What changed in this filing

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Item 1. Business

2024-08-28 compared with 2023-03-02 · 128 added, 157 removed, 209 unchanged (58% of the section changed)

We are a global public safety technology and services company organized in March 2016 delivering modern policing solutions to law enforcement and security personnel.

We are a mission-driven organization focused on improving public safety encounters and outcomes.

In late 2018, we commenced the sale of our initial public safety product, the BolaWrap 100 remote restraint device.

In 2020, we expanded our public safety technology offerings by introducing a virtual reality training platform called Wrap Reality, which is now being sold to law enforcement and corrections departments for simulation training and societal reentry scenarios.

In early 2022, we delivered an improved version of our flagship product, the BolaWrap 150, which is electronically deployed, more robust, lighter, and simpler to use compared to the BolaWrap 100s. 

We believe our solutions have an immediate addressable market consisting of about 900,000 full-time sworn law enforcement officers at over 18,000 federal, state, and local law enforcement agencies in the US, as well as 12.4 million police officers in more than 100 countries.

Additionally, we are exploring other domestic markets such as military and private security when allowable, while also targeting countries with the largest police forces as part of our international focus.

We operate in a segment of the non-lethal products global market, which is expected to reach $16.1 billion by 2027, as projected by 360iResearch, a market research consulting firm. 

We are a global public safety technology and services company that delivers safe and effective policing solutions to law enforcement and security personnel worldwide.

We are leading the movement for safer outcomes by equipping law enforcement with safer, non-painful compliance tools, and immersive training fit for modern society.

We began sales of our first public safety product, the BolaWrap 100 remote restraint device, in late 2018.

In the first quarter of 2022, we delivered a new generation product, the BolaWrap 150.

The BolaWrap 150 is electronically deployed and is more robust, smaller, lighter and simpler to deploy than the BolaWrap 100 that has since been phased out.

In late 2020 we added a new solution to our public safety technologies, our virtual reality (“VR”) training platform, Wrap Reality, and in August 2023 we acquired Intrensic, LLC, a Delaware limited liability company (“Intrensic”), which added a Body-Worn Camera (“BWC”) and Digital Evidence Management (“DEM”) solution to our portfolio of policing solutions.

Wrap Reality is now sold to law enforcement agencies for simulation training as well as corrections departments for the societal reentry scenarios.

Our target market for our solutions includes approximately 900,000 full-time sworn law enforcement officers in over 18,000 federal, state, and local law enforcement agencies in the U.S.

and over 12 million police officers in more than 100 countries.

Additionally, we are exploring opportunities in other domestic markets, such as military and private security.

Our international focus is on countries with the largest police forces.

According to 360iResearch, a market research consulting firm, our non-lethal products are part of a global market segment expected to grow to $16.1 billion by 2027.

We focus our efforts on the following products and services:

BolaWrap Remote Restraint Device  –

is a safe hand-held remote restraint device that discharges a seven and a half-foot Kevlar tether to wrap an individual at a range of 10-25 feet.

BolaWrap assists law enforcement to safely detain individuals without the need for pain compliance and higher uses-of-force.

Wrap Reality  –

is a virtual reality training system employing immersive computer graphics with proprietary software-enabled content.

It allows up to two participants to enter a simulated training environment simultaneously with customized weapon controllers that enable trainees to engage in strategic decision making along including non-use-of-force and verbal training.

In addition to the US law enforcement market, we have shipped our products to 59 countries.

We have established an active distributor network representing 50 states and one dealer representing Puerto Rico.

BolaWrap Remote Restraint Device – a hand-held remote restraint device that discharges a seven and half-foot Kevlar tether to entangle an individual at a range of 10-25 feet.

BolaWrap assists law enforcement to safely and effectively control encounters early without resorting to painful force options.

Wrap Reality – a law enforcement 3D training system employing immersive computer graphics VR with proprietary software-enabled content.

It allows up to two participants to enter a simulated training environment simultaneously, and customized weapons controllers enable trainees to engage in strategic decision making along the force continuum.

Wrap Reality has 45 scenarios for law enforcement and corrections and 15 scenarios for societal reentry.

Wrap Reality is one of the most robust 3D Virtual Reality solutions on the market for law enforcement and societal reentry today.

Wrap Intrensic – a Body-Worn Camera and Digital Evidence Management solutions provider.

BWC and DEM play crucial roles in capturing, storing, and managing digital evidence, such as video and audio recordings for various purposes, including criminal investigations and maintaining transparency in public interactions.

The Wrap Intrensic X2 camera hardware and storage and data management capability, along with awareness of front-line operations, provides customers with a solution to meet their challenges.

Wrap Intrensic Evidence on our cloud-based video storage platform provides an unlimited video storage platform that includes video and other evidence uploading, search, retrieval, redaction, and evidence sharing while reducing the need for resources required to manage this evidence.

In addition to the US law enforcement market, we have shipped our restraint products to 62 countries.

We have established an active distributor network representing 50 states and one dealer representing the US territory of Puerto Rico.

We have distribution agreements with 35 international distributors covering 75 countries.

We focus on significant sales, training and business development efforts to support our global distribution network.

We allocate significant resources to research and development for product innovation and product improvement.

We believe we have built a robust brand and global market presence, with notable competitive advantages in our industry.

