3DX Industries, Inc.

What they do

3DX Industries operates an additive manufacturing and precision machining business near Bellingham, Washington. The company uses a binder jet 3D metal printing system alongside an in-house CNC machine shop with fifteen machining centers, including four fanuc robo-drills. It serves product developers who need custom parts for prototyping, functional testing, and production, and offers both metal printing and traditional machining as a one-stop shop.

Revenue drivers

• Additive Manufacturing (3D Metal Printing) — The company's 3D metal printing process creates objects layer by layer from powdered material, a chemical binder, and a digital file. It is positioned for complex geometries and is part of the company's manufacturing services.
• CNC Precision Machining — A fully operational CNC machine shop with fifteen machining centers, including four fanuc robo-drills, provides traditional manufacturing methods for high-precision parts. This supplements additive manufacturing and supports one-stop shopping for customers.
• Custom Part Production for Product Developers — 3DX targets product developers worldwide who use 3D CAD software to create digital models for prototyping, functional testing, and market evaluation. Revenue comes from producing physical parts from these digital designs.

Recent performance

For the three months ended January 31, 2017, 3DX generated revenues of $100,751, up from $88,062 in the prior-year period. Cost of goods sold was $1,698 versus $9,397 a year earlier. Total operating expenses were $272,863, down from $295,235, due to lower depreciation and professional fees. The company recorded a net loss of $145,312, compared to a net loss of $243,733 in the same period last year. A one-time gain on disposal of equipment of $198,948 and $150,000 in debt discount amortization affected the results.

Strategy

3DX Industries aims to combine additive manufacturing and precision machining to serve product developers worldwide. The company purchased precision manufacturing assets in December 2013 and has since focused on expanding its manufacturing capabilities. It plans to broaden the range of part sizes, geometric complexity, and materials it can support. Management is seeking equity and/or debt financing to fund operational shortfalls over the next 12 months.

Risks

• Going Concern and Liquidity Risk — As of January 31, 2017, the company had $25,928 in cash, a working capital deficit of $2,774,905, and stated that current cash is not sufficient to satisfy liquidity requirements.
• Dependence on Additional Financing — 3DX requires additional financing to pursue planned activities, and management provides no assurance that future financing will be available on acceptable terms.
• Historical Net Losses — The company recorded net losses of $145,312 for the three months ended January 31, 2017, and has a history of losses, including $243,733 in the prior-year period.
• Restatement and Internal Control Risk — On January 22, 2018, the company changed accountants and stated that previously issued financials were not reliable, indicating possible material weaknesses in financial reporting.

Outlook

Management expects revenues to increase as additional customers are secured, but states that current revenue is not enough to meet operational overhead. The company is seeking equity or debt financing to fund the shortfall over the next 12 months. If financing is not available on satisfactory terms, 3DX may be unable to continue operations, develop, or expand. Management provides no assurance that future financing will be available or that the company will be successful.