PROXY
STATEMENT
TABLE
OF CONTENTS
SIGMA
LABS, INC.
3900
Paseo del Sol
Santa
Fe, New Mexico 87507
PROXY
STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
To
be Held May 24, 2021
This
Proxy Statement and the enclosed form of proxy are being furnished to stockholders of Sigma Labs, Inc. (the “Company”)
as of the close of business on March 26, 2021 (the “Record Date”), in connection with the solicitation on behalf of
the Board of Directors of the Company (the “Board” or the “Board of Directors”) of proxies for use at
a Special Meeting of Stockholders (the “Special Meeting”) to be held at 10:00 A.M. local time, on May 24, 2021, in
a virtual meeting format due to COVID-19, to protect the health and well-being of our stockholders, directors and employees and
taking into account current federal, state and local guidance, or at any adjournments or postponements thereof, for the purposes
set forth in the accompanying Notice of Special Meeting of Stockholders.
This
Proxy Statement and the accompanying proxy card are first being mailed on or about April 20, 2021 to our stockholders of record
as of the close of business on the Record Date. Stockholders should review the information provided herein in conjunction with
the Company’s 2020 Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “Annual Report”).
The Annual Report is also available under the “Investors” tab on our corporate website (www.sigmalabsinc.com),
and this Proxy Statement will also be available under the “Investors” tab on our corporate website beginning on or
about April 20, 2021 and on the SEC’s website at www.sec.gov. Information contained on, or that can be accessed through,
our website is not intended to be incorporated by reference into this Proxy Statement and references to our website address in
this Proxy Statement are inactive textual references only.
PURPOSES
OF THE MEETING
At
the Special Meeting, the Company’s Stockholders will consider and vote upon the following matter:
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(1)
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Approval
of an amendment to the Sigma Labs, Inc. Amended and Restated Articles of Incorporation (the “Articles of Incorporation”)
to increase the authorized number of shares of common stock from 12,000,000 to 24,000,000.
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Unless
contrary instructions are indicated on the proxy you submit, all shares represented by valid proxies received pursuant to this
solicitation (and that have not been revoked in accordance with the procedures set forth below) will be voted in accordance with
the recommendation of the Board of Directors as follows:
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“FOR”
approval of the amendment to the Articles of Incorporation to increase the authorized number of shares of common stock to
24,000,000 (Proposal I).
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In
the event a stockholder specifies a different choice by means of a properly submitted proxy, such stockholder’s shares will
be voted in accordance with the specification so made. In addition, your shares will be voted as the proxyholders may determine
in their discretion upon any other proposals as may properly come before the Special Meeting.
OUTSTANDING
VOTING STOCK AND VOTING RIGHTS
As
of the close of business on the Record Date, the Company had 10,492,098 shares par value $0.001 per share of common stock
(“Common Stock”) outstanding. Each stockholder of record on the Record Date is entitled to one vote on all matters
presented at the Special Meeting for each share of Common Stock held by such stockholder. The presence, either in person or by
properly executed proxy, of the holders of the majority of the shares of Common Stock entitled to vote at the Special Meeting
is necessary to constitute a quorum at the Special Meeting. Virtual attendance at the Special Meeting will be limited to stockholders
as of the Record Date, their authorized representatives, and guests of the Company. In order to attend, you must register in advance
at http://viewproxy.com/sigmalabsinc/2021SM/htype.asp prior to the deadline of May 21, 2021 at 11:59 p.m. (Eastern Time).
Upon completing your registration, you will receive further instructions via email, including your unique link that will allow
you to access the meeting and will also permit you to submit questions. Please be sure to follow the instructions on your Proxy
Card and/or Voting Authorization Form and subsequent instructions that will be delivered to you via email.
If
your shares of Common Stock are registered directly in your name with Issuer Direct Corporation, as of the Record Date, you may
vote:
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(1)
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By
Internet: Go to www.FCRvote.com/sglbsm and follow the instructions;
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(2)
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By
Telephone: Call toll-free to 1-866-402-3905 and follow the instructions;
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(3)
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By
Mail: Complete, sign, date and return your proxy card in the envelope supplied to you with the written proxy materials;
or
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(4)
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In
Person: Attend the Special Meeting virtually and vote at the Special Meeting in accordance with the instructions set forth
in the paragraph above and subsequent instructions that will be delivered to you via email.