Wrap is at the forefront of designing remote restraint tools that focus on de-escalating law enforcement encounters by wrapping up a subject to prevent mobility and fighting which reduces risk of injury to the officer and to the individuals with whom they are interacting.

Recent Developments

In November 2022, the Company entered into a Professional Services and Technology Acquisition Agreement (the “

Agreement ”) with Lumeto, Inc.

Lumeto ”) and Spatial Industries Group, Inc.

Spatial ”), whereby Lumeto and Spatial will provide the Company certain technology, services, and perpetual licenses for use within the Company’s Wrap Reality virtual simulation training platform.

The Company expects to realize the benefit of an upgraded cloud virtual reality platform as a result of the Agreement, as well as capabilities and resources to support its growth of law enforcement and corrections virtual reality training modules and enhanced capabilities.

Wrap Reality’s Cloud VR platform also has significant value in the firearms safety, concealed weapons, and civilian training space in addition to law enforcement, corrections, military and private security markets.

We focus significant sales, training and business development efforts to support our distribution network in addition to our internal sales team.

We focus significant resources on research and development innovations and continue to enhance our products and plan to introduce new products.

We believe we have established a strong brand and market presence globally and have established significant competitive advantages in our markets.

Industry Background

The market for non-lethal and less-lethal products and devices serves law enforcement agencies, correctional facilities, military agencies, private security guard companies, and retail consumers.

As thought leaders in new public safety products, we focus on the law enforcement agency segment of the market with our BolaWrap remote restraint solution and Wrap Reality virtual reality system.

Recent events, such as the rise in mental health cases, police reform, and reorganization of police departments, have started a growing conversation on the need for de-escalation before pain-compliance policing policy across the country.

As this de-escalation movement unfolds, there are thousands of law enforcement, police, and sheriff’s offices focusing on training, policies, and the use of more non-lethal restraining solutions.

As thought leaders in new public safety products, we focus on the law enforcement agency segment of the market with our BolaWrap remote restraint solution, Wrap Reality virtual reality system, and our Body-Worn Camera and Digital Evidence Management solutions.

Recent trends, such as the rise in mental health cases, police reform, and reorganization of police departments, have started a growing conversation across the country on the need for de-escalation before applying a pain-compliance policing policy.

As this de-escalation movement unfolds, there are thousands of law enforcement, police, and sheriff’s offices focusing on training, policies, and the use of more non-lethal restraining solutions.

This movement highlights a growing need for new approaches, which we believe will drive demand for our innovative and safe law enforcement solutions.

When law enforcement seeks to detain an individual, there usually is a use of force continuum that an agency follows, starting with officer presence and verbal commands.

If verbal commands break down, agencies may authorize the use of less lethal pain inducing compliance tools, such as pepper spray, pepper ball, wooden batons or metal collapsible batons, launchers and bean bags, and conducted energy weapons, such as Taser®.

Our BolaWrap product offers an alternative.

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The use of nonlethal solutions like BolaWrap potentially could lead to a reduction in use of force incidents that result in ending careers as well as the number of legal cases filed against agencies for excessive use of force, wrongful death, and injury, thus decreasing expensive litigation, settlements, and insurance costs.

We anticipate that use of the BolaWrap by public safety agencies can increase goodwill between public safety agencies and their communities, especially in a time when every interaction with public safety officers is subject to public and media scrutiny.

We believe the law enforcement community’s response to BolaWrap demonstrates the need for the product and its utility in safely detaining individuals.

Our goal is to equip every public safety officer with the BolaWrap remote restraint solution that they carry with them each day.

We participate in the global non-lethal market that, according to the January 2022 report by 360iResearch, was expected to grow to $16.1 billion in 2027.

We anticipate that use of the BolaWrap by public safety agencies can increase goodwill between public safety agencies and their communities, especially in a time when interactions with public safety officers are increasingly subject to public and media scrutiny.

We believe the law enforcement community’s response to BolaWrap demonstrates the need for the product and its utility in safely detaining individuals.

Our goal is to equip every public safety officer with a BolaWrap remote restraint solution that they carry with them each day.

We participate in the global non-lethal market that, according to the January 2022 report by 360iResearch, was expected to grow to $16.1 billion by 2027.

The following segments are our target markets:

Domestic and International Law Enforcement

Our products and services are primarily targeted at federal, state, and local law enforcement agencies in the US.

Our products and services are primarily targeted at federal, state, and local law enforcement agencies in the U.S.

As of 2018, there were over 18,000 law enforcement agencies and 800,000 full-time local and state law enforcement officers in the US, while the US Department of Justice reported over 100,000 full-time federal officers based on 2016 data.

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Correctional Facilities

In 2019, the US Bureau of Justice statistics (“Census of State and Federal Correctional Facilities, 2019,”

US Department of Justice, Bureau of Justice Statistics, published November 2021) estimated that there were 240,000 correctional officers in over 1,000 federal and state correctional facilities in the US, representing a large potential market for our products and services.

In 2019, the US Bureau of Justice statistics (“Census of State and Federal Correctional Facilities, 2019,” US Department of Justice, Bureau of Justice Statistics, published November 2022) estimated that there were 240,000 correctional officers in over 1,000 federal and state correctional facilities in the U.S., representing a large potential market for our products and services.

