UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31,September 30, 2018

OR

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

Commission file number: 001-38015

Sigma Labs, Inc.

(Exact name of registrant as specified in its charter)

3900 Paseo del Sol

Santa Fe, NM 87507

(Address of principal executive offices)

(505) 438-2576

(Registrant’s telephone number)

(Former Name or Former Address, if Changed Since Last Report

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 [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 [X] 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.

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 [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 10,November 8, 2018, the issuer had 5,178,9298,700,204 shares of common stock outstanding.

SIGMA LABS, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Sigma Labs, Inc.

Condensed Balance Sheets

(Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

Sigma Labs, Inc.

Condensed Statements of Operations

(Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

Sigma Labs, Inc.

Condensed Statements of Cash Flows

(Unaudited)

The accompanying notes are an integral part of these condensed financial statements.

SIGMA LABS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31,September 30, 2018

(Unaudited)

NOTE 1 - Summary of Significant Accounting Policies

Nature of Business -Sigma Labs, Inc., formerly named Framewaves, Inc., a Nevada corporation, was founded by a group of scientists, engineers and businessmen to develop and commercialize novel and unique manufacturing and materials technologies. Sigma believes that some of these technologies will fundamentally redefine conventional quality assurance and process control practices by embedding them into the manufacturing processes in real time, enabling process intervention and ultimately leading to closed loop process control. The Company anticipates that its core technologies will allow its clientele 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. The terms the “Company,” “Sigma,” “we,” “us” and “our” refer to Sigma Labs, Inc.

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.America and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim reporting. 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 March 31,September 30, 2018 and 2017 and for the periods then ended have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. The Company suggests these condensed financial statements be read in conjunction with the December 31, 2017 audited financial statements and notes thereto included in the Company’s Form 10-K. The results of operations for the periods ended March 31,September 30, 2018 and 2017 are not necessarily indicative of the operating results for the full year.

Reclassification- Certain amounts in prior-period financial statements have been reclassified for comparative purposes to conform to presentation in the current-period financial statements. In addition, $153,013 of issuance costs associated with the February 2017 capital raise have been reclassified from operating costs to a reduction in additional paid in capital and $35,680 reported as revenue in the first nine months of 2017 has been reclassified to deferred revenue.

Continuing Operations -The Company has sustained losses and had negative cash flows from operating activities since its inception. In 2017 and the first nine months of 2018, management has reported a change of strategy under which the company ceased to make sales and installations for research and development applications in order to focus its efforts entirely on potential customers already manufacturing 3D metal parts and therefore, already in need of quality improvement. The result of this change between September 2017 and the third quarter of 2018 was a significant decrease in revenues which the Company hopes to replace with orders for serial production use. The Company has raised significant equity capital and is developingas it continues to develop new products with commercial applications that may increase future revenues. On February 21, 2017, the Company closed an underwritten public offering of equity securities resulting in net proceeds of approximately $5.25 million,$5,097,000, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. The Company was able to fund operations for 2017 with these funds and end the year with a cash balance of $1,515,674. On March 28, 2018, Sigma received $535,000 in full payment of the Morf 3D note and related accrued interest balance. In addition, on April 6, 2018, the Company closed a private placement offering of equity securities resulting in net proceeds of approximately $840,000,$877,500, after deducting commissions and other offering expenses payable by the Company. On June 26, 2018 the Company closed a public offering of equity securities resulting in net proceeds of approximately $2,068,900, after deducting placement agent commissions and other offering expenses payable by the Company. As a result, the Company currently has sufficient cash and working capital to fund operations through 2018the first quarter of 2019 and is anticipating that significant salesproof of concept contracts may be closed in the second halflast quarter of fiscal 2018 generating material additional cash flow in the near term.

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 CompaniesCompany’s outstanding warrants, options or note conversion features were excluded from the diluted earnings per share computation due to the anti-dilutive effect they would have on the computation. At March 31,September 30, 2018 the Company had 1,645,500250 Convertible preferred stock shares, 3,228,500 warrants, 493,626697,207 stock options and a $100,000$50,000 Convertible Note Payable outstanding. The total number of shares of common stock underlying these instruments is 2,139,126.4,200,707. At September 30, 2017 the Company had 1,701,500 warrants, 279,938 stock options and $1,000,000 in Convertible Notes Payable outstanding. The total number of shares of common stock underlying these instruments was 2,481,438.

The following data shows the amounts used in computing loss per share and the effect on income and the weighted average number of shares of dilutive potential common stock for the periods ended March 31,September 30, 2018 and 2017:

Recently Enacted Accounting Standards –- The FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants.

Recent Accounting Standards Updates (“ASU”) through ASU No. 2018-052018-18 contain technical corrections to existing guidance or affects guidance to specialized industries or situations. The Company has evaluated recently issued technical pronouncements and has determined that, other than ASU 2014-09 (Topic 606) and the related ASU 2018-18 (Topic 808), addressed below, these updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

In May 2014, the FASB issued ASU 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition” (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. On January 1, 2018, we adopted Topic 606 and all related amendments (“new revenue standard”) to those contracts which were not completed as of January 1, 2018 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. There is no adjustment to the opening balance of retained earnings due to the cumulative effect of initially applying the new revenue standard determined to be immaterial. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is in the process of evaluating the impact the standard will have on its financial statements.

Accounting Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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.