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If
your shares are held by a bank, broker or other nominee, you are a beneficial owner of those shares rather than a stockholder
of record. If you are a beneficial owner, your bank, broker or other nominee will forward you a complete set of the proxy materials,
together with a voting authorization form. As a beneficial owner, you have the right to direct your bank, broker or other nominee
how to vote your shares by following the voting instructions provided by your bank, broker or other nominee. Please refer to the
proxy materials forwarded by your bank, broker or other nominee for instructions regarding the methods available to vote your
shares (Internet, telephone or mail). Please note that if your shares of Common Stock are held by a bank, broker or other nominee
and you wish to vote in person virtually at the Special Meeting, you must obtain a “legal proxy” from the bank, broker
or other nominee that holds your shares giving you the right to vote in person virtually at the Special Meeting, and you must
register in advance of the deadline of May 21, 2021 at 11:59 p.m. eastern at http://viewproxy.com/sigmalabsinc/2021SM/htype.asp.
Except
as noted below, if you are a holder of record, you may use the Internet or any telephone to transmit your voting instructions
or, if you received a printed set of the proxy materials, you may vote by mail by completing, signing, dating and returning the
proxy card enclosed with the proxy materials you received before the polls close at the Special Meeting. If you are a stockholder
of record, your proxy, whether submitted by Internet, telephone or by mail, may nevertheless be changed or revoked at any time
prior to the voting thereof at the Special Meeting at your discretion either by (i) sending to the Company’s Secretary a
written notice of revocation, (ii) by voting the shares covered thereby in person virtually at the Special Meeting in accordance
with the instructions set forth above, on your Proxy Card and/or Voting Authorization Form and subsequent instructions that will
be delivered to you via email or (iii) by submitting another proxy dated subsequent to the date of the initial proxy. Please note
that virtual attendance at the Special Meeting will not by itself constitute revocation of a proxy. If you are a beneficial owner,
please refer to the voting instructions provided by the bank, broker or other nominee that holds your shares for information about
the deadline for voting and instructions on how to change or revoke any previously submitted voting instructions.
The
vote required for approval of the proposal before the stockholders at the Special Meeting is as follows (and as summarized in
the table below):
For
Proposal I — approval of the amendment to the Articles of Incorporation to increase the authorized number of shares of common
stock from 12,000,000 to 24,000,000, an affirmative vote of holders of a majority of the outstanding shares of Common Stock entitled
to vote at the Special Meeting is required to approve such proposal. Each stockholder may vote for, vote against or abstain from
voting on such proposal. Abstentions are not treated as votes cast at the Special Meeting and therefore will have no effect on
the outcome of the vote for Proposal I. Abstentions will be counted for purposes of determining whether a quorum is present at
the meeting. A broker non-vote occurs when a broker, who has not received voting instructions from the beneficial owner of the
shares, does not vote on a non-routine proposal because the broker does not have discretionary authority to vote on such proposal,
but the broker may exercise its discretionary authority to vote the beneficial holder’s shares on a “routine”
matter at the Special Meeting. Proposal I is considered a “routine” matter under applicable stock exchange rules.
If you hold your shares through a broker and do not provide voting instructions to the broker, then under applicable stock exchange
rules governing your broker, the broker may vote your shares in its discretion with respect to Proposal I above. Broker non-votes
will be counted for purposes of determining whether a quorum is present at the meeting.
INFORMATION
CONCERNING THE PROXY SOLICITATION
The
cost of preparing and making available this Proxy Statement, the Notice of Special Meeting of Stockholders, and the proxy is borne
by the Company. In addition to the use of the Internet, employees of the Company may solicit proxies in person, by telephone,
by mail, via the Internet and by other means of communication. The Company’s employees will receive no compensation for
soliciting proxies other than their regular salaries. Solicitation of proxies may also be made by directors, officers or regular
employees of the Company. The Company may request banks, brokers and other custodians, nominees, and fiduciaries to forward copies
of the proxy materials to their principals and to request authority for the execution of proxies. The Company will reimburse such
persons for their expenses in so doing. We also will engage Alliance Advisors, LLC, a proxy solicitation firm, to assist in the
solicitation of proxies. We will pay such firm a fee of approximately $5,500, plus reasonable and approved out-of-pocket expenses.