Most correctional facilities fall under federal, state or local law enforcement jurisdiction and we believe these facilities could leverage Wrap Reality for law enforcement and societal reentry platforms as well as BolaWrap inside and outside of the correctional facility.

Private Security Firms and Guard Services

According to 2019 Bureau of Labor Statistics estimates (“Occupational Employment Statistics,”

US Department of Labor), there were 1.1 million privately employed security guards in the US They represent a broad range of individuals, including those employed by investigation and security services, hospitals, schools, local government, and others.

We believe that some security personnel armed with the BolaWrap could be effective to de-escalate some encounters without eliminating other devices available today.

Providing guards with the BolaWrap may reduce the potential liability of private security companies and personnel in such encounters.

According to the 2019 Bureau of Labor Statistics estimates (“Occupational Employment Statistics,” US Department of Labor), there were 1.1 million privately employed security guards in the U.S.

They represent a broad range of individuals, including those employed by investigation and security services, hospitals, schools, local government, and others.

We believe that the use of BolaWrap by security personnel could effectively de-escalate some encounters without eliminating other devices available today.

Providing security personnel with the BolaWrap may also reduce the potential liability of private security companies and personnel in such encounters.

Today, ATF classifications play a role in restricting Wrap's ability to transfer easily to non-government security firms.

We believe the classification is overly onerous and we will continue to work with the ATF and others to change our nonlethal product's classification.

We note that some of our international customer countries do not have any transfer or possession restrictions on the non-lethal BolaWrap devices and we believe this should be the future for BolaWrap.  

It is important to note that countries in which we have international customers do not have any transfer or possession restrictions on the non-lethal BolaWrap devices and we believe this should be the future for BolaWrap in the United States.

Virtual Reality Training Market

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The law enforcement and military sectors are important segments of the market, and increasing awareness of the benefits of virtual training and simulation is driving market growth.

Advancements in technology now enable virtual reality to recreate real-world scenarios in a 360-degree immersive environment.   

Wrap Products and Services

BolaWrap Remote Restraint

Our BolaWrap product line includes the BolaWrap 100, which was our first remote restraint product, and the BolaWrap 150, delivered to the market in Q1 of 2022.

The BolaWrap 150 offers electronic deployment and is more robust, smaller, lighter, and simpler to use.

Our BolaWrap product line includes the BolaWrap 100, which was our first remote restraint product and which has been phased out, and the BolaWrap 150, delivered to the market in the first quarter of 2022.

The BolaWrap 150 offers electronic deployment and is more robust, smaller, lighter, and simpler to use than the BolaWrap 100.

The BolaWrap is a handheld remote restraint device that discharges a seven and a half-foot Kevlar tether, entangling an individual from a range of 10-25 feet.

Developed in collaboration with law enforcement professionals, this device enables safe and effective control of low-force encounters, providing a valuable tool for law enforcement officers. 

The BolaWrap is a remote restraint device that safely wraps around an individual's arms and/or legs to impede movement and prevent harm to themselves or others.

The device provides a valuable tool for law enforcement officers to safely and humanely take subjects into custody without injury, especially when verbal commands are ignored.

With a wide effectiveness zone and a guiding seven dot green laser for accurate placement of the Kevlar tether, the BolaWrap mitigates the risk of injury to both the subject and officer.

The device provides a valuable tool for law enforcement officers to safely and humanely take subjects into custody without injury, especially when verbal commands are ineffective.

With a wide effectiveness zone and a guiding seven dot green laser for accurate placement of the Kevlar tether, the BolaWrap mitigates the risk of injury to the subject, officer and potential bystanders.

Its small, light, and rugged design allows officers to maintain other use of force continuum options while providing a non-lethal alternative to potentially injurious less-lethal forces or firearms.

BolaWrap's effectiveness in restraining individuals and hindering their ability to flee or fight has been proven.

Not only does it allow officers to act safely and effectively in difficult situations by minimizing the need for other uses of force, including hand-to-hand combat and other more injurious less lethal or lethal weapons, but also it helps minimize injury and prevent the force frenzy that can occur after chasing a fleeing subject.

Not only does it allow officers to act safely and effectively in difficult situations by minimizing the need for other uses of force, including hand-to-hand combat and other more injurious less lethal or lethal weapons, but also it helps minimize injury and prevent a force frenzy that can occur after chasing a fleeing subject.

Unlike other less-lethal tools that rely on pain compliance and may lead to escalation of incidents and serious injuries, the BolaWrap does not rely on pain or electricity-enabled neuromuscular incapacitation.

BolaWrap does not induce paralyzed falls or recovery time, making the BolaWrap an ideal non-lethal tool for law enforcement officers.

The fight or flight response that comes from less lethal tools that cause pain and injury is minimized by being wrapped by a BolaWrap device.

Additionally, the fight or flight response that comes from less lethal tools that cause pain and injury is minimized by being wrapped by a BolaWrap device.

We spend significant resources training law enforcement on the safe and effective use of the BolaWrap in conjunction with de-escalation and apprehension techniques.

However, like any restraining action, some injuries may result from the use of BolaWrap or because of its use.

However, like any restraining action, some injuries may result from the use of BolaWrap.

