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 is www.sigmalabsinc.com, although the information on our website is not deemed to be part of this prospectus.

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 services are subject to government regulation, changes in which may have an adverse effect on us.

We may be sued by third parties who claim that we have infringed their intellectual property rights.

We may make acquisitions in the future that we are unable to effectively manage given our limited resources.

Because we have limited capital resources, we may be dependent on cash flow and payments from customers in order to meet our expense obligations.

We are dependent on our President and Chief Executive Officer, and other key personnel, and the loss of any of these individuals could harm our business.

We may not be able to effectively control and manage our growth, which would negatively impact our operations.

Some of our clients may terminate our contracts prior to completion, which could result in revenue shortfalls and reduce profitability or cause losses on contracts.

We may require additional financing to continue our operations, and there is no assurance that we will be able to obtain such financing on acceptable terms, or at all.

Our business is subject to numerous risks, as more fully described in the section entitled Risk Factors that follows this Prospectus Summary. You should carefully read the Risk Factors section before you invest in our securities. We may be unable, for many reasons, including those beyond our control, to implement our business strategy. The following is a summary of some of the principal risks that are associated with our business:

We possess the resident expertise to provide manufacturing process engineering services and support to companies using our PrintRite3D® software Apps for metal AM. Accordingly, in addition to our primary business focus, we intend to generate revenues by providing such manufacturing engineering services and support to businesses licensing our PrintRite3D® software Apps.

In late 2015, we launched two programs − an Early Adopter Program ( “ EAP ” ) and an Original Equipment Manufacturer ( “ OEM ” ) Partner Program − designed to broaden our market presence and speed adoption of our PrintRite3D® technology. The EAP was designed to attract early adopter customers who have an existing, installed base of 3D metal printers and to offer them incentivized pricing in return for feedback on initial and beta releases of our PrintRite3D® software Apps. Our OEM Partner Program was specifically designed for AM machine manufacturers seeking to embed our PrintRite3D® quality assurance software Apps directly into their machines for customers purchasing a turnkey solution for their new AM machine purchases.

We generate revenues through sensor sales and software licensing of our PrintRite3D® technology to customers that seek to improve their manufacturing production processes, and through ongoing annual software upgrades and maintenance fees. Additionally, we generate revenues from our contract manufacturing activities in metal AM. By running a contract AM services operation, we are able to understand the current needs of our customers and where they are going with their next-generation product development efforts. Contract AM further allows us a means for continuing/self funding our IPQA®-enabled R&D and product development activities for PrintRite3D®. We provide our AM contract manufacturing services to customers in the form of Quality as a Service (QaaS). Starting with our PrintRite3D® cloud-based SaaS model, customers will contract with us to generate and establish a digital quality record (DQR) for AM built parts. Each DQR is cloud-based and allows for archiving and storage of quality data, access to our big data ANALYTICS software App for continuous quality monitoring and improvement, and automatic industry benchmarking while maintaining firewalls between company-specific data.

We also seek to be engaged in the following industry sectors and have begun to develop relationships with leading manufacturers in each such sector:

Provide manufacturing process engineering consulting services in respect of our PrintRite3D® quality assurance software Apps for advanced manufacturing to customers that have needs in developing next-generation technologies for advanced manufacturing technologies; and

Our principal business activities include the continued development and commercialization of our PrintRite3D® suite of software, with our main focus currently on the 3DP and the AM industry as well as making operational the contract additive manufacturing business for metal 3DP. Our strategy is to continue to leverage our advanced manufacturing knowledge, experience and capabilities through the following means:

Our specialized sensor (see C in Figure 1), known as SENSORPAK, is an IIoT-compliant edge computing device. It contains the modular hardware and software necessary to connect to cyber-physical objects (see B in Figure 1) living on the manufacturing floor. It allows for bi-directional information flow between the manufacturing floor and the Cloud (see A in Figure 1). It starts a million-fold data reduction that finishes with our PrintRite3D® software, which provides customers with product guarantees and assurances that parts were produced in compliance with stringent quality standards. It can collect, analyze, aggregate, filter, and then further communicate data from the manufacturing floor to the Cloud (see A in Figure 1) and enable links to other areas (see F in Figure 1) of the IIoT.

Our PrintRite3D® web-based software (see D in Figure 1) is being designed to reside in the Cloud (see A in Figure 1) of the Industrial Internet of Things (IIoT). We enable manufacturing engineers to assure the part quality layer-by-layer, provide for manufacturing statistical process control and harvest, aggregate, and analyze Big Data from the manufacturing in-process data collected from our SENSORPAK (see C in Figure 1), as well as post-process manufacturing data collected by our customers (see E in Figure 1).

The process of making a 3D printed part starts with our customers loading a CAD/CAM model of the part into the Cloud shown in A in Figure 1. Next, instructions are sent to the 3D printer (see B, as shown in Figure 1). Metal powder in the machine is then deposited onto the build platform where a laser beam focused onto the build platform melts each successive layer of powder in 20-50 micron increments. Our sensors (see C in Figure 1) detect, record, analyze and compare the part as it is being made layer-by-layer against the CAD/CAM specifications and physical reference points for quality assurance during the manufacturing. Our software certifies the shape, strength, and internal density of each part, which eliminates the need to: (1) destroy a large percentage of the parts in post-production quality assurance; and (2) retain all of the metal as opposed to cutting pieces and wasting metal.

We believe there is potential for our PrintRite3D® software to be incorporated into a majority of 3D metal printing devices made by companies like Electro-Optical Systems (EOS), Additive Industries, Trumpf Laser, Concept Lasers and others.

By using PrintRite3D® software, a high-precision manufacturer would have the ability to offer its customers, on an exclusive basis, product guarantees and assurances that its product was produced in compliance with stringent quality requirements. Initial orders have been received from GE Aviation, Honeywell Aerospace, Aeroject Rocketdyne, and Woodward.

Current methods for providing quality are cost prohibitive because approximately 25% of parts produced by 3D printing need to be destroyed in the post-production quality control process. Additional costs are incurred by using scanning technology on these parts. We offer our clients the ability to use sensors to track each layer, and our software continuously analyzes the part so that when it is finished we know if it is production quality. We believe our PrintRite3D® software could reduce inspection costs by a factor of 10 and development time for new parts by 50% or more.

The application of 3D printing to high-tolerance, precision manufactured metal parts has only recently emerged. 3D printing of metal parts today represents only a minor percentage of all 3D manufacturing. However, we believe the greatest future growth for 3D printing appears to be in metal parts given the interest from Fortune 100 companies, Federal government laboratories and agencies as well as university-based institutions. Emphasis from these high-end manufacturers is strongly focused on quality and precision manufacturing for high-tolerance parts. We believe the on-going success of 3D printing for metal parts will be highly dependent upon the quality assurance procedure used such as our PrintRite3D®.

3D printing (3DP) or additive manufacturing (AM) is changing the world by going directly from computer graphics to real parts. 3D printing has been applied to the manufacture of plastic parts for several years. 3D manufacturing of metal parts involves directing a laser at a layer of powdered metal and melting it. These layers become forged together from the bottom up. Revenues attributable to 3D manufacturing for metal products are estimated to be between $4 and $6 billion by 2020. (Wohlers Report 2015, 3D Printing and Additive Manufacturing State of the Industry  Annual Worldwide Progress Report).

