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spk01: Good day and welcome to the Sigma Labs First Quarter 2021 Financial Results Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Chris Tyson, Executive Vice President of MG North America. Please go ahead, sir.
spk00: Thank you and good afternoon. I'd like to thank you all for taking time to join us for Sigma Labs First Quarter 2021 Business Update and Results Conference Call. Your hosts today are Mark Ruppert, President and Chief Executive Officer of and Frank Orszakowski, the company's chief financial officer. A press release detailing these results crossed the wires this afternoon at 4.01 p.m. Eastern today and is available on the company's website, sigmalabsinc.com. Before we begin the formal presentation, I'd like to remind everyone that statements made on the call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call. Please refer to the company's SEC filings for a list of associated risks, and we would also refer you to the company's website for more supporting industry information. At this time, I would like to turn the call over to Sigma Labs President and Chief Executive Officer, Mark Rupert. Mark, the floor is yours.
spk09: Thank you, Chris, and thanks to everybody for joining the call today. I hope you and your families are safe and well as we get closer to the new normal. I know that I'm closer to the new normal because I'm sitting in an airport for the first time in a year. So I'm also pleased to tell you that Sigma Labs is headed also in the right direction. And if you hear some ambient noise here, I apologize. So Q1 was about acceleration, validation, and execution. Acceleration of acceptance of 3D metal printing, validation of a print right 3D product, and execution against all aspects of our business plan. As I mentioned in the 2020 year-end call last month, despite a very challenging year, we were able to execute on our business plan and position ourselves for an exciting 2021. Our Q1 results clearly reinforce my belief that the company has entered a new phase focused squarely on revenue growth and securing our position as a leader in quality assurance for 3D metal printing. Before I go into more detail, I'll have Frank review the financials. Frank?
spk11: Thank you, Mark. Our detailed financial results are contained in our Form 10-Q filed with the SEC today, and the press release we issued contains key highlights of our financial results. So today I'll provide a brief overview for the first quarter of 2021. Our revenue for the first quarter of 2021 totaled $458,000. This compares to revenues of $222,000 for the first quarter of 2020. The increase in revenue was due to a doubling of print right 3D unit sales over the first quarter of 2020. Our gross profit for the first quarter of 2021 was three, which resulted in a gross margin of 72%. This compares to a gross margin of negative 23,000 for the first quarter of 2020. The improvement in our gross margin is due to a combination of manufacturing enhancements, which have reduced our cost of goods, the nearly complete wind down of legacy rapid test and evaluation or RTE programs, and a customer exchange of a print write 3D unit during the first quarter at a lower cost. Our total operating expenses for the first quarter of 2021 were 1.78 million, while operating expenses for the first quarter of 2020 totaled 1.56 million. The increase of $222,000 is primarily the result of the addition of 10 employees during the first quarter. Four application engineers, one of whom was previously a contractor with us, four business development staff, one software engineer, and one administrative employee. Also contributing to the increase were operating and R&D expenses resulting from development of PrintWrite 3D version 7.0 and restocking of lab supplies and materials. Partially offsetting these increases were decreases in investor and public relations expenses as a result of lower advertising and trade show expenses as compared to the first quarter of 2020. Our other income for the three months ended March 31, 2021 was $801,000. This income resulted from an unrealized gain on the March 31st revaluation of the derivative liability from our March 26 financing. Generally accepted accounting principles required us to record the fair value of the warrants issued as a liability, since we currently do not have enough authorized and unissued shares available to settle the warrants if exercised. We are seeking stockholder approval to increase our authorized common shares at our May 24th special stockholders meeting, and should we receive that approval, we will be able to reclassify the liability to permanent equity. Cash used in operating activities for the first quarter ended March 31st, 2021 totaled 1.24 million compared to 1.53 million for the first quarter ended March 31st, 2020. The net loss applicable to common stockholders for the first quarter of 2021 was $712,000 or 9 cents per share. as compared to a net loss of 1.9 million or $1.30 per share in the first quarter of 2020. Our cash balance totaled $16.8 million at March 31st, 2021 as compared to 3.7 million at December 31st, 2020 and $631,000 at March 31, 2020. Working capital totaled 12.6 million at March 31st, 2021, as compared to $4.3 million at December 31, 2020, and $650,000 at March 31st, 2020. At March 31st, 2021, our stockholders' equity was $13.4 million, as compared to $5.2 million at December 31st, 2020, and $1.4 million at March 31st, 2020. And with that, I'll now turn the call back over to Mark.