NOTE 2 –- Notes Receivable

On May 1, 2017, the Company made a loan in the principal amount of $250,000 to Jaguar Precision Machine, LLC, a New Mexico limited liability company, pursuant to a Secured Convertible Promissory Note dated May 1, 2017 delivered by Jaguar to the Company. The loan bearsbore interest at the rate of 7% per annum, iswas due and payable in full on May 1, 2018, iswas secured by certain assets of Jaguar, and is convertible at the Company’s option into 10% of the outstanding shares of the common stock of Jaguar unless Jaguar exercises its right under specified circumstances to repay all principal and accrued interest on the loan. The purpose of the loan iswas to provide working capital to Jaguar to, among other things, standstart up a metallurgical laboratory and become ASM9100 certified for contracts related to AM of high-precision aerospace and defense components, in furtherance of our strategic alliance. Sigma receivesreceived from Jaguar priority for use of certain machines and services of Jaguar. On April 27, 2018, the promissory note was amended whereby the due date of the note was extended to June 1, 2018 in exchange for a cash payment of $5,000 received on May 1, 2018, 50% of which will be retained as payment for the 30-day extension. On June 6, 2018 the promissory note was amended whereby the due date was extended to August 1, 2018 in exchange for cash payments of $10,000 by each of June 7, 2018 and July 1, 2018, $8,000 of which is to be retained as payment for the 60-day extension. The first of the $10,000 payments was received by the Company on June 6, 2018. On June 15, 2018, the Company received a $150,000 payment from Jaguar, $17,803 of which was applied to accumulated interest through that date and $132,197, the balance, of which, was applied to the principal balance of the note. No payments have been received since that date. The holder of the promissory note has committed to paying the remaining principal balance along with accumulated interest on or before December 31, 2018. The September 30, 2018 principal balance of the note was $117,803 and the accumulated interest balance due was $2,346.

On March 27, 2017, the Company made a loan in the principal amount of $500,000 bearing interest at the rate of 7% per annum to Morf3D, Inc., an Illinois corporation, pursuant to a Secured Convertible Promissory Note dated March 27, 2017 delivered by Morf3D to the Company. The $500,000 loan principal and $35,000 of accumulated interest was paid in full on March 27, 2018.

NOTE 3 - Inventory

At March 31,September 30, 2018 and December 31, 2017, the Company’s inventory was comprised of:

NOTE 4 - Notes Payable

At March 31,September 30, 2018 the Company had a $100,000$50,000 convertible note bearing interest at a rate of 10% per annum outstanding which was due on the earlier of MayOctober 18, 2018. On October 18, 2018, or the closing of our next underwritten public offering of securities innote was amended pursuant to which we raise gross proceeds of at least $3,000,000. On April 5, 2018 the Company entered into an amendment to such Note, extending the due date was extended to April 18, 2019. Under the amendment, Sigma paid the $3,444 total accrued interest balance as of October 18, 2018 and eliminating the accelerationagreed to make future payment dates of that due date upon the closing of a public offering.accrued interest on December 31, 2018 and April 18, 2019.

NOTE 5 - Stockholders’ Equity

Common Stock

Effective February 15, 2017, our Articles of Incorporation were amended to provide for a reverse stock split of the outstanding shares of our common stock on a 1-for-2 basis (the “Reverse Stock Split”), and a corresponding decrease in the number of shares of our common stock that we are authorized to issue (the “Share Decrease”). Pursuant to the Share Decrease, the number of authorized shares of common stock decreased from 15,000,000 to 7,500,000 shares of common stock.

The effects of this stock split have been retroactively reflected to all periods presented.

Effective March 5, 2018, the Articles of Incorporation were again amended to increase the authorized number of shares of common stock to 15,000,000.

Effective October 18, 2018 the Articles of Incorporation were amended to increase the authorized number of shares of common stock to 22,500,000.

In 2017, the Company issued 40,934 shares of common stock to directors at an average value of $2.09 per share, or $85,408. Also in 2017, 7,750 shares previously issued to a director and 750 shares previously issued to an employee, with a combined carrying value of $9,830, were forfeited .

Ronald Fisher, the Company’s Vice President of Business Development, continues to be entitled to receive performance-based stock and cash bonuses under his Employment Offer Letter Agreement if certain milestones are satisfied by December 31, 2018, so long as Mr. Fisher remains an employee of the Company as of the date the applicable milestone is satisfied.forfeited.

In January 2018, the Company issued 23,256 shares of common stock to directors valued at $1.72 per share, or $40,000.

In April 2018, the Company issued 176,744 shares of common stock to directors valued at $1.2236 per share, or $216,264.

Between May 29, 2018 and June 1, 2018, we issued an aggregate of 1,000,000 shares of common stock upon conversion of the 1,000 shares of Series B Preferred Stock issued on April 6, 2018 (as described below under “Preferred Stock”).

On June 26, 2018, as part of its public offering of equity securities described in Note 1, the Company issued 2,040,000 shares of common stock and warrants to purchase a total of 717,000 shares of common stock (including the warrants described under “Preferred Stock” below that were issued on June 26, 2018). Each warrant has an initial price of $1.08 per share. The net proceeds to the company were approximately $2,068,900 after commissions and other offering expenses. The Company also issued Dawson James Securities, Inc., its placement agent in the public offering, a Unit Purchase Option to acquire up to 191,200 Units, at an exercise price of $1.25 per Unit, consisting of 191,200 shares of common stock and warrants to purchase up to 57,360 shares of common stock at an exercise price of $1.08 as compensation.