Sigma is a software company that has developed quality assurance software known as PrintRite3D®, which Sigma believes solves the major problems that have prevented large-scale metal part production using 3D printers. GE Aviation, for example, has stated that it plans to commit $3.5 billion by 2020 to, among other things, build a metal 3D production facility for its Leap engine and other engines to produce the applicable 3D printed parts. However, without companies like GE Aviation effectively being able to check each part for shape, density, strength and consistency, we believe that such companies will not be able to address the major problems currently preventing large-scale metal 3D production. We believe that our software, which is positioned inside the 3D metal printer, solves these problems by assuring each part is being made to the specifications of the computer file as it is being made . We enable 3D prototyping to become 3D manufacturing. Instead of performing quality assurance (QA) post production, our PrintRite3D® software could fundamentally redefine conventional QA by embedding quality assurance and process control into the manufacturing process in real time. We have filed patent applications directed to our In-Process Quality Assurance (IPQA®) procedure for advanced manufacturing. In addition, we anticipate that our core PrintRite3D® software will enable our customers to combine their advanced manufacturing technologies with our 3D manufacturing QA to achieve both cost savings and stronger parts. Vertical markets that we believe would benefit from our technology and software include aerospace, defense, bio-medical, power generation, and oil & gas industries. We provide our software products to customers in the form of Software as a Service (SaaS).

A 1-for-100 reverse stock split of our common stock was effected on March 17, 2016. All share and per share amounts in this prospectus have been retroactively adjusted to give effect to the reverse stock split.

This summary highlights certain information contained in other parts of this prospectus. Because it is only a summary, it does not contain all of the information that you should consider before investing in our securities. You should read the entire prospectus carefully, especially the risks of investing in our securities discussed under Risk Factors. Some of the statements contained in this prospectus, including statements under this summary and Risk Factors are forward-looking statements and may involve a number of risks and uncertainties. We note that our actual results and future events may differ significantly based upon a number of factors. You should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus.

For investors outside the United States: We have not and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities and the distribution of this prospectus outside the United States.

You should rely only on the information contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available to you. We have not, and the underwriters have not, authorized anyone to provide you with any information other than that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus may only be used where it is legal to offer and sell our securities. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted.

We expect to deliver the units to investors on or about , 2016. We have granted the underwriters an option for a period of 45 days to purchase up to an additional units. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be $ and the total proceeds to us, before expenses, will be $ .

The underwriters will receive compensation in addition to the underwriting discounts and commissions. See Underwriting beginning on page 63 of this prospectus for a description of the compensation payable to the underwriters.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE UNITS OR THE UNDERLYING SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

INVESTING IN THE UNITS AND THE UNDERLYING SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR A DISCUSSION OF INFORMATION THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE UNITS AND THE UNDERLYING SECURITIES.

This prospectus also covers the units and underlying securities issuable upon exercise of the unit purchase option to be issued to the underwriters.

The shares of our common stock and the warrants that comprise the units will automatically separate on the six-month anniversary of the date that the units are originally issued (the issuance date). However, the shares of our common stock and the warrants will become separable prior to the expiration of the six-month period if at any time after 30 days from the issuance date (1) the closing price of our common stock on The NASDAQ Capital Market is greater than 200% of the warrants exercise price for a period of 20 consecutive trading days (the trading separation trigger), (2) all warrants in given units are exercised for cash (solely with respect to the units that include the exercised warrants) (a warrant cash exercise trigger), or (3) the units are delisted (the delisting trigger) from The Nasdaq Capital Market for any reason (any such event, a separation trigger event). Upon the occurrence of a separation trigger event, the units will separate: (i) 15 days after the date of the trading separation trigger, (ii) on the date of any warrant cash exercise trigger (solely with respect to the units that include the exercised warrants), or (iii) on the date of the delisting trigger, as the case may be. The warrants are exercisable upon the separation of the units, provided that all warrants in given units may be exercised for cash at any time commencing 30 days after the issuance date.

Our securities are not listed on any national securities exchange and there is currently no market for the units or the warrants. Our common stock is currently quoted on the OTCQB under the symbol SGLB. The last reported per share price for our common stock was $2.96, as quoted by the OTCQB on July 20, 2016. We have applied to list our common stock, our units and our warrants on The NASDAQ Capital Market under the symbols SGLB,   and  , respectively. No assurance can be given that our application will be approved.

We are offering by this prospectus units (the units), each consisting of one share of our common stock and one warrant to purchase one share of our common stock at an exercise price of $ per share. Pursuant to this prospectus, we are also offering the shares of common stock underlying the warrants included in the units.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

There will be issued a warrant to purchase one share of common stock for every one share offered. The warrants are exercisable at a per-share price equal to 125% of the common stock offering price.

There will be issued a warrant to purchase one share of common stock for every one share offered. The warrants are exercisable at a per share price equal to 120% of the common stock public offering price.

Pursuant to Rule 416, under the Securities Act the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.

Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price of the securities registered hereunder to be sold by the registrant.

Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the Securities Act).

Units, each consisting of one share of Common Stock, par value $0.001 per share, and Warrants, each to purchase one share of Common Stock (3)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act:

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering: .

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering: .

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective Registration Statement for the same offering: .

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box: X .

Approximate date of commencement of proposed sale to public : As soon as practicable after the effective date of this registration statement.

in the case of a warrant cash exercise trigger, on the date such warrant cash exercise trigger is effected, but solely with respect to the units that include the exercised warrants; and

in the case of the trading separation trigger, on the 15th day after the date of the trading separation trigger;

all warrants in given units are exercised for cash (solely with respect to the units that include the exercised warrants) (a warrant cash exercise trigger); or

the closing price of our common stock on The NASDAQ Capital Market is greater than 200% of the warrants exercise price for a period of 20 consecutive trading days (the trading separation trigger);

The shares of common stock and the warrants that comprise the units offered hereby are issued and will trade together as units until the six-month anniversary of the issuance date at which point they will automatically separate. However, the shares of common stock and the warrants will become separable prior to the expiration of the six-month anniversary if at any time after 30 days from the issuance date any of the following separation trigger event occurs:

units. Each unit consists of one share of common stock and one warrant exercisable for one share of common stock. Under the registration statement of which this prospectus forms a part, we are also registering the shares of common stock issuable upon the exercise of the warrants.

shares of our common stock issuable upon exercise of outstanding stock options under our 2013 Equity Incentive Plan at a weighted average exercise price of $ per share as of June 30, 2016.

up to shares of common stock underlying the units (including the common stock underlying the warrants included in such units) included in the unit purchase option to be issued to the representative of the underwriters in connection with this offering; and

The number of shares of our common stock to be outstanding after this offering is based on 6,232,410 shares outstanding as of June 30, 2016 and excludes, as of that date:

For additional information regarding the terms of the warrants, see Description of Securities  Description of Securities We Are Offering by this prospectus  Warrants on page 53 of this prospectus.

From and after one year following their issuance, we may call the outstanding warrants, in whole and not in part, for redemption (1) at a price of $0.001 per warrant, so long as a registration statement relating to the common stock issuable upon exercise of the warrants has been effective and current during the 30 consecutive trading day period described below, (2) upon not less than 30 days prior written notice of redemption, and (3) if, and only if, the last reported sale price of a share of our common stock equals or exceeds 200% of the warrant exercise price, (subject to adjustment for splits, dividends, recapitalizations and other similar events) for any 20 consecutive trading day period ending three business days before we send the notice of redemption to holders of the warrants.

Each warrant is exercisable for one share of common stock at an initial cash exercise price of $ per share. The warrants are exercisable upon the separation of the units, provided that all warrants in given units may be exercised for cash at any time commencing 30 days after the issuance date. The warrants will expire on the fifth anniversary of the issuance date of the units.

