Good afternoon. And welcome to the Sigma Labs Earnings Conference Call for the Second Quarter ended June 30, 2017. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of the call will be available approximately one hour after the end of the call through September 14, 2017. I'll now like to turn the conference over to John Marco, Managing Director of Core IR the company’s Investor Relations Firm. Please go ahead sir.

Thank you, Anita and thank you everyone for joining today’s conference call to discuss Sigma Labs’ corporate developments and financial results for the second quarter ended June 30, 2017. With us today are John Rice, the company’s Interim CEO; Murray Williams, the company’s CFO and Mark Cola, the Company's President and CTO. At 4:13 p.m. Eastern Time today, Sigma Labs’ released financial results for the quarter ended June 30, 2017. If you have not received Sigma Labs’ earnings release, please visit the investor’s page at www.sigmalabsinc.com. During the course of this conference call, the company will be making forward-looking statements. The company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. This includes any projections of earnings, revenues, cash or other statements relating to the company’s future financial results, any statements about plans, strategies or objectives of management for future operations, any statements concerning proposed new products, any statements regarding anticipated new relationships or agreements, and any statements regarding expectations for the success of the company’s products in the U.S. and international markets, any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the forgoing. These statements are based on expectations and assumptions as of the date of this conference call and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the section of today’s press release titled cautionary note on forward-looking statements and in the public periodic reports the company files with the Securities and Exchange Commission. Investors or potential investors should read these risks. Sigma Labs assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. I will now turn the call over to John Rice, Interim CEO. John

Good afternoon. And welcome to all our shareholders and participants joining us for today's call. I am John Rice, the Chairman of your company's Board of Directors, and as of two weeks ago also the Company's Interim CEO. The purpose of this call is to report on the company's financial results and corporate development for the second quarter and specific and for the first half of this year in general. The narrative of this half year commences in January with the company's launch of a strategy to grow Sigma by building the 3D digital ecosystem from design to delivery. The minutes of that strategy the company worked with investment bankers and a successful public offering in February, that simultaneously generated $5.25 million in net proceeds, uplifted the company stock to NASDAQ in panel three new and independent members of the four person of Board of Directors and not incidentally, significantly stepped up the sophistication and complexity of Sigma Labs. The course of the company's narrative run in through the second quarter has two themes. One is continuing product and customer development. And two, a strategic business opportunity analysis within tub management of the Board and how best to drive towards building a digital ecosystem. And I'd say at the outset of this narrative that the management and the Board are not satisfied with the low level of first quarter sales and further even though we almost doubled our sales rate in the second quarter over the first, we are not satisfied with that outcome either. This narrative of the last seven and half months demonstrates or evidence that Sigma is successful building the strong technology platform and does have impressive product performance and test and onsite demonstration. And yet is a need of leveraging these assets into much better sales…

Yes, thank you, John. I'll begin with the discussion of the results for the three months ended June 30, 2017. And then discuss the results for the six months ended June 30, 2017. During the three months ended June 30, 2017, we recognized revenue of $290,553, as compared to revenue of $93,824 during the same period in 2016. The increase in revenue was primarily due to contracts in 2017, including Honeywell DARPA Phase III, Aerojet Rocketdyne, Solar Turbines, Pratt and Whitney, and Woodward which accounted for the majority of the $196,729 increase in revenues when comparing Q2 2017 to Q2 2016. In addition, the Q2 2016 revenues were lower due to the completion of the GEA America Makes Program in Q1 2016, providing no revenues from that contract in Q2 2016. Our General and Administrative expenses for the three months ended June 30, 2017, were $594,193, as compared to $480,697 for the same period in 2016. The $113,000 increase is primarily due to increases in legal fees and the increase in interest and finance costs on the $1 million promissory note originated in October 2016. Our payroll expenses for the three months ended June 30, 2017, were $300,661, as compared to $252,895 for the same period in 2016. The $47,766 increase is due to us having more employees in Q2 2017 than Q2 2016. Our expenses relating to stock-based compensation for the three months ended June 30, 2017, were $166,773, as compared to $59,362 for the same period in 2016. The $107,411 increase was due to more stock and stock options being used to pay for services as a mechanism for us to preserve cash. Our Research and Development expenses for the three months ended June 30, 2017, were $118,853, as compared to $11,907 for the same period in 2016.…

Thank you, Murray.

You are welcome.

So we remain unsatisfied with our second quarter performance and yet we are very confident about our prospects for continued growth through the remainder of 2017. We believe that our revenue will increase in future periods as we seek to further commercialize and expand our market presence for PrintRite3D related technologies and seek to identify compatible businesses to possibly acquire synergistic elements for our business. Although of course there is no assurance that any acquisitions can be consummated. So now it is time to open the call to questions. Operator, please do so.

