What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-10-28 compared with 2021-07-29 · 439 added, 172 removed, 349 unchanged (64% of the section changed)

Financial Statements

Wrap Technologies, Inc.

1 unchanged sentence

(in thousands, except par value and share amounts)

September 30,

Current assets:

Cash and cash equivalents

$ 9,858  

$ 16,647  

Short-term investments

30,004  

24,994  

Accounts receivable, net

2 unchanged sentences

Total current assets

45,932  

46,927  

Property and equipment, net

1 unchanged sentence

Intangible assets, net

$ 48,673  

$ 48,833  

LIABILITIES AND STOCKHOLDERS' EQUITY

1 unchanged sentence

Accounts payable

$ 1,503  

$ 1,232  

Accrued liabilities

Customer deposits

Deferred revenue

Deferred revenue- short term

Operating lease liability - short term

2 unchanged sentences

Long-term liabilities:

Deferred revenue- long term

Operating Lease Liability - long term

11 unchanged sentences

Additional paid-in capital

89,979  

71,705  

Accumulated deficit

( 44,530 )  

Accumulated other comprehensive income

Total stockholders' equity

45,464  

46,414  

Total liabilities and stockholders' equity

$ 48,673  

$ 48,833  

See accompanying notes to condensed consolidated interim financial statements.

2 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Product sales

$ 1,719  

$ 4,997  

$ 2,486  

Other revenue

4 unchanged sentences

Total cost of revenues

Gross profit (loss)

Operating expenses:

Selling, general and administrative

16,210  

Research and development

Total operating expenses

20,513  

Loss from operations

( 6,019 )  

( 3,863 )  

( 19,256 )  

Other income (expense):

Investment income

$ ( 5,991 )  

$ ( 3,862 )  

$ ( 19,220 )  

Net loss per basic and diluted common share

$ ( 0.15 )  

$ ( 0.11 )  

$ ( 0.50 )  

Weighted average common shares used to compute net loss per basic and diluted common share

40,413,332  

36,419,771  

38,767,009  

32,653,408  

Comprehensive loss:

Net unrealized loss on short-term investments

$ ( 5,991 )  

$ ( 3,862 )  

$ ( 19,220 )  

Net unrealized gain (loss) on short-term investments

Comprehensive loss

$ ( 5,993 )  

$ ( 3,855 )  

$ ( 19,224 )  

See accompanying notes to condensed consolidated interim financial statements.

Wrap Technologies, Inc.

Consolidated Statements of Stockholders' Equity

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Comprehensive

Stockholders'

Balance at March 31, 2021

Common shares issued upon exercise of warrants at $6.50 per share

Common shares issued upon exercise of warrants at $8.125 per share

Balance at June 30, 2021

39,911,390  

$ 87,277  

$ ( 38,539 )  

$ 48,755  

Common shares issued upon exercise of stock options

758,338  

Common shares issued upon vesting of restricted stock units

Common shares issued for services

79,133  

Share-based compensation expense

1 unchanged sentence

Net loss for the period

Balance at June 30, 2021

Six Months Ended June 30, 2021

( 5,991 )  

Balance at September 30, 2021

40,748,861  

$ 89,979  

$ ( 44,530 )  

$ 45,464  

Nine Months Ended September 30, 2021

Comprehensive

Stockholders'

Balance at December 31, 2020

Balance at January 1, 2021

37,554,162  

$ 71,705  

$ ( 25,310 )  

$ 46,414  

Common shares issued upon exercise of warrants at $ 6.50 per share

1,661,320  

10,799  

Common shares issued upon exercise of warrants at $ 8.125 per share

153,692  

Common shares issued upon exercise of stock options

915,404  

Common shares issued upon vesting of restricted stock units

421,407  

Common shares issued for services

42,876  

Share-based compensation expense

1 unchanged sentence

Net loss for the period

Balance at June 30, 2021

Three Months Ended June 30, 2020

( 19,220 )  

Balance at September 30, 2021

40,748,861  

$ 89,979  

$ ( 44,530 )  

$ 45,464  

Three Months Ended September 30, 2020

Comprehensive

Stockholders'

Balance at March 31, 2020

Sale of common stock and warrants at $6.00 per share in public offering, net of issuance costs

Balance at June 30, 2020

34,361,591  

$ 54,973  

$ ( 17,892 )  

$ 37,084  

Common shares issued upon exercise of warrants at $ 3.00 per share, net of issuance costs

102,621  

Common shares issued upon exercise of warrants at $ 5.00 per share, net of issuance costs

Common shares issued upon exercise of warrants at $6.50 per share

1,742,870  

Common shares issued upon exercise of warrants at $ 6.00 per share, net of issuance costs

675,000  

Common shares issued upon exercise of warrants at $ 6.50 per share, net of issuance costs

177,986  

Common shares issued upon exercise of stock options

34,250  

Common shares issued upon vesting of restricted stock units

14,999  

Share-based compensation expense

1 unchanged sentence

Net loss for the period

Balance at June 30, 2020

Six Months Ended June 30, 2020

( 3,862 )  