Unless we indicate otherwise, all information in this prospectus assumes no exercise by the underwriters of their option to purchase up to an additional units to cover over-allotments, if any, and, to the extent such over-allotment option is exercised, does not include the securities comprising the unit purchase option to be issued to the representatives of the underwriters in connection with this offering issuable in connection therewith.

We have applied to list our common stock on The NASDAQ Capital Market under the symbol SGLB. We have applied for the units to be listed on the NASDAQ Capital Market under the symbol  . We have applied for the warrants to be listed on the NASDAQ Capital Market under the symbol  . No assurance can be given that such listings will be approved or that a trading market will develop.

See Risk Factors beginning on page 10 and the other information included in this prospectus for a discussion of factors you should carefully consider before investing in our securities.

the remaining proceeds will be used for general corporate purposes, including working capital. See Use of Proceeds for a more complete description of the intended use of proceeds from this offering.

Assuming we complete the sale of units offered hereby at a public offering price of $ per unit, we estimate that the net proceeds from this offering will be approximately $ million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering as follows:







8







Selected Financial Data

The following table presents our selected financial data. The selected statement of operations data for each of the years ended December 31, 2015 and 2014 and the selected balance sheet data as of December 31, 2015 and 2014 are derived from our audited financial statements included elsewhere in this prospectus. The selected statement of operations data for the three months ended March 31, 2016 and 2015 and the selected balance sheet data as of March 31, 2016 are derived from our unaudited financial statements included elsewhere in this prospectus. We have prepared the unaudited financial information set forth below on the same basis as our audited financial statements and have included all adjustments, consisting of only normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for such periods. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. Furthermore, our historical results are not necessarily indicative of future results. The information set forth below should be read together with Managements Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the accompanying notes included elsewhere in this prospectus.





Year Ended December 31, Three Months Ended March 31, 2015 2014 2016 2015 (Unaudited) Statement of Operations Data:

Total revenue $ 1,234,810 $ 548,723 $ 358,455 $ 185,686 Operating expenses: Other general and administration 1,282,952 1,020,262 395,488 267,703 Payroll 585,706 404,054 215,589 72,660 Research and development 330,554 219,132 39,071 70,147 Total operating expenses 2,199,212 1,643,448 650,148 410,510 Net loss $ (1,696,282) $ (3,116,080) $ (470,667) $ (371,881) Net loss per share $ (0.27) $ (0.51) $ (0.08) $ (0.06) Weighted-average number of shares outstanding, basic and diluted 6,228,108 6,103,447 6,233,729 6,206,220 As of December 31, As of March 31, 2015 2014 2016 (Unaudited) Balance Sheet Data: Cash $ 1,539,809 $ 2,962,069 $ 1,086,363 Total assets 2,787,264 4,160,341 2,504,888 Total liabilities 109,916 354,350 226,656 Total Stockholders equity $ 2,677,348 $ 3,805,991 $ 2,278,232











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RISK FACTORS





Investing in our securities involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and Managements Discussion and Analysis of Financial Condition and Results of Operations, before deciding whether to invest in our securities. The occurrence of any of the events or developments described below could harm our financial condition, results of operations, business and prospects. In such an event, the market price of our securities could decline, and you could lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may have similar adverse effects on us.





Risks Related to Our Business





We have a limited operating history, are not currently profitable and may never become profitable.





We have incurred losses in every reporting period since we commenced business operations in 2010 and expect to continue to incur significant losses for the foreseeable future. Our net loss for the year ended December 31, 2015 was $1,696,282, and our net loss for the three months ended March 31, 2016 was $470,667. As of March 31, 2016, our accumulated deficit was $8,034,787. There is no assurance that any revenues we generate will be sufficient for us to become profitable or to maintain profitability. Our revenues for the year ended December 31, 2015 were $1,234,810, and our expenses for that period were $2,717,650. Our revenues for the three months ended March 31, 2016 were $358,455, and our expenses for that period were $721,699. As a result, our current revenues are not sufficient to fund our operations. Therefore, we cannot predict when, if ever, we might achieve profitability and we are not certain that we will be able to sustain profitability, if achieved. If we fail to achieve or maintain profitability, the market price of our securities is likely to be adversely affected.





We may require additional financing to continue our operations, and there is no assurance that we will be able to obtain such financing on acceptable terms, or at all.





As of March 31, 2016, we had cash in the amount of $1,086,363. We believe that the net proceeds from this offering, together with our existing cash and anticipated revenues, will be sufficient to fund our operations until at least January 2019, although there is no assurance that we will not require additional financing before that time. There is no assurance that any future financing that we require to fund our operations will be available on acceptable terms, or at all. Such financing, if in the form of equity, may be highly dilutive to our existing stockholders and may otherwise include onerous terms. Such financing, if in the form of debt, may include debt covenants and repayment obligations that are onerous and that adversely affect our business operations. If adequate funds are not available to us, we may be required to delay, limit or terminate our business operations.

Our limited operating history makes evaluation of our business difficult.





We commenced business operations in 2010 and are continuing to develop our technologies and to implement our business plan. Our ability to implement a successful business plan remains unproven, and there is no assurance that we will ever generate sufficient revenues to sustain our business. Our relatively short operating history, together with the other risks discussed in this Risk Factors section, may make it difficult for you to evaluate our business in connection with making a decision about whether to invest in our securities.





We face the risks normally associated with a new business.





We face all of the risks inherent in a new business, including the expenses, difficulties, complications and delays frequently encountered in connection with conducting new operations and efforts to develop and commercialize technologies. These uncertainties include developing our technologies and our brand name, raising capital to meet our working capital requirements and developing a customer base, among others. If we are not effective in addressing these risks, we will not be able to operate profitably in the future, and we may not have adequate working capital to meet our obligations as they become due.





Our business may be adversely affected by a global economic downturn.





Any economic downturn generally could cause a drop in government spending and business investment, which would have a material adverse effect on our business. Further, as a result of the current global economic situation, there may be a disruption or delay in performance by our third-party contractors and suppliers. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could be adversely affected.











10









We could incur significant damages if we are unable to adequately discharge our contractual obligations.





Our failure to comply with contract requirements or to meet our clients performance expectations on a contract could materially and adversely affect our financial performance and our reputation. This, in turn, would impact our ability to compete for new clients and contracts. Our failure to meet contractual obligations could also result in substantial actual and consequential damages under the terms of such contracts. In addition, some of our contracts require us to indemnify clients for our failure to meet performance standards and/or contain liquidated damages provisions and financial penalties related to performance failures. Although we do have liability insurance, the policy limits may not be adequate to provide protection against all such potential liabilities.





We have financial exposure on our fixed-price contracts because we are required to complete a project even if the costs exceed the revenues we generate on a fixed-price contract.





We presently provide and expect to provide services under fixed-price and performance-based arrangements. Generally, under our fixed-price contracts, we receive a specified fee regardless of our cost to perform under such contracts (compared with performance-based contracts under which we earn fees on a per-transaction basis). If we underestimate the cost to complete a contract, we will still be required to complete the work specified under such contract, which could result in a loss to us. To earn a profit on these fixed-price contracts, we must accurately estimate costs involved and assess the probability of meeting the specified objectives, realizing the expected units of work or completing individual transactions, within the contracted time period. We expect to recognize revenues on these contracts, including a portion of estimated profit, as costs are incurred.





Requests for Proposals (RFPs) to secure government contracts are time consuming to prepare and our ability to successfully respond to RFPs will impact our operations.