PROPOSAL
I
APPROVAL
OF AMENDMENT TO AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE OUR AUTHORIZED COMMON STOCK
Background
Our
Articles of Incorporation currently authorize a total of 12,000,000 shares of the Company’s Common Stock. After careful
consideration, for the reasons discussed below, our Board has adopted and is recommending that our stockholders approve and adopt
a proposal to amend our Articles of Incorporation to authorize an additional 12,000,000 shares of Common Stock, which would result
in total authorized shares of Common Stock under our Articles of Incorporation of 24,000,000 shares of Common Stock. The text
of the proposed Certificate of Amendment to our Articles of Incorporation, which we refer to as the Certificate of Amendment,
is attached as Appendix A.
For
the reasons discussed below, our Board determined that the proposed amendment was advisable and in the best interests of the Company
and its stockholders and approved and adopted the amendment, subject to stockholder approval at the Special Meeting. The adoption
of the Certificate of Amendment is expressly conditioned upon the approval of the Certificate of Amendment by our stockholders.
Accordingly, if we do not receive the required stockholder approval for the Certificate of Amendment, we will not adopt the Certificate
of Amendment.
If
stockholders approve and adopt the amendment, it will become effective upon the filing of a Certificate of Amendment to our Articles
of Incorporation with the Secretary of State of the State of Nevada, which the Company intends to file shortly after the Special
Meeting.
Text
of the Proposed Amendment
The
following is the text of the proposed amendment to Articles of Incorporation.
The
first two paragraphs of ARTICLE IV of the Articles of Incorporation would be amended to read in their entirety as follows:
“The
total number of shares of all classes of capital stock which the corporation shall have authority to issue is 34,000,000 shares.
Stockholders shall not have any preemptive rights, nor shall stockholders have the right to cumulative voting in the election
of directors or for any other purpose.
The
classes and the aggregate number of shares of stock of each class which the corporation shall have authority to issue are as follows:
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(a)
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24,000,000
shares of common stock, $0.001 par value (“Common Stock”);
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(b)
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10,000,000
shares of preferred stock, $0.001 par value (“Preferred Stock”).”
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Reasons
for the Proposed Amendment
On
March 25, 2021, the Company entered into a Securities Purchase Agreement with certain purchasers named therein (the “Purchasers”)
pursuant to which the Company sold to the Purchasers in a registered direct offering 2,190,000 shares of Common Stock and in a
concurrent private placement warrants to purchase 2,190,000 shares of Common Stock (the “Placement Warrants”). Under
the Securities Purchase Agreement, the Company is required to hold a meeting of its stockholders for the purpose of obtaining
approval of an amendment to the Company’s Articles of Incorporation that increases the number of authorized shares of Common
Stock from 12,000,000 to 24,000,000. The Purchasers have agreed to vote the shares purchased under the Securities Purchase Agreement
in favor of the Amendment.
As of March 31, 2021, the Company has 10,493,598 shares of Common Stock outstanding. As of such date, the
Company has outstanding derivative securities (convertible preferred stock, stock options and warrants, including the Placement
Warrants) which, upon full exercise or conversion, would result in the issuance of approximately 4,968,493 additional shares of
Common Stock. Also, the Company is required to reserve approximately 374,203 additional shares of Common Stock covering the exercise
or conversion of certain derivative securities. Pending obtaining stockholder approval of the amendment to increase our authorized
shares of Common Stock, we have received waivers from certain holders of derivative securities with respect to their exercise or
conversion of such securities.
The
Board of Directors also believes that the additional shares of Common Stock could be used in a number of ways to improve the overall
value of the Company:
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We
could use the shares for potential strategic transactions, including, among other things, acquisitions, strategic partnerships,
joint ventures, restructurings, business combinations and investments, although we have not entered into any agreements regarding
such strategic transactions.
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These
shares could also be used for potential future financings, although we have not entered into any agreements regarding such
financings.
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These
shares could also be used as part of our equity compensation program in order to attract, retain and motivate talented employees,
consultants, advisors and non-employee directors. These equity grants provide these individuals with a direct stake in the
future outcome of the Company and serve to align the interests of our employees with our stockholders.
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These
shares could also be used for the acquisition of potential future product lines, although we have not entered into any agreements
for such acquisitions.
