Cautionary Note on Forward-Looking Statements:
Certain statements contained in this interview may be “forward-looking statements” within the meaning of the Securities Litigation Reform Act of 1995. They are generally identified by words such as “believes,” “may,” “expects,” “anticipates,” “should” and similar expressions. These forward-looking statements are subject to a number of risks, uncertainties and assumptions that could adversely affect Sigma Labs, Inc. (the “Company”), including the risks set forth in the Company’s most recent annual report on Form 10-K. The forward-looking statements in this interview are made only as of the date of this interview. The Company undertakes no obligation to update any of these forward-looking statements, whether as a result of new information, future events or otherwise.
Sigma Labs, Inc., (web site), through its subsidiary, B6 Sigma, Inc., develops and commercializes manufacturing and materials technologies. It offers in-process quality assurance suite of technologies and materials-related suite of technologies primarily for 3D printing industry. The company also provides engineering consulting services to its manufacturing and materials technology expertise to third parties in developing next-generation technologies for materials and manufacturing projects. It serves aerospace and defense manufacturing, oil and gas manufacturing, power generation, bio-medical manufacturing, automotive manufacturing, and firearms and recreational equipment industries. The company was founded in 2010 and is based in Santa Fe, New Mexico.
Mark J. Cola has over 32 years of experience in the aerospace and nuclear industries, including with Rockwell International, SPECO Division of Kelsey-Hayes Co., Westinghouse in the Naval Nuclear Reactors Program, Houston Lighting & Power, and within the NNSA Weapons Complex at Los Alamos National Laboratory at which he held various technical and managerial positions including team leader and group leader of the welding and joining section as well as an advanced manufacturing technology group, respectively. He has also worked as a Research Engineer at Edison Welding Institute and for Thermadyne’s Stoody Division, a leading manufacturer of wear-resistant materials.
Mr. Cola was appointed as Chief Executive Officer of Sigma Labs Inc. on September 20, 2012 and President, Chief Operating Officer and a director of the Company in September 2010. From June 2006 through April 2010, Mr. Cola served as Director of Operations for the Beyond6 Sigma Division of TMC Corporation.
At Beyond6 Sigma, Mr. Cola worked with a wide range of clients ranging from aerospace to defense systems. His expertise is in manufacturing process development, friction welding, light alloys such as titanium and aluminum, mechanical, physical and welding metallurgy, and nickel-based super-alloys for harsh environments. Mr. Cola served as the Technical Co-Chairman for the inaugural National Nuclear Security Administration Future Technologies Conference held in May 2004, and he is a principal reviewer for the American Welding Society’s Welding Journal. Mr. Cola earned a B.S. in Metallurgical Engineering and an M.S. in Welding Engineering from The Ohio State University.
3DPrintingStocks.com: Thank you Mark, for taking part in this Q&A.
The 2016 FDA draft guidance on Additive Manufacturing for medical devices, and the recent America Makes/ANSI preliminary final draft of the AMSC standard both stopped short of explicitly identifying and concluding sensor based IPQA as a structural part of the guidance and standard. The Honeywell/DARPA initiative conclusion is yet to be presented.
Do you feel that the metal AM industry and the OEM metal 3D print end users have been sufficiently given the ‘green light’ by these two organizations to incorporate sensor based IPQA® without concern that the oversight organizations will later limit or reject use of the technology?
Regarding the draft guidance by the FDA, I believe that the OEM metal 3D printing end users have been sufficiently given the ‘green light’ by these two organizations to incorporate sensor based IPQA® without concern that the oversight organizations will later limit or reject use of the technology. The reason I believe that is because it’s not in the interest of the standards organizations to limit implementation, but simply to ensure the safety of the products produced. Their draft guidance speaks to this exact fact by the nature of their comments regarding the need for further R&D.
Regarding the America Makes/ANSI final draft guidance, I believe the fact that it is 182 pages speaks volumes about the critical nature and importance the standards organizations place on it and their role ensuring metal additive manufacturing (“AM”) has a future place in 3D advanced manufacturing as well as the products produced using metal AM.
Furthermore, under Section 188.8.131.52 Process Monitoring, the standards organizations list it as, “…generally in a low technology readiness level (TRL)”, which indicates that they view the state of process monitoring to be at an early stage of adoption / implementation. Process monitoring systems however, are emerging quickly and the first to market providers should realize the largest benefit in terms of market penetration and share.
