferred Stock   Shares Outstanding   Common Stock   Paid-in Capital   Accumulated Deficit   Total 
   Preferred Stock   Common Stock   Additional         
   Shares Outstanding   Preferred Stock   Shares Outstanding   Common Stock   Paid-in Capital   Accumulated Deficit   Total 
Balances, June 30 , 2023   316       1    538,636    539    54,915,026    (52,524,277)   2,391,289 
Net Loss   -    -    -    -    -    (871,661)   (871,661)
Common Shares Sold in Public Offering   -    -    72,721    73    453,562    -    453,635 
Offering Costs   -    -    -    -    (89,080)   -    (89,080)
Round-Up Shares Issued in Connection with Reverse Split             40,179    40    (40)   -    - 
Preferred Stock Dividends   -    -    -    -    10,687    (10,687)   - 
Stock Options Issued to Directors for Services   -    -    -    -    5,793    -    5,793 
Stock Options Issued to Employees   -    -    -    -    84,078    -    84,078 
                                    
Balances, September 30, 2023   316    1    651,536    652    55,380,026    (53,406,625)   1,974,054 

 

   Preferred Stock   Common Stock   Additional         
   Shares Outstanding   Preferred Stock   Shares Outstanding   Common Stock   Paid-in Capital   Accumulated Deficit   Total 
Balances, June 30, 2022   465   $      1    524,940   $525   $53,886,192   $(45,076,185)  $8,810,533 
Net Loss   -    -    -    -    -    (2,292,308)   (2,292,308)
Preferred Stock Dividends   -    -    -    -    14,220    (14,220)   - 
Stock Options Issued for Third Party Services   -    -    -    -    973    -    973 
Stock Options Awarded to Directors for Services   -    -    -    -    27,152    -    27,152 
Stock Options Awarded to Employees   -    -    -    -    275,418    -    275,418 
                                    
Balances September 30, 2022   465   $1    524,940   $525   $54,203,955   $(47,382,713)  $6,821,768 

 

5
 

 

For the Nine Months Ended September 30, 2023 and September 30, 2022

 

   Preferred Stock   Common Stock   Additional         
   Shares Outstanding   Preferred Stock   Shares Outstanding   Common Stock   Paid-in Capital   Accumulated Deficit   Total 
Balances, December 31, 2022   465   $     1    524,940   $525   $54,416,668   $(49,342,484)  $5,074,710 
Net Loss   -    -    -    -    -    (3,931,455)   (3,931,455)
Common Shares Sold in Public Offering   -    -    72,721    73    453,562    -    453,635 
Offering Costs   -    -    -    -    (89,080)   -    (89,080)
Round-Up Shares Issued in Connection with Reverse Split   -    -    40,179    40    (40)   -    - 
Preferred Stock Dividends   -    -    2,195    2    33,120    (33,122)   - 
Common Shares Issued for Conversion of Preferred Stock   (149)   -    11,501    12    (12)   -    - 
Common Warrant Issued for Conversion of Preferred Stock   -    -    -    -    99,564    (99,564)   - 
Stock Options Issued to Directors for Services   -    -    -    -    19,316    -    19,316 
Stock Options Issued for Third Party Services   -    -    -    -    (489)   -    (489)
Stock Options Issued to Employees   -    -    -    -    447,417    -    447,417 
                                    
Balances, September 30, 2023   316    1    651,536    652    55,380,026    (53,406,625)   1,974,054 

 

   Preferred Stock   Common Stock   Additional         
   Shares Outstanding   Preferred Stock   Shares Outstanding   Common Stock   Paid-in Capital   Accumulated Deficit   Total 
Balances, December 31, 2021   465   $     1    524,940   $525   $53,452,405   $(40,593,180)  $12,859,751 
Net Loss   -    -    -    -    -    (6,746,873)   (6,746,873)
Preferred Stock Dividends   -    -    -    -    42,660    (42,660)   - 
Stock Options Issued to Directors for Services   -    -    -    -    70,594    -    70,594 
Stock Options Issued for Third Party Services   -    -    -    -    24,463    -    24,463 
Stock Options Issued to Employees   -    -    -    -    613,833    -    613,833 
                                    
Balances, September 30, 2022   465   $1    524,940   $525   $54,203,955   $(47,382,713)  $6,821,768 

 

See accompanying notes to condensed financial statements.

 

6
 

 

Sigma Additive Solutions, Inc.

Condensed Statements of Cash Flows

(Unaudited)

 

  

September 30,

2023

  

September 30,

2022

 
   Nine Months Ended 
  

September 30,

2023

  

September 30,

2022

 
OPERATING ACTIVITIES          
Net Loss  $(3,931,455)  $(6,746,873)
Adjustments to reconcile Net Loss to Net Cash used in operating activities:          
Noncash Expenses:          
Depreciation and Amortization   74,151    88,302 
Stock Based Compensation - Employees   447,417    613,833 
Stock Based Compensation - Third Party Services   (489)   24,463 
Stock Based Compensation - Directors   19,316    70,594 
Gain on Sale of Property and Equipment   (28,632)   - 
Change in assets and liabilities:          
Accounts Receivable   312,620    44,422 
Inventory   175,877    (257,352)
Prepaid Assets   67,393    (63,446)
Accounts Payable   372,236    197,105 
Deferred Revenue   (8,991)   (19,166)
Accrued Expenses   (86,327)   (338,297)
NET CASH USED IN OPERATING ACTIVITIES   (2,586,884)   (6,386,415)
           
INVESTING ACTIVITIES          
Purchase of Property and Equipment   -    (83,848)
Proceeds from Sale of Property and Equipment   

78,000

    - 
Purchase of Intangible Assets   (145,515)   (176,104)
NET CASH USED IN INVESTING ACTIVITIES   (67,515)   (259,952)
           
FINANCING ACTIVITIES          
Gross Proceeds from Public Issuance of Comon Stock   453,635    - 
Offering Costs   (89,080)   - 
NET CASH PROVIDED BY FINANCING ACTIVITIES   364,555    - 
           
NET CHANGE IN CASH FOR PERIOD   (2,289,844)   (6,646,367)
           
CASH AT BEGINNING OF PERIOD   2,845,931    11,447,047 
           
CASH AT END OF PERIOD  $556,087   $4,800,680 
           
Supplemental Disclosures:          
Noncash investing and financing activities disclosure:          
Preferred Stock Dividends  $33,122   $42,660 
Conversion of Preferred Shares to Common Shares  $188,830   $- 
Other noncash operating activities disclosure:          
Issuance of Securities for Services  $18,827   $95,057 
Disclosure of cash paid for:          
Interest  $9,706   $5,367 
Income Taxes  $-   $- 

 

See accompanying notes to condensed financial statements.

 

7
 

 

SIGMA ADDITIVE SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

September 30, 2023

 

NOTE 1 - Summary of Significant Accounting Policies

 

Nature of Business - Sigma Additive Solutions, Inc., a Nevada corporation (“Company,” “Sigma,” “we,” “us” and “our”), was founded by a group of scientists, engineers and businessmen to develop and commercialize novel and unique manufacturing and materials technologies. The Company’s core technologies are designed to allow its customers to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve breakthrough product potential in many industries, including aerospace, defense, oil and gas, bio-medical, and power generation.

 

Reverse Stock Split - Effective September 22, 2023, we effected a 1-for-20 reverse stock split of the outstanding shares of our common stock and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. The effects of the reverse stock split have been retroactively reflected in all periods presented.

 

Basis of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2023 and 2022 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the December 31, 2022 audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the period ended September 30, 2023 are not necessarily indicative of the operating results for the full year.

 

Going Concern – The Company has sustained losses and had negative cash flows from operating activities since its inception.

 

On September 7, 2023, we raised $364,555 in net proceeds pursuant to our At-The-Market Issuance Sales Agreement, or ATM Agreement, and on October 13, 2023, we raised an additional $772,468 in net proceeds. With these additional proceeds, the Company estimates that it has sufficient cash and working capital to fund its scaled-back operations as described below pending the completion of our acquisition of NextTrip Holdings, Inc. and sale of assets to Divergent Technologies, Inc., or through March 2024. The Company reduced its employee headcount, and discontinued product development activities for the time being to ensure lowered expenses. The Company is continuing to operate and support its existing customers who have maintenance agreements and leases in place, supporting new installations in the field, and actively seeking potential sales of the PrintRite3D systems and software to customers who have lease agreements in place, systems on consignment, or otherwise express interest in Sigma’s products available for sale. The Company completed two such sales in the quarter ended September 30, 2023, and believes additional sales are achievable going forward as we progress towards closing the pending transactions. There is no assurance, however, that we will be able to close either transaction. If we fail to complete the acquisition of NextTrip Holdings, Inc., we intend to proceed with the sale of assets to Divergent Technologies, Inc. and may seek to undertake another strategic transaction, if possible, or the dissolution and liquidation or the bankruptcy of the Company. For these reasons, there is substantial doubt about our ability to continue as a going concern.

 

Fair Value of Financial Instruments – The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables, accounts payable, and accrued liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The Company does not use derivative instruments for hedging market risk or for trading or speculative purposes.

 

8
 

 

Loss Per Share – The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants, options and preferred stock were excluded due to the anti-dilutive effect they would have on the computation. At September 30, 2023 and 2022, the Company had the following common shares underlying these instruments:

 Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

   2023   2022 
   September 30, 
   2023   2022 
Warrants   222,043    191,164 
Stock Options   90,727    89,247 
Preferred Stock   3,069    7,446 
Total Underlying Common Shares   315,839    287,857 

 

The following table shows the amounts used in computing loss per share and the effect on net loss and the weighted average number of potentially dilutive shares for the periods shown:

 

   2023   2022   2023   2022 
   Three Months Ended
September 30		   Nine Months Ended
September 30		 
   2023   2022   2023   2022 
                 
Net Loss Per Common Share – Basic and Diluted  $(1.57)  $(4.39)  $(7.28)  $(12.93)
                     
Loss Applicable to Common Stockholders (numerator)  $(882,348)  $(2,306,528)  $(3,964,577)  $(6,789,533)
                     
Weighted Average Number of Common. Shares Outstanding Used in Loss Per Share During the Period (denominator)   560,310    524,940    544,587    524,940 

 

Accounting Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management. Significant accounting estimates that may materially change in the near future are impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence.

 

Leases – The Company leases office space from third parties. The Company determines if a contract is a lease at inception. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term begins on the commencement date, which is the date the Company takes possession of the asset and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Leases are classified as operating or finance leases based on factors such as the lease term, lease payments, and the economic life, fair value and estimated residual value of the asset. Where leases include an option to purchase the leased asset at the end of the lease term, this is assessed as a part of the Company’s lease classification determination. The Company has month-to-month leases only, cancellable upon 45 days’ notice. Therefore, the Company has elected the short-term lease recognition exemption for all leases, whereby leases are not recorded on the Company’s balance sheet and lease payments are recognized as lease expense on a straight-line basis over the lease term.

 

9
 

 

Long-Lived and Intangible Assets – Long-lived assets and certain identifiable definite life intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company periodically evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. No patents were written off in the third quarter of 2023 or in fiscal 2022. Utility patents are amortized over a 17-year period. Patents which are pending are not amortized.

 

Revenue Recognition – The Company’s revenue is derived primarily from sales of our software and related hardware suite under perpetual licenses and from providing engineering services under contracts. The Company recognizes revenue in accordance with ASC Topic No. 606. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance under prior U.S. GAAP and replaced it with a principles-based approach for determining revenue recognition. The core principle of the standard is the recognition of revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In general, we determine revenue recognition by: (1) identifying the contract, or contracts, with our customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to performance obligations in the contract; and (5) recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

 

In January 2022, the Company began offering a subscription option to its customers pursuant to which it leases its PrintRite3D platform for terms of between 12 and 36 months and provide technical support and maintenance for the term of the arrangement, as well as installation and training. The Company has determined these are leases because they relate to discrete pieces of equipment to which customers have the right to substantially all the economic benefit and exclusive use during the term of the arrangement. These leases are classified as operating leases and the Company retains title to the underlying equipment.

 

The leases may be renewed for successive one-year terms unless notice is given by either party of its intent not to renew at least 30 days before the end of the lease term. For leases with 36-month terms, the lessee may terminate the agreement after the first 18 months upon at least 30 days written notice. Some, but not all, of the leases permit lessees to purchase the equipment at any time at an amount that approximates fair value and are not reasonably certain to be exercised at the inception of the lease. There are no anticipated variable lease payments at the inception of the lease.

 

There are two non-lease components in the arrangement that consist of technical support and maintenance, and installation and training, respectively. The Company has elected single component practical expedient accounting to combine the technical support and maintenance with the lease as they have the same pattern of transfer. The installation and training component does not have the same pattern of transfer; therefore, this component is not eligible for single component practical expedient accounting. The consideration has been allocated on a relative fair value basis of the underlying lease and non-lease components. The Company has estimated the residual value of the leased equipment based on its useful life, and the ability to refurbish and sell the equipment, as well as the Company’s ability to componentize the hardware and utilize subassemblies in other products.

 

Revenue from these operating leases for the three and nine months ended September 30, 2023 was $8,503 and $36,846, respectively.

 

Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable are carried at original invoice amount less an estimated allowance for doubtful accounts. We determine the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. As of September 30, 2023 and September 30, 2022, the Company had established an allowance for doubtful accounts of $115,600 and $0, respectively.

 

10
 

 

Minimum Lease Payments Receivable

 

Minimum lease payments receivable for the succeeding years ending December 31 are as follows:

 

Year ending December 31,  Amount 
2023 (remaining)  $8,503 
2024   8,503 
2025   - 
2026   

-

 
Thereafter   - 
Total  $17,006 

 

Equipment Underlying Operating Leases:

 

Equipment under operating leases as of September 30, 2023 was comprised of the following:

 

  

September 30,

2023

 
PrintRite3D Hardware  $77,208 
Accumulated Depreciation   (15,203)
Net Book Value  $62,005 

 

The Company is depreciating the underlying equipment over its useful life of 7 years, but certain subassemblies and components may have a longer economic life.

 

NOTE 2 – Inventory

 

At September 30, 2023 and December 31, 2022, the Company’s inventory comprised the following:

 

  

September 30,

2023

  

December 31,

2022

 
Raw Materials  $283,401   $294,194 
Work in Process   108,776    140,723 
Finished Goods   382,889    516,026 
Total Inventory  $775,066   $950,943 

 

NOTE 3 – Intangible Assets

 

The Company’s intangible assets consist of patents and patent applications.

 

The Company capitalizes costs incurred in connection with acquiring its patents. These costs include registration, documentation, and legal fees associated with the application. Costs incurred with patents that have been previously granted are expensed as incurred.

 

Provisional patent applications are not amortized until a patent has been granted. Once a patent is granted, the Company will amortize the related costs over the estimated useful life of the patent. If a patent application is denied, then the costs will be expensed at that time.

 

During the nine months ended September 30, 2023, $43,530 of costs related to patents issued during the quarter were reclassified from provisional patent application to patents and began to be amortized as of the date of issue.

 

11
 

 

The following is a summary of definite-life intangible assets less accumulated amortization as of September 30, 2023 and December 31, 2022, respectively:

 

  

September 30,

2023

  

December 31,

2022

 
Provisional Patent Applications  $

777,235

   $675,251 
Patents   568,280    524,750 
Less: Accumulated Amortization   (97,818)   (74,716)
           
Net Intangible Assets  $1,247,697   $1,125,285 

 

Amortization expense on intangible assets was $23,102 and $17,010 for the nine months ended September 30, 2023 and 2022, respectively.