On August 31, 2018, the Company issued 100,000 shares of common stock upon conversion of 100 shares of Series C Preferred Stock issued on June 26, 2018 (as described below under “Preferred Stock”).

Deferred Compensation

In previous years and in the threenine months ended March 31,September 30, 2018, the Company issued to various employees, directors, and contractors shares of the Company’s common stock, subject to restrictions, pursuant to the 2013 Equity Incentive Plan (the “2013 Plan”). Such shares were valued at the fair value at the date of issue. The fair value was expensed as compensation over the vesting period and recorded as a reduction of stockholders’ equity. During the threenine months ended March 31,September 30, 2018 and March 31,September 30, 2017, $21,217$213,449 and $53,762 ,$192,248 respectively of the unvested compensation cost related to these issues was recognized.

As of March 31,September 30, 2018 and December 31, 2017, the balance of unvested compensation to be recognized was $50,359$64,066 and $31,576, respectively and is recorded as prepaid stock compensation as of those dates.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, $0.001 par value. No250 and 0 shares of preferred stock were issued and outstanding at March 31,September 30, 2018 orand December 31, 2017.2017, respectively.

On April 6, 2018, Sigma issued 1,000 shares of the Company’s newly-created non-voting Series B Convertible Preferred Stock, which were convertible into 1,000,000 shares of common stock and warrants to purchase an aggregate of 750,000 shares of the Company’s common stock, for an aggregate purchase price of $1,000,000. The warrants have an initial exercise price of $1.47 per share, the closing price of the Company’s Common Stock reported on The NASDAQ Capital Market on April 6, 2018, subject to adjustment in certain circumstances. The net proceeds to the company were approximately $877,500 after commissions and other offering expenses. Sigma also issued Dawson James Securities, Inc., its placement agent in the foregoing private placement, warrants to purchase up to 140,000 shares of common stock, at an exercise price of $1.47 per share, as compensation.

On June 26, 2018, as part of the public offering described in Note 1, the Company issued 350 of the Company’s newly-created non-voting Series C Convertible Preferred Stock, which were convertible into 350,000 shares of common stock, and warrants to purchase an aggregate of 105,000 shares of the Company’s common stock. The warrants have an initial exercise price of $1.08 per share, 11% above the closing price of the Company’s Common Stock reported on The NASDAQ Capital Market on June 26, 2018, subject to adjustment in certain circumstances.

Stock Options

As of March 31,September 30, 2018, an aggregate of 750 shares and 257,124697,207 shares of common stock were reserved for issuance under the 2011 and the 2013 Plans, respectively.

On February 21, 2018, the Company granted Mark Cola, ana former officer of the company, two ten-year options under the 2013 Plan to purchase an aggregate of 123,50061,750 shares of common stock each, with the optionseach option having an exercise price of $1.49 per share,share. Pursuant to vestMr. Cola’s employment agreement, one of the options became fully-vested on the October 10, 2018 date that Mr. Cola retired from the Company, and becomethe other option vests and becomes exercisable ratably over 17 monthly installments on the 15th day of each month commencing on March 15, 2018, subject in each case to Mr. Cola’s continuing employment.employment as a consultant.

On February 26, 2018, the Company granted nine employees ten-year options under the 2013 Equity Incentive Plan to purchase an aggregate of 70,188 shares of common stock, with each option having an exercise price of $1.56 per share, and with vesting periods ranging from 3 to 4 years beginning February 26, 2019.

On April 19, 2018, Sigma granted John Rice, our President and Chief Executive Officer, three options to purchase up to 20,000 shares of our common stock under our 2013 Plan. In addition, on each of April 30, May 31, June 30, 2018 and July 31, 2018, Sigma granted Mr. Rice an option to purchase up to 20,000 shares of our common stock under our 2013 Plan. The foregoing options have an exercise price per share equal to $1.88, $1.54, $1.48, $1.26, $1.47, $1.19 and $.87 respectively, which is at least the closing price of our common stock on the respective date of grant, and each is fully vested as of the respective grant date.

On April 19, 2018, Sigma granted Ron Fisher, our Vice President of Business Development, a five-year option to purchase an aggregate of 28,750 shares of common stock, with such option having an exercise price of $1.22 per share, and with 1,438 shares vesting upon grant and the balance vesting in four annual installments over four years following the date of grant (1,366 shares, 4,097 shares, 6,828 shares and 15,021 shares, respectively).

During the threenine months ended March 31,September 30, 2018, options to purchase 2,938288,076 shares of common stock vested, and $140,305$569,718 of compensation cost was recognized. As of March 31,September 30, 2018, there were options to purchase 493,626697,207 shares issued and outstanding under the 2013 Plan. Of this amount, there are vested options exercisable for 116,505373,689 shares of common stock. As of March 31, 2018, the Company had 257,124 shares reserved for future grant under its plans and thereNo options were no options exercised during the nine months or the quarter ended March 31,September 30, 2018.

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over four years of service and expire ten years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

Total share-based compensation expense included in the condensed statements of operations for the threenine months ended March 31,September 30, 2018 and 2017 is $161,522$783,167 and $139,632,$505,630, of which $140,305$569,718 and $86,909$313,382 is related to stock options, respectively. There was no capitalized share-based compensation cost as of March 31,September 30, 2018 and 2017.