To market our services to government clients, we will likely be required to respond to Requests for Proposals (RFPs). To do so effectively, we must estimate accurately our cost structure for servicing a proposed contract, the time required to establish operations and likely terms of the proposals submitted by competitors. We must also assemble and submit a large volume of information within an RFPs rigid timetable. Our ability to respond successfully to RFPs will greatly impact our business. There is no assurance that we will be awarded any contracts through the RFP process, or that our submitted RFPs will result in profitable contracts.





Some of our clients may terminate our contracts prior to completion, which could result in revenue shortfalls and reduce profitability or cause losses on contracts.





Many of our contracts with clients contain initial or base periods of one or more years, as well as option periods typically covering more than one-half of the contracts initial duration. However, such clients are under no obligation to exercise the option to extend the contract term. The profitability of some of our contracts could be adversely impacted if such options are not exercised and the contract term is not extended accordingly. Additionally, our contracts contain provisions permitting a client to terminate the contract on short notice, with or without cause. The unexpected termination of significant contracts could result in significant revenue shortfalls. If revenue shortfalls occur and are not offset by corresponding reductions in expenses, our business could be adversely affected. We cannot anticipate if, when or to what extent a client might terminate its contracts with us.





We are subject to government audits, and our failure to comply with applicable laws, regulations and standards could subject us to civil and criminal penalties and administrative sanctions.





The government agencies we contract with have the authority to audit and investigate our contracts with them. As part of that process, a government agency may review our performance on a contract, our pricing practices, our cost structure and our compliance with applicable laws, regulations and standards. If the agency determines that we have improperly allocated costs to a specific contract, we will not be reimbursed for those costs and we will be required to refund the amount of any such costs that have been previously reimbursed. If a government audit identifies improper activities by us or we otherwise determine that these activities have occurred, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines and suspension or disqualification from doing business with the government. Any adverse determination could adversely impact our ability to bid for RFPs in one or more jurisdictions.





Unions may interfere with our ability to obtain contracts.





Our success will depend in part on our ability to win profitable contracts to administer and manage programs that may have been previously administered by government employees. Many government employees, however, belong to labor unions with considerable financial resources and lobbying networks. Unions have in the past and are likely to continue to apply political pressure on legislators and other officials seeking to outsource government programs. Union opposition may result in fewer opportunities for us to service government agencies.







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We rely on our relationship with government agencies to obtain contracts, and there is no assurance that we will be able to maintain a satisfactory relationship with these agencies.





To facilitate our ability to prepare bids in response to RFPs, we expect to rely in part on establishing and maintaining relationships with officials of various government entities and agencies. These relationships will enable us to provide informal input and advice to the government entities and agencies prior to the development of an RFP. We also expect to engage marketing consultants, including lobbyists, to establish and maintain relationships with elected officials and appointed members of government agencies. The effectiveness of these consultants may be reduced or eliminated if a significant political change occurs. We may be unable to successfully manage our relationships with government entities and agencies and with elected officials and appointees and any failure to do so may adversely affect our ability to bid successfully for RFPs.





We face significant competition in bidding for government contracts from large national and international organizations.





The government contracting industry is subject to intense competition. Many of our competitors are national and international in scope and have greater resources than we do. Substantial resources could enable certain competitors to low bid on government RFPs or to take other measures in an effort to gain market share. In addition, we may be unable to compete for a certain large government contract because we may not be able to meet an RFPs requirement to obtain and post a large cash performance bond. Also, in some geographic areas, we face competition from smaller consulting firms with established reputations and political relationships. There is no assurance that we will compete successfully against our existing competitors or any new competitors.





We may not be able to effectively control and manage our growth, which would negatively impact our operations.





We have operated our current line of business for approximately six years, and we expect to grow in the near future as our business develops and becomes established. If our business grows as we anticipate, it will be necessary for us to manage our expansion in an orderly fashion. Any significant growth in our activities or in the market for our services will require extension of our managerial, operational, marketing and other resources. Future growth will also impose significant additional responsibilities upon the members of management to identify, recruit, maintain, integrate, and motivate new employees. Our failure to manage growth effectively may lead to operational inefficiencies that will have a negative effect on our profitability. Additionally, if our growth comes at the expense of providing quality service and generating reasonable profits, our ability to successfully bid for contracts and our profitability will be adversely affected. We cannot assure investors that we will be able to effectively manage any future growth we may experience.





Failure to obtain adequate insurance coverage could put us at risk for uninsured losses.





We currently have liability insurance. Some or all of our customers may require insurance as a requirement to conduct business with us. We may be unable to obtain or maintain adequate liability insurance on acceptable terms, if at all, and there is a risk that our insurance will not provide adequate coverage against our potential losses. Additionally, there are certain types of losses that may not be insurable at a cost that we can afford, and insurance may not be available at any cost with respect to certain losses. Claims or losses in excess of any insurance coverage we may obtain, or the lack of insurance coverage, could put us at risk of loss for any uninsured loss, which would have a material adverse effect on our business and financial condition.





We are dependent on our President and Chief Executive Officer, and other key personnel, and the loss of any of these individuals could harm our business.





We depend on Mark J. Cola, our President and Chief Executive Officer, as well as key scientific and other personnel. The loss of any of these individuals could harm our business and significantly delay or prevent the achievement of our business objectives. In addition, our delivery of services will be labor-intensive: when we are awarded a contract, we may need to quickly hire project leaders and project management personnel. The additional staff may also create a concurrent demand for increased administrative personnel. The success of our business will require that we attract, develop, motivate and retain:





·

experienced and innovative executive officers;

·

senior managers who have successfully managed or designed programs in the public sector; and

·

information technology professionals who have designed or implemented complex information technology projects.





Innovative, experienced and technically proficient individuals are in great demand and are likely to remain a limited resource. We may be unable to continue to attract and retain desirable executive officers, senior managers, and technology professionals. Our inability to hire sufficient personnel on a timely basis or the loss of significant numbers of executive officers and senior managers could adversely affect our business.







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Because we have limited capital resources, we may be dependent on cash flow and payments from customers in order to meet our expense obligations.





A number of factors may cause our revenues, cash flow and operating results to vary from quarter to quarter, including the following:





·

the progression of contracts;

·

the levels of revenues earned on fixed-price and performance-based contracts (including any adjustments in expectations for revenue recognition on fixed-price contracts);

·

the commencement, completion or termination of contracts during any particular quarter;

·

the schedules of government agencies and large multinational corporations for awarding contracts;

·

the failure of our customers to fulfill their obligations under contracts with us; and

·

the term of awarded contracts and potential acquisitions.





Changes in the volume of activity and the number of contracts commenced, completed or terminated during any quarter may cause significant variations in our cash flow from operations because a significant portion of our expenses are fixed. Fixed expenses include, rent, payroll, insurance, employee benefits, taxes and other administrative costs and overhead. Moreover, we expect to incur significant operating expenses during the start-up and early stages of large contracts and typically do not receive corresponding payments in that same quarter.





We may make acquisitions in the future that we are unable to effectively manage given our limited resources.





We may choose to grow our business by acquiring other entities. We may be unable to manage businesses that we have acquired or to integrate them successfully without incurring substantial expenses, delays or other problems that could negatively impact our results of operations. Moreover, business combinations involve additional risks, including:





·

diversion of managements attention;

·

loss of key personnel;

·

our becoming significantly leveraged as a result of the incurrence of debt to finance an acquisition;

·

assumption of unanticipated legal or financial liabilities;

·

unanticipated operating, accounting or management difficulties in connection with the acquired entities;

·

amortization of acquired intangible assets, including goodwill; and

·

dilution to existing stockholders and our earnings per share.