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Other
than the issuance of additional shares of Common Stock pursuant to the exercise or conversion of derivative securities, we do
not currently have any definitive agreements or arrangements to issue any of the proposed additional authorized shares of Common
Stock that will become available for issuance if this proposal is approved. The additional authorized shares would enable us to
act quickly in response to opportunities that may arise for these types of transactions, in most cases without the necessity of
obtaining further stockholder approval and holding a special stockholders’ meeting before such issuance could
proceed, except as provided under Nevada law and the NASDAQ Stock Market.
Possible
Effects of the Proposed Amendment
If
the proposed amendment to the Articles of Incorporation to authorize an additional 12,000,000 shares of Common Stock described
above is approved and adopted by our stockholders, we will have the authority under our Articles of Incorporation to have up to
24,000,000 shares of Common Stock and 10,000,000 shares of preferred stock issued and outstanding. As of the close of business
on the Record Date, we had 10,492,098 shares of Common Stock and 465 shares of preferred stock issued and outstanding. If this
proposal is approved, the additional authorized shares of Common Stock may be issued at the discretion of the Company’s
Board of Directors without further stockholder action, except as may be required by law or the rules of Nasdaq. The increase in
authorized shares would not have any immediate dilutive effect on the proportionate voting power or other rights of existing stockholders.
However, any subsequent issuance of shares of common stock, other than on a pro-rata basis to all stockholders, would reduce each
stockholder’s proportionate interest in our company. Any of the additional shares of common stock issued in the future would
have the same rights and privileges as attach to the common stock currently authorized and outstanding and the par value of the
Common Stock would remain unchanged at $0.001 par value per share. Those rights do not include preemptive rights with respect
to the future issuance of any additional shares.
We
have not proposed the increase in the number of authorized shares of common stock with the intention of using the additional authorized
shares for anti-takeover purposes, but the Company would be able to use the additional shares to oppose a hostile takeover attempt
or delay or prevent changes in control or management of the Company. For example, without further stockholder approval, our Board
of Directors could sell shares of common stock in a private transaction to purchasers who would oppose a takeover or favor our
current Board of Directors. Although this proposal to increase the authorized number of shares of common stock has been prompted
by business and financial considerations and our requirement to obtain stockholder approval under the Securities Purchase Agreement,
and not by the threat of any known or threatened hostile takeover attempt, stockholders should be aware that approval of this
proposal could facilitate future attempts by the Company to oppose changes in control of the Company and perpetuate our management,
including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices.
We
cannot provide assurances that any such transactions previously mentioned will be consummated on favorable terms or at all, that
they will enhance stockholder value or that they will not adversely affect our business or the trading price of the common stock.
Any such transactions may require the Company to incur nonrecurring or other charges and may pose significant integration challenges
or management and business disruptions, any of which could materially and adversely affect our business and financial results.
If
the stockholders approve the proposal, the amendment will become effective upon the filing of the Certificate of Amendment to
the Articles of Incorporation as set out above and in Appendix A with the Secretary State of the State of Nevada.
If
Proposal I is not approved and adopted by our stockholders, our Articles of Incorporation will not be amended as set forth above
and we will continue to have the authority under our Articles of Incorporation to have up to only 12,000,000 shares of Common
Stock and 10,000,000 shares of preferred stock issued and outstanding. We would encounter greater difficulty in carrying out our
business plans and achieving profitability because we may be unable (1) to issue additional shares of common stock to attract
new employees or to award current employees for future performance, (2) to raise working capital by issuing shares of our common
stock, and (3) to acquire other businesses and products in exchange for shares of our common stock. Also, we would not have sufficient
number of authorized shares to satisfy our obligations with respect to the Company’s outstanding derivative securities,
and we would be required to call a meeting of stockholders every 75 days after the Special Meeting to seek approval of the increase
in authorized shares to not be in breach of the Securities Purchase Agreement.
Interests
of Directors and Executive Officers
Our
directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal
except to the extent of their ownership of shares of our Common Stock and derivative securities to the extent that the exercise
or conversion thereof may be affected by the failure to increase the authorized shares of our Common Stock.
Vote
Required
The
affirmative vote of the holders of at least a majority of the Company’s issued and outstanding shares of Common Stock entitled
to vote at the Special Meeting is required to approve and adopt the proposed amendment to the Articles of Incorporation to authorize
an additional 12,000,000 shares of Common Stock.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” APPROVAL OF THE AMENDMENT TO OUR AMENDED AND
RESTATED ARTICLES OF INCORPORATION.
OWNERSHIP
OF SECURITIES