 

The estimated aggregate amortization expense for years ending December 31 is as follows:

 

      
2023 (Remaining)  $8,033 
2024   32,131 
2025   32,131 
2026   32,131 
Thereafter   366,036 
      
Amortization expense  $470,462 

 

NOTE 4 – Stockholders’ Equity

 

Common Stock

 

Effective September 22, 2023, we effected a 1-for-20 reverse stock split of the outstanding shares of our common stock and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. In connection with the reverse split, we issued 40,197 common shares to round-up fractional shares to the nearest whole share.

 

The effects of the reverse stock split have been retroactively reflected in all periods presented.

 

In the third quarter of 2023, the Company sold 72,721 shares of common stock through our ATM Agreement, resulting in net proceeds of $364,555.

 

In the first quarter of 2023, the Company issued 11,380 shares of common stock in exchange for the conversion of 132 shares of Series D Convertible Preferred Stock and 2,161 shares of common stock as in-kind payment of dividends thereon.

 

Also in the first quarter of 2023, the Company issued 122 shares of common stock in exchange for the conversion of 17 shares of Series E Convertible Preferred Stock and 33 shares of common stock as in-kind payment of dividends thereon.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value per share, of which 316 and 465 shares were issued and outstanding at September 30, 2023 and December 31, 2022, respectively.

 

12
 

 

In January 2020, the Company entered into a Securities Purchase Agreement with certain institutional investors (the “Institutional Private Placement”), pursuant to which the Company issued and sold 1,640 shares of the Company’s newly created Series D Convertible Preferred Stock (the “Series D Preferred Stock”) at an initial stated value of $1,000 per share. Dividends accrue at a rate of 9% per annum (subject to increase upon the occurrence (and during the continuance) of certain triggering events described therein) and are payable monthly in kind by the increase of the stated value of the Series D Preferred Shares by said amount. The holders of the Series D Preferred Shares have the right at any time to convert all or a portion of the Series D Preferred Shares (including, without limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing date) into shares of the Company’s Common Stock at the conversion price then in effect, which was $6.00 as of September 30, 2023 (subject to adjustment for stock splits, dividends, recapitalizations and similar events and full ratchet price protection in the event the Company issues or sells, or is deemed to have issued or sold, shares of Common Stock for a consideration per share less than a price equal to the conversion price then in effect).

 

On January 27, 2023, the holder of the remaining 132 outstanding shares of Series D Preferred Stock elected to convert such shares, which resulted in the issuance of 13,541 shares of common stock.

 

At September 30, 2023, there were no shares of Series D Preferred Stock outstanding.

 

Concurrent with the Institutional Private Placement, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued and sold to certain of its directors and the Company’s then largest stockholder 333 shares of the Company’s newly created Series E Convertible Preferred Stock (the “Series E Preferred Stock”) at an initial stated value of $1,000 per share. Dividends accrue at a dividend rate of 9% per annum and are payable monthly in kind by the increase of the stated value of the Series E Preferred Stock by said amount. The Series E Preferred Stock is initially convertible into 2,428 shares of common stock (subject to adjustment for stock splits, dividends, recapitalizations and similar events).

 

On January 23, 2023, the holder of 17 shares of Series E Preferred Stock elected to convert such shares, which resulted in the issuance of 155 shares of common stock.

 

At September 30, 2023, 316 shares of Series E Preferred Stock were outstanding, which were convertible into 3,069 shares of common stock, including in-kind dividends thereon.

 

Stock Options

 

The Company’s 2013 Equity Incentive Plan expired on March 15, 2023. As such, there were no shares of common stock reserved for future issuance thereunder as of September 30, 2023.

 

On January 26, 2023, the Company granted options to its non-employee directors to purchase up to an aggregate of 2,620 shares of common stock at an exercise price of $11.60. As of September 30, 2023, 75% of such grants were fully vested and exercisable, and the remaining 25% will vest on December 31, 2023, subject to the directors remaining in our service through such date.

 

On January 26, 2023, the Company granted 19 employees options to purchase up to an aggregate of 19,065 shares of common stock in connection with their employment. The options have an exercise price of $11.60, vested as to 50% on the date of the grant, and will vest as to the remaining 50% in equal monthly installments over the subsequent 23 months, provided that the employees remain employed by the Company through such dates.

 

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s common stock on the grant date, but not less than 100% of the fair market value. Stock options are typically granted throughout the year and generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the vesting period for each stock option award.

 

Total stock-based compensation expense included in the statements of operations for the nine months ended September 30, 2023 and 2022 was $447,417 and $613,833 respectively, all of which is related to stock options.

 

13
 

 

The fair value of stock-based awards was estimated using the Black-Scholes model with the following weighted average assumptions for the nine months ended September 30, 2023, and 2022:

 

   2023   2022 
Dividend yield   0.00%   0.00%
Risk-free interest rate   4.05%   0.95 -3.23%
Expected volatility   100.23-100.25%   106.40 -109.97%
Expected life (in years)   5    5 

 

Option activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   Options   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		   Aggregate
Intrinsic
Value ($)		 
                 
Options outstanding at December 31, 2021   69,795    84.80    3.89        - 
Granted   24,374    50.00    4.43    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (4,216)   87.80    -    - 
Options outstanding at December 31, 2022   89,953    75.20    3.30    - 
Granted   21,704    11.60    4.32    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (20,930)   68.59    -    - 
Options outstanding at September 30, 2023   90,727    61.58    2.96    - 
Options unvested at September 30, 2023   15,876    37.11    3.83    - 
Options vested at September 30, 2023   74,851    66.76    2.78    - 
Options outstanding at September 30, 2023   90,727    61.58    2.96    - 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At September 30, 2023, no option had an exercise price below the $3.06 closing price of our common stock as reported on The Nasdaq Capital Market.

 

At September 30, 2023, there was $278,132 of unrecognized stock-based compensation expense related to unvested stock options with a weighted average remaining recognition period of 1.26 years.

 

Stock Appreciation Rights

 

On June 23, 2020, the board of directors (the “Board”) of the Company adopted the 2020 Stock Appreciation Rights Plan (the “Plan”). The purposes of the Plan are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the stockholders of the Company; and (iii) promote the success of the Company’s business. The Plan provides for incentive awards only in the form of stock appreciation rights payable in cash (“SARs”) and no shares of common stock are reserved or will be issued pursuant to the Plan.

 

14
 

 

A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (“Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a share of common stock on the date of grant of the SAR. The administrator of the Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant.

 

The Company did not grant any SAR’s during the nine months ended September 30, 2023.

 

The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the vesting period for each SAR award. The SARs are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation,” and any changes in fair value are reflected in the Statement of Operations as of the applicable reporting date.

 

The fair value of SAR awards was estimated using the Black-Scholes model with the following weighted average assumptions for the nine months ended September 30, 2023 and the year ended December 31, 2022:

 

   2023   2022 
Dividend yield   -    0.00%
Risk-free interest rate   -    0.82-2.79%
Expected volatility   -    108.0-119.0%
Expected life (in years)   -    5 

 

SARs activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   SARs   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		   Aggregate
Intrinsic
Value ($)		 
                 
SARs outstanding at December 31, 2021   18,532    63.00    4.24    - 
Granted   40,743    36.20    4.48    - 
Exercised   -    -    -        - 
Forfeited or cancelled   (1,386)   58.20    -    - 
SARs outstanding at December 31, 2022   57,889    44.20    4.11    - 
Granted   -    -    -    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (17,432)   43.03-    -    - 
SARs outstanding September 30, 2023   40,457    44.75    3.40    - 
SARs unvested at September 30, 2023   17,051    54.92    3.04    - 
SARs vested at September 30, 2023   23,406    37.35    3.66    - 
SARs outstanding at September 30, 2023   40,457    44.75    3.40    - 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At September 30, 2023, no SAR had an exercise price below the $3.06 closing price of our common stock as reported on The Nasdaq Capital Market.

 

At September 30, 2023, there was $396,579 of unrecognized stock-based compensation expense related to unvested SARs with a weighted average remaining recognition period of 1.51 years.

 

15
 

 

Warrants

 

Warrant activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   Warrants   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		 
Warrants outstanding at December 31, 2021   199,397    122.00    2.10 
Granted   -    -    - 
Exercised   -    -    - 
Forfeited or cancelled   (8,233)   -    - 
Warrants outstanding at December 31, 2022   191,164    93.24    1.19 
Granted   151,483    6.42    2.19 
Exercised   -    -    - 
Forfeited or cancelled   (120,604)   90.72    - 
Warrants outstanding at September 30, 2023   222,043    26.48    2.07 

 

NOTE 5 - Subsequent Events

 

On October 13, 2023, the Company raised $772,468 in net proceeds by selling 128,887 common shares pursuant to its ATM Agreement.

 

On October 6, 2023, the Company entered into a definitive asset purchase agreement (“APA”) with Divergent Technologies, Inc., or Divergent, pursuant to which have agreed to sell to Divergent, and Divergent has agreed to purchase from us, certain assets consisting primarily of patents, software code and other intellectual property for a purchase price of $1,626,242, including a $37,000 earnest-money deposit previously paid to us by Divergent.

 

The parties’ respective obligations to close are subject to the accuracy of the parties’ respective representations and warranties and performance of their respective covenants and satisfaction or waiver of other customary conditions specified in the Asset Purchase Agreement.

 

The Asset Purchase Agreement contains customary representations and warranties which will survive for one year following the closing. The Asset Purchase Agreement also contains restrictive covenants regarding the conduct of our business pending the closing.

 

In the interim, between the signing date and closing date or termination of the Asset Purchase Agreement, we have granted Divergent a non-exclusive, non-transferable, non-sublicensable (except to Divergent customers and affiliates), limited, irrevocable (except in connection with the termination of the Asset Purchase Agreement in certain circumstances), worldwide, royalty-free license to the “Licensed IP” (as defined) for testing, evaluation, and commercialization purposes.

 

On October 12, 2023, the Company entered into a definitive Share Exchange Agreement for the acquisition of NextTrip Holdings, Inc., a travel technology company based in Sunrise, Florida (“NextTrip”). Pursuant to the terms and conditions of the Agreement, Sigma will acquire 100% of the capital stock of NextTrip in exchange for shares of Sigma common stock constituting 19.99% of its outstanding common stock plus additional contingent shares of Sigma common stock upon the achievement of post-closing milestones tied to the business performance of NextTrip. Assuming all business milestones are achieved, the equity owners of NextTrip will receive a total of 6 million shares of our common stock, resulting in existing Sigma holders retaining, on a pro forma basis, approximately 9.8% of the total outstanding shares immediately following the issuance of such shares.

 

The parties’ respective obligations to close the Acquisition are subject to the satisfaction or waiver of various conditions specified in the Share Exchange Agreement. The conditions include approval by Sigma shareholders of the issuance of the Exchange Shares as required by applicable listing standards of The Nasdaq Capital Market, or Nasdaq, amendments to our amended and restated articles of incorporation to change our name and to increase our authorized common stock, and the continued listing or our common stock on Nasdaq, as well as customary other closing conditions.

 

16
 

 

The Share Exchange Agreement contains representations and warranties and covenants of the parties customary for a transaction of this nature which will not survive the closing of the Acquisition. The Share Exchange Agreement also contains customary covenants regarding the conduct of the respective businesses of Sigma and NextTrip pending the closing of the Acquisition. The Share Exchange Agreement permits us to sell our quality assurance software assets at or after the closing of the Acquisition as contemplated by our Asset Purchase Agreement with Divergent Technologies, Inc.

 

Both transactions are expected to be completed in the fourth quarter of 2023, subject to shareholder approvals and other customary closing conditions.

 

On October 6, 2023, Nasdaq Listing Qualifications (“Nasdaq”) notified the Company that it had regained compliance with the minimum bid price Listing Rule 5550(a)(2) as the Company’s closing bid price of its common stock had been at or greater than $1.00 per share for ten consecutive business days following the effective date of the Company’s reverse stock split. Nasdaq further notified the Company that the matter is closed.

 

On August 17, 2023, the Company received notice from Nasdaq that because our stockholders’ equity as of June 30, 2023 was $2,391,289, we no longer comply with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on the Nasdaq Capital Market to maintain minimum stockholders’ equity of $2,500,000, and do not meet the alternatives of market value of listed securities or net income from continuing operations. The notice stated that under Nasdaq Rules, we have 45 calendar days to submit a plan to regain compliance and that if our plan is accepted, Nasdaq can grant us an extension of up to 180 calendar days from the date of the notice to evidence compliance.

 

On October 2, 2023, the Company submitted its plan to regain compliance to Nasdaq and requested an extension to February 13, 2024 to evidence compliance with the Rule and all other applicable criteria for continued listing on Nasdaq.

 

On October 23, 2023, Nasdaq informed the Company that based on the submission, it had granted the requested extension until February 13, 2024 to demonstrate compliance with the Rule. Nasdaq further informed the Company that if the Company fails to evidence compliance upon filing its periodic report for the quarter ended March 31, 2024 with the SEC and Nasdaq, the Company may be subject to delisting.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Forward-looking statements

 

This Quarterly Report contains “Forward-Looking Statements.” All statements other than statements of historical fact are “Forward-Looking Statements” including but not limited to, statements regarding the pending strategic transactions or the possible dissolution and liquidation or bankruptcy of the Company. All Forward-Looking Statements included in this Quarterly Report are made as of the date hereof and are based on information available to us as of such date. We assume no obligation to update any Forward-Looking Statement. In some cases, Forward-Looking Statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “potential,” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the Forward-Looking Statements contained herein are reasonable, there can be no assurance that such expectations or any of the Forward-Looking Statements will prove to be correct, and actual results could differ materially from those projected or assumed in the Forward-Looking Statements. Future financial condition and results of operations, as well as any Forward-Looking Statements are subject to inherent risks and uncertainties, including factors referred to in our press releases and reports filed with the Securities and Exchange Commission (“SEC”). All subsequent Forward-Looking Statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Additional factors that may have a direct bearing on our operating results are described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 and elsewhere in this Quarterly Report.

 

Corporation Information

 

We were incorporated as Messidor Limited in Nevada on December 23, 1985, and changed our name to Framewaves Inc. in 2001. On September 27, 2010, we changed our name to Sigma Labs, Inc. We commenced our current business operations in 2010. On May 17, 2022, we began doing business as Sigma Additive Solutions, and on August 9, 2022, changed our name to Sigma Additive Solutions, Inc.

 

Our principal executive offices are located at 3900 Paseo del Sol, Santa Fe, New Mexico 87507, and our telephone number is (505) 438-2576. Our website address is www.sigmaadditive.com. The Company’s annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), and other information related to the Company, are available, free of charge, on our website. The Company’s website and the information contained therein, or connected thereto, are not and are not intended to be incorporated into this Quarterly Report.

 

Critical Accounting Policies and Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported assets, liabilities, sales and expenses in the accompanying financial statements. Critical accounting policies are those that require the most subjective and complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. By their nature, changes in these assumptions and estimates could significantly affect our financial position or results of operations. Significant accounting estimates that may materially change in the near future are revenue recognition, impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence. Such critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Note 1 of the Notes to Financial Statements included in this Quarterly Report. However, we do not believe that there are any alternative methods of accounting for our operations that would have a material effect on our financial statements.