Our training includes primary use cases that fall into the three broad categories routinely encountered by law enforcement and security personnel:

To remotely restrain and limit the mobility of an individual who is experiencing a mental health crisis, narcotics-induced psychosis, or other crisis condition rendering them incapable of responding to law enforcement’s verbal commands but that presents a danger to law enforcement, the public or themselves if not restrained;

To remotely restrain and limit the mobility of an individual attempting to evade arrest or questioning, as well as individuals ignoring verbal commands from law enforcement.

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Agencies have reported achieving compliance by utilizing the BolaWrap in the following ways:

By pointing the BolaWrap’s seven dot green line dot laser at the suspect in conjunction with verbal commands

Via the sound emitted by the BolaWrap upon deployment and causing a distraction

Through the feeling of being wrapped and/or restraint of the Kevlar cord around the suspect’s legs, arms, or torso

by pointing the BolaWrap’s seven dot green line dot laser at the suspect in conjunction with verbal commands;

by the sound emitted by the BolaWrap upon deployment and causing a distraction;

through the feeling of being wrapped and/or the restraint of the Kevlar cord around the suspect’s legs, arms, or torso;

when used in conjunction with other less-lethal tools.

While we encourage all law enforcement agencies to fill out a Use of Device Report when the BolaWrap is used during an encounter in the field, agencies do not always report all field deployments.

While we encourage all law enforcement agencies to fill out a Use of Device Report when the BolaWrap is used during an encounter in the field, agencies do not always report all field deployments.

Some agencies consider the deployment of the BolaWrap to be a non-use of force or a de minimis use of force that does not require any reporting.

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We have trained our sales team to focus on agency-wide deployment to drive the highest level of immediate success with the device and to integrate it into department-wide use of force polices.

In January 2023, we launched our Use of Force Reduction Guarantee whereby we will buy back an agency’s devices when they deploy agency wide and do not see a reduction in Use –of -Force by at least 10%, after meeting certain criteria.

In late Q1 2022, we delivered the latest generation of our BolaWrap device, the BolaWrap 150.

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Unlike the BolaWrap 100, the BolaWrap 150 utilizes cassettes that are unique to the device and cannot be interchanged between models.

We have declared that the BolaWrap 150 will be our primary product and will be supported for 5 to 10 years from the product launch date.

We have positioned the BolaWrap 150 as our primary product and plan to support it for 5 to 10 years from the product launch date.

To support the increased production volume for the BolaWrap 150, we implemented a more automated supply chain in the production, quality control, and testing lines in 2022.

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Micro-gas generators are micro explosive parts used in a variety of industrial products, including automobile airbags.

See “Risk Factors”

included below in this Annual Report for additional information regarding risks and uncertainties associated with our business.

See “Risk Factors” included below in this Annual Report for additional information regarding risks and uncertainties associated with our business.

In 2019, we partnered with an independent technology company to create a virtual reality system with training scenarios.

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Countless additional scenarios can be made by using the Wrap Reality adapt functionality to pick and choose key components to build a scenario.

It takes advantage of some of the most advanced virtual reality hardware available and allows up to two participants to enter the simulated training environment simultaneously.

In August 2021, we announced the development of an expanded Wrap Reality Virtual Training platform with a collaboration with Amazon Web Services (AWS).

It takes advantage of advanced virtual reality hardware and allows up to two participants to enter the simulated training environment simultaneously.

In August 2021, we announced the development of an expanded Wrap Reality Virtual Training platform through a collaboration with Amazon Web Services (AWS).

This new platform combines our law enforcement simulator with secure cloud services to track training progress and provide the ability to replay recorded training sessions.

We continue to upgrade scenarios and develop de-escalation techniques into new scenarios and seek to enhance the Wrap Reality experience through continued software and platform innovation.

Additionally, we entered into a Professional Services and Technology Acquisition Agreement with Lumeto and Spatial in November 2022, which is expected to provide the Company with an upgraded cloud virtual reality platform, capabilities, and resources to support the growth of law enforcement and corrections virtual reality training modules and enhanced capabilities.

We are optimistic about the potential for future growth of WRAP Reality by public safety agencies, given our early adoption and deployment of robust virtual reality training technology.

By leveraging our existing platform and our investment in cloud software with the Lumeto Acquisition, we now will have the opportunity to develop and offer critical training scenarios at very competitive price points.

By leveraging our existing platform and our investment in cloud software, we now will have the opportunity to develop and offer critical training scenarios at very competitive price points.

We have the ability to offer both on-premises and full cloud capabilities with multiple hardware options.

This expansion enables us to deliver the platform to a broad range of customers, including law enforcement agencies, public and private security, corrections and the general public for firearms, concealed weapon, and safety training.

Wrap Intensic

In August 2023, Wrap entered into the Intrensic Purchase Agreement (as defined herein) for the acquisition of Intrensic, an innovator of DEMS and body-worn cameras.

The integration of Intrensic’s offerings into the Company’s product suite allows the Company to expand its relationship with existing customers, increase its addressable market, and further innovate its technology offering.

The acquisition helps the Company broaden its addressable market by appealing to a wider range of law enforcement and public safety agencies that are looking for integrated solutions combining non-lethal devices and digital evidence management.

By offering a more comprehensive set of tools and technologies, the Company strengthened its position in the public safety technology market by differentiating itself from competitors that only offer single solutions.