spk09: I agree. Thanks, Frank. As I hope you agree, every financial metric that you can evaluate the company on has improved significantly over the year ago. But it's not just the financial metrics that are improving. We're also beginning to see returns on our investments and improving results in other areas of business that, in my experience, are leading indicators for future revenue growth. First, our marketing programs have generated month-over-month increases in inquiries and leads. The recent webinars as well as those highlighting the industry influencers and research organizations have increased our profile in the industry. Secondly, hire to our plan, adding resources in the field to facilitate deal flow through our partners. We quickly assimilated the 10 new hires into the company and expect them to contribute to our progress in Q2. Our pipeline and level of engagement and sales opportunities continues to increase, and our new field sales resources, who are all industry experts, have hit the ground running. It's also very gratifying to see that our philosophy of radical collaboration, in this case with NIST, played a major role in the core features of PrintWrite 3D 7.0, which I'll discuss momentarily. Finally, we also continue to build leverage in our sales model with the addition of Amoxin, a Turkish 3D printer OEM, who gave us an initial order in Q1. I believe that these actions prepare us to handle the increased demand as 3D metal printing accelerates around the globe. The market acceleration is coincident with the continued validation of our technology by government agencies such as DARPA, international R&D organizations such as Fraunhofer, MTC, Northwestern, EWI, independent software companies such as Ansys and Materialize, aerospace and defense companies, including sophisticated 3D printer users such as Lockheed Martin, Airbus, and the recent contract we got with a European aerospace and defense company. Oil and gas industry leaders like Baker Hughes, and private organizations that are building factories of the future like IM4.OS, and 3D printer manufacturers, including DMG, Hori, Additive Industries, and as I mentioned earlier, Amoxin. So what do we need to see happen in the next few quarters as we focus on driving revenue? First, we need to begin to turn some of the single order contracts into multiple system orders. Second, we're going to continue to expand our distribution and increase the leverage in our model with new hardware and software partnerships. We need to increase the deal flow through existing partners, specifically DMG MORI out of industries and materialize. And I'm pleased to say we're seeing increased activity there also. We're also going to continue to hire the industry's best sales and engineering talent to ensure that we can maintain our technological lead and support our partners. And finally, we will continue to attack the market holistically, gaining inroads with R&D organizations, universities, advanced additive manufacturing programs, global manufacturers with aggressive additive manufacturing with 3D printing programs, and then printer OEMs and additive manufacturing software ISVs. As I've mentioned in the past, although difficult to predict the exact velocity and timing, We believe that the direction and the end result is inevitable and that 3D printing will play an increasing and vital role in manufacturing for decades to come. The economic and quality barriers are being broken down and we will see increased use around the globe. Finally, I'm very excited to announce that we'll be releasing PrintWrite 3D 7.0 in a few weeks at the AMUG conference. It is a significant release and has some groundbreaking features that the industry has been waiting for for some time. I'll list some of the features that we'll be talking about at AMOG in a couple of weeks. The first and most important is temperature monitoring and calibration. This is the work that we did with NIST, and it's very important for machine-to-machine calibration, which I'm sure you can understand if you can't calibrate machine-to-machine. It's tough to control quality and consistency. We'll also be introducing user-facing machine learning predictive models. This allows the user to look at past history and begin to predict based on the in-process recording that we're doing and the analytics that we've developed to predict a potential defect or anomaly. Multilaser quality metrics. This is used to monitor and alert users when lasers are coming into close contact and interacting, which is also a quality and consistency issue. We'll be introducing a production framework for visualizing of reference data and enabling more statistical analysis of anomalies. We'll also be introducing some 3D visualization diagnostics, which provide usability enhancements and rapid cross-section analysis and easy comparison to CT data. And of course, the holy grail for ensuring quality is doing a CT post-process, but it's extremely expensive. So this is a major step for users. And finally, enhanced user security, which is becoming more and more important to the industry. As you can see, we are aggressively introducing new features that we believe will continue to increase our competitive advantage. As I mentioned at the outset of my comments, Q1 was about acceleration, validation, and execution. I expect to see more of the same in the coming quarters. With that, Frank and I will be glad to answer any questions you might have. Operator?