 

The critical accounting policies and estimates addressed below reflect our most significant judgements and estimates used in the preparation of our financial statements.

 

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Revenue Recognition – The Company’s revenue is derived primarily from sales of our software and related hardware suite under perpetual licenses and from providing engineering services under contracts. The Company recognizes revenue in accordance with ASC Topic No. 606. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance under prior GAAP and replaced it with a principles-based approach for determining revenue recognition. The core principle of the standard is the recognition of revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In general, we determine revenue recognition by: (1) identifying the contract, or contracts, with our customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to performance obligations in the contract; and (5) recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

 

In January 2022, the Company began offering a subscription option to its customers, pursuant to which it leases its PrintRite3D platform for terms between 12 and 36 months and provide technical support and maintenance for the term of the arrangement, as well as installation and training. The Company has determined these are leases because they relate to discrete pieces of equipment to which customers have the right to substantially all the economic benefit and exclusive use during the term of the arrangement. These leases are classified as operating leases and the Company retains title to the underlying equipment.

 

The leases may be renewed for successive one-year terms unless notice is given by either party of its intent not to renew at least 30 days before the end of the lease term. For leases with 36-month terms, the lessee may terminate the agreement after the first 18 months upon at least 30 days written notice. Some, but not all, of the leases permit lessees to purchase the asset at any time at an amount that approximates fair value and are not reasonably certain to be exercised at the inception of the lease. There are no anticipated variable lease payments at the inception of the lease.

 

There are two non-lease components in the arrangement that consist of technical support and maintenance, and installation and training. The Company has elected single component practical expedient accounting to combine the technical support and maintenance with the lease as they have the same pattern of transfer. The installation and training component does not have the same pattern of transfer; therefore, this component is not eligible for single component practical expedient accounting. The lease consideration is allocated on a relative fair value basis of the underlying lease and non-lease components. The Company has estimated the residual value of the leased equipment based on its useful life, and the ability to refurbish and sell the equipment, as well as the Company’s ability to componentize the hardware and utilize subassemblies in other products.

 

The Company is depreciating assets over their useful life of 7 years, but certain subassemblies and components may have a longer economic life.

 

Accounts Receivable and Allowance for Doubtful Accounts - Trade accounts receivable are carried at original invoice amount less an estimated allowance for doubtful accounts. We determine the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. As of September 30, 2023 and September 30, 2022, the Company has established an allowance for doubtful accounts of $115,000 and $0, respectively.

 

Inventory Valuation - Inventories consist of raw materials used in the production of customized parts, work-in-process and finished goods components which will be sold to customers. Inventories are valued at the lower of cost or net realizable value, using the first-in, first-out method. Charges for obsolete inventory are based on identification of specific items resulting from regular, on ongoing reviews of our inventory.

 

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Long-Lived and Intangible Assets – Long-lived assets and certain identifiable definite life intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company periodically evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal or external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. Utility patents are amortized over a 17-year period. Patents which are pending are not amortized.

 

Stock-Based Compensation – We measure the compensation costs of stock-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the vesting period of the stock-based compensation. Stock-based compensation arrangements may include stock options, grants of shares of common stock with and without restrictions, performance-based awards, and stock appreciation rights, or SARs. Compensation cost is measured on the date of grant at its fair value.

 

Equity instruments issued to non-employees are recorded on the basis of the grant date fair value of the instruments. In general, the measurement date is either (a) when a performance commitment, as defined, is reached or (b) the earlier of the date that (i) the non-employee performance requirement is complete or (ii) the instruments vest. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant.

 

The fair value of common stock grants is based upon the closing price of our common stock as reported on The Nasdaq Capital Market on the date of the grant. The grant date fair value of stock options and SARs is calculated using the Black Scholes valuation model, and requires estimates of several inputs to the model, including risk-free interest rates, dividends, and expected volatility of our stock price.

 

Business Overview

 

Sigma Additive Solutions, Inc. (“Sigma,” “we,” “us,” “our” and the “Company”) was founded by a group of scientists, engineers and businesspeople to develop and commercialize novel and unique manufacturing and materials technologies. The Company anticipated that its core technologies would allow its customers to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve breakthrough product potential in many industries, including aerospace, defense, oil and gas, bio-medical, and power generation.

 

Historically, we generated revenues through sales of our PrintRite3D® technology to customers that seek to improve their manufacturing production processes, and through ongoing annual software upgrades and maintenance fees. In 2022, we began offering our current PrintRite3D integrated hardware and software solution on a subscription basis, which reduced the initial upfront cost to a new user from over $100,000 to approximately $3,000-$5,000 per month. The combination of subscription pricing and the new software-only products that can be embedded into OEM and software partner offerings was intended to make our technology more affordable to acquire and easier to bundle, distribute and support in an effort to become the industry standard. The shift in our business model adversely affected our revenues and near-term revenue growth as we increased our focus on building strategic partnerships, expanding our partner ecosystem, and ensuring the success of our existing customers as they move into production.

 

On March 1, 2023, we announced that we had retained Lake Street Capital Markets as our financial advisor in connection with our consideration of a range of strategic alternatives, including a possible strategic investment, acquisition, merger, business combination, or similar transaction.

 

In our Current Report filed with the SEC on October 13, 2023, we reported that we had entered into an Asset Purchase Agreement with Divergent Technologies, Inc., or Divergent, pursuant to which have agreed to sell to Divergent, and Divergent has agreed to purchase from us, certain assets consisting primarily of patents, software code and other intellectual property for a purchase price of $1,626,242, including a $37,000 earnest-money deposit previously paid to us by Divergent. The closing under the Asset Purchase Agreement is expected to occur subsequent to the closing or termination of our acquisition of NextTrip Holdings, Inc.

 

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The parties’ respective obligations to close are subject to the accuracy of the parties’ respective representations and warranties and performance of their respective covenants and satisfaction or waiver of other customary conditions specified in the Asset Purchase Agreement.

 

In our additional Current Report filed with the SEC on October 13, 2023, On October 12, 2023, we reported that we had entered into a Share Exchange Agreement with NextTrip Holdings, Inc., pursuant to which we will acquire NextTrip (the “Acquisition”) in exchange for shares of our common stock, which we refer to as the Exchange Shares, subject to approval of our shareholders and other conditions described below. As a result, NextTrip will become a wholly owned subsidiary of Sigma, which is expected to change its corporate name to “NextTrip, Inc.” following the Acquisition.

 

Upon the closing of the Acquisition, the shareholders of NextTrip will be issued a number of Exchange Shares equal to 19.99% of our issued and outstanding shares of common stock immediately prior to the closing. Under the Share Exchange Agreement, the NextTrip shareholders will be entitled to receive additional shares of our common stock, referred to as the Contingent Shares, subject to NextTrip’s achievement of future business milestones specified in the Share Exchange Agreement.

 

Alternatively, independent of the aforementioned milestones, for each month during the fifteen (15) month period following the closing date that in which $1,000,000 or more in gross travel bookings are generated by the combined company, to the extent not previously issued, the Contingent Shares will be issuable up to the maximum Contingent Shares issuable under the Share Exchange Agreement.

 

The Contingent Shares, together with the shares of our common stock issued at the closing, will not exceed 6,000,000 shares of our common stock, or approximately 90.2% of our issued and outstanding shares of common stock immediately following the issuance of such shares. Assuming all the business milestones are achieved and no other change in our outstanding shares, Sigma shareholders will retain approximately 9.8% of the Company’s outstanding shares immediately following the issuance of such shares.

 

The parties’ respective obligations to close the Acquisition are subject to the satisfaction or waiver of various conditions specified in the Share Exchange Agreement. The conditions include approval by Sigma shareholders of the issuance of the Exchange Shares as required by applicable listing standards of Nasdaq, amendments to our amended and restated articles of incorporation to change our name as described above and to increase our authorized common stock, the continued listing or our common stock on Nasdaq, as well as customary other closing conditions.

 

The Agreement contains representations and warranties and covenants of the parties customary for a transaction of this nature which will not survive the closing of the Acquisition. The Share Exchange Agreement also contains customary covenants regarding the conduct of the respective businesses of Sigma and NextTrip pending the closing of the Acquisition. The Share Exchange Agreement permits us to sell our quality assurance software assets at or after the closing of the Acquisition as contemplated by our Asset Purchase Agreement with Divergent Technologies, Inc.

 

The Share Exchange Agreement may be terminated by the parties by mutual agreement or by a party in the event of a breach of the other party’s representations, warranties or covenants, subject to certain exceptions, or if the Acquisition is not completed by December 31, 2023.

 

Results of Operations

 

Three Months Ended September 30, 2023 and September 30, 2022

 

During the three months ended September 30, 2023, we recognized revenue of $141,988, as compared to $ 188,245 in the same period in 2022, a decrease of $46,257, or 25%. The decrease was due to decreased PrintRite3D sales of $41,595, and decreased annual maintenance contract revenue of $13,560, as compared to the third quarter of 2022. Partially offsetting the decreases were increases in PrintRite3D lease revenue of $5,669, and on-site development and support revenue of $3,229.

 

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Our cost of revenue for the three months ended September 30, 2023 was $176,116, as compared to $79,713 for the same period in 2022, an increase of $96,403, or 121%. The increase was primarily attributable to the cost of a new quad laser intended for a lease that was sold at a discounted price in the third quarter of 2023 as compared to the third quarter of 2022.

 

Our total operating expenses for the three months ended September 30, 2023 were $866,199, as compared to $2,392,956 for the same period in 2022, a decrease of $1,526,757, or 64%. The decrease was primarily attributable to a decrease in salaries and benefits of $938,911, a decrease in stock-based compensation of $191,340, a decrease in operations and R&D costs of $152,000, a decrease in organization costs of $92,942, and a decrease in office expense of $119,531 primarily attributable to reduced headcount and travel as further described below.

 

Salary and benefits costs were $288,894 for the three months ended September 30, 2023, as compared to $1,227,805 for the same period in 2022, a decrease of $938,911, or 77%. The decrease was attributable to: (a) decreased salaries of $705,631 attributable to furloughed and terminated employees; (b) a decrease in commission and bonus expense of $37,405; (c) decreased taxes and benefits of $117,025; (d) decreased severance expense of $30,301; and (e) a decrease in stock appreciation rights of $48,549.

 

Stock-based compensation was $84,078 for the three months ended September 30, 2023, as compared to $275,418 for the same period in 2022, a decrease of $191,340, or 70%. This decrease was primarily a result of forfeitures of unvested options by former employees.

 

We incurred operations and research and development costs of $245 during the three months ended September 30, 2023, as compared to $152,245 in the same period in 2022, a decrease of $152,000. The decrease was due to decreasing operations and R&D work as we have shifted our focus to closing our two corporate transactions and supporting existing customers.

 

We incurred investor, public relations, and marketing costs of $15,797 during the three months ended September 30, 2023, as compared to $46,832 during the same period in 2022. The decrease of $31,035, or 66%, was due to a decrease in investor relations consulting costs of $22,609 as a result of renegotiated lower monthly fees and a decrease in marketing costs of $8,426.

 

We incurred organization costs of $47,580 during the three months ended September 30, 2023, as compared to $140,522 during the same period in 2022. The decrease of $92,942, or 66%, was primarily attributable to a decrease in non-employee director compensation of $21,359 primarily due to fewer stock options granted in 2023 and a decrease in shareholder services costs of $72,785 due to a change in timing of our annual shareholders’ meeting from the third quarter of 2022 to the fourth quarter of 2023. Partially offsetting these decreases was an increase in regulatory compliance fees of $1,202.

 

Legal and professional fees incurred in the three months ended September 30, 2023 were $251,265, as compared to $252,886 during the same period in 2022, a decrease of $1,621. This decrease was primarily a result of decreased recruiting fees of $74,250, and a decrease in consulting expenses of $47,754 for an advisor to the board of directors and a marketing consultant. Partially offsetting these decreases was an increase in legal expenses fees of $116,426 due to employment related matters and legal and financial advisors engaged to assist in Sigma’s evaluation of corporate transactions, and an increase in accounting expenses of $3,337.

 

Office expenses for the three months ended September 30, 2023, were $61,077 as compared to $183,608 for the same period in 2022, a decrease of $122,531, or 67%. The decrease resulted from: (a) decreased travel and entertainment expenses of $71,746; (b) decreased office supply expenses of $4,374; (c) decreased dues & subscriptions of $23,816; (d) decreased payroll services expense of $10,538; (e) decreased rent and utilities of $10,588; and (f) decreased training and education expense of $848. These decreases were the result of a reduction in the number of employees.

 

Depreciation and amortization expense for the three months ended September 30, 2023 was $24,554, as compared to $26,857 for the same period in 2022, a decrease of $2,303, or 9%. The decrease was primarily the result of returned and sold property and equipment.

 

Other operating expenses were $92,709 for the three months ended September 30, 2023, as compared to $86,783 for the same period in 2022. The $5,926 increase was primarily related to a FINRA filing fee.

 

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In the three months ended September 30, 2023, we realized net other income of $28,666, as compared to net other expense of $7,884 in the same period in 2022. The increase in other income of $36,550 was primarily due to the net gain on the sale of our 3DPrinter.

 

Preferred dividends for the three months ended September 30, 2023 were $10,687, as compared to $14,220 for the same period in 2022. The decrease was due to fewer outstanding shares of preferred stock as a result of conversions to common shares.

 

Our net loss applicable to common stockholders for the three months ended September 30, 2023 was $882,348 as compared to $2,306,528 for the same period in 2022, a decrease of $1,424,180, or 62%. The decrease was due to the decrease in the loss from operations of $1,384,097, a decrease in preferred dividends of $3,533, and an increase in other income of $36,550.

 

Nine Months Ended September 30, 2023 and September 30, 2022

 

During the nine months ended September 30, 2023, we recognized revenue of $369,188, as compared to $476,749 in the same period in 2022, a decrease of $107,561, or 23%. The decrease primarily resulted from fewer PrintRite3D sales of $91,297, decreased annual maintenance and support of $19,389, and decreased on-site development and support of $52,815 as compared to the third quarter of 2022. Partially offsetting the decreases were an increase in PrintRite3D lease revenue of $19,840, an increase in PrintRite3D consulting services of $25,500, and an increase in Rapid Test and Evaluation, or RTE revenue of $10,600.

 

Our cost of revenue for the nine months ended September 30, 2023 was $276,270, as compared to $312,879 for the same period in 2022, a decrease of $36,609, or 12%. The decrease was primarily attributable to fewer unit sales and installations in the third quarter of 2023 as compared to the third quarter of 2022.

 

Our total operating expenses for the nine months ended September 30, 2023 were $4,078,912, as compared to $6,968,079 for the same period in 2022, a decrease of $2,889,167, or 42%. The decrease was primarily attributable to a decrease in salaries and benefits of $1,929,975, a decrease in stock-based compensation of 166,416, a decrease in operations and R&D of 210,332, a decrease in investor, public relations, and marketing expense of $164,893, a decrease in organization costs of 123,071 and a decrease in office expense of $382,875 primarily attributable to reduced headcount and travel as further described below.