Also, client dissatisfaction or performance problems with an acquired firm could materially and adversely affect our reputation as a whole. Further, the acquired businesses may not achieve the revenues and earnings that we anticipated.





We may be unable to develop or commercialize new and rapidly evolving technologies.





Many of our activities involve developing products or processes that are based upon new, rapidly evolving technologies. The ability to commercialize or further develop these technologies could fail for a variety of reasons, both within and outside of our control.











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We may be unable to protect our intellectual property rights.





Our success in part depends on the ability to protect our intellectual property and proprietary technology. To do so, we will be required to prosecute patent applications and maintain patents, obtain new patents and pursue trade secret and other intellectual property protection. We were awarded two U.S. patents with respect to our munitions technology. We were also awarded a U.S. patent with respect to our IPQA® technology. In addition, we filed eight foreign and U.S. patent applications pertaining to our IPQA® technology and rapid qualification of additive manufacturing for metal parts. Also, we filed a PCT patent application pertaining to the advanced dental implant technology. However, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. There can be no assurance that our program for protection of intellectual property and proprietary technology will be sufficient to protect our intellectual property and proprietary technology from competitors. Our business is also subject to the risk that our issued patents will not provide us with significant competitive advantages if, for example, a competitor were to independently develop or obtain similar or superior technologies. In addition, our issued patents may be challenged or infringed upon by third parties. The enforcement of intellectual property rights is subject to considerable uncertainty, and can be expensive and time-consuming. Patent reform laws and court decisions interpreting such laws, may create additional uncertainty around our ability to obtain and enforce patent protection. Any significant impairment of our intellectual property rights could harm our business and our ability to compete. The unauthorized use of our intellectual property could make it more expensive to do business and harm our operating results. Proprietary trade secrets and unpatented know-how are also very important to our business, however, trade secrets are difficult to protect. Our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential or proprietary information.





We may be sued by third parties who claim that we have infringed their intellectual property rights.





We may be exposed to future litigation by third parties based on claims that our research, development and commercialization activities infringe the intellectual property rights of third parties to which we do not hold licenses or other rights, or that we have misappropriated the trade secrets of others. Any litigation or claims against us, whether or not valid, could result in substantial costs, and could place a significant strain on our financial and human resources. In addition, if successful, such claims could cause us to pay substantial damages. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.





Our services are subject to government regulation, changes in which may have an adverse effect on us.





Our business activities subject us to a variety of federal, state and local laws and regulations. For example, we will required to comply with applicable provisions of the International Traffic in Arms Regulations (ITAR), as well as other export controls and laws governing the manufacture and distribution of munitions technology. Despite the fact that we have applied for and received ITAR compliance, changes in the laws and regulations applicable to our business activities may have an adverse effect on our operations and profitability by making it more expensive and less profitable for us to do business. Additionally, the market for our services depends largely on federal and state legislative programs. These programs can be modified or amended at any time by acts of federal and state governments. Further, if additional programs are not proposed or enacted, or if previously enacted programs are challenged, repealed or invalidated, our growth strategy could be adversely impacted.





Our bylaws contain provisions indemnifying our officers and directors against all costs, charges, and expenses incurred by them.





Our Bylaws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by an officer or director, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been one of our directors or officers. To the extent that our directors and officers insurance policy does not provide reimbursement for such costs, charges, expenses and other amounts, we may incur substantial expenses in satisfying our indemnification obligations.





Our operating costs could be significantly higher than we expect, and this could reduce our future profitability.





In addition to general economic conditions, market fluctuations and international risks, significant increases in operating, development and implementation costs could adversely affect us due to numerous factors, many of which are beyond our control.











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A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.





Businesses have become increasingly dependent on digital technologies to conduct day-to-day operations. At the same time, cyber incidents, including deliberate attacks or unintentional events, have increased. A cyber-attack could include gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption or result in denial of service on websites. We depend on digital technology, including information systems and related infrastructure, to process and record financial and operating data, and communicate with our employees and business partners. Our technologies, systems, networks, and those of our business partners may become the target of cyber-attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information, or other disruption of our business operations. Although to date we have not experienced any losses relating to cyber-attacks, there is no assurance that we will not suffer such losses in the future. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.





Risks Related to Our Securities and this Offering





The price of our securities could be subject to volatility related or unrelated to our operations, which could result in substantial losses for purchasers of our securities in this offering.





Between January 1, 2015 and July 20, 2016, the trading price of our common stock has ranged from a low of $2.45 to a high of $12.50, and could be subject to wide fluctuations in the future in response to various factors, some of which are beyond our control. The trading price of our units, warrants and common stock sold in this offering could be subject to similar fluctuations as a result of such factors. These factors include those discussed previously in this Risk Factors section of this prospectus and others, such as:

·

delays or failures in the commercialization of our current or future products and services;

·

quarterly variations in our results of operations or those of our competitors;

·

changes in our earnings estimates or recommendations by securities analysts or adverse publicity about us or our products or services;

·

announcements by us or our competitors of new products and services, significant contracts, commercial relationships, acquisitions or capital commitments;

·

adverse developments with respect to our intellectual property rights;

·

commencement of litigation involving us or our competitors;

·

any major changes in our board of directors or management;

·

market conditions in our industry; and

·

general economic conditions in the United States and abroad.





In addition, the stock market, in general, may experience broad market fluctuations, which may adversely affect the market price or liquidity of our securities.





We could be subject to securities class action litigation.





Any sudden decline in the market price of our securities could trigger securities class action lawsuits against us. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the time and attention of our management would be diverted from our business and operations. We also could be subject to damages claims if we are found to be at fault in connection with a decline in our market price of our securities.





An active trading market in our securities may not develop, and you may therefore have difficulty selling your securities at or above their public offering price.





Prior to this offering, there has been no public market for the units and warrants offered by this prospectus. Although our common stock is quoted on the OTCQB, our common stock trades infrequently and in low volumes on the OTCQB. The initial offering price of our units will be determined through our negotiations with the underwriters and may not be indicative of the prices that will prevail after this offering.











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We have applied to list our units, common stock and warrants on The NASDAQ Capital Market upon the completion of this offering. Even if our securities are listed on The NASDAQ Capital Market, there is no assurance that the securities will trade in the public market at or above the public offering price. Furthermore, there is no assurance that an active trading market for any of our securities will develop or be sustained following this offering. If an active market for our securities does not develop or is not maintained, it may be difficult for you to sell the securities that you purchase in this offering when you wish to sell them or at a price that you consider satisfactory. An inactive trading market may also impair our ability to raise capital to continue to fund operations by selling securities and may impair our ability to acquire other companies or technologies by using our securities as consideration.





Even if our securities are listed on The NASDAQ Capital Market upon the completion of this offering, there is no assurance that we will at all times thereafter satisfy the continued listing requirements of The NASDAQ Capital Market.





Even if our securities are listed on The NASDAQ Capital Market upon the completion of this offering, we cannot assure you that we will thereafter be able to satisfy the continued listing requirements of The NASDAQ Capital Market. For example, there is no assurance that our common stock will continue to have a bid price of at least $1.00 per share, which is the minimum bid price under such continued listing requirements, or that we will be able to satisfy other quantitative continued listing requirements. If our securities are de-listed from The NASDAQ Capital Market, our stockholders could incur material adverse consequences such as reduced liquidity for their securities and reduced market prices for their securities. Following such de-listing, we could encounter increased difficulty in issuing additional securities at an attractive price, or at all, in order to fund our operations.





If you purchase securities in this offering, you will experience immediate and substantial dilution in the net tangible book value of your shares of common stock.