The fair value of share-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions for the threenine months ended March 31,September 30, 2018 and 2017:

Warrants

At March 31,September 30, 2018, the Company had outstanding warrants to purchase a total of 1,645,5003,228,500 shares of common stock,stock; 1,621,500 warrants at an exercise price of $4.00 per share, which if not exercised, will expire on February 21, 2022, and 24,000890,000 warrants at an exercise price of $2.00$1.47 per share, which if not exercised, will expire on October 17, 2019.07, 2023, and 717,000 warrants at an exercise price of $1.08 per share, which if not exercised, will expire on June 26, 2023.

On May 31, 2018, 24,000 warrants with an exercise price of $2.00 were exercised in a cashless exchange transaction resulting in the issuance of 4,800 shares of the Company’s common stock.

NOTE 6 - Subsequent Events

On April 6,

Between October 3, 2018 Sigmaand October 9, 2018, the Company issued 1,000an aggregate of 250,000 shares of common stock upon the conversion of 250 shares of the Company’s newly-created non-voting Series BC Convertible Preferred Stock, which are initially convertible into 1,000,000Preferred.

Between October 18, 2018 and November 1, 2018 the Company issued 101,475 shares of common stock andupon the exercise of warrants to purchase an aggregate of 750,000 shares of the Company’s common stock, for an aggregate purchase price of $1,000,000. The warrants have an initial exercise price of $1.47 per share, the closing price of the Company’s Common Stock reported on The NASDAQ Capital Market on April 6, 2018, subject to adjustment in certain circumstances. The net proceeds to the company were approximately $840,000 after commissions and other offering expenses. Sigma also issued Dawson James Securities, Inc., its placement agent in the foregoing private placement, warrants to purchase up to 140,000 shares of common stock, at an exercise price of $1.47$1.08 per share, as compensation.share.

On April 19,October 18, 2018, Sigma granted John Rice, our interim Chief Executive Officer, three optionsthe 2013 Plan was amended to purchase up to 20,000fix at 1,650,000 shares the aggregate number of shares of our common stock issued or issuable under ourthe 2013 Plan.

On April 30,October 18, 2018, Sigmathe Company increased the annual base salary of Darren Beckett, our Chief Technology Officer, from $135,000 to $180,000, effective retroactive to September 16, 2018, and granted Mr. Beckett an option to purchase 20,000 shares of common stock under the 2013 Plan at an exercise price of $1.206 per share. The option has a term of five years and vests as follows: 1,000 shares will vest and become exercisable on September 16, 2019; 3,000 shares will vest and become exercisable on September 16, 2020; 5,000 shares will vest and become exercisable on September 16, 2021, and 11,000 shares will vest and become exercisable on September 16, 2022, subject, in each case, to Mr. Beckett being in the continuous employ of the Company on the applicable vesting date.

Effective October 19, 2018, our Amended and Restated Articles of Incorporation, as amended, were amended pursuant to a Certificate of Amendment filed with the Nevada Secretary of State to increase the authorized number of shares of our common stock to 22,500,000.

On November 1, 2018, the Company granted Mr. Rice an option to purchase up to 20,00068,750 shares of our common stock under our 2013 Plan. The foregoing options have an exercise price per share equal to $1.88, $1.54, $1.48 and $1.2580 respectively, which is at least the closing price of our common stock on the respective date of grant, and each is fully vested as of the respective grant date. The Company also agreed to grant Mr. Rice an option to purchase up to 20,000 shares on each of May 31, 2018, June 30, 2018 and July 31, 2018 (each, a “Monthly Option”), so long as Mr. Rice remains an employee of the Company as of the applicable grant date (except that if Mr. Rice ceases to be employed by the Company as a result of a disability), any Monthly Option that has not been granted as of such date (i.e., prior to July 31, 2018) will still be granted on the applicable grant date), with an exercise price equal to the greater of (x) the average closing price of our common stock during the applicable month, and (y) the closing price of our common stock on the date of grant, and will be vested in full on the date of grant.

On April 19, 2018, Sigma issued each of its four non-employee directors 44,186 shares ofCompany’s common stock under the 2013 Equity Incentive Plan with such shares to vest ratably over four quarterly installments, subject in each case to such director’s continuing service as a director.

On April 19, 2018, Sigma granted Ron Fisher, our Vice Presidentat an exercise price of Business Development, a five-year option to purchase an aggregate of 28,750 shares of common stock,$1.79 per share, with such option having an exercise pricea term of $1.22 per share,five years and vesting in four annual installments over four years followingbeing fully vested on the date of grant (1,366 shares, 4,097 shares, 6,828 shares and 15,021 shares, respectively).date.

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

Forward-looking statements

This Quarterly Report, including any documents which may be incorporated by reference into this Report, contains “Forward-Looking Statements.” All statements other than statements of historical fact are “Forward-Looking Statements” for purposes of these provisions, including any projections of revenue or other financial items, any statements of the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, and any statements of assumptions underlying any of the foregoing. All Forward-Looking Statements included in this document 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 any other 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, 2017 and elsewhere in this 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 from Framewaves Inc. to Sigma Labs, Inc. We commenced our current business operations in 2010.