 

Salary and benefits costs were $1,774,658 for the nine months ended September 30, 2023, as compared to $3,704,633 for the same period in 2022, a decrease of $1,929,975, or 52%. The decrease was comprised of: (a) decreased salaries of $1,517,791 attributable to furloughed and terminated employees; (b) a decrease in commission and bonus expense of $113,363 due to the reversal of 2022 year-end bonuses and fewer commissions on sales; (c) decreased taxes and benefits of $243,350; and (d) decreased stock appreciation rights expense of $70,800 due to the quarterly revaluation at September 30, 2023. Partially offsetting these decreases was an increase in severance expense of $15,408.

 

Stock-based compensation was $447,417 for the nine months ended September 30, 2023, as compared to $613,833 for the same period in 2022, a decrease of $166,416, or 27%. This decrease was primarily a result of the forfeiture of unvested options by former employees.

 

We incurred operations and research and development costs of $232,216 during the nine months ended September 30, 2023, as compared to $442,548 in the same period in 2022, a decrease of $210,332, or 48%. The decrease was due to a decrease in operations costs of $141,346 and a decrease in R&D costs of $68,986. The decrease in operations costs related to fewer parts and material purchases in the third quarter of 2023. The decrease in R&D costs was primarily due to suspending consulting work with a third-party software vendor in connection with the development of our software-only product suite.

 

We incurred investor, public relations, and marketing costs of $128,565 during the nine months ended September 30, 2023, as compared to $293,458 during the same period in 2022. The decrease of $164,893, or 56%, was primarily due to a decrease in investor relations consulting costs of $92,822 related to renegotiated lower fees, a decrease in attendance at tradeshows and conferences of $46,535 due to fewer employees, and a decrease in marketing costs of $25,536.

 

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We incurred organization costs of $137,017 during the nine months ended September 30, 2023, as compared to $260,088 during the same period in 2022. The decrease of $123,071, or 47% was attributable to a decrease in non-employee director compensation of $51,278 primarily due to fewer stock options granted in 2023 and a decrease in shareholder services of $71,914 as a result of a change in the timing of our annual shareholders meeting from the third quarter of 2022 to the fourth quarter of 2023.

 

Legal and professional fees incurred in the nine months ended September 30, 2023 were $587,541, as compared to $608,830 incurred during the same period in 2022, a decrease of $21,289, or 3.5%. This decrease was a result of a decrease in consulting expenses from 2022 of $222,187 which were related to a manufacturing consultant, technical accounting support, HR consultant, and an advisor to the Board of Directors, a decrease in recruiting fees of $74,250, and a decrease in IT service fees of $6,539 related to new employee setup fees in 2022. Partially offsetting these decreases were an increase in legal fees of $272,302 due to employment related matters and legal and financial advisors engaged to assist in Sigma’s evaluation of strategic corporate transactions, and an increase in accounting fees of $9,385.

 

Office expenses for the nine months ended September 30, 2023, were $309,765 as compared to $692,640 for the same period in 2022, a decrease of $382,875, or 55%. The decrease resulted primarily from:(a) decreased travel and entertainment expenses of $247,989; (b) decreased office supply expenses of $24,531; (c) decreased dues & subscriptions of $36,496; (d) decreased payroll services expense of $14,640; (e) decreased rent and utilities of $24,196; and (f) decreased training and education expense of $33,559. These decreases were all the result of a reduction in the number of employees and no company-wide conference being held in 2023.

 

Depreciation and amortization expense for the nine months ended September 30, 2023 was $74,151, as compared to $88,302 for the same period in 2022, a decrease of $14,151, or 16%. The decrease was primarily the result of the increased life expectancy of our leased and consigned PrintRite3D systems, as well as returned and sold property and equipment.

 

Other operating expenses were $387,582 for the nine months ended September 30, 2023, as compared to $263,747 for the same period in 2022. The $123,835 increase was primarily due to an allowance for doubtful account of $115,600 related to a customer receivable for which collectability is uncertain.

 

In the nine months ended September 30, 2023, we realized net other income of $54,539, as compared to $57,336 in the same period in 2022. The decrease of $2,797 was primarily due to the New Mexico High Wage Tax credit of $76,628 received in 2022, partially offset by a net gain on the sale of our 3DPrinter and a write-off of accounts payable due to an unclaimed customer deposit in the third quarter of 2023.

 

Preferred dividends for the nine months ended September 30, 2023 were $33,122, as compared to $42,660 for the same period in 2022. The decrease was due to fewer outstanding shares of preferred stock as a result of conversions to common shares.

 

Our net loss applicable to common stockholders for the nine months ended September 30, 2023, was $3,964,577 as compared to $6,789,533 for the same period in 2022, a decrease of $2,824,956, or 41.6%. The decrease was primarily due to the decrease in the loss from operations of $2,818,215 and a decrease in preferred dividends of $9,538, partially offset by a decrease in total other income of $2,797.

 

Liquidity and Capital Resources

 

Due to uncertainties regarding our ability to meet our current and future operating and capital expenses, there is substantial doubt about our ability to continue as a going concern for 12 months from the date of the filing of this Quarterly Report,

 

As of September 30, 2023, we had $556,087 in cash and working capital of $564,386I, as compared with $2,845,931 in cash and working capital of $3,644,522 as of December 31, 2022.

 

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On October 13, 2023, we raised $772,468 in net proceeds by selling 128,887 common shares pursuant to our ATM Agreement. With these additional proceeds, the Company estimates that it has sufficient cash and working capital to fund its scaled-back operations as described below through the earlier of the closing of our asset sale to Divergent and acquisition of NextTrip, or March 2024. The Company reduced its employee headcount, and discontinued product development activities for the time being to ensure lowered expenses. The Company is continuing to operate and support its existing customers who have maintenance agreements and leases in place, supporting new installations in the field, and actively seeking potential sales of the PrintRite3D systems and software to customers who have lease agreements in place, systems on consignment, or otherwise express interest in Sigma’s products available for sale. The Company completed two such sales in the quarter ended September 30, 2023, and believes additional sales are achievable going forward as we progress towards closing the pending transactions. There is no assurance, however, that we will be able to close either transaction. If we fail to complete the acquisition of NextTrip Holdings, Inc., we intend to proceed with the sale of assets to Divergent Technologies, Inc. and may seek to undertake another strategic transaction, if possible, or the dissolution and liquidation or the bankruptcy of the Company. For these reasons, there is substantial doubt about our ability to continue as a going concern.

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities during the nine months ended September 30, 2023 was $2,586,884 as compared to $6,386,415 during the same period in 2022, a decrease of $3,799,531, or 59.5%.

 

During the nine months ended September 30, 2023, the net cash used in operating activities was the result of a net loss of $3,931,455 before preferred dividends, partially offset by changes in working capital of $832,808 and non-cash expenses of $511,763 related to depreciation and amortization of $74,151 and stock-based compensation of $466,244, partially offset by a gain on the sale of property and equipment of $28,632. Changes in working capital were driven by a decrease in accounts receivable of $312,620, a decrease in inventory of $175,877, a decrease in prepaid expenses of $67,393 an increase in accounts payable and accrued expenses of $285,909, partially offset by a decrease in deferred revenue of $8,991. The decrease in accounts receivable was a result of cash collections from 2022 sales and the establishment of an allowance for doubtful accounts of $115,000, and the decrease in inventory was due to the cessation of manufacturing activity. The increase in accounts payable and accrued expenses was due to extending payment times to vendors to conserve cash in advance of obtaining additional financing.

 

During the nine months ended September 30, 2022, the net cash used in operating activities was the result of a net loss of $6,746,873 before preferred dividends and the use of cash for working capital of $436,734, partially offset non-cash expenses of $797,192 related to depreciation and amortization of $88,302 and stock-based compensation of $708,890. Changes in working capital were driven by an increase in inventory of $257,352, an increase in prepaid expenses of $63,446, a decrease in deferred revenue of $19,166, and a decrease in accounts payable and accrued expenses of $141,192 partially offset by a decrease in accounts receivable of $44.422. The decrease in accrued expenses was largely driven by the payment of incentive bonuses, and the decrease in accounts receivable was a result of cash collections from 2021 sales. Increases in inventory and prepaid expenses resulted from the stocking of long lead-time parts for planned production and payment of our annual Nasdaq listing fee, respectively.

 

Net Cash Used in Investing Activities

 

Net cash used in investing activities during the nine months ended September 30, 2023 was $67,515, which compares to $259,952 of cash used in investing activities during the same period of 2022, a decrease of $192,437, or 74.0%. The decrease resulted from a decrease in patent costs of $30,589, proceeds from the sale of our 3D printer of $78,000, and no purchases of property, plant and equipment during the first nine months of 2023.

 

Net Cash Provided by Financing Activities

 

The Company raised $364,555 in net proceeds through our ATM Agreement during the third quarter of 2023, and an additional $772,468 in net proceeds in October, 2023. There were no warrant exercises during the nine months ended September 30, 2023 or September 30, 2022.

 

Inflation, changing prices and rising interest rates have had no material effect on our continuing operations over our two most recent fiscal years.

 

We have no off-balance sheet arrangements as defined in Item 303(a) of Regulation S-K.

 

25
 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of disclosure controls and procedures and changes in internal controls over financial reporting.

 

Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), defines the term “disclosure controls and procedures” as those controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our management, with the participation of our President and Chief Executive Officer, and our Chief Financial Officer and Treasurer, as of the end of the period covered by this quarterly report, our management concluded that our disclosure controls and procedures are effective at a reasonable assurance level in ensuring that information required to be disclosed by us in our reports is recorded, processed, summarized and reported within the required time periods. No change in our “internal control over financial reporting” (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the nine months ended September 30, 2023 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

26
 

 

PART II

 

OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

Not applicable.

 

ITEM 1A. RISK FACTORS.

 

You should consider the “Risk Factors” included under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 30, 2023, as well as the following updated Risk Factor:

 

We have curtailed certain business activities pending the completion of the Divergent and NextTrip transactions.

 

As of September 30, 2023, we had cash on hand of $556,087, and on October 13, 2023, we raised an additional $772,468 in net proceeds from the sale of common stock pursuant to our ATM Agreement. With these additional proceeds, the Company estimates that it has sufficient cash and working capital to fund its scaled-back operations as described below pending the completion our asset sale with Divergent Technologies, Inc. and our acquisition of NextTrip Holdings, Inc., or through March 2024. The Company reduced its employee headcount, and discontinued product development activities for the time being to ensure lowered expenses. The Company is continuing to operate and support its existing customers who have maintenance agreements and leases in place, supporting new installations in the field, and actively seeking potential sales of the PrintRite3D systems and software to customers who have lease agreements in place, systems on consignment, or otherwise express interest in Sigma’s products available for sale. The Company completed two such sales in the quarter ended September 30, 2023, and believes additional sales are achievable going forward as we progress towards closing both transactions. There is no assurance, however, that we will be able to close either transaction. If we fail to complete the acquisition of NextTrip Holdings, Inc., we intend to proceed with the sale of assets to Divergent Technologies, Inc. and may seek to undertake another strategic transaction, if possible, or the dissolution and liquidation or the bankruptcy of the Company. For these reasons, there is substantial doubt about our ability to continue as a going concern.

 

There is no assurance that we will satisfy NASDAQ’s continued listing requirements, and our common stock could be delisted.

 

On August 17, 2022, The Company received notice from Nasdaq that because our stockholders’ equity as of June 30, 2023 was $2,391,289, we no longer comply with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on the Nasdaq Capital Market to maintain minimum stockholders’ equity of $2,500,000, and do not meet the alternatives of market value of listed securities or net income from continuing operations. The notice stated that under Nasdaq Rules, we have 45 calendar days to submit a plan to regain compliance and that if our plan is accepted, Nasdaq can grant us an extension of up to 180 calendar days from the date of the notice to evidence compliance.

 

On October 2, 2023, the Company submitted its plan to regain compliance to Nasdaq and requested an extension to February 13, 2023 to evidence compliance with the Rule and all other applicable criteria for continued listing on Nasdaq.

 

On October 23, 2023, Nasdaq informed the Company that based on the submission, it had granted the requested extension until February 13, 2024 to demonstrate compliance with the Rule. Nasdaq further informed the Company that if the Company fails to evidence compliance upon filing its periodic report for the quarter ended March 31, 2024 with the SEC and Nasdaq, the Company may be subject to delisting. In such an event, Nasdaq rules would permit us to appeal the decision to reject our proposed compliance plan or any delisting determination to a Nasdaq Hearings Panel. Completion of the Acquisition is part of our plan submitted to Nasdaq to regain compliance with Nasdaq’s minimum stockholders’ equity requirement. If the Acquisition is not completed, it is likely that our common stock would be delisted from Nasdaq If our securities are delisted from Nasdaq, our stockholders could incur material, adverse consequences such as difficulty selling their shares of our common stock and reduced market prices for their shares. Delisting is also likely to have a material, adverse effect on our ability to sell and issue shares of our common stock in order to fund our operations, if any.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None

 

27
 

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

Not applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None

 

ITEM 6. EXHIBITS.

 

1.1  

At-The-Market Sales Issuance Agreement dated August 14, 2023 between Sigma Additive Solutions, Inc. and Lake Street Capital Markets, LLC (incorporated by reference to Exhibit 1.1 to Current Report on Form 8-K filed on August 14, 2023).

     
31.1   Rule 13a-14(a) Certification of Principal Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
     
31.2   Rule 13a-14(a) Certification of Principal Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
     
32.1   Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
     
101.INS   Inline XBRL Instance Document.
101.SCH   Inline XBRL Schema Document.
101.CAL   Inline XBRL Calculation Linkbase Document.
101.DEF   Inline XBRL Definition Linkbase Document.
101.LAB   Inline XBRL Labels Linkbase Document.
101.PRE   Inline XBRL Presentation Linkbase Document.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

** Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

28
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  SIGMA ADDITIVE SOLUTIONS, INC.
     