Sigma’s recommendation is that standard practices should be developed that guide users to an understanding of how to deploy in-process quality assurance™ in a production environment. By doing so, in-process monitoring data can be linked to physical measurements of finished components, thereby enabling the industry to achieve a new, faster, less expensive way of qualifying a process which provides the kind of cost savings the President has positioned the $56 billion increase slated for the defense industry in the 2017 budget.
3DPrintingStocks.com: Sigma Labs appears to have been the pioneer in sensor based IPQA® for metal AM. Now, however, the likes of EOS EOSTATE MeltPool, Materialise Inspector, Concept Laser QM meltpool 3D, and other industry IPQA® efforts are coming forward. What credibility and danger of encroachment on PrintRite3D® business opportunities should be given to these competing systems?
If 3D advanced manufacturing, particularly metal AM, is to evolve into a truly advanced state, then the industry, and the regulatory bodies specifically, must embrace the paradigm shift that is inevitable with any new technology, i.e., it must ‘see’ (aka, in-process quality assurance™) what’s going on within a process and not just ‘look’ (aka, in-process monitoring) at a process. Others are ‘looking’ at a process, yet, to our knowledge, only Sigma Labs is actually ‘seeing’ what’s going on within a process. Therein lies what we believe sets Sigma Labs apart. While others are offering ‘in-process monitoring’, to my knowledge, none are offering IPQA® other than Sigma Labs. Why? Because I believe that only Sigma Labs has the unique combination of domain-specific materials & process engineering knowledge in powder metallurgy and welding (the two underlying principles of 3D metal printing), which allows Sigma Labs to ‘see’ what’s going on within a process. Looking is not the same as seeing. “Seeing” is taking the approach that it’s the underlying in-process dynamical behaviors of the process that must be understood, mapped and a digital fingerprint established (and not just having control of process inputs). While important, the process inputs are manifested in physical changes to the melt (weld) pool. Change an input, the result is a change in the digital fingerprint of the process. Sigma Labs captures, digitizes and stores the digital fingerprint or signature of the process.
These are just a few of the reasons that we believe that Sigma Labs maintains a thought leader position.
3DPrintingStocks.com: Materialise Inspector is described as providing similar capabilities as PrintRite3D®. To what degree does Sigma Labs feel that the awarded Sigma Labs’ patent ownership will protect PrintRite3D® from encroachment of the competition within the metal AM industry?
We regard our patents, trademarks, domain names, trade secrets, know-how, and other intellectual property as critical to our success. We rely on a combination of patent, trademark, trade secret, other intellectual property law, confidentiality procedures, and contractual provisions with employees, partners, and others to protect the technology and other proprietary rights, information and know-how that comprise the core of our business. We are currently prosecuting ten foreign and U.S. patent applications related to our IPQA® technology and rapid qualification of additive manufacturing for metal parts. Eight of these ten patent applications published between November 2015 and January 19, 2017.
Regarding Materialise Inspector software, we believe a few key points and differences are as follows:
- It’s only for AM machines that run Materialise’s build processor software. Whereas, Sigma Labs PrintRite3D® technology is AM machine agnostic.
- I understand that their software generates a layer by layer simulation based upon build parameters entered. As such this is only M&S software unlike PrintRite3D® which is empirically-based manufacturing software observing and measuring real-time process quality that can form the basis for an IPQA®-assisted quality assurance approach to AM product quality.
- It generates an “energy density map” based upon input parameters, then it highlights areas of concern, one can then go back and edit parameters, and re-run the heat map. It is like a “print preview” for metal printing. It can also be used to optimize build parameters. Given that, here again it is a good start much like M&S software similar to that available from 3DSIM or ESI. It helps to speed the Edisonian trial & error approach to process development yet does not substitute the need for quality measurements during the process. It appears to be complementary to our IPQA®-enabled PrintRite3D®.
3DPrintingStocks.com: Is PrintRite3D® considered complimentary to, or in competition with, both Materialise Inspector and Concept Laser QM meltpool 3D, with regard to the co-operation agreement in place with Materialise, and the JTDA with General Electric?
Sigma Labs’ PrintRite3D® INSPECT™ software is most certainly complementary to both Materialise Inspector software as well as ‘in-process monitoring’ software offered by machine OEMs. It completes their offering by turning their data into actionable intelligence. The reason is because we believe that Sigma Labs PrintRite3D® INSPECT™ software goes beyond where others leave off. It makes the data collected actionable such that a manufacturing engineer can do two things, namely, verify with objective evidence that the process is under control, and also use the data to buy and accept the products that were additively manufactured.