Wrap Intrensic offers a robust digital evidence management platform that enables law enforcement agencies to securely store, manage, and share digital evidence, including body-worn camera footage, dashboard camera videos, and other digital files.

The platform is equipped with features such as secure cloud storage, easy file retrieval, evidence tagging, chain of custody documentation, and sharing capabilities to streamline workflows and ensure data integrity.

Wrap Intrensic also provides body-worn camera solutions designed to capture high-quality video evidence in various law enforcement scenarios.

These cameras feature HD recording, night vision, and secure data upload capabilities and seamlessly integrate with the digital evidence management platform for efficient video uploading and management.

Since completing the acquisition in August 2023, Wrap has launched a host of new features and functionality to the Intrensic platform including WrapAI, a suite of artificial intelligence-powered functionality for Wrap Intrensic BWC and DEMS.

This suite includes AI video redaction, AI video transcription, and AI assisted contextual content search, keeping Wrap Intrensic on the cutting edge of innovation in the DEMS and BWC marketplace.

By offering comprehensive solutions for video evidence management, Wrap Intrensic enhances accountability and transparency within law enforcement agencies.

The technology facilitates improved documentation of interactions and incidents, which is critical in investigations and when building public trust.

The solutions are used in various settings, including routine patrols, traffic stops, and large-scale public events.

Wrap Intrensic's platform simplifies digital evidence management, reducing the administrative burden on law enforcement personnel.

Secure cloud storage and rigorous chain-of-custody protocols protect digital evidence against unauthorized access and tampering.

The integration of non-lethal tools like BolaWrap with digital evidence solutions contributes to safer interactions between law enforcement officers and the community, strengthening Wrap Technologies' position in the public safety technology market by offering an end-to-end solution that combines innovative de-escalation devices with state-of-the-art evidence management.

The Company remains optimistic on the outlook of Wrap Intrensic as a competitive and innovative solution set in the marketplace.

Selling, Marketing and Training

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Our training not only supports our sales, but it also provides revenue due to the extreme value our customers place on our training services.

We started charging for our training services in Q3 of 2022.

We started charging for our training services in the third quarter of 2022.

Our primary target market is law enforcement agencies in the US and globally.

The purchasing decision for our BolaWrap products and accessories is typically made by a group including agency heads, procurement, training staff, and use of force experts, and may involve political decision-makers such as city council members.

The decision-making process may take several weeks to over a year due to budget constraints and other distractions.

The decision-making process may take several weeks to over a year due to budget constraints and other considerations.

We use product demonstrations as a primary sales tool and follow up with sales activities.

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Our current focus is on cultivating partnerships with major agencies and providing active assistance to our distributors through our dedicated sales, business development, and support teams.

We sell through distributors in most cases and go direct to our end customers where the right distributor skill set, and capability is not available.

We sell through distributors in most cases and go direct to our end customers where the right distributor skill set, and capability is not available.

We currently have distribution agreements with a network of distributors representing 50 states and one dealer representing Puerto Rico.

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We have distribution agreements with 35 international distributors covering 75 countries.

These agreements are generally requiring minimum sales and follow up performance and allow us to sell direct to customers subject if performance is not being met.

These agreements generally require minimum sales and follow up performance and allow us to sell direct to customers if performance is not being met.

We focus significant sales and business development efforts to support our international distributors.

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Additionally, we are actively seeking partnerships with other organizations to further enhance our sales, marketing, and technology efforts.

We engage with other industry experts to ensure our virtual reality scenarios align with industry standards of engagement. 

Prospective customers become aware of Wrap solutions through a variety of marketing channels such as social media, paid advertising, media coverage, press releases, web searches, sales calls, and public relations.

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The Company believes that providing training and demonstrations to law enforcement officers and trainers increases their support for purchasing and deploying the products within their departments.

Generally, agencies will adapt their use of force policy to take remote restraint and the BolaWrap into a key new area of their policy for non-invasive tools that did not previously exist.

BolaWrap is typically not a categorical use of force, or if classified as force, is typically at the lowest level on a department policy, below all other less lethal weapons like pepper spray, pepperball, batons, bean bags, Tasers®

and conducted energy weapons.

We have developed and offer robust training and class materials that certify law enforcement officers and trainers as BolaWrap Instructors in the use of the BolaWrap solution.

Generally, agencies will adapt their use of force policy to incorporate remote restraint and the BolaWrap into a key new area of their policy for non-invasive tools that often did not previously exist.

BolaWrap is typically not a categorical use of force, or if classified as force, and is typically at the lowest level on a department policy, below all other less lethal weapons like pepper spray, pepperball, batons, bean bags, Tasers® and conducted energy weapons.

In order to provide comprehensive training and sales support, we initiated the Wrap “Train the Trainer” program in October 2018.

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Most departments who leverage the BolaWrap across all field officers incorporate BolaWrap training into most other training materials and in service training throughout the year.

An example would be officers doing an in-service training on Driving under the Influence (DUI) arrests being updated on BolaWrap and practice using the BolaWrap during the arrest portion of training on individuals under the influence of alcohol or drugs.

An example would be officers doing an in-service training on Driving under the Influence (DUI) arrests using the BolaWrap during the arrest portion of training on individuals under the influence of alcohol or drugs.