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 iswww.sigmalabsinc.com. www.sigmalabsinc.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 that website as soon as we electronically file those documents with, or otherwise furnish them to, the SEC. 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 on Form 10-Q.

2018Recent Developments

In the course of the third quarter of 2018, we reported several events, includingSigma accomplished important internal product development milestones that led to the following (in reverse chronological order):Company announcing on October 25, 2018 the rollout of a combination of new products at the Formnext additive manufacturing (AM) trade show in Frankfurt, Germany the week of November 12, 2018. Sigma believes that that combination of advanced new hardware and Sigma’s new PrintRite3D® Version 4.0 software completes the evolution of Sigma’s PrintRite3D® technology from its well-stressed and tested roots in research and development, into a compact and hardened commercial-industrial product that is deployable into demanding serial production settings.

During April 23-26, 2018 the Company participated in The Rapid 2018 Conference in Fort Worth, Texas, at which the Company exhibitedOur competition is delivering In-Process-Quality-“Monitoring” tools that we believe generally deliver un-analyzed data to their customers to utilize as they see fit. Sigma is commercializing its PrintRite3D® In-Process Quality Assurance™ (IPQA®)hardware and software applications.package that emerged from the third quarter of 2018 and is emphasizing to prospective customers Sigma’s dedication to delivering a product which provides In-Process-Quality-“Assurance” that gathers and analyzes in-process manufacturing data and delivers actionable conclusions that improve quality. We believe that such a product is made possible because of both: (1) PrintRite3D®’s ability to detect and notify users of process and machine discontinuities that require adjustments of the computers’ lasers in order to reduce AM machine-induced quality deficiencies, and (2) PrintRite3D®’s ability, in real-time in-process manufacturing runs, to detect a growing library of randomly recurring quality deficiencies, identify the signature traits of these deficiencies, and provide warnings and options to operators to adjust input and machine control parameters to mitigate those deficiencies early enough in their development to avoid rejection of the part.

During April 8-12,On May 30, 2018, Sigma announced its successful demonstration of proof of concept of closed-loop feedback control. As a result of Sigma’s root cause analyses of various AM quality discrepancies, we have come to believe that the Company participatedfuture of AM manufacturing machines is that the machines must and will be “self-driving”, i.e., controlled by a closed loop control system that adjusts and directs AM machine operating controls to maintain the optimum standard of melt pool qualities for the part designs and metals in The Additive Manufacturing Users Group (AMUG) Conferencequestion. We believe that the hardware and Exhibition in St. Louis, Missouri. Mark Cola,software package of our President and Chief Technology Officer, participated asPrintRite3D® Version 4 is a panel membersignificant advancement in the In-Situ Monitoring Panel discussion, which focusedrealization of this vison of the future.

Concurrent with the above-mentioned product development milestones that were realized in the third quarter, Sigma has been testing a new proof of concept sales program that was made possible and practicable by the attainment of such product development milestones. Beta test results have demonstrated that Sigma can now install and commence manufacturing test-runs on many AM machines in a 24-hour period and that a proof of concept and value analysis can be accomplished in a matter of weeks subject to how promptly customers and third-party laboratories commit resources and deliver their feedback on the time and cost associated with validation of the manufacturing process for aerospace quality components.results.

On April 6, 2018, the Company closed a private placement of preferred stock and warrants resulting in net proceeds of approximately $840,000, after deducting commissions and other offering expenses payable by the Company.Other Recent Developments

On March 28,October 18, 2018, Morf3D repaid Sigma in full forDarren Beckett’s title was changed from Vice President of Engineering to Chief Technology Officer of the $500,000 loan with interest that Sigma had extended to Morf3D on March 27, 2017.Company.

On March 26,August 29, 2018, we announced that we entered intowere awarded a Cooperative Researchcontract in connection with our PrintRite3D^® hardware, software and Development Agreement (CRADA) with the National Institute of Standards and Technology (NIST). NIST and Sigma will study the effects of recycled powder and part placement on process variability and part quality using Sigma’s PrintRite3D® technology. The study will be the first of its kind to characterize the use of recycled powderengineering services by a federally funded organization involved in the Laser Powder Bed Fusion (LPBF) process using both in-situ monitoring technologyspace industry. Under the contract, our sensor arrays will determine and post process mechanical property characterization, and is vitally importantcommunicate the quality of manufactured parts in real time to the global Additive Manufacturing (AM) community because today it is known that changes in powder characteristics and chemistry may impact the build process and resulting part quality. This collaboration represents an important step forward in providing a much-awaited technical solution and understanding of powder reuse and its implicit cost savings. The results from this study will be disseminated to the AM community through journal articles while the in-situ and ex-situ data will be made available via the NIST AM Material Database. During this study, Sigma’s In-Process Quality Assurance™ PrintRite3D INSPECT® software will play a key role in quantifying process variability and part quality using its proprietary Thermal Energy Density™ (TED™) In Process Quality Metric™, an industry first for quantitatively measuring melt pool variation and part quality.