The offering price of our units is substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase units in this offering, you will pay a price per unit that substantially exceeds our net tangible book value per share of common stock after this offering. Based on an assumed public offering price of $ per unit, which was the last reported price for our common stock on , 2016 as quoted by the OTCQB, you will experience immediate dilution of $ per share of common stock, representing the difference between our pro forma net tangible book value per share after giving effect to this offering and the offering price. For a further description of the dilution that you will experience immediately after this offering, see Dilution.

You may experience additional dilution as a result of future equity offerings.





In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per unit in this offering. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be lower than the price per unit paid by investors in this offering.

We have broad discretion in the use of the net proceeds of this offering and may not use them effectively.





We intend to use the net proceeds of this offering for the development of our products and services, as described in Use of Proceeds. We may also use a portion of the net proceeds of this offering to acquire other products or businesses, although we are not currently a party to an agreement regarding any such acquisition. However, our management will have broad discretion in the application of the net proceeds from this offering and will have the right to use the net proceeds for purposes that differ substantially from our current plans. Management may spend the net proceeds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by management to apply these funds effectively could result in financial losses that could have a material and adverse effect on our business and cause the market price of our securities to decline.





We do not intend to pay dividends on our common stock, and your ability to achieve a return on your investment will depend on appreciation in the market price of our securities.





As described in the section entitled Dividend Policy in this prospectus, we currently intend to invest our future earnings, if any, to fund our growth and not to pay any cash dividends on our common stock. Since we do not intend to pay dividends, your ability to receive a return on your investment will depend on any future appreciation in the market price of our securities. There is no assurance that our securities will appreciate in price.







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If securities or industry analysts do not publish research or reports about us, or if they issue adverse or misleading opinions regarding us or our securities, the market price of our securities and their trading volume could decline.





If we do not obtain and maintain research coverage by securities and industry analysts, the market price for our securities may be adversely affected. The market price of our securities also may decline if any analyst who covers us issues an adverse or erroneous opinion regarding us, our business model, our intellectual property or our performance. If one or more analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the market price of our securities and their trading volume to decline and possibly adversely affect our ability to engage in future financings.

Our principal stockholders and management own a significant percentage of our common stock and will be able to significantly affect matters subject to stockholder approval.





Upon the closing of this offering, based on shares outstanding as of June 30, 2016, our executive officers, directors, holders of 5% or more of our common stock and their respective affiliates will beneficially own in the aggregate approximately % of our outstanding shares of common stock. As a result of their stock ownership, these stockholders will have the ability to influence our management and policies, and will be able to significantly affect the outcome of matters requiring stockholder approval such as elections of directors, amendments of our organizational documents or approvals of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.





Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.





Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have outstanding shares of common stock based on the number of shares outstanding as of June 30, 2016 and after giving effect to this offering. Of these shares of our common stock, the shares to be sold in this offering, plus any shares sold upon exercise of the underwriters option to purchase additional units, will be freely tradable, without restriction, in the public market immediately following this offering, unless purchased by our affiliates. Of the remaining shares, shares are currently restricted under securities laws or as a result of lock-up agreements, but will be able to be sold after this offering as described in the Shares Eligible for Future Sale section of this prospectus. Additional shares of common stock will be eligible for sale in the public market if and to the extent that shares of common stock are issued upon the exercise of the warrants issued in this offering. We also intend to register all shares of our common stock that we may issue under our equity compensation plans. As of June 30, 2016, options to purchase shares of our common stock at a weighted average exercise price of $ per share were outstanding.





Sales of a large number of the shares described in the preceding paragraph, or the perception that a large number of shares may be sold, could have a material adverse effect on the trading price of our common stock.

The warrants issued in this offering may not have any value.





The warrants issued in this offering will be exercisable beginning 30 days after their issuance and will expire on the fifth anniversary of the date of issuance. In the event the trading price of our common stock does not exceed the exercise price of the warrants during the period when the warrants are exercisable, the warrants may not have any value. There is no assurance that the market price of our common stock will ever equal or exceed the exercise price of the warrants, and there is no assurance as to what the market price of the warrants will be.





As a holder of warrants, you will have no rights as a stockholder with respect to the shares of common stock underlying the warrants until you acquire our common stock.





Until you acquire our common stock upon exercise of your warrants, you will have no rights with respect to the common stock underlying those warrants. Upon exercise of your warrants, you will be entitled to exercise the rights of a common stockholder only as to matters for which the record date for actions to be taken by our common stockholders occurs after the date you exercise your warrants.











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We will incur significant costs to ensure compliance with U.S. and NASDAQ reporting and corporate governance requirements.





We will incur significant costs associated with our public company reporting requirements and with applicable U.S. and NASDAQ corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the SEC and NASDAQ. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.





If we fail to maintain effective internal control over financial reporting, the market price of our securities may be adversely affected.





As a public reporting company, we are required to establish and maintain effective internal control over financial reporting. Failure to establish such internal control, or any failure of such internal control once established, could adversely impact our public disclosures regarding our business, financial condition or results of operations. Any failure of our internal control over financial reporting could also prevent us from maintaining accurate accounting records and discovering accounting errors and financial frauds.





Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal control over financial reporting. The standards that must be met for management to assess the internal control over financial reporting as effective are complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. If we cannot assess our internal control over financial reporting as effective, investor confidence and share value may be negatively impacted. In addition, managements assessment of internal control over financial reporting may identify weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting (including those weaknesses identified in our periodic reports), or disclosure of managements assessment of our internal control over financial reporting may have an adverse impact on the price of our securities.





Provisions in our articles of incorporation and bylaws could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.





Our articles of incorporation and bylaws contain provisions that could delay or prevent changes in control or changes in our management without the consent of our board of directors. These provisions include the following:





·

a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;

·

no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

·

the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

·

the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could adversely affect the rights of our common stockholders or be used to deter a possible acquisition of our company;

·

the ability of our board of directors to alter our bylaws without obtaining stockholder approval;

·

the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our articles of incorporation and bylaws regarding the election and removal of directors;

·

a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

·

the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and

·

advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirers own slate of directors or otherwise attempting to obtain control of us.







18









These provisions could inhibit or prevent possible transactions that some stockholders may consider attractive.





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS





This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, business strategy, proposed new products and services, research and development costs, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products and services, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.





In some cases, you can identify forward-looking statements by terms such as may, will, should, expect, plan, anticipate, could, intend, target, project, contemplate, believe, estimate, predict, potential or continue or the negative of these terms or other similar expressions. The forward-looking statements in this prospectus are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this prospectus and are subject to a number of risks, uncertainties and assumptions described under the sections in this prospectus entitled Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this prospectus.





Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.





You should read this prospectus, the documents that we reference in this prospectus and the documents we have filed as exhibits to the registration statement with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.





USE OF PROCEEDS





We estimate that we will receive net proceeds of approximately $ million, assuming a public offering price of $ per unit, which was the last reported price for our common stock on , 2016 as quoted by the OTCQB, after deducting estimated underwriting discounts and commissions and estimated expenses of the offering payable by us of approximately $ million, which includes legal, accounting, printing costs and various fees associated with the registration and listing of our securities. If the underwriters exercise in full their option to purchase additional units, we estimate that the net proceeds from this offering will be approximately $ million.





A $1.00 increase (decrease) in the assumed public offering price of $ per unit would increase (decrease) our net proceeds from this offering by approximately $ million, assuming that the number of units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of units in the number of units offered by us, as set forth on the cover page of this prospectus, would increase (decrease) our net proceeds from this offering by approximately $ million, assuming no change in the assumed public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.