If departments are conducting in-service training on responding to those in a mental health crisis, they also need to train and have ongoing practice on deploying BolaWrap on those in crisis and practice taking these individuals safely into protective custody.

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In order to schedule and organize training events, registration, and training records, we utilize a cloud-based software system called the Wrap Learning Management System.

This system is also home to a Resource Library which we highly encourage distributors and purchasers to use to educate themselves on the use of BolaWrap. 

In the modern world of policing, we understand that it is crucial to provide equipment and services that are well-supported, and that officers receive proper training and procedures to perform their duties effectively and safely.

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Our training programs and virtual reality platform are also well positioned to grow rapidly in global markets.

Our commercialization strategy concentrates on the immediate addressable domestic market, comprising more than 18,000 federal, state, and local law enforcement agencies, with approximately 900,000 full-time sworn officers in just the US alone.

Our commercialization strategy concentrates on the immediately addressable domestic market, comprising more than 18,000 federal, state, and local law enforcement agencies, with approximately 900,000 full-time sworn officers in just the US alone.

We also aim to target the 100 largest police forces internationally, which have over 12 million police officers.

Our objective is to unlock the full potential of our technology solutions suite, which targets law enforcement and security personnel on a global scale.

In the coming year of 2023, we plan to maintain financial prudence and deliver value to our shareholders.

We plan to maintain financial prudence and deliver value to our shareholders.

Our focus will remain on expanding our revenues through pursuing business opportunities both domestically and internationally.

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Our assembly processes involve unique systems and materials, and we contract with third-party suppliers to produce various parts, components, and subassemblies.

We established initial startup production in Las Vegas in 2018, and in October 2019, we completed a move and began production at our current facility in Arizona.

We established initial startup production in Las Vegas in 2018, and in October 2019, we completed a move to and began production at our current facility in Arizona.

In this facility, we perform manufacturing, final assembly, testing, and shipping of our products.

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However, we are subject to challenges in our global supply chain, such as component shortages, increased lead times, cost fluctuations, and logistics constraints, which can affect our production schedules and have a negative impact on our financial performance.

In late 2022, we have started to ensure we have more final product inventory on hand to meet new business needs.

While we anticipate supply chain challenges to improve in 2023, we recognize that future supplier shortages and logistics issues could have a material adverse effect on our operations and financial results.

At December 31, 2022, we had backlog of approximately $257 thousand expected to be delivered in the first quarter of 2023.

In late 2022, we started to ensure we have more final product inventory on hand to meet new business needs.

While we anticipate supply chain challenges to improve in the remainder of 2024, we recognize that future supplier shortages and logistics issues could have a material adverse effect on our operations and financial results.

As of December 31, 2023, we had backlog of approximately $209 thousand that was delivered in the first quarter of 2024.

The amount of backlog at any point in time is dependent upon order timing, scheduled delivery dates to our customers and product lead times.

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This warranty is generally limited and may include certain shipping costs for the customer.

We also offer the option for our customers to purchase additional one-year warranty increments for their products. 

Our company positions the BolaWrap product as a new non-invasive remote restraint solution for law enforcement rather than a replacement for other devices currently in use.

When looking at the use of force continuum we place our solution in a category completely separate from common less lethal solutions that use pain compliance and can cause serious injuries or even death in some circumstance.

We believe every law enforcement officer in the world who carries handcuffs should carry a BolaWrap at the same time.

BolaWrap is leveraged just prior to handcuffs, and we are doing everything we can to educate the public and agencies about the important need to adopt this critical non-invasive and safe tool.

We also offer the option for our customers to purchase additional one-year warranty increments for their products.

The Company positions the BolaWrap product as a new non-invasive remote restraint solution for law enforcement rather than a replacement for other devices currently in use.

When looking at the use of force continuum, we place our solution in a category completely separate from common less lethal solutions that use pain compliance and can cause serious injuries or even death in some circumstances.

We believe every law enforcement officer in the world who carries handcuffs should carry a BolaWrap at the same time as BolaWrap is leveraged just prior to handcuffs.

However, we do compete with other use of force products for budget allocations.

The BolaWrap product may also be perceived as an alternative to other solutions despite our valuable and separate positioning.

Because the BolaWrap will likely be used so much more often than all of the other tools combined, we believe we stand in a category of our own.

Because we believe the BolaWrap may be used more often than certain other tools given, we expect to stand in a category of our own.

Many agencies with the BolaWrap do not consider it a use-of-force tool, which uniquely distinguishes it from every other tool on an officer's belt.

The most common interactions officers have with the public revolve around de-escalating situations.

In such scenarios, the BolaWrap stands out as one of the safest de-escalation tool available.

Given these factors, we believe the BolaWrap may be used more often than certain other tools, positioning us to be widely recognized as standing in a category of our own.

Indirectly, other use of force devices such as tasers (CEWs), pepper spray, pepperball, batons, and impact weapons may try to compete with the BolaWrap product.

However, many law enforcement personnel consider these to be distinct tools, each best-suited to a particular set of higher use of force circumstances.

Purchasing one tool does not preclude the purchase of others, but budgetary considerations and space limitations on officer’s belts may limit the number of devices purchased and carried.

The BolaWrap's unique remote restraint use, effectiveness, and low possibility of injury positions it as an effective competitor against all other alternatives.