[Operator Instructions] The first question comes from Aaron Tilden, a Private Investor. Please go ahead.

Hi, good afternoon, John. I had a question I guess when Mark Cola was doing a call he said he is trying and still locked with GE, I was wondering that's still true or do you still have engineers that are currently working with GE after the America Makes project that ended.

Well, Mark is sitting right beside me so I'll ask him to answer the question.

Hi, Aaron, thanks for asking the question. You are absolutely correct the America Makes program ramp through the first quarter actually slightly into the second quarter this year and that was where our focus of our efforts have been as with contemplating and completing that activity and so now we are actually looking forward to new opportunities with GE although we don't currently have any.

All right, all right. I guess my question Mark would be concerning working with other partner of manufactures, I am personally concerned about the HP set fusion machine, do you have any -- I don't need to tuck my evaluation or you have tested your part all I was saying by any chance.

No. We are not currently active doing any work with HP type printers. No, not at the moment.

The next question comes from Sigma Labs, Inc Please go ahead.

Good afternoon, gentlemen. Hope you are having a good day today. Over the years we've kind of had all the same kind of questions and are kind of still that way. But in particular now we have wrap of the America Makes projects with the GE and that group and report that put out led to some consternation among the investors and that it was either not well written or ambiguous but can you expand on the implication of that report for Sigma Labs and PrintRite3D because it appeared that you could read it one way saying, the study did in fact find the PrintRite3D did exactly what it claims to do and you can also read it another way saying that it did not meet the hurdles that they were looking as a function of product. Can you expand on that please?

Well, Mark, we want to read that report I mean in the former message not the latter, I think for beginners, there are two factors and Mark Cola will also weigh into this. There is problem that we have with how it was written of course and also we've moved passed it, the technology that we provided at the time of functioning and workable and the report doesn't make that as clear as it should have. The technology that we have today in version 2.0 is virtually impossible for them to misunderstand if we were to run it today the same test, what's your comment Mark.

Yes. You are exactly right, John. The version of software and the system they had is almost four years old and I can't comment on the writing because that's just their style and but with respect to evaluating the technology it's absolutely is evaluated with respect to the version they have. But to John's point as well with respect to 2.0 we would and we are currently actually running that analysis through our current version of software. And we hope to report on that back to America Makes sure that we've been in contact with America Makes about providing an indemnity to that study that would basically provide clarification on the current algorithm and their capabilities in version 2.0 today. So we are working on that and hope to have that back America Makes for dissemination shortly.

Okay. Just one other question. When a company has a product that is a solution or absolutely needed solution to an industry such as PrintRite3D the whole suite, you kind of would expect companies would be rushing to your door for your product and we have the metal AM industry now right on the cusp of actual production operations and yet it still seems to be the case that it is a major slog for Sigma Labs to get PrintRite3D accepted. I mean you guys have done great to getting at out there for evaluations but it just seems to have a hit wall out there. Is it still your anticipation and belief that just a little bit more effort and the logjam is going to break free or has some new event occurred whereby PrintRite3D does not quite seemed to be the solution that these people need.

Everything we are seeing in over the past year has seemed to be progressing towards the goal that you articulated that people want to go into production and needing those technology. That said they are still on the cusp where their prototype has been done and they are exploring whether or not go out and buy 10, 20 or 30 machines. They haven't placed those orders. And until the folks who are in prototype mode anticipate production actually place the orders for the producing machines, they will in our opinion continue to wait and see.

How does that relate to the number of machines that are already in used out there? I mean retrofitting existing machines I'd think that if they saw PrintRite3D being a very, very valuable product that they would go ahead and move forward with retrofitting existing machine but that doesn't seemed to be happening as well. Is that also in the mix of them contemplating that they are going to go until full production direction or is there some other issue.

Well, remember, the existing machine base is substantially a prototype base, these are machines that produce early prototype products that allow them to test and evaluate the product and so on and so forth but not in the production mode and given that the traditional approach to quality, there is a tendency to let's make 10 and cut out five. When you go into production you simply can't do that. That the yield problem that is going to be created in production can really only be answered with in process quality monitoring. And it ultimately with ITQA that controls the machine.

The next question comes from Paul Newark with Retail. Please go ahead.

Yes, I wanted to go back a little bit from the most early statements where you were dissatisfied with the amount of sales in Q1. We've heard over the last several conference calls that you are expecting nine months for PrintRite to gain traction. Is there anything you can point which can give me as an investor continued confidence that within the next nine months, next three quarters we are going to see a significant increase in sales of PrintRite?