The principal purposes of this offering are to obtain additional capital to support our operations, to establish a broader public market for our common stock and to facilitate our future access to the public equity markets. We anticipate that we will use the net proceeds of this offering for the following purposes:

·

approximately $3,000,000 to purchase AM Manufacturing equipment including new EOS 3D printers and related support equipment and site license for a full material / processing suite of software;

·

approximately $500,000 to purchase manufacturing and inspection equipment including milling, turning, metallographic preparation capabilities; and

·

the remainder for working capital and general corporate purposes.











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We have not determined the exact amounts we plan to spend in any of the areas identified above or the timing of these expenditures. As a result, our management will have broad discretion to allocate the net proceeds to us from this offering, and investors will be relying on the judgment of our management regarding the application of the proceeds from this offering. We reserve the right to change the use of these proceeds as a result of certain contingencies such as competitive developments, the results of our commercialization efforts, acquisition and investment opportunities and other factors. Pending use of the proceeds as described above, we intend to invest the net proceeds of this offering in short-term, interest-bearing, investment-grade securities or certificates of deposit.

MARKET PRICE OF OUR COMMON STOCK





Our common stock is quoted for trading on the OTCQB under the symbol SGLB. The following table sets forth the high and low bid prices for our common stock for the periods indicated after giving effect to our 1-for-100 reverse stock split on March 17, 2016. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.





High Low Fiscal Year Ending December 31, 2016

First Quarter $ 6.99 $ 4.01 Second Quarter 4.75 2.45 Third Quarter (through July 20, 2016) 3.06 2.52



Fiscal Year Ended December 31, 2015



First Quarter $ 9.50 $ 4.20 Second Quarter 12.50 7.00 Third Quarter 9.00 5.01 Fourth Quarter 9.60 5.00



Fiscal Year Ended December 31, 2014



First Quarter $ 18.30 $ 10.00 Second Quarter 17.49 10.20 Third Quarter 13.30 10.60 Fourth Quarter 11.50 5.92





On July 20, 2016, the high and low bid prices for our common stock on the OTCQB were $3.00 and $2.80, respectively. As of July 20, 2016, there were 6,244,910 shares of our common stock outstanding held by approximately 540 holders of record. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.





DIVIDEND POLICY





We have never declared or paid dividends on our capital stock. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. We do not anticipate paying any dividends on our capital stock in the foreseeable future. Investors should not purchase our securities with the expectation of receiving cash dividends. Any future determination related to our dividend policy will be made at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements, contractual restrictions, business prospects and other factors our board of directors may deem relevant.

CAPITALIZATION





The following table sets forth our cash and capitalization as of March 31, 2016 on:





·

an actual basis; and

·

an adjusted basis, after giving additional effect to the sale of units in this offering at an assumed public offering price of $ per unit, which was the last reported price for our common stock on , 2016 as quoted by the OTCQB, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.







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You should read the following table in conjunction with our financial statements and related notes, Selected Financial Data and Managements Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this prospectus.





As of March 31, 2016 Actual As Adjusted (unaudited) Cash $ 1,086,363 $ - Stockholders equity: Preferred Stock, $0.001 par value per share: 10,000,000 shares authorized; no shares issued and outstanding, actual or as adjusted Common stock, $0.001 par value per share: 7,500,000 shares authorized; 6,232,778 shares issued and outstanding, actual; shares issued and outstanding, as adjusted 6,233 - Additional paid-in capital 10,579,536 - Less deferred compensation (272,750) - Retained earnings (deficit) (8,034,787) - Total stockholders equity 2,278,232 - Total capitalization $ 2,278,232 $ -





A $1.00 increase (decrease) in the assumed public offering price of $ per unit, which was the last reported price for our common stock on , 2016 as quoted by the OTCQB, would increase (decrease) the adjusted amount of each of cash, total stockholders equity and total capitalization by $ million, assuming that the number of units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of units in the number of units offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the as adjusted amount of each of cash, total stockholders equity and total capitalization by approximately $ million, assuming that the assumed public offering price of $ per unit remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.





The number of shares of our common stock shown as issued and outstanding on an adjusted basis in the table is based on 6,232,778 shares of our common stock issued and outstanding as of March 31, 2016 and excludes, as of that date:





·

3,125 shares of common stock issuable upon exercise of warrants outstanding as of March 31, 2016, at a weighted average exercise price of $8.00 per share;

·

78,750 shares of common stock issuable upon exercise of stock options outstanding as of March 31, 2016, at a weighted average exercise price of $5.84 per share;

·

167,132 shares of common stock available for future issuance under our 2013 Equity Incentive Plan as of March 31, 2016;and

·

1,500 shares of common stock available for future issuance under our 2011 Equity Incentive Plan as of March 31, 2016.





DILUTION





If you invest in our common stock by purchasing units in this offering, your ownership interest will be diluted to the extent of the difference between the public offering price per unit in this offering and the as adjusted net tangible book value per share of our common stock after this offering.





As of March 31, 2016, we had a historical net tangible book value of $2,080,602, or $0.34 per share of common stock. Our historical net tangible book value is the amount of our total tangible assets less our total liabilities. Historical net tangible book value per share represents historical net tangible book value divided by the 6,232,778 shares of our common stock outstanding as of March 31, 2016.







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Investors participating in this offering will incur immediate and substantial dilution. After giving effect to the sale of units in this offering at an assumed public offering price of $ per unit, which was the last reported price for our common stock on , 2016 as quoted by the OTCQB, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of March 31, 2016 would have been approximately $ million, or approximately $ per share of common stock. This represents an immediate increase in as adjusted net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to investors participating in this offering.





The following table illustrates this per share dilution to new investors participating in this offering:

Assumed public offering price per unit $ Net tangible book value per share as of March 31, 2016 $ 0.34 Increase in net tangible book value per share attributable to the sale of shares of common stock in this offering $ As adjusted net tangible book value per share after this offering $ Dilution per share to new investors $





A $1.00 increase (decrease) in the assumed public offering price of $ per unit would increase (decrease) the net proceeds from this offering by approximately $ million, assuming that the number of units offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses. An increase of units in the number of units offered by us, as set forth on the cover page of this prospectus, would increase the as adjusted net tangible book value per share after this offering by $ million and decrease the dilution per share to new investors participating in this offering by $ million, assuming no change in the assumed public offering price per unit and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A decrease of units in the number of units offered by us, as set forth on the cover page of this prospectus, would decrease the as adjusted net tangible book value per share after this offering by $ and increase the dilution per share to new investors participating in this offering by $ , assuming no change in the assumed public offering price and after deducting estimated underwriter discounts and commissions and estimated offering expenses payable.





The following table summarizes, on an as adjusted basis as of March 31, 2016, the differences between the number of shares of common stock purchased from us, the total consideration and the average price per share paid by existing stockholders and by investors participating in this offering at an assumed public offering price of $ per unit, which was the last reported price for our common stock on ______, 2016 as quoted by the OTCQB, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.





Shares Purchased Total Consideration Average Price Number Percent Amount Percent Per Share Existing stockholders 6,244,910 $ 7,714,805 $ 1.24 New investors Total 100.0% $ 100.0% $

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of March 31, 2016. The number of shares of our common stock to be outstanding after this offering excludes, as of that date:

·

3,125 shares of common stock issuable upon exercise of warrants outstanding as of March 31, 2016, at a weighted average exercise price of $8.00 per share;

·

78,750 shares of common stock issuable upon exercise of stock options outstanding as of March 31, 2016, at a weighted average exercise price of $5.84 per share;

·

167,132 shares of common stock available for future issuance under our 2013 Equity Incentive Plan as of March 31, 2016; and

·

1,500 shares of common stock available for future issuance under our 2011 Equity Incentive Plan as of March 31, 2016.