3DPrintingStocks.com: There has been some previous discussion hinting that PrintRite3D® technology has applications outside of metal AM; that the technology can be just as revolutionary within conventional manufacturing structures. What is the nature of Sigma Labs’ vision concerning where, how, and to what extent PrintRite3D® can move into conventional manufacturing?
Great question. Thanks for asking. Sigma Labs started out in 2010 working on IPQA®-based contracts for Boeing Aircraft Company in the area of advanced manufacturing using rotary friction welding for a Metals Affordability Initiative (MAI) sponsored by the USAF. That led to further contracts with Boeing for linear friction welding of titanium-tailored blanks for their 787 Dreamliner. Both were very successful programs. Other joining process-based programs followed.
The underlying premise here is that, where applicable, we believe that most manufacturing processes could benefit from an IPQA®-assisted approach. In particular, most welding and joining processes, machining, mechanical finishing and laser marking, as well as most subtractive manufacturing processes, fall into that category. Sigma Labs is interested in expanding PrintRite3D®’s reach into other advanced manufacturing avenues at the appropriate time.
Lastly, as the Industrial and Commercial IoT and Industry 4.0 gains momentum, most legacy machine tools will require a means to be connected to the ‘cloud’, which we believe will require IPQA® technology that allows for Edge Intelligence and relevant in-process data to be sent to the cloud where enhanced data analytics can be mined for additional engineering and manufacturing intelligence.
3DPrintingStocks.com: Do you believe PrintRite3D® will be adopted by AM for other than metals applications? Will this market feel the need to adopt sensor based IPQA®?
The underlying fundamental approach to quality assurance for AM components enabled by IPQA® is broadly applicable to other AM processes beyond metal. We believe that all 3DP made components could benefit from and IPQA®-assisted approach to quality assurance.
3DPrintingStocks.com: Many are eagerly anticipating announcement of the first true application of PrintRite3D® in a full production capacity. Is the newly announced Pratt & Whitney commercial contract indeed representing the first full-production use of PrintRite3D® at a metal AM manufacturer? If not, when do you expect such a contract from a client?
Pratt & Whitney represents another participant in Sigma Labs’ Early Adopter Program. They fall into our vertical of end user customers that have an installed base of 3D printing machines. The program now has participants like Woodward Corporation (Tier 1 supplier to aerospace and automotive), Siemens turbomachinery group, Honeywell Aerospace, GE Aviation, Spartacus3D, and others. The program was designed to incentivize end users to adopt our IPQA®-enabled technology to quality assurance for AM products while they are in the test & evaluation or characterization phase of their product development efforts.
Each of these EAP participants is moving into production, albeit at different rates. It’s an exciting race to see who enters full-production use first.
3DPrintingStocks.com: With PrintRite3D® becoming an important tool for AM production of critical, high-reliability part builds, it seems natural to incorporate the technology for other metal AM builds. To what extent do you anticipate PrintRite3D® will be adopted by metal AM production for other than critical, high-reliability part builds?
Sigma Labs believes that any commercial AM product could benefit from an IPQA®-assisted approach to quality assurance. As commercial producers become more aware of the features and benefits of PrintRite3D® for assuring the quality of their products, Sigma believes customers will begin to pull our technology in as a unique selling point to differentiate them from competitors, enhancing their overall return-on-investment (ROI) in AM technology.
3DPrintingStocks.com: With the America Makes project 4027/ANSI standard nearing implementation, do you feel this will specifically enable and result in additional commercial contracts from the wider AM industry?
The GEA led, America Makes-sponsored program had its final program presentation on Wednesday, March 15, 2017 at the America Makes Technology Readiness Review meeting at the University of El Paso, El Paso, TX. Many end users were in attendance and the final program results as presented by GE Aviation generated considerable interest and many in depth questions from the America Makes members in the audience. Sigma Labs expects that once the final report is issued, several additional interested end users as well as OEM machine producers will be considering PrintRite3D® for their QA needs.
3DPrintingStocks.com: With Sigma Labs’ inclusion in Phase 3 of the DARPA program, do you feel that a successful conclusion of the initiative will enable and result in new large scale adoption of sensor based IPQA® within the defense community’s AM projects?
We fully anticipate that once the DARPA-sponsored, Honeywell led effort is completed, Sigma Labs’ PrintRite3D® QA technology should be fully embraced by Honeywell’s Model Based Enterprise Approach to rapid qualification of laser powder bed fusion (LPBF) based printing of metal parts. The defense community is certainly paying attention to Honeywell and their DARPA OM program. Honeywell, much like many defense contractors has identified several products that could be produced using 3D metal printing and quality assured using PrintRite3D®.