spk01: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we poll for questions. Our first question is from Barry Stein of Spartan Capital Securities. Please state your question.
spk05: Hey, good afternoon, folks.
spk09: Hello, Barry.
spk05: Hey, I wanted to just kind of, you know, get a big picture sense of when we might see the significant turn in revenue. You know, if I look back, and this year has been no exception, you've been selling more stock than you've been selling, you know, 3D printing equipment. And I get that you need to fund the company and capital's available. Maybe you could talk about some of the impediments. Is it that just, you know, 3D printing is not being, metal printing is not being accepted? as quickly as you had hoped. Your technology seems like it's really state-of-the-art, best in the industry. You seem to be accepted by the major players in the industry, but we're just not seeing yet the revenue on the top line. You've added a lot of resources, I think 10 new employees, and I've listened to that. They all seem to be around generating revenue. So at what point do you think we might get to a quarter or a year of where we see more revenue on the top line than we see sales of stock of the company. Thank you.
spk09: I'm sure. And that's a very fair question for you to ask. And first of all, I'd say that selling stock was important and getting the company funded at a level where we can take advantage of what we believe the opportunity will be was very important to us. And without that, we wouldn't have an opportunity to pursue. In answer to the second part of the question, when do we expect to see some material increase in revenue? I believe in the second half of the year we'll begin to see multi-unit sales. As far as the question relative to what's the impediment, the first is the number of companies going into production using 3D metal printing. We're seeing more and more hit that production level where they have multiple printers from different manufacturers. And that's what's required for our software to have the value proposition that makes somebody move forward. So I will say the answer to your second question, material revenue, the second half of the year driven by multi-system sales. Does that answer your question?
spk05: That's very helpful. And if you don't mind, a follow-up on that. And this is kind of an uneducated question, so forgive me. One of the companies that are doing 3D metal printing now that are not using your product, what are they doing? Are they just accepting high error rates or just taking a chance that the product may have a lot of faults in it and going ahead with that anyway? I don't understand how you can be doing 3D metal printing without a Sigma Labs product in the process.
spk09: Well, obviously, that's the vision we're trying to fulfill there. But to answer your question is when they acquire a printer and they're in prototyping or R&D, they probably are not that worried about the quality and consistency because they start with a relatively low-value component that if something happens to it, it's not catastrophic. As they go up that competency curve and move into more complex and mission-critical parts, And as they build those parts at more volume, the risk of catastrophe goes up exponentially. And so what we have to see happen is companies go through that competency curve from R&D to prototyping to doing a low-value part that's not mission critical to doing a high-value part that is mission critical to getting it into production levels. And as they get more mission criticalness, and the production levels go up, risk goes up. And that's when we'll begin to see the real inflection point in our revenue.
spk05: And if you don't mind, one last question, please. You've expressed optimism that the second half of the year, you'll start to ship multiple machine shipments. What end verticals are you seeing the most optimism in? Is it aerospace, medical devices, consumer products? Where are you seeing that interest, and what is driving that enthusiasm? What broad industries? Thank you.