We may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. New investors will experience further dilution if any of our outstanding options or warrants are exercised, new options are issued and exercised under our equity incentive plan or we issue additional shares of common stock, other equity securities or convertible debt securities in the future.







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SELECTED FINANCIAL DATA





The following table presents our selected financial data. The selected statement of operations data for the years ended December 31, 2015 and 2014 and the selected balance sheet data as of December 31, 2015 and 2014 are derived from our audited financial statements included elsewhere in this prospectus. The selected statement of operations data for the three months ended March 31, 2016 and 2015 and the selected balance sheet data as of March 31, 2016 are derived from our unaudited financial statements included elsewhere in this prospectus. We have prepared the unaudited financial information set forth below on the same basis as our audited financial statements and have included all adjustments, consisting of only normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for such periods. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. Furthermore, our historical results are not necessarily indicative of future results. The information set forth below should be read together with Managements Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the accompanying notes included elsewhere in this prospectus.





Year Ended December 31, Three Months Ended March 31, 2015 2014 2016 2015 (Unaudited) Statement of Operations Data:

Total revenue $ 1,234,810 $ 548,723 $ 358,455 $ 185,686 Operating expenses: Other general and administration 1,282,952 1,020,262 395,488 267,703 Payroll 585,706 404,054 215,589 72,660 Research and development 330,554 219,132 39,071 70,147 Total operating expenses 2,199,212 1,643,448 650,148 410,510 Net loss $ (1,696,282) $ (3,116,080) $ (470,667) $ (371,881) Net loss per share $ (0.27) $ (0.51) $ (0.08) $ (0.06) Weighted-average number of shares outstanding, basic and diluted 6,228,108 6,103,447 6,233,729 6,206,220





As of December 31, As of March 31, 2015 2014 2016 (Unaudited) Balance Sheet Data: Cash $ 1,539,809 $ 2,962,069 $ 1,086,363 Total assets 2,787,264 4,160,341 2,504,888 Total liabilities 109,916 354,350 226,656 Total stockholders equity $ 2,677,348 $ 3,805,991 $ 2,278,232















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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





You should read the following information together with our financial statements and notes thereto that are included in this prospectus. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, those presented under Risk Factors and elsewhere in this prospectus.





Overview

Sigma is a software company that has developed quality assurance software known as PrintRite3D®, which Sigma believes solves the major problems that have prevented large-scale metal part production using 3D printers. GE Aviation, for example, has stated that it plans to commit $3.5 billion by 2020 to, among other things, build a metal 3D production facility for its Leap engine and other engines to produce the applicable 3D printed parts. However, without companies like GE Aviation effectively being able to check each part for shape, density, strength and consistency, we believe that such companies will not be able to address the major problems currently preventing large-scale metal 3D production. We believe that our software, which is positioned inside the 3D metal printer, solves these problems by assuring each part is being made to the specifications of the computer file as it is being made. We enable 3D prototyping to become 3D manufacturing. Instead of performing quality assurance (QA) post production, our PrintRite3D® software could fundamentally redefine conventional QA by embedding quality assurance and process control into the manufacturing process in real time. We have filed patent applications directed to our In-Process Quality Assurance (IPQA®) procedure for advanced manufacturing. In addition, we anticipate that our core PrintRite3D® software will enable our customers to combine their advanced manufacturing technologies with our 3D manufacturing QA to achieve both cost savings and stronger parts. Vertical markets that we believe would benefit from our technology and software include aerospace, defense, bio-medical, power generation, and oil & gas industries. We provide our software products to customers in the form of Software as a Service (SaaS).





About 3D Printing





3D printing (3DP) or additive manufacturing (AM) is changing the world by going directly from computer graphics to real parts. 3D printing has been applied to the manufacture of plastic parts for several years. 3D manufacturing of metal parts involves directing a laser at a layer of powdered metal and melting it. These layers become forged together from the bottom up. Revenues attributable to 3D manufacturing for metal products are estimated to be between $4 and $6 billion per year by 2020. (Wohlers Report 2015, 3D Printing and Additive Manufacturing State of the Industry - Annual Worldwide Progress Report).

The application of 3D printing to high-tolerance, precision manufactured metal parts has only recently emerged. 3D printing of metal parts today represents only a minor percentage of all 3D manufacturing. However, we believe the greatest future growth for 3D printing appears to be in metal parts given the interest from Fortune 100 companies, Federal government laboratories and agencies as well as university-based institutions. Emphasis from these high-end manufacturers is strongly focused on quality and precision manufacturing for high-tolerance parts. We believe the on-going success of 3D printing for metal parts will be highly dependent upon the quality assurance procedure used such as our PrintRite3D®.

About Quality Assurance in 3D Printing





Current methods for providing quality are cost prohibitive because approximately 25% of parts produced by 3D printing need to be destroyed in the post-production quality control process. Additional costs are incurred by using scanning technology on these parts. We offer our clients the ability to use sensors to track each layer, and our software continuously analyzes the part so that when it is finished we know if it is production quality. We believe our PrintRite3D® software could reduce inspection costs by a factor of 10 and development time for new parts by 50% or more.





By using PrintRite3D® software, a high-precision manufacturer would have the ability to offer its customers, on an exclusive basis, product guarantees and assurances that its product was produced in compliance with stringent quality requirements. Initial orders have been received from GE Aviation Honeywell Aerospace, Aeroject Rocketdyne, and Woodward.





There is real potential for our PrintRite3D® software to be incorporated into a majority of 3D metal printing devices made by companies like Electro-Optical Systems (EOS), Additive Industries, Trumpf Laser, Concept Lasers and others.





Sigmas Cloud-Based IIoT Solutions





The process of making a 3D printed part starts with our customers loading a CAD/CAM model of the part into the Cloud shown in A in Figure 1. Next, instructions are sent to the 3D printer (see B, as shown in Figure 1). Metal powder in the machine is then deposited onto the build platform where a laser beam focused onto the build platform melts each successive layer of powder in 20-50 micron increments. Our sensors (see C in Figure 1) detect, record, analyze and compare the part as it is being made layer-by-







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layer against the CAD/CAM specifications and physical reference points for quality assurance during the manufacturing. Our software certifies the shape, strength, and internal density of each part, which eliminates the need to: (1) destroy a large percentage of the parts in post-production quality assurance; and (2) retain all of the metal as opposed to cutting pieces and wasting metal.





Our PrintRite3D® web-based software (see D in Figure 1) is being designed to reside in the Cloud (see A in Figure 1) of the Industrial Internet of Things (IIoT). We enable manufacturing engineers to assure the part quality layer-by-layer, provide for manufacturing statistical process control and harvest, aggregate, and analyze Big Data from the manufacturing in-process data collected from our SENSORPAK (see C in Figure 1), as well as post-process manufacturing data collected by our customers (see E in Figure 1).





Our specialized sensor (see C in Figure 1), known as SENSORPAK, is an IIoT-compliant edge computing device. It contains the modular hardware and software necessary to connect to cyber-physical objects (see B in Figure 1) living on the manufacturing floor. It allows for bi-directional information flow between the manufacturing floor and the Cloud (see A in Figure 1). It starts a million-fold data reduction that finishes with our PrintRite3D® software, which provides customers with product guarantees and assurances that parts were produced in compliance with stringent quality standards. It can collect, analyze, aggregate, filter, and then further communicate data from the manufacturing floor to the Cloud (see