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However, we believe that our unique positioning, strong product and technology foundation, and dedicated professional training and sales support team provide a competitive advantage.

Overall, we are extremely impressed with the depth and capability of our 3D Virtual Reality (VR) Wrap Reality Capability.

We have 38 fully formed law enforcement scenarios and 25 corrections and societal reentry scenarios in 3D plus the customizability of Wrap Reality Adapt which we believe provides more robust 3D options than the competitive.

The largest capitalized competitor in space currently offers only three 3D scenarios and is selling subscriptions of more than six million dollars a year.

Overall, we believe that the depth and capability of our 3D Virtual Reality (VR) Wrap Reality Capability will prove to be impressive.

We have 38 fully formed law enforcement scenarios and 25 corrections and societal reentry scenarios in 3D in addition to the customizability of Wrap Reality Adapt which we believe provides more robust 3D options than our competitors.

The largest capitalized competitor in this space currently offers only three 3D scenarios and is selling subscriptions of more than six million dollars a year.

Government Regulation

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Our BolaWrap products are classified as firearms and AOWs by the ATF, and we hold the necessary licenses to manufacture and deal in such firearms.

We believe these devices have been classified as AOW due to the lack of updates to outdated statutes and implementing firearms regulations.

We believe these devices have been classified as AOW due to the lack of updates to outdated statutes and firearms regulations.

We are actively working to improve the legislation and to allow our products to be directly transferred to private security forces and private individuals due to its safe effective capabilities standing alone in the non-invasive non-lethal category.

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However, patent applications may not result in issued patents covering all important claims, and there is a risk that they could be denied in their entirety.

We currently have nineteen issued US patents related to the BolaWrap technology and eight additional US patents pending.

In September 2018, we commenced filing our foreign patent applications targeting the European Union (38 countries) and seventeen other countries, of which thirty-four have been issued to date.

To date we have a total of 53 issued domestic and international patents for our small global company.

During 2022 we filed thirty-three patent applications, two of which were US filings.

We feel the significant investment in patent protection in the US and abroad creates a significant amount of IP and value in Wrap Technologies.

We currently have twenty-two issued US patents related to the BolaWrap technology and six additional US patents pending.

In September 2018, we commenced filing our foreign patent applications selectively targeting the members of the European Patent Office (39 countries) and seventeen other countries, of which forty-five patents have been issued to date.

To date we have a total of sixty-seven issued domestic and international patents for our small global company.

During 2023 we filed nine patent applications, seven of which were US filings.

We feel the investment in patent protection in the US and abroad strengthens our intellectual property and creates value in Wrap Technologies.

The failure to obtain patent protection or the loss of patent protection on our existing and future technologies or the circumvention of our patents by competitors could have a material adverse effect on our ability to compete successfully.

We have been granted trade name protection for “BolaWrap”

and “Wrap”

in multiple countries and expect to employ a combination of registered and common law trade names, trademarks and service marks in our business.

We have been granted trade name protection for “BolaWrap” and “Wrap” in multiple countries and expect to employ a combination of registered and common law trade names, trademarks and service marks in our business.

We rely on a variety of intellectual property protections for our products and technologies, including contractual obligations, and we intend to pursue a policy of vigorously enforcing such rights.

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Related Party License and Royalties

We are obligated to pay royalties pursuant to an exclusive Amended and Restated Intellectual Property License Agreement, dated as of September 30, 2016, with Syzygy Licensing, LLC (“

Syzygy ”), a private technology invention, consulting and licensing company owned and controlled by Elwood G.

We are obligated to pay royalties pursuant to an exclusive Amended and Restated Intellectual Property License Agreement (the “License Agreement”), dated as of September 30, 2016, with Syzygy Licensing, LLC (“Syzygy”), a private technology invention, consulting and licensing company owned and controlled by Elwood G.

Norris, a founder and former officer and current stockholder of the Company, and James A.

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Syzygy has no ongoing operations, and does not engage in any manufacturing, production or other related activities.

The agreement provides for the payment of royalties of 4% of revenue from products employing the licensed device technology up to the earlier to occur of (i) the payment by the Company of an aggregate of $1.0 million in royalties, or (ii) September 30, 2026.

The License Agreement provides for the payment of royalties of 4% of revenue from products employing the licensed device technology up to the earlier to occur of (i) the payment by the Company of an aggregate of $1.0 million in royalties, or (ii) September 30, 2026.

All development and patent costs have been paid by us and patent applications and the technology related to the BolaWrap 100 and the BolaWrap 150 have been completely and solely assigned to the Company, subject to this royalty obligation.

As of December 31, 2022 $720 thousand have been paid out under this royalty obligation leaving a maximum of $280 thousand to be paid out in the future.

We do find that local and international law enforcement does have seasonality in how they purchase and expend funds.

Many local law enforcement agencies in the US are on a July 1 to June 30th calendar year resulting in increased spending in Q3 and Q4 of the fiscal year.

The US federal government is on an October 1 to September 30 th budget year resulting in use or loose spending that often occurs in Q3 of the fiscal year.

Some domestic and international budgets are on a calendar fiscal year resulting in Q4 typically being the largest buying quarter of the year.