November 13, 2023 By: /s/ Jacob Brunsberg
    Jacob Brunsberg
    President and Chief Executive Officer
    (Principal Executive Officer)
     
November 13, 2023 By: /s/ Frank Orzechowski
    Frank Orzechowski
    Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer)

 

29

 

Exhibit 31.1

 

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Jacob Brunsberg, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Sigma Additive Solutions, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date November 13, 2023

 

  By: /s/ Jacob Brunsberg
  Name: Jacob Brunsberg
  Title: President and Chief Executive Officer
    (Principal Executive Officer)

 

 

 

 

Exhibit 31.2

 

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Frank Orzechowski, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Sigma Additive Solutions, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 13, 2023

 

  By: /s/ Frank Orzechowski
  Name: Frank Orzechowski
  Title:

Chief Financial Officer, Treasurer

(Principal Financial and Accounting Officer)

 

 

 

Exhibit 32.1

 

Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Jacob Brunsberg, the Chief Executive Officer, and Frank Orzechowski, the Chief Financial Officer, of Sigma Additive Solutions, Inc. (the “Company”), hereby certify, that, to their knowledge:

 

1. The Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934; and

 

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Jacob Brunsberg   /s/ Frank Orzechowski
Jacob Brunsberg   Frank Orzechowski
President and Chief Executive Officer   Chief Financial Officer, Treasurer
(Principal Executive Officer)   (Principal Financial and Accounting Officer)
     
November 13, 2023   November 13, 2023

 

 

 

v3.23.3
Cover - shares
 9 Months Ended
Sep. 30, 2023
Nov. 10, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 2023  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 001-38015  
Entity Registrant Name SIGMA ADDITIVE SOLUTIONS, INC.  
Entity Central Index Key 0000788611  
Entity Tax Identification Number 27-1865814  
Entity Incorporation, State or Country Code NV  
Entity Address, Address Line One 3900 Paseo del Sol  
Entity Address, City or Town Santa Fe  
Entity Address, State or Province NM  
Entity Address, Postal Zip Code 87507  
City Area Code (505)  
Local Phone Number 438-2576  
Title of 12(b) Security Common Stock, par value $0.001 per share  
Trading Symbol SASI  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   780,423
v3.23.3
Condensed Balance Sheets - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current Assets:    
Cash $ 556,087 $ 2,845,931
Accounts Receivable, net 59,000 371,620
Inventory 775,066 950,943
Prepaid Assets 37,833 105,226
Total Current Assets 1,427,986 4,273,720
Other Assets:    
Property and Equipment, net 161,971 304,903
Intangible Assets, net 1,247,697 1,125,285
Total Other Assets 1,409,668 1,430,188
TOTAL ASSETS 2,837,654 5,703,908
Current Liabilities:    
Accounts Payable 607,212 277,492
Deferred Revenue 111,082 120,073
Accrued Expenses 145,306 231,633
Total Current Liabilities 863,600 629,198
TOTAL LIABILITIES 863,600 629,198
Commitments & Contingencies
Stockholders’ Equity    
Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 316 and 465 shares issued and outstanding, respectively 1 1
Common Stock, $ 0.001 par value; 1,200,000 shares authorized; 651,536 and 524,940 shares issued and outstanding, respectively 652 525
Additional Paid-In Capital 55,380,026 54,416,668
Accumulated Deficit (53,406,625) (49,342,484)
Total Stockholders’ Equity 1,974,054 5,074,710
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,837,654 $ 5,703,908
v3.23.3
Condensed Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 316 465
Preferred stock, shares outstanding 316 465
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 1,200,000 1,200,000
Common stock, shares issued 651,536 524,940
Common stock, shares outstanding 651,536 524,940
v3.23.3
Condensed Statements of Operations (Unaudited) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Income Statement [Abstract]        
REVENUES $ 141,988 $ 188,245 $ 369,188 $ 476,749
COST OF REVENUE 176,116 79,713 276,270 312,879
GROSS PROFIT (34,128) 108,532 92,918 163,870
OPERATING EXPENSES:        
Salaries & Benefits 288,894 1,227,805 1,774,658 3,704,633
Stock-Based Compensation 84,078 275,418 447,417 613,833
Operations and R&D Costs 245 152,245 232,216 442,548
Investor, Public Relations and Marketing 15,797 46,832 128,565 293,458
Organization Costs 47,580 140,522 137,017 260,088
Legal & Professional Service Fees 251,265 252,886 587,541 608,830
Office Expenses 61,077 183,608 309,765 692,640
Depreciation & Amortization 24,554 26,857 74,151 88,302
Other Operating Expenses 92,709 86,783 387,582 263,747
Total Operating Expenses 866,199 2,392,956 4,078,912 6,968,079
LOSS FROM OPERATIONS (900,327) (2,284,424) (3,985,994) (6,804,209)
OTHER INCOME (EXPENSE)        
Interest Income 278 17 3,025
State Incentives 76,628
Exchange Rate Gain (Loss) (4) (6,184) (3,356) (16,950)
Interest Expense (3,235) (1,978) (9,706) (5,367)
Other Income 31,905 67,584
Total Other Income (Expense) 28,666 (7,884) 54,539 57,336
LOSS BEFORE PROVISION FOR INCOME TAXES (871,661) (2,292,308) (3,931,455) (6,746,873)
Provision for income Taxes
Net Loss (871,661) (2,292,308) (3,931,455) (6,746,873)
Preferred Dividends (10,687) (14,220) (33,122) (42,660)
Net Loss Applicable to Common Stockholders $ (882,348) $ (2,306,528) $ (3,964,577) $ (6,789,533)
Net Loss per Common Share basic $ (1.57) $ (4.39) $ (7.28) $ (12.93)
Net Loss per Common Share diluted $ (1.57) $ (4.39) $ (7.28) $ (12.93)
Weighted Average Number of Shares Outstanding basic 560,310 524,940 544,587 524,940
Weighted Average Number of Shares Outstanding diluted 560,310 524,940 544,587 524,940
v3.23.3
Statement of Stockholders' Equity (Unaudited) - USD ($)
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Total
Balances at Dec. 31, 2021 $ 1 $ 525 $ 53,452,405 $ (40,593,180) $ 12,859,751
Balance, shares at Dec. 31, 2021 465 524,940      
Net Loss (6,746,873) (6,746,873)
Preferred Stock Dividends 42,660 (42,660)
Stock Options Issued to Directors for Services 70,594 70,594
Stock Options Issued to Employees 613,833 613,833
Stock Options Issued for Third Party Services 24,463 24,463
Stock Options Issued for Third Party Services (24,463) (24,463)
Balances at Sep. 30, 2022 $ 1 $ 525 54,203,955 (47,382,713) 6,821,768
Balance, shares at Sep. 30, 2022 465 524,940      
Balances at Jun. 30, 2022 $ 1 $ 525 53,886,192 (45,076,185) 8,810,533
Balance, shares at Jun. 30, 2022 465 524,940      
Net Loss (2,292,308) (2,292,308)
Preferred Stock Dividends 14,220 (14,220)
Stock Options Issued to Directors for Services 27,152 27,152
Stock Options Issued for Third Party Services 973 973
Stock Options Awarded to Employees 275,418 275,418
Stock Options Issued for Third Party Services (973) (973)
Balances at Sep. 30, 2022 $ 1 $ 525 54,203,955 (47,382,713) 6,821,768
Balance, shares at Sep. 30, 2022 465 524,940      
Balances at Dec. 31, 2022 $ 1 $ 525 54,416,668 (49,342,484) 5,074,710
Balance, shares at Dec. 31, 2022 465 524,940      
Net Loss (3,931,455) (3,931,455)
Common Shares Sold in Public Offering $ 73 453,562 453,635
Common Shares Sold in Public Offering   72,721      
Offering Costs (89,080) (89,080)
Round-Up Shares Issued in Connection with Reverse Split $ 40 (40)
Roundup share issued in connection with reverse split   40,179      
Preferred Stock Dividends $ 2 33,120 (33,122)
Stock Options Issued to Directors for Services 19,316 19,316
Stock Options Issued to Employees 447,417 447,417
Stock Options Issued for Third Party Services 489 489
Preferred Stock Dividends, shares   2,195      
Common Shares Issued for Conversion of Preferred Stock $ 12 (12)
Common Shares Issued for Conversion of Preferred Stock, shares (149) 11,501      
Common Warrant Issued for Conversion of Preferred Stock 99,564 (99,564)
Stock Options Issued for Third Party Services (489) (489)
Balances at Sep. 30, 2023 $ 1 $ 652 55,380,026 (53,406,625) 1,974,054
Balance, shares at Sep. 30, 2023 316 651,536      
Balances at Jun. 30, 2023 $ 1 $ 539 54,915,026 (52,524,277) 2,391,289
Balance, shares at Jun. 30, 2023 316 538,636      
Net Loss (871,661) (871,661)
Common Shares Sold in Public Offering $ 73 453,562 453,635
Common Shares Sold in Public Offering   72,721      
Offering Costs (89,080) (89,080)
Round-Up Shares Issued in Connection with Reverse Split   $ 40 (40)
Roundup share issued in connection with reverse split   40,179      
Preferred Stock Dividends 10,687 (10,687)
Stock Options Issued to Directors for Services 5,793 5,793
Stock Options Issued to Employees 84,078 84,078
Balances at Sep. 30, 2023 $ 1 $ 652 $ 55,380,026 $ (53,406,625) $ 1,974,054
Balance, shares at Sep. 30, 2023 316 651,536      
v3.23.3
Condensed Statements of Cash Flows (Unaudited) - USD ($)
 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
OPERATING ACTIVITIES    
Net Loss $ (3,931,455) $ (6,746,873)
Noncash Expenses:    
Depreciation and Amortization 74,151 88,302
Gain on Sale of Property and Equipment (28,632)
Change in assets and liabilities:    
Accounts Receivable 312,620 44,422
Inventory 175,877 (257,352)
Prepaid Assets 67,393 (63,446)
Accounts Payable 372,236 197,105
Deferred Revenue (8,991) (19,166)
Accrued Expenses (86,327) (338,297)
NET CASH USED IN OPERATING ACTIVITIES (2,586,884) (6,386,415)
INVESTING ACTIVITIES    
Purchase of Property and Equipment (83,848)
Proceeds from Sale of Property and Equipment 78,000
Purchase of Intangible Assets (145,515) (176,104)
NET CASH USED IN INVESTING ACTIVITIES (67,515) (259,952)
FINANCING ACTIVITIES    
Gross Proceeds from Public Issuance of Comon Stock 453,635
Offering Costs (89,080)
NET CASH PROVIDED BY FINANCING ACTIVITIES 364,555
NET CHANGE IN CASH FOR PERIOD (2,289,844) (6,646,367)
CASH AT BEGINNING OF PERIOD 2,845,931 11,447,047
CASH AT END OF PERIOD 556,087 4,800,680
Noncash investing and financing activities disclosure:    
Preferred Stock Dividends 33,122 42,660
Conversion of Preferred Shares to Common Shares 188,830
Other noncash operating activities disclosure:    
Issuance of Securities for Services 18,827 95,057
Disclosure of cash paid for:    
Interest 9,706 5,367
Income Taxes
Employees [Member]    
Noncash Expenses:    
Stock Based Compensation 447,417 613,833
Third Party Services [Member]    
Noncash Expenses:    
Stock Based Compensation (489) 24,463
Director [Member]    
Noncash Expenses:    
Stock Based Compensation $ 19,316 $ 70,594
v3.23.3
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

NOTE 1 - Summary of Significant Accounting Policies

 

Nature of Business - Sigma Additive Solutions, Inc., a Nevada corporation (“Company,” “Sigma,” “we,” “us” and “our”), was founded by a group of scientists, engineers and businessmen to develop and commercialize novel and unique manufacturing and materials technologies. The Company’s core technologies are designed to allow its customers to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve breakthrough product potential in many industries, including aerospace, defense, oil and gas, bio-medical, and power generation.

 

Reverse Stock Split - Effective September 22, 2023, we effected a 1-for-20 reverse stock split of the outstanding shares of our common stock and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. The effects of the reverse stock split have been retroactively reflected in all periods presented.

 

Basis of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2023 and 2022 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the December 31, 2022 audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the period ended September 30, 2023 are not necessarily indicative of the operating results for the full year.

 

Going Concern – The Company has sustained losses and had negative cash flows from operating activities since its inception.

 

On September 7, 2023, we raised $364,555 in net proceeds pursuant to our At-The-Market Issuance Sales Agreement, or ATM Agreement, and on October 13, 2023, we raised an additional $772,468 in net proceeds. With these additional proceeds, the Company estimates that it has sufficient cash and working capital to fund its scaled-back operations as described below pending the completion of our acquisition of NextTrip Holdings, Inc. and sale of assets to Divergent Technologies, Inc., or through March 2024. The Company reduced its employee headcount, and discontinued product development activities for the time being to ensure lowered expenses. The Company is continuing to operate and support its existing customers who have maintenance agreements and leases in place, supporting new installations in the field, and actively seeking potential sales of the PrintRite3D systems and software to customers who have lease agreements in place, systems on consignment, or otherwise express interest in Sigma’s products available for sale. The Company completed two such sales in the quarter ended September 30, 2023, and believes additional sales are achievable going forward as we progress towards closing the pending transactions. There is no assurance, however, that we will be able to close either transaction. If we fail to complete the acquisition of NextTrip Holdings, Inc., we intend to proceed with the sale of assets to Divergent Technologies, Inc. and may seek to undertake another strategic transaction, if possible, or the dissolution and liquidation or the bankruptcy of the Company. For these reasons, there is substantial doubt about our ability to continue as a going concern.

 

Fair Value of Financial Instruments – The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables, accounts payable, and accrued liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The Company does not use derivative instruments for hedging market risk or for trading or speculative purposes.

 

 

Loss Per Share – The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants, options and preferred stock were excluded due to the anti-dilutive effect they would have on the computation. At September 30, 2023 and 2022, the Company had the following common shares underlying these instruments:

 Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

   2023   2022 
   September 30, 
   2023   2022 
Warrants   222,043    191,164 
Stock Options   90,727    89,247 
Preferred Stock   3,069    7,446 
Total Underlying Common Shares   315,839    287,857 

 

The following table shows the amounts used in computing loss per share and the effect on net loss and the weighted average number of potentially dilutive shares for the periods shown:

 

   2023   2022   2023   2022 
   Three Months Ended
September 30		   Nine Months Ended
September 30		 
   2023   2022   2023   2022 
                 
Net Loss Per Common Share – Basic and Diluted  $(1.57)  $(4.39)  $(7.28)  $(12.93)
                     
Loss Applicable to Common Stockholders (numerator)  $(882,348)  $(2,306,528)  $(3,964,577)  $(6,789,533)
                     
Weighted Average Number of Common. Shares Outstanding Used in Loss Per Share During the Period (denominator)   560,310    524,940    544,587    524,940 

 

Accounting Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management. Significant accounting estimates that may materially change in the near future are impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence.

 

Leases – The Company leases office space from third parties. The Company determines if a contract is a lease at inception. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term begins on the commencement date, which is the date the Company takes possession of the asset and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Leases are classified as operating or finance leases based on factors such as the lease term, lease payments, and the economic life, fair value and estimated residual value of the asset. Where leases include an option to purchase the leased asset at the end of the lease term, this is assessed as a part of the Company’s lease classification determination. The Company has month-to-month leases only, cancellable upon 45 days’ notice. Therefore, the Company has elected the short-term lease recognition exemption for all leases, whereby leases are not recorded on the Company’s balance sheet and lease payments are recognized as lease expense on a straight-line basis over the lease term.

 

 

Long-Lived and Intangible Assets – Long-lived assets and certain identifiable definite life intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company periodically evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. No patents were written off in the third quarter of 2023 or in fiscal 2022. Utility patents are amortized over a 17-year period. Patents which are pending are not amortized.

 

Revenue Recognition – The Company’s revenue is derived primarily from sales of our software and related hardware suite under perpetual licenses and from providing engineering services under contracts. The Company recognizes revenue in accordance with ASC Topic No. 606. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance under prior U.S. GAAP and replaced it with a principles-based approach for determining revenue recognition. The core principle of the standard is the recognition of revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In general, we determine revenue recognition by: (1) identifying the contract, or contracts, with our customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to performance obligations in the contract; and (5) recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

 

In January 2022, the Company began offering a subscription option to its customers pursuant to which it leases its PrintRite3D platform for terms of between 12 and 36 months and provide technical support and maintenance for the term of the arrangement, as well as installation and training. The Company has determined these are leases because they relate to discrete pieces of equipment to which customers have the right to substantially all the economic benefit and exclusive use during the term of the arrangement. These leases are classified as operating leases and the Company retains title to the underlying equipment.

