Since last April the stock of Sigma Labs Inc (OTCMKTS:SGLB, SGLB message board) has been largely going in only one direction – down. The situation got even worse during the last couple of months with the stock registering new 52-week lows almost daily. Yesterday the negative momentum picked up even more speed and SGLB crashed by more than 17% closing the session at $0.043. The 5.5 million shares that changed hands surpassed the 30-day average for the company by nearly 5 times. Compared to its high of around 18 cents so far the ticker has wiped 77% of its value.

The depressing performance can be attributed to the fact that in 2014 SGLB decided to move away from consulting and focus more on their product offering. The transition has resulted in significantly worse financial results. The latest quarterly report covers the period ending September 30, 2014, and contains the following:

$3.7 million cash

$3.8 million total current assets

$143 thousand total current liabilities

$92 445 thousand total revenue

$539 thousand net loss

As you can see the numbers are far better than what can be found in the balance sheet of the typical pennystock venture. Still, investors were far from pleased to see the drastic increase of SGLB’s net loss – for the nine month period during 2013 they reported a net loss of $504 thousand while for the same period in 2014 they incurred a net loss of $2.8 million.

Recently the company has been able to announce some positive news. They launched their PrintRite3D INSPECT quality assurance software and expected to start generating revenue from it during the fourth quarter of 2014. In fact, in a recent PR SGLB announced that on a preliminary basis they expect the revenue for the quarter to be $200 thousand.

In November Sigma received a contract from Honeywell Aerospace as part of a Defense Advanced Research Project Agency (DARPA) Phase II award. The contract is expected to continue until mid-2016 with a total value of $500 thousand. More recently, on January 15, SGLB were granted their first contract also worth around $500 thousand from GE Aviation. Before the end of the first quarter of 2015 SGLB’s second product - PrintRite3D® DEFORM, should be launched.

Will this be enough to stop the devastating slide of their stock though? So far the answer is far from positive. Investors should also keep in mind that as of November 12, 2014, SGLB had 618 million outstanding shares out of the 750 million authorized. On December 22 the S-3 registration statement was declared effective and now the company has the right to sell up to $100 million of its common stock, preferred stock, debt securities, warrants and units. The issuance of more shares could easily demand an increase of the authorized amount.

SGLB have a lot going for them but the risks around the company should not be underestimated. Do extensive due diligence and plan your trades carefully.