On March 1, 2018, we announced we were releasing Version 3.0.2 of our PrintRite3D INSPECT® In-Process Quality Assurance™ (IPQA®) software. This evolutionary version of PrintRite3D® is now available for new installations and upgrades to existing customers. This latest release features Sigma Labs’ new and proprietary Thermal Energy Density™ (TED™) In Process Quality Metric™ (IPQM®), setting what the Company views as a new industry standard for quantitatively measuring melt pool and part quality. Armed with Sigma Labs’ new PrintRite3D INSPECT® Version 3.0.2 software, process engineers will now be able to produce an alloy-specific process map generated using Sigma Labs’ in-process TED™ metric, an industry first. This industry first approach to in-process monitoring is designed to enable rapid process qualification, which Sigma Labs believes will result in increased production yields and faster product to market times.end-user.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the accompanying consolidated financial statements and related notes. These estimates and assumptions have a significant impact on our consolidated financial statements. Actual results could differ materially from those estimates. 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. Our significant accounting policies are disclosed in Note 1 to the Financial Statements included in this Quarterly Report on Form 10-Q. 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.

Results of Operations

We expect to generate revenue primarily by selling and licensing our IPQA technologies, selling technical support services and contract manufacturing and selling specialty parts and studies to businesses that seek to improve their manufacturing production processes and production-run quality yields. Our ability to generate revenues in the future will depend on our ability to further commercialize and increase market presence of our PrintRite3D® technologies, and it will depend on if key prospective customers continue to move from AM metal prototyping to production.

Three Months Ended September 30, 2018 and 2017

In the third quarter of 2018, we recognized revenue of $128,593 compared to $78,046 during the same period of 2017, an increase of $50,547. A revenue decrease of $37,903 from government programs between the two quarters was offset by a $69,000 increase in commercial sales and $22,472 in contract AM service revenue in the third quarter of 2018 compared to no such sales in the third quarter of 2017. Our cost of revenue for the third quarter of 2018 was $56,309 as compared to $81,214 during the same period of 2017. The decrease of $24,905 was primarily due to the non-recurring costs associated with the implementation of our Early Adopter Program and Original Equipment Manufacturer (OEM) Partner Program in the third quarter of 2017.

Sigma’s total operating expenses for the third quarter of 2018 were $1,401,087 compared to $1,095,206 for the same period of 2017, a $305,881 increase. Our operating expenses are comprised of internal operating and sales expenses, outside service fees, research & development costs, and depreciation & amortization.

The most significant of our operating expenses is personnel costs, comprised of payroll and stock-based compensation expense. Payroll costs in the third quarter of 2018 were $524,508 compared to $335,495 for the same period in 2017. The $189,013 increase resulted primarily from the strategic addition of six employees since the third quarter of 2017, three in the third quarter of 2017 and three in the second quarter of 2018, as we continue the concentrated acceleration of technology development and our expansion into the European 3D manufacturing market. Stock-based compensation for the third quarter of 2018 was $198,578 compared to $199,225 for the same period in 2017.

During the three months ended March 31,September 30, 2018, Sigma incurred research and development expenditures of $139,090 compared to $68,543 in the same period of 2017. The $70,547 increase in these expenditures resulted primarily from an increase in software and algorithm consultant costs and an increase in purchases of component parts, upgraded servers and specialized equipment directly related to the development of our PrintRite3D® 4.0 product suite that is being launched at the Formnext AM trade fair the week of November 12, 2018.

Sigma’s public company costs and investor relation fees incurred in the third quarter of 2018 were $142,821 compared to $118,586 incurred during the same period in 2017.

During the third quarter of 2018, Sigma’s office expenses were $131,629 compared to $78,044 in the same period of 2017. The $53,585 increase in these expenditures resulted primarily from additional office rent and related expenses to accommodate our new employee hires and from additional travel expense related to both our more aggressive outreach to prospective OEM and service bureau clients and our expansion into the European market in 2018.

In the third quarter of 2018, our net other income & expense was net income of $7,978 compared to net other expense of $18,536 in the third quarter of 2017. The third quarter 2018 net income was comprised of $9,862 of interest income on the remaining note receivable balance offset by interest expense on the remaining $50,000 balance of our note payable.

Sigma’s total net loss for the third quarter of 2018 was $1,320,825 as compared to $1,116,910 for the third quarter of 2017, a $203,915 increase with operating income contributing $230,429 to the increased loss and increased other income and expense offsetting it by $26,514.

Nine months Ended September 30, 2018 and 2017

During the nine months ended September 30, 2018, we recognized revenue of $103,415, as$330,671 compared to $114,523$483,122 of revenue recognized during the same period of 2017. The primary contributors to the $152,450 reduction were revenue decreases of $174,726 from government program work and $57,227 in new system sales, partially offset by increased contract AM service sales in 2018 of $79,503. Our cost of revenue recognizedfor the nine months ended September 30, 2018 was $198,672 compared to $267,160 during the same period in 2017, a decrease of $68,488. Reduced direct labor and materials cost associated with the decline in government and commercial sales primarily contributed to the total decrease.

Sigma’s total operating expenses for the nine months ended September 30, 2018 were $4,000,728 compared to $3,209,923 for the same period in 2017, a $790,805 increase. Payroll costs for the nine months ended September 30, 2018 were $1,349,214 compared to $1,120,699 for the same period in 2017. The $228,515 increase resulted primarily from the foregoing addition of six employees beginning in the third quarter of 2017. Stock-based compensation for the nine months ended September 30, 2018 was $783,167 compared to $505,630 for the same period in 2017. This $277,537 increase was comprised primarily from $156,712 in vesting recognized on stock options granted to our Chief Executive Officer in the second and third quarters of 2018 and the amortization of $92,371 in stock compensation cost related to stock compensation paid to non-employee directors over the nine months ended September 30, 2018.