That’s hard question for the CEO of a public company to address. So let me see if I can tiptoe through that minefield. What we've seen in the past year is the phenomenon that prior questioner was identifying which is with the size of installed base out there why isn't Sigma Labs technology moving more quickly into the market. Now one of the things that we are seeing in recent months is manufactures are coming into the picture who are not aerospace per se but manufactures of parts for other industries for interest and also aerospace, who are interested in delivering more prosaic product and they are bringing our equipment for evaluation with an anticipation of ordering machines much more quickly than the very larger Tier-1 brand name aerospace companies. So we feel we may be seeing a middle market emerging here and they may well end up -- moving more quickly into the space than the big Tier -1. So there is grounds to believe that we have a horizontally expanding and extending horizontally more quickly than we had thought and we definitely are seeing the aerospace community moving more slowly than they had thought.

Okay. Following that up a little bit there is a $0.5 million convertible loan given to Morf3D so they can release one of the more modern EOS printers. I am curious as to the utilization of the EOS printer that Sigma owns and how what capacity of use that's running at, what the percentages are in terms of cash generating for the company, what the percentage use of research and development, just to get a sense of what we've got and we are investing in.

So Mark I am going to need to refer you on that. I don't have the specifics on the actual use other than the R&D purpose that we used it for.

The generality of our machine is here that it is an R&D machine that it is primary use. At the same time we've done some more with in Jaguar for individual customers, we've done some local work for the laboratories. But its primary use Sigma is learning information that I think is probably key to going to the close loop control and that's our lab.

Shouldn't be there any percentages given because for several years we've been talking about this machine and there have been reports of people making request for quote and for printing from Sigma as well as the R&D within the various projects. And I am just trying to get a sense of how it makes more sense for Sigma to go ahead and make this $500,000 loan to more where that is designed more part of and intend to merge with Morf3D, I am just not clear that whole transaction and the need for in terms of Sigma having bought rather expensive machine and I understand the need for R&D but the loan and the questions about what the alternative path might have been but that will be water under the bridge.

Understood. So the importance of the series EOS series for 100 machines to Morf, Morf is in the prototype business and we believe capable of expanding very quickly into low volume production run with additional pieces of equipment. And Sigma is an IPQA company and so our natural alliance with them, it is logical for us and necessary for us to be able to reach out and work with people who are working at the high end of the research spectrum moving into production. The machine we have in Santa Fe is necessarily primary R&D because our technology is cannot be developed in a vacuum. We need to be working in the exact same conditions, the exact same equipment, the exact same material, the exact same challenges that are our customers and what would be OEM or end users like Honeywell. We need to be doing all of the things they are to provide them what they need. So the 290 and Santa Fe will continue to be 90% R&D and 10% revenue. And when we need production level work that will be in a strategic alliance with Jaguar machine and more in other as time develops.

The next question comes from Tao Smith, a Private Investor. Please go ahead.

Thank you. Good afternoon. I fully understand that there can be no assurance at any potential acquisitions that are being considered will actually be consummated. But I am wondering if you could give us some guidance as to the status of the possible alliance with more 3D and Jaguar.

I have tried to do that as best as I can within the limit of public company reporting. In the world of no assurances, we continue -- these companies are strategically important to us. These relationships are strategically important to us and like all courtships we are considering continuing to invest ourselves in the courtship.

I understand. At least it's still live, it's not dead, is that correct?

We are continuing to invest ourselves in the courtship. I am holding flowers.

I understand the difficulty and the dilemma. If I may ask one other question. It would appear that the date there have been no sales of printers with PrintRite3D embedded by additive industries or the other run name OEM, is that correct?

Mark?

That's correct. Now, we continue to work with their engineering groups to effect integration of our PrintRite both hardware and some cases hardware and other most cases or all cases the software and so we right now are on a track that we are anticipating if their schedules don't slide to the right, it looks like a first quarter second quarter deployment of printers with the PrintRite technology inside of it. Sorry that was first and second quarter of 2018

And additive is an early stage company themselves.

Correct.

This concludes our question-and-answer session. I'd like to turn the conference back over to John Rice for closing remarks.

Well, I want to thank everyone for again for your time today. We are excited and passionate and buoy we committed to the future of achieving the promise of Sigma Labs into delivering lasting shareholder value to you, our loyal shareholders. So thank you again for your time. Thank you for your continued support. And we look forward to continuing report and what we hopeful to ever increasing achievements in the coming months.

This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.