As of December 31, 2023, $919 thousand has been paid out under this royalty obligation, leaving a maximum of $81 thousand to be paid out in the future.

Local and international law enforcement has seasonality with respect to when they purchase and expend funds.

Many local law enforcement agencies in the US are on a July 1 to June 30 calendar year resulting in increased spending in the third and fourth quarter of the fiscal year.

The US federal government is on an October 1 to September 30 budget year, resulting in use or lose spending that often occurs in in the third quarter of the fiscal year.

Some domestic and international budgets are on a calendar fiscal year resulting in the fourth quarter typically being the largest buying quarter of the year.

Financial Information about Customer Concentration and Geographic Areas

Financial information regarding customer concentration and geographic areas in which we operate is contained in Note 17, Major Customers and Related Information to our consolidated financial statements.

Human Capital

Executive Officers

The Company’s executive officers serve at the discretion of the board of directors.

The current executive officers of Wrap Technologies, Inc.

and their ages and business experience are set forth below.

TJ Kennedy, age 51, was appointed as a director of the Company in April 2021, and Chief Executive Officer of the Company in April 2022.

Prior to his appointment as the Company’s Chief Executive Officer, Mr.

Kennedy served as the Chief Executive Officer, president, and member of the board of directors of Qumu, Inc.

QUMU) (“

Qumu ”) from July 2020 to April 2022.

Qumu was acquired in 2023 by Enghouse Systems.

From January 2019 to July 2020, Mr.

Kennedy served as the Chief Executive Officer and member of the board of directors of Allerio, Inc., and a director of the Public Safety Network from January 2018 to July 2020.

From July 2013 to January 2018, Mr.

Kennedy served as the President/Deputy Executive Director of FirstNet – the First Responder Network Authority and independent authority of the US federal government.

FirstNet was the federal authority created by the US Congress to build out the first nationwide public safety broadband network for first responders in the world.

Kennedy negotiated the public private partnership that was a result of the $100B IDIQ contract with the US federal government.

Kennedy holds a Bachelor of Science in Health Promotion and Education from the University of Utah, and a Master of Business Administration from Johns Hopkins University.

Kevin Mullins , age 53, began serving as the Company’s President on April 18, 2022.

Prior to being appointed as the Company’s President, Mr.

Mullins served as the President and Chief Executive Officer of Intrensic, LLC since 2015, which provides digital evidence and video management software solutions for law enforcement agencies.

Mullins has also served on the board of directors of SaferMobility, LLC since 2013, a provider of a campus security solution that delivers personal safety through an easy-to-use smartphone application that connects directly to your security or law enforcement teams.

Mullins received a Bachelor of Arts in Business Administration from Virginia’s College at Wise, Virginia, and a Master in Business Administration from the University of Virginia in Charlottesville, Virginia.

Chris DeAlmeida , age 45, was appointed as Chief Financial Officer of the Company in July 2022.

DeAlmeida is an accomplished senior financial executive, with experience in financial management and analysis, financial reporting, and mergers and acquisitions activity.

Prior to his appointment, Mr.

DeAlmeida was Chief Financial Officer of Encore Dredging Partners since January 2020, and acted as a consulting partner at BCH Group since 2018.

Additional roles include Executive Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer at Orion Group Holdings, Inc.

ORN) from 2012 to 2018, Vice President Accounting and Finance at Orion Group Holdings, Inc.

from 2007 to 2012 and Investor Relations at Continental Airlines, Inc.

UAL) from 2005 to 2007.

DeAlmeida holds a Bachelor of Science in Finance from the University of Houston at Clear Lake.

Glenn Hickman, age 34, was appointed as the Company’s Chief Operating Officer (“

COO ”) on July 1, 2021.

Prior to his appointment, since March 2021, Mr.

Hickman served as a consultant to the Company.

From 2014 to 2019, Mr.

Hickman served as Vice President of Research and Development for Axon Enterprises (formerly TASER International).

At Axon, Hickman led the launch of six hardware products, all connected to an ecosystem of cloud software and mobile apps.

He created engineering and supply chain processes and grew the engineering team from 35 to 70.

Hickman was responsible for establishing Axon’s first manufacturing line in Shenzhen, China, and an optics engineering team in Finland.

Hickman graduated with distinction from Stanford University, receiving his Bachelor and Master of Science in Mechanical Engineering, and his MBA with honors from Northwestern University’s Kellogg School of Management with a double major in Strategy and Marketing. 

We employ 69 full-time employees with 66 in the US, two located in the United Kingdom and one located in Australia.

In addition to our four executive officers, we had 16 persons engaged in sales, marketing, sales support and training, 28 in production, 13 in research and development and 8 in administration.

Financial information regarding customer concentration and geographic areas in which we operate is contained in Note 18.

We employ 52 full-time employees with 50 in the U.S.

and two located in the United Kingdom.

In addition to our two executive officers, we had 20 personnel engaged in sales, marketing, sales support and training, 12 in production, seven in research and development and 10 in administration.

In addition, we engage consultants from time to time to provide additional sales, marketing, training and research and development services, and anticipate engaging consultants going forward to supplement our full- and part-time personnel.

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Available Information

As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the Securities and Exchange Commission (the “

SEC ”).

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

You can find our SEC filings at the SEC’s website at www.sec.gov .

Our Internet address is www.wrap.com .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business