spk09: Sure. Right now, and just so I can draw you guys a visual, I'm sitting in a parking lot in an airport, and that's where you hear a car go by. Right now, the most activity we see is coming from aerospace, space exploration, and Department of Defense. And the reason is because all those are creating the high-value mission-critical parts that I talked about earlier. And as the increase in the usage of those parts and the number of parts they produce goes up, the economics of putting in a system like ours become much more reasonable and acceptable to the end users. So aerospace defense, space exploration, and department defense initiatives around the globe are seeing the most activity.
spk05: Okay, thank you for fielding all my questions.
spk09: You're quite welcome. Hi, all.
spk01: How you doing? Hey, David.
spk10: So, first, I want to say thanks to Frank because, you know, It seems like most companies your size end up reporting sort of at the very last minute, and it's refreshing to have you report early. So you must be doing something right and staying on top of things to report early, and it's refreshing. That's just a personal note. So, Mark, one of the things that I guess I've always sort of looked at as maybe a metric we should be considering in terms of your progress is this notion of being able to take the value proposition from the manufacturer down to the OEM. And, you know, I think I've always kind of felt like while there was, you know, some opportunity certainly in business that could be done by you going directly to those manufacturers that ultimately for you to be successful, you really would have to drive this down to the OEMs and get them to adopt it. And to me, that's one of the things that's going to measure the success of this. And how do you feel about the progress on that? Because it seems to me like you're making pretty good progress on the OEM side, and that to me is kind of critical.
spk09: Well, if I understand the complete nature of your question, when I talk about attacking the market holistically, what creates demand for our product are end users like an Airbus or a Lockheed Martin who are well up the competency curve for 3D metal printing and have multiple printers from multiple vendors that are multiple generations. As we create the demand from those end users, that puts pressure on the OEMs. Now, as I've mentioned in the past, most of the 3D printer manufacturers have their own monitoring system. But what they don't have is a consistent monitoring system that's standards-based that works on other people's printers. So as we put pressure, as we create the demand and have success with the end users, like the ones I mentioned earlier, we'll put pressure on the OEMs and Our approach to the OEMs is one of cooperation. We would like to not compete with their monitoring system, but begin to use data from their monitoring system and combine it with our analytics. So it's kind of a symbiotic relationship between the end users creating demand, the OEM people, the manufacturers acquiescing to that demand and opening up opportunities for us.
spk10: Can you tell us where most of those new sales people are focused? Are they just focused on both?
spk09: They're focused on both. So they're focused on both OEMs and then they're divided by vertical.
spk10: So are you happy with the progress you've made on the OEM side?
spk09: Yes, we're very happy. We have two that are selling actively now that have been a good pipeline for us, one coming online, and then we have several other initiatives that we're working with in the early stages. So, you know, OEM deals take time, and as I said, most of them have their own monitoring system. So we need to create demand from the end users up first. But, yeah, we're doing as well as we can, and we're happy with our progress.
spk10: Okay, so 7.0, it sounds to me like, you know, that's kind of progress towards, what we've always sort of referred to as the closed system or the closed loop. If this is a nine-inning game, how far is 7.0 in the game towards the closed loop holy grail?
spk09: David, I'll answer the question, and then we'll move on to another question. But I would say if it's a nine-inning game, we're in the bottom of the seventh, top of the eighth. Wow, great. Thank you. Thank you, David.
spk01: Our next question is from shareholder Bill Chapman. Please state your question.
spk08: Good afternoon, guys. Hello, Bill. Hey, Harry. Do you think you'll keep momentum from Q1 to go into Q2?
spk09: Yes, we already see the momentum going into Q2. And that's why I mentioned the other metrics that we track, such as the marketing inquiries and leads. And that's why we brought in industry veterans into the field organization, because they clearly have the background both from the sales and from additive manufacturing to come up to speed quickly and add value to those companies that are making inquiries relative to our technology. So, yes, I see the momentum continuing.
spk08: Okay, good. You had mentioned the second half of the fiscal year, so I appreciate hearing that. Let me ask you, too, did you get any revenue from D&G Mori or Additive?