During the nine months ended September 30, 2018, Sigma incurred research and development expenditures of $356,112 compared to $254,956 in the same period of 2017. The $101,156 increase resulted primarily from an increase in software and algorithm consultant costs and a $52,219 increase in purchases of component parts, upgraded servers and specialized equipment as part of our continued concentrated acceleration of technology development, along with the development in the third quarter of 2018 of our PrintRite3D® 4.0 product suite.

Sigma’s public company and investor relation fees incurred in the nine months ended September 30, 2018 were $426,417, compared to $362,499 during the same period in 2017. The $63,918 increase is the result of a $47,892 aggregate increase in cash fees paid to our non-employee directors, a $57,385 increase in advisory service fees and a $41,500 reduction in NASDAQ fees due to the non-recurring entry fee paid in 2017.

During the nine months ended September 30, 2018, Sigma’s office expenses were $337,671 compared to $226,988 in the same period of $11,108. 2017. The $110,683 increase in these expenditures resulted primarily from $34,631 in additional hardware, software, supplies and office space costs in 2018 related to our additional employees, and from $76,052 of additional travel expense in 2018 related to both a more aggressive outreach to prospective OEM, service bureau and end user customers and our expansion into the European market.

In the nine months ended September 30, 2018, our net other income & expense was a net expense of $11,776, as compared to net other income of $61,678 in the same periods of 2017. The nine-month 2018 net expense was primarily comprised of a $36,733 write-off of patent and patent application costs offset by interest income of $26,948 on our outstanding note receivable.

Sigma’s net loss for the nine months ended September 30, 2018 totaled $3,880,505 as compared to $2,932,283 for the same period of 2017, a $948,222 increase, with operating income contributing $874,768 and other income and expense contributing $73,454.

We financed our operations during the three and nine months ended March 31,September 30, 2018 and 2017 primarily from revenue generated from PrintRite3D® system sales and engineering consulting services we provided to third parties during these periods, and, in 2017, through sales of our common and preferred stock and, in 2017, through the issuance of debt securities. We expect that our revenue will increase in future periods as we seek to further commercialize and expand our market presence for our PrintRite3D®-related technologies and obtain new contract manufacturing orders in connection with our EOS M290, and continue to provide our services under our contracts with Honeywell Aerospace for the DARPA Period 2 program. Our Cost of Revenue for the three months ended March 31, 2018 and 2017 was $73,795 and $74,534, respectively.

Sigma’s operating expenses for the three months ended March 31, 2018 were $1,177,130 as compared to $1,159,494 for the same period in 2017. Our operating expenses are comprised of internal operating and sales expenses, outside service fees, research & development costs, and depreciation & amortization.

The most significant of these operating expenses is personnel costs, specifically the payroll and stock-based compensation components of personnel costs. Personnel costs were $560,179 for the three months ended March 31, 2018 and $577,842 for the same period in 2017 or 48% and 50% of total operating expenses for the period, respectively. Total payroll costs for the first three months of 2018 were $39,554 lower than in the same period in 2017, primarily due to a $50,000 bonus payment in 2017 to our Vice President of Business Development in connection with the satisfaction of performance milestones. Stock-based compensation was $21,890 higher in the first three months of 2018 compared to the same period in 2017.

Outside services fees incurred in the three months ended March 31, 2018 were $319,622 compared to $364,784 incurred during the same period in 2017. Services in connection with our obligations as an SEC reporting company, the February 2017 public offering, and in preparation of the April 2018 sale of convertible preferred stock were the major components of the fees incurred in both periods. The net decrease in these fees in 2018 results primarily from the one-time $42,000 entry fee paid to NASDAQ in connection with our being listed on the NASDAQ Capital Market in the three months ended March 31, 2017.

Research and development expenditures of $121,977 were incurred during the three months ended March 31, 2018 compared to $54,505 in the same period of 2017. This $67,472 increase resulted primarily from the purchase of multiple upgraded servers and various pieces of specialized equipment as part of our continued concentrated acceleration of technology development in 2018.

In the three months ended March 31, 2018, our net other income & expense was a net expense of $23,366 compared to net other income of $139,860 in 2017. The 2018 loss was comprised of a $36,733 write-off of patent and patent application costs offset by interest income of $13,167 on the outstanding notes receivable. The 2017 net positive contribution is comprised of $152,068 in New Mexico state job incentive credits received and a $93,206 positive revaluation of derivatives offset by $56,441 of debt amortization expense and $49,315 of interest expense on the $1,000,000 notes originated in October of 2016.

Sigma’s net loss for the three months ended March 31, 2018 totaled $1,170,876, as compared to $943,965 for the same period of 2017, a $226,911 increase. The 2018 net operating loss contributed $63,684 to the overall loss increase, and other income and expenses contributed the balance.M290.

Liquidity and Capital Resources

As of March 31,September 30, 2018, we had $1,347,319$2,228,547 in cash and had a working capital surplus of $1,292,394,$2,208,620, as compared with $1,515,674 in cash and a working capital surplus of $2,273,801 as of December 31, 2017.