 

The leases may be renewed for successive one-year terms unless notice is given by either party of its intent not to renew at least 30 days before the end of the lease term. For leases with 36-month terms, the lessee may terminate the agreement after the first 18 months upon at least 30 days written notice. Some, but not all, of the leases permit lessees to purchase the equipment at any time at an amount that approximates fair value and are not reasonably certain to be exercised at the inception of the lease. There are no anticipated variable lease payments at the inception of the lease.

 

There are two non-lease components in the arrangement that consist of technical support and maintenance, and installation and training, respectively. The Company has elected single component practical expedient accounting to combine the technical support and maintenance with the lease as they have the same pattern of transfer. The installation and training component does not have the same pattern of transfer; therefore, this component is not eligible for single component practical expedient accounting. The consideration has been allocated on a relative fair value basis of the underlying lease and non-lease components. The Company has estimated the residual value of the leased equipment based on its useful life, and the ability to refurbish and sell the equipment, as well as the Company’s ability to componentize the hardware and utilize subassemblies in other products.

 

Revenue from these operating leases for the three and nine months ended September 30, 2023 was $8,503 and $36,846, respectively.

 

Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable are carried at original invoice amount less an estimated allowance for doubtful accounts. We determine the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. As of September 30, 2023 and September 30, 2022, the Company had established an allowance for doubtful accounts of $115,600 and $0, respectively.

 

 

Minimum Lease Payments Receivable

 

Minimum lease payments receivable for the succeeding years ending December 31 are as follows:

 

Year ending December 31,  Amount 
2023 (remaining)  $8,503 
2024   8,503 
2025   - 
2026   

-

 
Thereafter   - 
Total  $17,006 

 

Equipment Underlying Operating Leases:

 

Equipment under operating leases as of September 30, 2023 was comprised of the following:

 

  

September 30,

2023

 
PrintRite3D Hardware  $77,208 
Accumulated Depreciation   (15,203)
Net Book Value  $62,005 

 

The Company is depreciating the underlying equipment over its useful life of 7 years, but certain subassemblies and components may have a longer economic life.

 
v3.23.3
Inventory
 9 Months Ended
Sep. 30, 2023
Inventory Disclosure [Abstract]  
Inventory

NOTE 2 – Inventory

 

At September 30, 2023 and December 31, 2022, the Company’s inventory comprised the following:

 

  

September 30,

2023

  

December 31,

2022

 
Raw Materials  $283,401   $294,194 
Work in Process   108,776    140,723 
Finished Goods   382,889    516,026 
Total Inventory  $775,066   $950,943 

 
v3.23.3
Intangible Assets
 9 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets

NOTE 3 – Intangible Assets

 

The Company’s intangible assets consist of patents and patent applications.

 

The Company capitalizes costs incurred in connection with acquiring its patents. These costs include registration, documentation, and legal fees associated with the application. Costs incurred with patents that have been previously granted are expensed as incurred.

 

Provisional patent applications are not amortized until a patent has been granted. Once a patent is granted, the Company will amortize the related costs over the estimated useful life of the patent. If a patent application is denied, then the costs will be expensed at that time.

 

During the nine months ended September 30, 2023, $43,530 of costs related to patents issued during the quarter were reclassified from provisional patent application to patents and began to be amortized as of the date of issue.

 

 

The following is a summary of definite-life intangible assets less accumulated amortization as of September 30, 2023 and December 31, 2022, respectively:

 

  

September 30,

2023

  

December 31,

2022

 
Provisional Patent Applications  $

777,235

   $675,251 
Patents   568,280    524,750 
Less: Accumulated Amortization   (97,818)   (74,716)
           
Net Intangible Assets  $1,247,697   $1,125,285 

 

Amortization expense on intangible assets was $23,102 and $17,010 for the nine months ended September 30, 2023 and 2022, respectively.

 

The estimated aggregate amortization expense for years ending December 31 is as follows:

 

      
2023 (Remaining)  $8,033 
2024   32,131 
2025   32,131 
2026   32,131 
Thereafter   366,036 
      
Amortization expense  $470,462 

 
v3.23.3
Stockholders’ Equity
 9 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Stockholders’ Equity

NOTE 4 – Stockholders’ Equity

 

Common Stock

 

Effective September 22, 2023, we effected a 1-for-20 reverse stock split of the outstanding shares of our common stock and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. In connection with the reverse split, we issued 40,197 common shares to round-up fractional shares to the nearest whole share.

 

The effects of the reverse stock split have been retroactively reflected in all periods presented.

 

In the third quarter of 2023, the Company sold 72,721 shares of common stock through our ATM Agreement, resulting in net proceeds of $364,555.

 

In the first quarter of 2023, the Company issued 11,380 shares of common stock in exchange for the conversion of 132 shares of Series D Convertible Preferred Stock and 2,161 shares of common stock as in-kind payment of dividends thereon.

 

Also in the first quarter of 2023, the Company issued 122 shares of common stock in exchange for the conversion of 17 shares of Series E Convertible Preferred Stock and 33 shares of common stock as in-kind payment of dividends thereon.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value per share, of which 316 and 465 shares were issued and outstanding at September 30, 2023 and December 31, 2022, respectively.

 

 

In January 2020, the Company entered into a Securities Purchase Agreement with certain institutional investors (the “Institutional Private Placement”), pursuant to which the Company issued and sold 1,640 shares of the Company’s newly created Series D Convertible Preferred Stock (the “Series D Preferred Stock”) at an initial stated value of $1,000 per share. Dividends accrue at a rate of 9% per annum (subject to increase upon the occurrence (and during the continuance) of certain triggering events described therein) and are payable monthly in kind by the increase of the stated value of the Series D Preferred Shares by said amount. The holders of the Series D Preferred Shares have the right at any time to convert all or a portion of the Series D Preferred Shares (including, without limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing date) into shares of the Company’s Common Stock at the conversion price then in effect, which was $6.00 as of September 30, 2023 (subject to adjustment for stock splits, dividends, recapitalizations and similar events and full ratchet price protection in the event the Company issues or sells, or is deemed to have issued or sold, shares of Common Stock for a consideration per share less than a price equal to the conversion price then in effect).

 

On January 27, 2023, the holder of the remaining 132 outstanding shares of Series D Preferred Stock elected to convert such shares, which resulted in the issuance of 13,541 shares of common stock.

 

At September 30, 2023, there were no shares of Series D Preferred Stock outstanding.

 

Concurrent with the Institutional Private Placement, the Company entered into a Securities Purchase Agreement pursuant to which the Company issued and sold to certain of its directors and the Company’s then largest stockholder 333 shares of the Company’s newly created Series E Convertible Preferred Stock (the “Series E Preferred Stock”) at an initial stated value of $1,000 per share. Dividends accrue at a dividend rate of 9% per annum and are payable monthly in kind by the increase of the stated value of the Series E Preferred Stock by said amount. The Series E Preferred Stock is initially convertible into 2,428 shares of common stock (subject to adjustment for stock splits, dividends, recapitalizations and similar events).

 

On January 23, 2023, the holder of 17 shares of Series E Preferred Stock elected to convert such shares, which resulted in the issuance of 155 shares of common stock.

 

At September 30, 2023, 316 shares of Series E Preferred Stock were outstanding, which were convertible into 3,069 shares of common stock, including in-kind dividends thereon.

 

Stock Options

 

The Company’s 2013 Equity Incentive Plan expired on March 15, 2023. As such, there were no shares of common stock reserved for future issuance thereunder as of September 30, 2023.

 

On January 26, 2023, the Company granted options to its non-employee directors to purchase up to an aggregate of 2,620 shares of common stock at an exercise price of $11.60. As of September 30, 2023, 75% of such grants were fully vested and exercisable, and the remaining 25% will vest on December 31, 2023, subject to the directors remaining in our service through such date.

 

On January 26, 2023, the Company granted 19 employees options to purchase up to an aggregate of 19,065 shares of common stock in connection with their employment. The options have an exercise price of $11.60, vested as to 50% on the date of the grant, and will vest as to the remaining 50% in equal monthly installments over the subsequent 23 months, provided that the employees remain employed by the Company through such dates.

 

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s common stock on the grant date, but not less than 100% of the fair market value. Stock options are typically granted throughout the year and generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the vesting period for each stock option award.

 

Total stock-based compensation expense included in the statements of operations for the nine months ended September 30, 2023 and 2022 was $447,417 and $613,833 respectively, all of which is related to stock options.

 

 

The fair value of stock-based awards was estimated using the Black-Scholes model with the following weighted average assumptions for the nine months ended September 30, 2023, and 2022:

 

   2023   2022 
Dividend yield   0.00%   0.00%
Risk-free interest rate   4.05%   0.95 -3.23%
Expected volatility   100.23-100.25%   106.40 -109.97%
Expected life (in years)   5    5 

 

Option activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   Options   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		   Aggregate
Intrinsic
Value ($)		 
                 
Options outstanding at December 31, 2021   69,795    84.80    3.89        - 
Granted   24,374    50.00    4.43    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (4,216)   87.80    -    - 
Options outstanding at December 31, 2022   89,953    75.20    3.30    - 
Granted   21,704    11.60    4.32    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (20,930)   68.59    -    - 
Options outstanding at September 30, 2023   90,727    61.58    2.96    - 
Options unvested at September 30, 2023   15,876    37.11    3.83    - 
Options vested at September 30, 2023   74,851    66.76    2.78    - 
Options outstanding at September 30, 2023   90,727    61.58    2.96    - 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At September 30, 2023, no option had an exercise price below the $3.06 closing price of our common stock as reported on The Nasdaq Capital Market.

 

At September 30, 2023, there was $278,132 of unrecognized stock-based compensation expense related to unvested stock options with a weighted average remaining recognition period of 1.26 years.

 

Stock Appreciation Rights

 

On June 23, 2020, the board of directors (the “Board”) of the Company adopted the 2020 Stock Appreciation Rights Plan (the “Plan”). The purposes of the Plan are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the stockholders of the Company; and (iii) promote the success of the Company’s business. The Plan provides for incentive awards only in the form of stock appreciation rights payable in cash (“SARs”) and no shares of common stock are reserved or will be issued pursuant to the Plan.

 

 

A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (“Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a share of common stock on the date of grant of the SAR. The administrator of the Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant.

 

The Company did not grant any SAR’s during the nine months ended September 30, 2023.

 

The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the vesting period for each SAR award. The SARs are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation,” and any changes in fair value are reflected in the Statement of Operations as of the applicable reporting date.

 

The fair value of SAR awards was estimated using the Black-Scholes model with the following weighted average assumptions for the nine months ended September 30, 2023 and the year ended December 31, 2022:

 

   2023   2022 
Dividend yield   -    0.00%
Risk-free interest rate   -    0.82-2.79%
Expected volatility   -    108.0-119.0%
Expected life (in years)   -    5 

 

SARs activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   SARs   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		   Aggregate
Intrinsic
Value ($)		 
                 
SARs outstanding at December 31, 2021   18,532    63.00    4.24    - 
Granted   40,743    36.20    4.48    - 
Exercised   -    -    -        - 
Forfeited or cancelled   (1,386)   58.20    -    - 
SARs outstanding at December 31, 2022   57,889    44.20    4.11    - 
Granted   -    -    -    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (17,432)   43.03-    -    - 
SARs outstanding September 30, 2023   40,457    44.75    3.40    - 
SARs unvested at September 30, 2023   17,051    54.92    3.04    - 
SARs vested at September 30, 2023   23,406    37.35    3.66    - 
SARs outstanding at September 30, 2023   40,457    44.75    3.40    - 

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At September 30, 2023, no SAR had an exercise price below the $3.06 closing price of our common stock as reported on The Nasdaq Capital Market.

 

At September 30, 2023, there was $396,579 of unrecognized stock-based compensation expense related to unvested SARs with a weighted average remaining recognition period of 1.51 years.

 

 

Warrants

 

Warrant activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   Warrants   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		 
Warrants outstanding at December 31, 2021   199,397    122.00    2.10 
Granted   -    -    - 
Exercised   -    -    - 
Forfeited or cancelled   (8,233)   -    - 
Warrants outstanding at December 31, 2022   191,164    93.24    1.19 
Granted   151,483    6.42    2.19 
Exercised   -    -    - 
Forfeited or cancelled   (120,604)   90.72    - 
Warrants outstanding at September 30, 2023   222,043    26.48    2.07 

 
v3.23.3
Subsequent Events
 9 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events

NOTE 5 - Subsequent Events

 

On October 13, 2023, the Company raised $772,468 in net proceeds by selling 128,887 common shares pursuant to its ATM Agreement.

 

On October 6, 2023, the Company entered into a definitive asset purchase agreement (“APA”) with Divergent Technologies, Inc., or Divergent, pursuant to which have agreed to sell to Divergent, and Divergent has agreed to purchase from us, certain assets consisting primarily of patents, software code and other intellectual property for a purchase price of $1,626,242, including a $37,000 earnest-money deposit previously paid to us by Divergent.

 

The parties’ respective obligations to close are subject to the accuracy of the parties’ respective representations and warranties and performance of their respective covenants and satisfaction or waiver of other customary conditions specified in the Asset Purchase Agreement.

 

The Asset Purchase Agreement contains customary representations and warranties which will survive for one year following the closing. The Asset Purchase Agreement also contains restrictive covenants regarding the conduct of our business pending the closing.

 

In the interim, between the signing date and closing date or termination of the Asset Purchase Agreement, we have granted Divergent a non-exclusive, non-transferable, non-sublicensable (except to Divergent customers and affiliates), limited, irrevocable (except in connection with the termination of the Asset Purchase Agreement in certain circumstances), worldwide, royalty-free license to the “Licensed IP” (as defined) for testing, evaluation, and commercialization purposes.

 

On October 12, 2023, the Company entered into a definitive Share Exchange Agreement for the acquisition of NextTrip Holdings, Inc., a travel technology company based in Sunrise, Florida (“NextTrip”). Pursuant to the terms and conditions of the Agreement, Sigma will acquire 100% of the capital stock of NextTrip in exchange for shares of Sigma common stock constituting 19.99% of its outstanding common stock plus additional contingent shares of Sigma common stock upon the achievement of post-closing milestones tied to the business performance of NextTrip. Assuming all business milestones are achieved, the equity owners of NextTrip will receive a total of 6 million shares of our common stock, resulting in existing Sigma holders retaining, on a pro forma basis, approximately 9.8% of the total outstanding shares immediately following the issuance of such shares.

 

The parties’ respective obligations to close the Acquisition are subject to the satisfaction or waiver of various conditions specified in the Share Exchange Agreement. The conditions include approval by Sigma shareholders of the issuance of the Exchange Shares as required by applicable listing standards of The Nasdaq Capital Market, or Nasdaq, amendments to our amended and restated articles of incorporation to change our name and to increase our authorized common stock, and the continued listing or our common stock on Nasdaq, as well as customary other closing conditions.

 

 

The Share Exchange Agreement contains representations and warranties and covenants of the parties customary for a transaction of this nature which will not survive the closing of the Acquisition. The Share Exchange Agreement also contains customary covenants regarding the conduct of the respective businesses of Sigma and NextTrip pending the closing of the Acquisition. The Share Exchange Agreement permits us to sell our quality assurance software assets at or after the closing of the Acquisition as contemplated by our Asset Purchase Agreement with Divergent Technologies, Inc.

 

Both transactions are expected to be completed in the fourth quarter of 2023, subject to shareholder approvals and other customary closing conditions.