spk09: The deal with the European Aerospace Company was with Additive. It was directly OEM through them. And they're right now assembling the printer in our system in their headquarters, and they'll be delivering it from their factory floor directly to the end user. We also have... One trial going on with additive with a customer prospect is paying an engineering fee to evaluate our technology. DMG Mori, we got a sale last quarter but didn't get one this quarter, but we hope to get one or two this coming quarter in Q2.
spk08: Okay, good to hear. Let's see, you had a gross margin of 72%, and how is that looking for the future?
spk09: Well, it won't stay at 72%. I'll ask Frank to comment on this after I finish. But it won't stay at 72%. Our target is 60% to 65%. And as we drive more revenue and systems through DMG and additive and materialize or moxon, the new Turkish 3D metal printer manufacturer, we'll be able to have a consistent 60% to 65%. It's inflated a little bit to 72%. because of some history and some winding downs of some old deals. And Frank, do you want to comment any more on that?
spk11: Yeah, I would say that a couple of things. One is the engineering group has gone through and really looked at the product top to bottom and made a number of enhancements which have allowed us to reduce the cost of a number of the components. Our cost of goods has come down quite a bit from what it was in 2019 and early 2020. And we really did receive a benefit for that in the first quarter of 2021. We had a system that shipped at the end of 2020, and it was one of our older systems at a higher cost. And that system, the customer decided they wanted a new system. They didn't want the older system. And so effectively what happened is we took that older system back into inventory, shipped them one of our new systems at a much lower cost. And that gave us a one-time credit in our cost of sales of about $45,000. So there's about 10 percentage points in there for the first quarter related to that. But that puts us squarely in Mark's range of about 62%. So, you know, we're, we're pretty comfortable that the number ongoing is going to be in that 60 to 65% range, which is our target.
spk08: Okay, sounds great. Thanks, guys. Oh, go ahead, Mark.
spk09: One other thing to add to that. As I've mentioned before, we expect the OEMs to take over some provisioning of the hardware. And today, when we do a deal with the DMG MORI or Materialize, we have a lower cost of goods because they provide some of the components that we utilize in our solution. As they take over the provisioning of the hardware in multiple stages, we expect the gross margin for the OEM deals to go up and approach 90%. Okay, great.
spk08: Thank you very much. You're welcome.
spk01: Our next question comes from Anthony Charos of Simerdy Group. Please state your question.
spk06: Hey, Mark. Great quarter. Congratulations. I have just a quick question. One of my questions was answered already. Where do you see the increased sales activities coming from, and why do you believe it will be in those areas, and when do you believe those sectors will pick up?
spk09: Sure. As I mentioned earlier, Anthony, the aerospace, space exploration, and defense, and Department of Defense, That's where we're seeing the most pickup. And the reason is because the demand for them to create parts on demand and critical parts on demand and then increase the production is growing. And as you produce more emission-critical parts, at a higher production level, your risk goes up. So I think that that's what they're seeing. They're also expert users of 3D metal printing, so they have multiple printers. So they have all those things going in the direction of reducing risk and addressing the economics of printing by users. producing those mission-critical high-value production components. So that's where we see the most activity. The second area where we're beginning to see more activity is in electronic vehicles and automotive. And again, for the same reason, the competition is tough. They have to get lighter, stronger, more durable parts and get their production costs down and get their range up. So there's a lot of activity there that we're beginning to get involved with. Those are the two major areas that we see.
spk06: Excellent. Well, full steam ahead. Great quarter. I'm looking forward to tremendous growth in the next... Thanks, Anthony. Congratulations. Thank you.
spk09: You're welcome.
spk01: Our next question is from Martin Roth of Ferret Capital Management.
spk07: Hello, Mark. Can you hear me? Yes. Yes, I can.
spk09: I say I can hear you.