Our major sources of funding have been proceeds from public and private offerings of our equity securities (both common stock and preferred stock), and from warrant exercises.On April 6, 2018, the Company closed a private placement of equity securities resulting in net proceeds of approximately $840,000,$920,000, after deducting commissions and other offering expenses payable by the Company. On June 26, 2018, the Company closed a public offering of equity securities resulting in net proceeds of approximately $2,139,000, after deducting commissions and other offering expenses payable by the Company. The principal balance in the amount of $100,000$50,000 and any accrued and unpaid interest on the convertible promissory note that is payable by us is due in October 18, 2018.April 2019.

During the remainder of 2018, we expect to further ramp upsustain our operations and our commercialization and marketing efforts which willwithout material increase the amount of cash we will use in our operations.cash burn rate. We expect that our continued developmentenhancements of our IPQA®-enabled PrintRite3D® technology that were developed substantially during the nine months ended September 30, 2018 and being brought to market in the fourth quarter of 2018 will enable us to further commercialize this technology for the AM metal market in 2018.2019. However, until commercialization of our full suite of PrintRite3D® technologies, we plan to continue funding our development activities and operating expenses by licensing our PrintRite3D® systems and supporting field services, as applicable, and providing PrintRite3D®-enabled engineering consulting services concerning our areas of expertise (materials and manufacturing quality assurance and process control technologies) and contract manufacturing for metal AM, and through the use of proceeds from sales of our securities.

Net Cash Used in Operating Activities

Net cash used in operating activities during the threenine months ended March 31,September 30, 2018 increased to $612,249$2,695,939 from $440,553$1,950,394 during the same period in 2017, primarily due to the $67,472which is an increase in research and development expenses in 2018 as noted above, coupled with the receiptcash used of the $152,068 incentive credit$745,545. Sigma’s higher net loss in the threenine months ended March 31, 2017.September 30, 2018 contributed $912,493 to this increase while more attentive management of payables offset $166,948 of that increased use of cash.

Net Cash Used/Provided by Investing Activities

Net cash provided by investing activities during the threenine months ended March 31,September 30, 2018 was $443,894,$469,899, which compares to cash used in investing activities during the same period of 2017 totaling $550,441. The $994,335$829,146. $1,400,000 of this $1,299,045 positive swing is attributable primarilydirectly related to the Marchdebt financing of 2017. Sigma loaned funds of $750,000 in the first half of 2017 and received payment of $650,000 of such loans in May and June of 2018. The additional expenditure of $69,654 related to patents and $38,766 for office furniture and laboratory equipment in 2018 receipt of payment in full ofwere the $500,000 loan made to Morf3D in March of 2017.

significant offsetting factors.

Net Cash Used/Provided by Financing Activities

Cash provided by financing activities during the threenine months ended March 31,September 30, 2018 decreased to $0$2,938,914 from $5,225,650$5,072,636 during the same period in 2017, a reduction of $2,133,722. $2,126,236 of this reduction is due to theour receipt of $5,823,300total net proceeds of $2,946,400 from our April 2018 private placement and June 2018 public offering compared to our receipt of total net proceeds less $597,651 of offering costs,$5,072,636 from our February 2017 public offering. There were no financing activities in the first quarter of 2018.

The Company anticipates fewer lossesless loss in the fourth quarter of 2018, due to expected increased revenues from proof of concept engagements, offset by increased salaries and related expenses in connection with our additional employees and potential acquisitions (although there are no agreements with respect to the acquisition by the Company of any third party, and there can be no assurance that any agreements will be entered into or, if entered into, that any acquisition or other transaction will be consummated).employees.

We have no credit lines as of May 10,November 11, 2018, nor have we ever had a credit line since our inception.

Based on the funds we have as of May 10,November 11, 2018, and the proceeds we expect to receive underfrom proof of concept engagements for our PrintRite3D®-enabled engineering consulting agreements, from selling or licensing ourupdated PrintRite3D® systemshardware and software technology, and sales of contract AM manufacturing for metal AM parts, and from the repayment of loans made by Sigma, we believe that we will have sufficient funds to pay our administrative and other operating expenses through 2018.at least the first quarter of 2019. Our ability to continue to fund our liquidity and working capital needs will be dependent upon the success of and revenues from existing and future PrintRite3D®-enabled engineering consulting-proof of concept contracts, follow-on contracts resulting from successful proof of concept engagements, possible strategic partnerships, contract manufacturing orders in connection with our EOS M290, and perhapspossibly by obtaining additional capital from the sale of additional securities or by borrowing funds from lenders to fulfill our business plans. If we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. There is no assurance that we will be successful in obtaining additional funding. If we fail to obtain sufficient funding when needed, we may be forced to delay, scale back or eliminate all or a portion of our commercialization efforts and operations.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures. Rule 13a-15(e) under 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.

Changes in internal controls over financial reporting.Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our management, with the participation of our Interim Chief Executive Officer, and our Principal Financial and Accounting Officer, 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.

Changes in internal controls over financial reporting. In addition, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the three months ended March 31,September 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Not applicable.

ITEM 1A. RISK FACTORS.

Not applicable.

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

NoneNot applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS.

* Indicates a management contract or compensatory plan or arrangement.

** Filed herewith.

++ Pursuant to applicable securities laws and regulations, the Registrant is deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and is not subject to liability under any anti-fraud provisions of the federal securities laws as long as the Registrant has made a good faith attempt to comply with the submission requirements and promptly amends the interactive data files after becoming aware that the interactive data files fails to comply with the submission requirements. These interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.*** Furnished herewith.

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.