 

On October 6, 2023, Nasdaq Listing Qualifications (“Nasdaq”) notified the Company that it had regained compliance with the minimum bid price Listing Rule 5550(a)(2) as the Company’s closing bid price of its common stock had been at or greater than $1.00 per share for ten consecutive business days following the effective date of the Company’s reverse stock split. Nasdaq further notified the Company that the matter is closed.

 

On August 17, 2023, the Company received notice from Nasdaq that because our stockholders’ equity as of June 30, 2023 was $2,391,289, we no longer comply with Nasdaq Listing Rule 5550(b)(1), which requires companies listed on the Nasdaq Capital Market to maintain minimum stockholders’ equity of $2,500,000, and do not meet the alternatives of market value of listed securities or net income from continuing operations. The notice stated that under Nasdaq Rules, we have 45 calendar days to submit a plan to regain compliance and that if our plan is accepted, Nasdaq can grant us an extension of up to 180 calendar days from the date of the notice to evidence compliance.

 

On October 2, 2023, the Company submitted its plan to regain compliance to Nasdaq and requested an extension to February 13, 2024 to evidence compliance with the Rule and all other applicable criteria for continued listing on Nasdaq.

 

On October 23, 2023, Nasdaq informed the Company that based on the submission, it had granted the requested extension until February 13, 2024 to demonstrate compliance with the Rule. Nasdaq further informed the Company that if the Company fails to evidence compliance upon filing its periodic report for the quarter ended March 31, 2024 with the SEC and Nasdaq, the Company may be subject to delisting.
v3.23.3
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Nature of Business

Nature of Business - Sigma Additive Solutions, Inc., a Nevada corporation (“Company,” “Sigma,” “we,” “us” and “our”), was founded by a group of scientists, engineers and businessmen to develop and commercialize novel and unique manufacturing and materials technologies. The Company’s core technologies are designed to allow its customers to combine advanced manufacturing quality assurance and process control protocols with novel materials to achieve breakthrough product potential in many industries, including aerospace, defense, oil and gas, bio-medical, and power generation.

 
Reverse Stock Split

Reverse Stock Split - Effective September 22, 2023, we effected a 1-for-20 reverse stock split of the outstanding shares of our common stock and a corresponding decrease in the number of shares of our common stock that we are authorized to issue. The effects of the reverse stock split have been retroactively reflected in all periods presented.

 
Basis of Presentation

Basis of Presentation - The accompanying financial statements have been prepared by the Company in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2023 and 2022 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed financial statements should be read in conjunction with the December 31, 2022 audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations for the period ended September 30, 2023 are not necessarily indicative of the operating results for the full year.

 
Going Concern

Going Concern – The Company has sustained losses and had negative cash flows from operating activities since its inception.

 

On September 7, 2023, we raised $364,555 in net proceeds pursuant to our At-The-Market Issuance Sales Agreement, or ATM Agreement, and on October 13, 2023, we raised an additional $772,468 in net proceeds. With these additional proceeds, the Company estimates that it has sufficient cash and working capital to fund its scaled-back operations as described below pending the completion of our acquisition of NextTrip Holdings, Inc. and sale of assets to Divergent Technologies, Inc., or through March 2024. The Company reduced its employee headcount, and discontinued product development activities for the time being to ensure lowered expenses. The Company is continuing to operate and support its existing customers who have maintenance agreements and leases in place, supporting new installations in the field, and actively seeking potential sales of the PrintRite3D systems and software to customers who have lease agreements in place, systems on consignment, or otherwise express interest in Sigma’s products available for sale. The Company completed two such sales in the quarter ended September 30, 2023, and believes additional sales are achievable going forward as we progress towards closing the pending transactions. There is no assurance, however, that we will be able to close either transaction. If we fail to complete the acquisition of NextTrip Holdings, Inc., we intend to proceed with the sale of assets to Divergent Technologies, Inc. and may seek to undertake another strategic transaction, if possible, or the dissolution and liquidation or the bankruptcy of the Company. For these reasons, there is substantial doubt about our ability to continue as a going concern.

 
Fair Value of Financial Instruments

Fair Value of Financial Instruments – The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables, accounts payable, and accrued liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The Company does not use derivative instruments for hedging market risk or for trading or speculative purposes.

 

 
Loss Per Share

Loss Per Share – The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants, options and preferred stock were excluded due to the anti-dilutive effect they would have on the computation. At September 30, 2023 and 2022, the Company had the following common shares underlying these instruments:

 Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

   2023   2022 
   September 30, 
   2023   2022 
Warrants   222,043    191,164 
Stock Options   90,727    89,247 
Preferred Stock   3,069    7,446 
Total Underlying Common Shares   315,839    287,857 

 

The following table shows the amounts used in computing loss per share and the effect on net loss and the weighted average number of potentially dilutive shares for the periods shown:

 

   2023   2022   2023   2022 
   Three Months Ended
September 30		   Nine Months Ended
September 30		 
   2023   2022   2023   2022 
                 
Net Loss Per Common Share – Basic and Diluted  $(1.57)  $(4.39)  $(7.28)  $(12.93)
                     
Loss Applicable to Common Stockholders (numerator)  $(882,348)  $(2,306,528)  $(3,964,577)  $(6,789,533)
                     
Weighted Average Number of Common. Shares Outstanding Used in Loss Per Share During the Period (denominator)   560,310    524,940    544,587    524,940 

 
Accounting Estimates

Accounting Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimated by management. Significant accounting estimates that may materially change in the near future are impairment of long-lived assets, values of stock compensation awards and stock equivalents granted as offering costs, and allowance for bad debts and inventory obsolescence.

 
Leases

Leases – The Company leases office space from third parties. The Company determines if a contract is a lease at inception. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term begins on the commencement date, which is the date the Company takes possession of the asset and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Leases are classified as operating or finance leases based on factors such as the lease term, lease payments, and the economic life, fair value and estimated residual value of the asset. Where leases include an option to purchase the leased asset at the end of the lease term, this is assessed as a part of the Company’s lease classification determination. The Company has month-to-month leases only, cancellable upon 45 days’ notice. Therefore, the Company has elected the short-term lease recognition exemption for all leases, whereby leases are not recorded on the Company’s balance sheet and lease payments are recognized as lease expense on a straight-line basis over the lease term.

 

 
Long-Lived and Intangible Assets

Long-Lived and Intangible Assets – Long-lived assets and certain identifiable definite life intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company periodically evaluates the recoverability of its long-lived assets based on estimated future cash flows and the estimated liquidation value of such long-lived assets and provides for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the long-lived assets. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. Assets to be disposed of are carried at the lower of carrying value or estimated net realizable value. No patents were written off in the third quarter of 2023 or in fiscal 2022. Utility patents are amortized over a 17-year period. Patents which are pending are not amortized.

 
Revenue Recognition

Revenue Recognition – The Company’s revenue is derived primarily from sales of our software and related hardware suite under perpetual licenses and from providing engineering services under contracts. The Company recognizes revenue in accordance with ASC Topic No. 606. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance under prior U.S. GAAP and replaced it with a principles-based approach for determining revenue recognition. The core principle of the standard is the recognition of revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In general, we determine revenue recognition by: (1) identifying the contract, or contracts, with our customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to performance obligations in the contract; and (5) recognizing revenue when, or as, we satisfy performance obligations by transferring the promised goods or services.

 

In January 2022, the Company began offering a subscription option to its customers pursuant to which it leases its PrintRite3D platform for terms of between 12 and 36 months and provide technical support and maintenance for the term of the arrangement, as well as installation and training. The Company has determined these are leases because they relate to discrete pieces of equipment to which customers have the right to substantially all the economic benefit and exclusive use during the term of the arrangement. These leases are classified as operating leases and the Company retains title to the underlying equipment.

 

The leases may be renewed for successive one-year terms unless notice is given by either party of its intent not to renew at least 30 days before the end of the lease term. For leases with 36-month terms, the lessee may terminate the agreement after the first 18 months upon at least 30 days written notice. Some, but not all, of the leases permit lessees to purchase the equipment at any time at an amount that approximates fair value and are not reasonably certain to be exercised at the inception of the lease. There are no anticipated variable lease payments at the inception of the lease.

 

There are two non-lease components in the arrangement that consist of technical support and maintenance, and installation and training, respectively. The Company has elected single component practical expedient accounting to combine the technical support and maintenance with the lease as they have the same pattern of transfer. The installation and training component does not have the same pattern of transfer; therefore, this component is not eligible for single component practical expedient accounting. The consideration has been allocated on a relative fair value basis of the underlying lease and non-lease components. The Company has estimated the residual value of the leased equipment based on its useful life, and the ability to refurbish and sell the equipment, as well as the Company’s ability to componentize the hardware and utilize subassemblies in other products.

 

Revenue from these operating leases for the three and nine months ended September 30, 2023 was $8,503 and $36,846, respectively.

 
Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts – Trade accounts receivable are carried at original invoice amount less an estimated allowance for doubtful accounts. We determine the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. As of September 30, 2023 and September 30, 2022, the Company had established an allowance for doubtful accounts of $115,600 and $0, respectively.

 

 

Minimum Lease Payments Receivable

 

Minimum lease payments receivable for the succeeding years ending December 31 are as follows:

 

Year ending December 31,  Amount 
2023 (remaining)  $8,503 
2024   8,503 
2025   - 
2026   

-

 
Thereafter   - 
Total  $17,006 

 

Equipment Underlying Operating Leases:

 

Equipment under operating leases as of September 30, 2023 was comprised of the following:

 

  

September 30,

2023

 
PrintRite3D Hardware  $77,208 
Accumulated Depreciation   (15,203)
Net Book Value  $62,005 

 

The Company is depreciating the underlying equipment over its useful life of 7 years, but certain subassemblies and components may have a longer economic life.

 
v3.23.3
Summary of Significant Accounting Policies (Tables)
 9 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

 Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share

   2023   2022 
   September 30, 
   2023   2022 
Warrants   222,043    191,164 
Stock Options   90,727    89,247 
Preferred Stock   3,069    7,446 
Total Underlying Common Shares   315,839    287,857 
Schedule of Computing Loss Per Share

The following table shows the amounts used in computing loss per share and the effect on net loss and the weighted average number of potentially dilutive shares for the periods shown:

 

   2023   2022   2023   2022 
   Three Months Ended
September 30		   Nine Months Ended
September 30		 
   2023   2022   2023   2022 
                 
Net Loss Per Common Share – Basic and Diluted  $(1.57)  $(4.39)  $(7.28)  $(12.93)
                     
Loss Applicable to Common Stockholders (numerator)  $(882,348)  $(2,306,528)  $(3,964,577)  $(6,789,533)
                     
Weighted Average Number of Common. Shares Outstanding Used in Loss Per Share During the Period (denominator)   560,310    524,940    544,587    524,940 
Schedule of Minimum Lease Payments Receivable

Minimum lease payments receivable for the succeeding years ending December 31 are as follows:

 

Year ending December 31,  Amount 
2023 (remaining)  $8,503 
2024   8,503 
2025   - 
2026   

-

 
Thereafter   - 
Total  $17,006 
Schedule of Assets underlying Operating Leases

Equipment under operating leases as of September 30, 2023 was comprised of the following:

 

  

September 30,

2023

 
PrintRite3D Hardware  $77,208 
Accumulated Depreciation   (15,203)
Net Book Value  $62,005 
v3.23.3
Inventory (Tables)
 9 Months Ended
Sep. 30, 2023
Inventory Disclosure [Abstract]  
Schedule of Inventory

At September 30, 2023 and December 31, 2022, the Company’s inventory comprised the following:

 

  

September 30,

2023

  

December 31,

2022

 
Raw Materials  $283,401   $294,194 
Work in Process   108,776    140,723 
Finished Goods   382,889    516,026 
Total Inventory  $775,066   $950,943 
v3.23.3
Intangible Assets (Tables)
 9 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Definite-life Intangible Assets and Accumulated Amortization

The following is a summary of definite-life intangible assets less accumulated amortization as of September 30, 2023 and December 31, 2022, respectively:

 

  

September 30,

2023

  

December 31,

2022

 
Provisional Patent Applications  $

777,235

   $675,251 
Patents   568,280    524,750 
Less: Accumulated Amortization   (97,818)   (74,716)
           
Net Intangible Assets  $1,247,697   $1,125,285 
Schedule of Aggregate Amortization Expense

The estimated aggregate amortization expense for years ending December 31 is as follows:

 

      
2023 (Remaining)  $8,033 
2024   32,131 
2025   32,131 
2026   32,131 
Thereafter   366,036 
      
Amortization expense  $470,462 
v3.23.3
Stockholders’ Equity (Tables)
 9 Months Ended
Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Schedule of Share Based Payments Award Stock Options Valuation Assumptions

The fair value of stock-based awards was estimated using the Black-Scholes model with the following weighted average assumptions for the nine months ended September 30, 2023, and 2022:

 

   2023   2022 
Dividend yield   0.00%   0.00%
Risk-free interest rate   4.05%   0.95 -3.23%
Expected volatility   100.23-100.25%   106.40 -109.97%
Expected life (in years)   5    5 
Schedule of Warranty Activity

Warrant activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   Warrants   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		 
Warrants outstanding at December 31, 2021   199,397    122.00    2.10 
Granted   -    -    - 
Exercised   -    -    - 
Forfeited or cancelled   (8,233)   -    - 
Warrants outstanding at December 31, 2022   191,164    93.24    1.19 
Granted   151,483    6.42    2.19 
Exercised   -    -    - 
Forfeited or cancelled   (120,604)   90.72    - 
Warrants outstanding at September 30, 2023   222,043    26.48    2.07 
Stock Appreciation Rights [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Schedule of Share Based Payments Award Stock Options Valuation Assumptions

The fair value of SAR awards was estimated using the Black-Scholes model with the following weighted average assumptions for the nine months ended September 30, 2023 and the year ended December 31, 2022:

 

   2023   2022 
Dividend yield   -    0.00%
Risk-free interest rate   -    0.82-2.79%
Expected volatility   -    108.0-119.0%
Expected life (in years)   -    5 
Schedule of Stock Option Activity

SARs activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows:

 

   SARs   Weighted
Average
Exercise
Price ($)		   Weighted
Average
Remaining
Contractual
Life (Yrs.)		   Aggregate
Intrinsic
Value ($)		 
                 