spk07: Okay, good. First question I would like to ask is your ability or the ability of the 3D printers to do things that are made of metal. Is there a metal that hasn't been used yet in 3D that will make the demand for 3D printing literally explode?
spk09: Well, you're seeing more and more metals come on the market. So it's one of the most active parts of the industry right now is the invention and the innovation that's coming from metal powders and alloys that allow the designer to design things they couldn't in the past. I am not an expert when it comes to the powders and the materials, but given the progress that's been made over the last 18 months, I expect to see that progress continue. And the metal science for the materials continue to drive more innovation and allow designers to do things, as I said before, they could never imagine doing in the past. So it's a thriving part of the industry that right now a lot of people are innovating and inventing, bringing to market metals that will, as I said earlier, allow designers to do things they couldn't have done in the past.
spk07: Thank you. With regard to your relationship with Lockheed Martin, I think there were two events that turned me on. One was the fact that you were able to win a contract from them, who I regard as certainly in the top five as a repository of technology, and it may be higher than that for all I know. And the second thing that is a validation is your performance in this quarter was where you were able to book a significant order. My question is, if you look at the various conversations that you are having with potential customers, let me classify them this way. Something that's on the stove that is hot, it's not made yet, something that's on a back burner, and something that may be still in the refrigerator. Could you characterize what you're looking at and how that shapes up? If you want to be specific, I'd like that.
spk09: Yes, well, it's hard because it's across the spectrum. It all depends on where that prospect is on their curve and on their journey relative to their additive manufacturing initiative. If you look at a Lockheed Martin or a Baker Hughes, they're clearly out front and the In that category, we have several conversations that I would put in your first category as being very hot. We have a lot of conversations with people in the middle category who are trying to decide the value of a third-party agnostic and process quality assurance system. And then, of course, you have the new users who come up who don't really know what they need yet. And one of the things we've talked about in the past is you have to know whether you're selling religion or selling Bibles. To the people that are hot, we're selling Bibles because they already know they need a third-party standard-based system. To the people that are cold, we're preaching religion, educating them. And that's why you see our marketing efforts address both of those issues. We have very specific events and seminars and webinars for the very advanced users who are able to challenge our engineers. And then we have industry ones that really educate the whole industry, and that goes back to our radical collaboration strategy. Did that answer your question? Hello? Hello?
spk01: I think he dropped off. Our next question is from Harold Weber of Aegis Capital. Please state your question.
spk02: Hello, Mark. Hello, Harold. How are you doing? Nice to see some good improvement. I hope that momentum continues to build. In relation to some of the comments about these new metals that you were making and a question, I don't know if you're familiar with a company called Pyrogenesis in Canada. You guys are making these plasma metals. A whole new story came out recently. I'm wondering how these new types of metals, and they're making this, they're supplying it to tier one aerospace guys, which I would assume is sort of an overlap of what we're doing. Is this agnostic regarding the type of materials or whatever they put in there, it's usable, we can do our thing with whatever new materials are put into these printers? I'm assuming that is sort of the idea. Is that so or not?
spk09: Yes, for the most part, we're agnostic to the type of metal. As a new metal comes out, of course, we have to build a knowledge base on how that metal reacts during the process. So there's an example with a customer just recently who was dusting a part with a titanium powder of 90% through its production. And so we see people beginning to experiment with different types of metals in different combinations of metals. We're agnostic to that except for the fact that we have to have enough knowledge in our knowledge base and have seen it enough to be able to begin to predict and use our machine learning. So each one is a little bit of a learning curve for us, but it's a repeatable process that we do relatively quickly.
spk02: So I would like to think that we're conscious of these new materials coming in and trying to build that database to supply proper statistical info as we do to these customers about these new products coming online, coming on the market. Obviously, that's how the market is going to expand, like you say, about new metals and new materials for new purposes, new applications, and so forth. So that would give us some additional first mover advantage, I'm hoping.