3DPrintingStocks.com: With Sigma Labs having been chosen to help define the AM standards for the US Air Force rocket systems program, do you feel that PrintRite3D® will specifically be included in the resulting standard, and if so, will this lead to a much larger role for Sigma Labs in other USAF projects?
Sigma Labs was delighted to be selected to participate in the USAF Booster program with program leader Aerojet Rocketdyne. The contract extension we recently received further validates the value PrintRite3D® lends to qualifying space flight hardware. They want to take it to the next level of evaluation for qualifying their process and certifying their AM parts. To date, the feedback from Aerojet Rocketdyne has been most encouraging and quite favorable regarding PrintRite3D® and its many features and benefits to qualifying space flight hardware. The exposure that Sigma Labs receives as a result of participating in this program is of immeasurable value.
3DPrintingStocks.com: In the past you discussed a push/pull adoption process for PrintRite3D® in the AM industry; whereby the printer machine manufacturers would find themselves being pushed to incorporate PrintRite3D® in their machines by end users desiring to utilize the benefits and certification that PrintRite3D® provides. With the recent announcement of a commercial contract with the European OEM provider, do you feel that this push has begun? And do you feel that this first instance of embedding PrintRite3D® in printers will be a catalyst to pull the remaining printer manufacturers into embedding PrintRite3D® in order to remain competitive?
Sigma is delighted to have been able to announce our first commercial agreement for embedding PrintRite3D® into 3D printing machines. The resultant announcement was a pull of our technology in house from our OEM partner. They recognized the differentiating value of incorporating a leading technology like Sigma Labs’ PrintRite3D® technology as opposed to developing it in house themselves.
We believe it’s the first of many OEM opportunities as our technology continues to gain market acceptance. Sigma Labs is in either discussions with or negotiations with other OEM machine manufacturers for similar agreements. Specifically, our recent announce regarding Additive Industries NV, another OEM machine manufacturer, speaks to this very point.
3DPrintingStocks.com: Sigma Labs shareholders have had a rough ride balancing the promise of PrintRite3D® technology and the weak company balance sheet. Along with a limited investor base and lengthy industry delays, investors have suffered severely over the past two years. What is your address to shareholders concerning the company’s weak balance sheet and the difficulties of valuing the potential of the PrintRite3D® technology?
We greatly appreciate our shareholders and their patience as the technology continues to gain wider acceptance in the 3D printing industries particularly in the aerospace & defense communities. The test & evaluation (T&E) phases these industries undertake are similar to the clinical trials that a bio-tech company undertakes. There are periods of T&E that are necessary before a product can pass the stringent requirements set forth by the end users and within guidance set forth by the regulatory agencies. In the end, the wait is more than worth it as new products enhance lives.
Regarding our ‘weak balance sheet’, our recent capital raise strengthens our balance sheet and we expect that our uplist to NASDAQ will open the door to a broader base of institutional investors
3DPrintingStocks.com: The complexity of the science and methodology of AM manufacturing has most investors and analysts behind in their understanding of the ground changing technology of AM and IPQA®. Are you considering undertaking a marketing effort to educate and encourage new investors to boost the investor base in the company?
We have recently engaged with PR firm DGI Comm (www.dgicomm.com) as well as IR firm CoreIR (www.coreir.com) to assist with just these types of matters. As a result of these outreach efforts, we have begun to see broader awareness for Sigma Labs and its technology.
3DPrintingStocks.com: What do you anticipate the growth rate of Sigma Labs will be in the coming one, two and three years’ time?
It has been proven that the fastest way to increase sales is to do more with your existing customers, which should be easier to accomplish when our customers are given more manufacturing options and solutions, hence, why we are pursuing strategic alliances Our objective is to deliver a seamless and fully-integrated digital manufacturing enterprise using the most advanced manufacturing technologies. We believe the industry needs a complete, integrated AM solution for A&D customers in particular and an organization that can oversee the entire AM value chain – from material selection to design and manufacturing, as well as in-process quality assurance. Lastly, Disruptive technologies like AM combined with advanced but currently used manufacturing technologies and large customer bases are expected to create growth for Sigma Labs over the next 5 years.
Disclosure: I own shares of Sigma Labs Inc. (SGLB). I have not been paid by any company or any third party for this Q&A