SARs outstanding at December 31, 2021   18,532    63.00    4.24    - 
Granted   40,743    36.20    4.48    - 
Exercised   -    -    -        - 
Forfeited or cancelled   (1,386)   58.20    -    - 
SARs outstanding at December 31, 2022   57,889    44.20    4.11    - 
Granted   -    -    -    - 
Exercised   -    -    -    - 
Forfeited or cancelled   (17,432)   43.03-    -    - 
SARs outstanding September 30, 2023   40,457    44.75    3.40    - 
SARs unvested at September 30, 2023   17,051    54.92    3.04    - 
SARs vested at September 30, 2023   23,406    37.35    3.66    - 
SARs outstanding at September 30, 2023   40,457    44.75    3.40    - 
v3.23.3
Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares
 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total Underlying Common Shares 315,839 287,857
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total Underlying Common Shares 222,043 191,164
Equity Option [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total Underlying Common Shares 90,727 89,247
Preferred Stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total Underlying Common Shares 3,069 7,446
v3.23.3
Schedule of Computing Loss Per Share (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Accounting Policies [Abstract]        
Net Loss per Common Share - Basic $ (1.57) $ (4.39) $ (7.28) $ (12.93)
Net Loss per Common Share - Diluted $ (1.57) $ (4.39) $ (7.28) $ (12.93)
Loss Applicable to Common Stockholders (numerator) $ (882,348) $ (2,306,528) $ (3,964,577) $ (6,789,533)
Weighted Average Number of Common Shares Outstanding Used in Loss Per Share During the Period (denominator), Basic 560,310 524,940 544,587 524,940
Weighted Average Number of Common Shares Outstanding Used in Loss Per Share During the Period (denominator), Dilued 560,310 524,940 544,587 524,940
v3.23.3
Schedule of Minimum Lease Payments Receivable (Details)
Dec. 31, 2022
USD ($)
Accounting Policies [Abstract]  
2023 (remaining) $ 8,503
2024 8,503
2025
2026
Thereafter
Total $ 17,006
v3.23.3
Schedule of Assets underlying Operating Leases (Details)
Sep. 30, 2023
USD ($)
Accounting Policies [Abstract]  
PrintRite3D Hardware $ 77,208
Accumulated Depreciation (15,203)
Net Book Value $ 62,005
v3.23.3
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Oct. 13, 2023
Oct. 12, 2023
Sep. 22, 2023
Sep. 07, 2023
Sep. 30, 2023
Sep. 30, 2023
Sep. 30, 2022
Subsidiary, Sale of Stock [Line Items]              
Reverse stock split     1-for-20 reverse stock split        
Lease income from operating leases         $ 8,503 $ 36,846  
Allowance for doubtful accounts receivable         $ 115,600 $ 115,600 $ 0
Underlying equipment useful life         7 years 7 years  
Utility Patents [Member]              
Subsidiary, Sale of Stock [Line Items]              
Utility patents usefull life         17 years 17 years  
Subsequent Event [Member]              
Subsidiary, Sale of Stock [Line Items]              
Number of shares   6,000,000          
At-The-Market Issuance Sales Agreement [Member]              
Subsidiary, Sale of Stock [Line Items]              
Number of shares       364,555      
At-The-Market Issuance Sales Agreement [Member] | Subsequent Event [Member]              
Subsidiary, Sale of Stock [Line Items]              
Net proceeds $ 772,468            
v3.23.3
Schedule of Inventory (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Raw Materials $ 283,401 $ 294,194
Work in Process 108,776 140,723
Finished Goods 382,889 516,026
Total Inventory $ 775,066 $ 950,943
v3.23.3
Summary of Definite-life Intangible Assets and Accumulated Amortization (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]    
Less: Accumulated Amortization $ (97,818) $ (74,716)
Net Intangible Assets 1,247,697 1,125,285
Provisional Patent Applications [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross 777,235 675,251
Patents [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross $ 568,280 $ 524,750
v3.23.3
Schedule of Aggregate Amortization Expense (Details)
Dec. 31, 2022
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2023 (Remaining) $ 8,033
2024 32,131
2025 32,131
2026 32,131
Thereafter 366,036
Amortization expense $ 470,462
v3.23.3
Intangible Assets (Details Narrative) - USD ($)
 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Finite-Lived Intangible Assets [Line Items]    
Amortization expense on intangible assets $ 23,102 $ 17,010
Patent [Member]    
Finite-Lived Intangible Assets [Line Items]    
Costs relate to patents issued $ 43,530  
v3.23.3
Schedule of Share Based Payments Award Stock Options Valuation Assumptions (Details)
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Dividend yield 0.00% 0.00%  
Risk-free interest rate 4.05%    
Expected life 5 years 5 years  
2020 Stock Appreciation Rights Plan [Member]      
Dividend yield   0.00%
Risk-free interest rate    
Expected volatility    
Expected life   5 years
Risk-free interest rate, minimum     0.82%
Risk-free interest rate, maximum     2.79%
Expected volatility, minimum     108.00%
Expected volatility, maximum     119.00%
Minimum [Member]      
Risk-free interest rate   0.95%  
Expected volatility 100.23% 106.40%  
Maximum [Member]      
Risk-free interest rate   3.23%  
Expected volatility 100.25% 109.97%  
v3.23.3
Schedule of Stock Option Activity (Details) - USD ($)
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Number of Options Outstanding, Beginning Balance 89,953 69,795  
Weighted Average Exercise Price Outstanding, Beginning Balance $ 75.20 $ 84.80  
Weighted Average Remaining Contractual Life, Outstanding Balance 2 years 11 months 15 days 3 years 3 months 18 days 3 years 10 months 20 days
Aggregate Intrinsic Value, Outstanding Beginning Balance  
Number of Options, Granted 21,704 24,374  
Weighted Average Exercise Price, Granted $ 11.60 $ 50.00  
Aggregate Intrinsic Value, Granted    
Number of Options, Exercised 0 0  
Weighted Average Exercise Price, Exercised  
Aggregate Intrinsic Value, Exercised  
Number of Options, Forfeited or cancelled (20,930) (4,216)  
Aggregate Intrinsic Value, Forfeited or cancelled  
Number of Options Outstanding, Ending Balance 90,727 89,953 69,795
Weighted Average Exercise Price Outstanding, Ending Balance $ 61.58 $ 75.20 $ 84.80
Aggregate Intrinsic Value Outstanding, Ending Balance  
Number of Options, Unvested 15,876    
Weighted Average Exercise Price, Unvested $ 37.11    
Weighted Average Remaining Contractual Life, Unvested 3 years 9 months 29 days    
Aggregate Intrinsic Value, Options Unvested    
Number of Options, Vested 74,851    
Weighted Average Exercise Price, Vested $ 66.76    
Aggregate Intrinsic Value, Options Vested    
Stock Appreciation Rights [Member]      
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]      
Number of Options Outstanding, Beginning Balance 57,889 18,532  
Weighted Average Exercise Price Outstanding, Beginning Balance $ 44.20 $ 63.00  
Weighted Average Remaining Contractual Life, Outstanding Balance 3 years 4 months 24 days 4 years 1 month 9 days 4 years 2 months 26 days
Aggregate Intrinsic Value, Outstanding Beginning Balance  
Number of Options, Granted 40,743  
Weighted Average Exercise Price, Granted $ 36.20  
Weighted Average Remaining Contractual Life, Granted   4 years 5 months 23 days  
Aggregate Intrinsic Value, Granted  
Number of Options, Exercised    
Weighted Average Exercise Price, Exercised    
Aggregate Intrinsic Value, Exercised    
Number of Options, Forfeited or cancelled (17,432) (1,386)  
Weighted Average Exercise Price, Forfeited or cancelled 43 years 10 days 58 years 2 months 12 days  
Aggregate Intrinsic Value, Forfeited or cancelled  
Number of Options Outstanding, Ending Balance 40,457 57,889 18,532
Weighted Average Exercise Price Outstanding, Ending Balance $ 44.75 $ 44.20 $ 63.00
Aggregate Intrinsic Value Outstanding, Ending Balance
Number of Options, Unvested 17,051    
Weighted Average Exercise Price, Unvested $ 54.92    
Weighted Average Remaining Contractual Life, Unvested 3 years 14 days    
Aggregate Intrinsic Value, Options Unvested    
Number of Options, Vested 23,406    
Weighted Average Exercise Price, Vested $ 37.35    
Weighted Average Remaining Contractual Life, Vested 3 years 7 months 28 days    
Aggregate Intrinsic Value, Options Vested    
v3.23.3
Schedule of Warranty Activity (Details) - $ / shares
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Dec. 31, 2021
Equity [Abstract]      
Warrants Outstanding, Beginning Balance 191,164 199,397  
Weighted Average Exercise Price Outstanding, Beginning Balance $ 93.24 $ 122.00  
Weighted Average Remaining Contractual Life Years, Ending Balance 2 years 25 days 1 year 2 months 8 days 2 years 1 month 6 days
Warrants, Granted 151,483  
Weighted Average Exercise Price Outstanding, Granted $ 6.42  
Warrants,Exercised  
Weighted Average Exercise Price Outstanding,Exercised  
Warrants, Forfeited or cancelled (120,604) (8,233)  
Weighted Average Exercise Price Outstanding, Forfeited or cancelled $ 90.72  
Weighted Average Remaining Contractual Life Years, Granted 2 years 2 months 8 days    
Warrants Outstanding, Ending Balance 222,043 191,164 199,397
Weighted Average Exercise Price Outstanding, Ending Balance $ 26.48 $ 93.24 $ 122.00
v3.23.3
Stockholders’ Equity (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 22, 2023
Sep. 22, 2023
Sep. 07, 2023
Jan. 27, 2023
Jan. 26, 2023
Jan. 23, 2023
Jan. 31, 2020
Sep. 30, 2023
Mar. 31, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Dec. 31, 2021
Subsidiary, Sale of Stock [Line Items]                            
Reverse stock split   1-for-20 reverse stock split                        
Common shares issued to round-up fractional shares 40,197                          
Preferred stock, shares authorized               10,000,000     10,000,000   10,000,000  
Preferred stock, par value               $ 0.001     $ 0.001   $ 0.001  
Preferred stock, shares issued               316     316   465  
Preferred stock, shares outstanding               316     316   465  
Options exercise price                     $ 3.06      
Number of Options, Granted                     21,704   24,374  
Allocation share based compensation expense               $ 84,078   $ 275,418 $ 447,417 $ 613,833    
Number of Options Outstanding, Beginning Balance                 89,953   89,953 69,795 69,795  
Weighted Average Exercise Price Outstanding, Beginning Balance                 $ 75.20   $ 75.20 $ 84.80 $ 84.80  
Weighted Average Remaining Contractual Life Years, Outstanding Balance                     2 years 11 months 15 days   3 years 3 months 18 days 3 years 10 months 20 days
Aggregate Intrinsic Value, Outstanding Beginning Balance                      
Weighted Average Exercise Price, Granted                     $ 11.60   $ 50.00  
Weighted Average Remaining Contractual Life Years, Granted                     4 years 3 months 25 days   4 years 5 months 4 days  
Aggregate Intrinsic Value, Granted                          
Number of Options, Exercised                     0   0  
Weighted Average Exercise Price, Exercised                        
Aggregate Intrinsic Value, Exercised                        
Number of Options, Forfeited or cancelled                     (20,930)   (4,216)  
Weighted Average Exercise Price, Forfeited or cancelled                     $ 68.59   $ 87.80  
Aggregate Intrinsic Value, Forfeited or cancelled                        
Number of Options Outstanding, Ending Balance               90,727     90,727   89,953 69,795
Weighted Average Exercise Price Outstanding, Ending Balance               $ 61.58     $ 61.58   $ 75.20 $ 84.80
Aggregate Intrinsic Value Outstanding, Ending Balance                      
Number of Options, Unvested               15,876     15,876      
Weighted Average Exercise Price, Unvested               $ 37.11     $ 37.11      
Weighted Average Remaining Contractual Life Years, Unvested                     3 years 9 months 29 days      
Aggregate Intrinsic Value, Options Unvested                        
Number of Options, Vested               74,851     74,851      
Weighted Average Exercise Price, Vested               $ 66.76     $ 66.76      
Weighted Average Remaining Contractual Life Years, Vested                     2 years 9 months 10 days      
Aggregate Intrinsic Value, Options Vested                        
Unrecognized stock-based compensation expense, stock option               278,132     $ 278,132      
Weighted average remaining recognition period                     1 year 3 months 3 days      
Directors [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Vesting percentage                     75.00%      
Directors [Member] | December 31, 2022 [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Vesting percentage                     25.00%      
19 Employees [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Vesting percentage         50.00%                  
Number of Options, Granted         19,065                  
Option strike price         $ 11.60                  
2020 Stock Appreciation Rights Plan [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Options exercise price                     $ 3.06      
Unrecognized share based compensation cost               $ 396,579     $ 396,579      
Weighted average remaining recognition period                     1 year 6 months 3 days      
Employee Retention Agreements [Member] | 2020 Stock Appreciation Rights Plan [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Options exercise price         $ 11.60                  
Series E Convertible Preferred Stock [Member] | Other Securities Purchase Agreement [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Share issued and sold during period, shares                     333      
Conversion of stock, shares converted                     2,428      
Dividend rate                     9.00%      
Series D Preferred Stock [Member] | Institutional Securities Purchase Agreement [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Share issued and sold during period, shares             1,640              
Common stock issued during period       13,541                    
Preferred stock, par value             $ 1,000              
Preferred stock, shares outstanding       132       0     0      
Dividend rate             9.00%              
Conversion price per share               $ 6.00     $ 6.00      
Series E Preferred Stock [Member] | Institutional Securities Purchase Agreement [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Common stock issued during period           155                
Preferred stock, par value               $ 1,000     $ 1,000      
Preferred stock, shares outstanding           17   316     316      
Number of stock issued converted during period, shares                     3,069      
Common Stock [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Common stock issued during period               72,721     72,721      
Number of stock issued converted during period, shares                     11,501      
Common Stock [Member] | Series D Convertible Preferred Stock [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Conversion of stock, shares converted                 132          
Number of shares as in-kind payment, shares                 2,161          
Common Stock [Member] | Series E Convertible Preferred Stock [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Conversion of stock, shares converted                 17          
Number of shares as in-kind payment, shares                 33          
At-The-Market Issuance Sales Agreement [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Common stock issued during period     364,555                      
At-The-Market Issuance Sales Agreement [Member] | Common Stock [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Share issued and sold during period, shares               72,721            
Net proceeds               $ 364,555            
Private Placement [Member] | Purchase Agreement [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Warrants to purchase shares of common stock         2,620                  
Private Placement [Member] | Common Stock [Member] | Series D Convertible Preferred Stock [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Common stock issued during period                 11,380          
Private Placement [Member] | Common Stock [Member] | Series E Convertible Preferred Stock [Member]                            
Subsidiary, Sale of Stock [Line Items]                            
Common stock issued during period                 122          
v3.23.3
Subsequent Events (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Oct. 13, 2023
Oct. 12, 2023
Oct. 06, 2023
Sep. 07, 2023
Sep. 30, 2023
Sep. 30, 2023
Aug. 17, 2023
Jun. 30, 2023
Dec. 31, 2022
Sep. 30, 2022
Jun. 30, 2022
Dec. 31, 2021
Subsequent Event [Line Items]                        
Purchase price         $ 453,635 $ 453,635            
Stockholders equity         $ 1,974,054 $ 1,974,054   $ 2,391,289 $ 5,074,710 $ 6,821,768 $ 8,810,533 $ 12,859,751
Minimum [Member]                        
Subsequent Event [Line Items]                        
Stockholders equity             $ 2,500,000          
At-The-Market Issuance Sales Agreement [Member]                        
Subsequent Event [Line Items]                        
Number of shares       364,555                
Subsequent Event [Member]                        
Subsequent Event [Line Items]                        
Purchase price     $ 1,626,242                  
Earnest money deposit     $ 37,000                  
Percentage of outstanding common stock   1999.00%                    
Number of shares   6,000,000                    
Percentage of outstanding shares   980.00%                    
Subsequent Event [Member] | Business Acquisition [Member]                        
Subsequent Event [Line Items]                        
Acquire rate of capital stock   10000.00%                    
Subsequent Event [Member] | At-The-Market Issuance Sales Agreement [Member]                        
Subsequent Event [Line Items]                        
Net proceeds $ 772,468                      
Share issued and sold during period, shares 128,887                      
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