spk09: I'm sure. In our case right now, we let the user drive which ones we focus on. So we don't look at all the ones that are coming out and pick and choose and qualify all of them. But as an example I used earlier, the combination of dusting and part of the titanium, if that becomes more and more a standard process and has value to the end user, then we'll build knowledge base around that.
spk02: So basically you're doing it based on requests from your customers?
spk09: Yes. They're driving our prioritization because the amount of activity in the whole material sector, we could not predict the winner nor keep up with it. But if Lockheed Martin comes and says we have a new metal we'd like to try, we're going to be all over it.
spk02: Okay. In regards to the new print light that you announced a little while back, what type of responses have you seen in regard to that? I guess some less heavy industrial users. I'm wondering to see about expanding our customer base to other potential industry applications and things of that nature. What have you seen on that?
spk09: Yeah, we're seeing more activity from the OEMs relative to the light product than we are from the end users. And I think the OEMs want a lighter product, less expensive, that they can sell before they go after the print-write 3D system. So more activity from OEMs and end users. And to be honest with you, not a lot of activity amongst the end users yet. And I think that's an educational thing and a marketing thing. So we still think it's an important product to our portfolio, and we think it will help on the OEM side more.
spk02: So is it reasonable to say that we are looking more to the OEMs for customer ventures, customer applications?
spk09: Well, yes. Yes, I mean, as I talked earlier, our philosophy and our strategy is to attack the market holistically. So we want the end users' great demand and the OEMs to provide leverage to our model. And if we can get a print-right 3D light into an OEM and go after the mid-market, they can then take a tremendous amount of the sales burden off of the company, and that's where we get the leverage. So... Yes, it's through the OEMs for light as the primary distribution.
spk02: In general, do we see that take up having effect?
spk09: We have activity. I can't tell you that to use the example earlier, the metaphor, nothing hot right now. It's all kind of in the mid-stage on the back burner, but moving forward.
spk02: And in regards to our mainline products?
spk09: I'm sorry?
spk02: In regard to the main product?
spk09: No, in regard to light.
spk02: Okay. And the take-up on the other stuff, how's that going?
spk09: As I said earlier, the activity is very good, and I expect to see continued momentum.
spk02: Is that globally going on? How do you see reactions based on, you know, we're opening up maybe earlier than other places? I know you're doing international stuff. What type of deal do you have at this point?
spk09: It's definitely global. Two of the four deals we got were in Europe this quarter. I believe the forecast for the coming quarter, Q2, is about the same. So Europe continues to dominate as far as our customers. The U.S. is quickly coming behind, and we have some activity going on in Japan. So, Harold, thank you very much for your questions.
spk02: Thank you.
spk01: Our final question is from Martin Roth of Ferret Capital Management. Hello.
spk07: Can you hear me? Yes. Mark, I got cut off, so I missed a couple of questions that were asked. Let me ask you this. Do you have any indications that Lockheed is considering any additional units from you?
spk09: No, we do not. All I can tell you is that we are heavily engaged with them. They challenge our engineers, and our engineers, who I believe are the best in the industry, have stood up, have responded to the challenges. So we're still in that phase where they're going through all their tests and analysis. So right now they're just a new customer with one system that has a lot of potential.
spk07: Do they see any additional things that you could do to make the product even more versatile?
spk09: Of course. They're one of the most sophisticated users in the world, and so they have more ideas than we could possibly accommodate. But the great thing about the collaboration that we have with our customers is that it's very deep, and they understand that we can only do so much, so they help us prioritize the functions and features that are most important to them. So to date, it's been a very fruitful and beneficial relationship for us.
spk07: Thank you. By my own calculation, I'm guessing that the doubling of sales was primarily due to the sale to Lockheed Martin. Would you comment on that?
spk09: No, it wasn't primarily due to it. That was one of the four systems that we sold in the quarter. and it was at the higher end, but it wasn't primarily due to Lockheed Martin. It was due to an increase across the board.
spk07: Now, with regard to Ermuscan, you're going to be an added option where Materialize is going to make the sale to the Turks. Is that right?
spk09: No, in that particular case... Ermoxin uses Materializes MCP, which is their materialized control platform. We've integrated our technology with Materializes. So I went to Turkey last January. It was the last trip I did prior to the trip I'm on right now. And we did a joint sale to Ermoxin. And they use our technologies integrated together. and then install that on their machine on the factory and deliver it to the end user. So it's a joint sale, cooperative, integrated system that Moxon is using and selling. And we expect them to sell a couple more, hopefully one or two more this quarter.
spk07: Now, Materialize is taking you along. You didn't have to make a special sales to Amoxin. Is that right?
spk09: No, we made a joint sales call.
spk07: I understand that, but Materialize is really the one that's doing the heavy lifting.
spk09: I think it was a joint effort, but yes, they're clearly the bigger company. They have much broader reach than us. They brought us into that particular opportunity.
spk07: With regard to that, they will be earning a profit over and above your profit. Is that fair to say?
spk09: No, they sell their product and we sell our product.
spk07: Okay, good.
spk09: So there's no, and matter of fact, our gross margin when we sell integrated with materialized is much higher because they provide some of the hardware that we would traditionally provide if it wasn't a materialized control platform. Thank you.
spk01: Our final question is from Paul Berger of Hammock Investors. Please state your question.
spk04: Hi, Mark. Can you drill down a little bit more on what you think your estimate revenues will be in the second quarter and throughout the year, and also some indication of cash burn? Sure, sure.
spk09: As far as guidance, we're not given guidance other than I believe what I said earlier, we'll continue to see increasing revenue and the momentum is there to provide that increasing revenue. A lot of that depends on timing and when we get that first multiple system sale. But I'll say relative to revenue is that you should see increasing revenue quarter over quarter. And I'm sorry, Paul, what was your second question?
spk04: Can you give us some indication on cash burn and where do you see your cash being?
spk09: Sure. Sure. So as you heard from Frank and also in the press release, we've got about $60 million in cash. Our cash burn went down from $1.5 to $1.2 in the first quarter. We're going to build the business based on demand. So I would expect our cash burn to remain about where it is, maybe go down a little bit, and that just depends on how quickly we build the company, and that depends on the demand for the product as companies go up that competency curve. So as far as the runway, you can do the calculation yourself, but we're funded so that I'm not worried about funding the company now. I'm worried about driving the company and building it. So I hope that answers somewhat your question.
spk04: Okay. And also, can you give a little more color into, I mean, one of the big areas that you want to hit are machines that are already out there, not just new machines. Yeah. Are you making any progress in that area? And what will it take to get there?
spk09: Yeah. As a matter of fact, the Lockheed Martin was an existing machine that they had Airbus was a general electric concept laser machine. So we are getting more and more activity in the retrofit market. We expect that the heat up as a relationship with Materialize begins to generate more opportunities for us because you can take Materialize's control platform and our technology, put it on an old printer and have a state of the art system that, as we mentioned earlier, is in that bottom of the seventh, top of the eighth, towards a closed-loop type of environment. So you can take a second-generation system and make it a third-generation system with our technology.
spk04: Okay. And are you looking at trying to get any analysts to follow you? I mean, I'm surprised that Wainwright hasn't put a report out on you.
spk09: We are actively looking to and having several conversations that I expect that we will have an analyst or two in addition to trickle research follow us in the future. And hopefully not the too distant future. So I appreciate your questions. And as I mentioned earlier, this quarter was about acceleration of the industry, salvation of our technology and execution. And those are the three things that we expect to see in the coming quarters. And if we do that, the answers to a lot of these questions will become new because you'll see our revenue begin to accelerate and at some point in time begin to get that leverage from the model that we built in the multiple system sales. So with that, thank you for your time. If you have any more follow-up questions, please don't hesitate to contact MZ or Stephen Kirshner And we'll be glad to get back to you. Thank you, operator.
spk01: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.
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