Balance at September 30, 2020

37,109,317  

$ 69,181  

$ ( 21,754 )  

$ 47,437  

Nine Months Ended September 30, 2020

Comprehensive

Stockholders'

Balance at December 31, 2019

Balance at January 1, 2020

29,829,916  

$ 31,923  

$ ( 12,730 )  

$ 19,196  

Sale of common stock and warrants at $ 6.00 per share in public offering, net of issuance costs

2,066,667  

11,667  

Common shares issued upon exercise of warrants at $ 3.00 per share, net of issuance costs

253,125  

Common shares issued upon exercise of warrants at $ 5.00 per share, net of issuance costs

Common shares issued upon exercise of warrants at $6.50 per share

3,593,873  

17,234  

Common shares issued upon exercise of warrants at $ 6.00 per share, net of issuance costs

675,000  

Common shares issued upon exercise of warrants at $ 6.50 per share, net of issuance costs

261,679  

Common shares issued upon exercise of stock options

327,500  

Common shares issued upon vesting of restricted stock units

101,557  

Share-based compensation expense

1 unchanged sentence

Net loss for the period

Balance at June 30, 2020

( 9,024 )  

Balance at September 30, 2020

37,109,317  

$ 69,181  

$ ( 21,754 )  

$ 47,437  

See accompanying notes to condensed consolidated interim financial statements.

Wrap Technologies, Inc.

Consolidated Statements of Cash Flows

Condensed Consolidated Statements of Cash Flows

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows From Operating Activities:

$ ( 19,220 )  

Adjustments to reconcile net loss to net cash used in operating activities:

2 unchanged sentences

Gain on sale of assets

( 17 )  

Warranty provision

Inventory obsolescence

Software impairment charge

Change in contingent liability

( 23 )  

Non-cash lease expense

4 unchanged sentences

Accounts receivable

( 1,414 )  

( 160 )  

Prepaid expenses and other current assets

1 unchanged sentence

Operating lease liability

( 71 )  

Customer deposits

3 unchanged sentences

Net cash used in operating activities

( 13,729 )  

Cash Flows From Investing Activities:

Purchase of short-term investments

( 30,014 )  

Proceeds from maturities of short-term investments

25,000  

Capital expenditures for property and equipment

( 811 )  

Investment in patents and trademarks

( 129 )  

Purchase of intangible assets

( 561 )  

Proceeds from long-term deposits

Net cash used in investing activities

( 6,511 )  

Cash Flows From Financing Activities:

Sale of common stock and warrants

12,400  

Offering costs paid on sale of common stock and warrants

Proceeds from exercise of warrants

12,048  

24,480  

Offering costs paid on exercise of warrants

2 unchanged sentences

Repayment of debt

( 275 )  

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

13,451  

36,110  

Net (decrease) increase in cash and cash equivalents

( 6,789 )  

Cash and cash equivalents, beginning of period

16,647  

16,984  

Cash and cash equivalents, end of period

$ 9,858  

$ 20,118  

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Change in unrealized gain on short-term investments

$ ( 2 )  

See accompanying notes to condensed consolidated interim financial statements.

2 unchanged sentences

(in thousands, except per share and share amounts)

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business Description

Wrap Technologies, Inc., a Delaware corporation (the “ Company ”, “ we ”, “ us ”, and “ our ”), is a publicly traded company with our Common Stock, par value $0.0001 per share (“ Common Stock ”), listed on the Nasdaq Capital Market (“ Nasdaq ”) under the trading symbol “WRAP”.

Wrap Technologies, Inc., a Delaware corporation (the “

Company ”, “

we ”, “

us ”, and “

our ”), is a publicly traded company with our Common Stock, par value $ 0.0001 per share (“

Common Stock ”), listed on the Nasdaq Capital Market (“

Nasdaq ”) under the trading symbol “WRAP”.

The Company is a developer and supplier of public safety products and training services for law enforcement and security personnel.

The Company’s primary product is the BolaWrap® remote restraint device.

The principal markets for the Company’s proprietary products and services are in North and South America, Europe, Middle East and Asia.

The Company’s primary product is the BolaWrap®

remote restraint device.

The principal markets for the Company’s proprietary products and services are in North and South America, Europe, Middle East and Asia.

Basis of Presentation

The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“ SEC ”).

The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10 -Q and Article 8 of Regulation S- X and the rules and regulations of the Securities and Exchange Commission (“

SEC ”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

GAAP” ) have been condensed or omitted pursuant to such rules and regulations.

In management’s opinion, the accompanying financial statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading.

generally accepted accounting principles ( “

GAAP ”) have been condensed or omitted pursuant to such rules and regulations.

Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the footnotes.

The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 4, 2021.

The accompanying condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated balance sheet at December 31, 2020 contained in the above referenced Form 10 -K.

Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Where necessary, the prior year’s information has been reclassified to conform to the current year presentation.

Principles of Consolidation

3 unchanged sentences

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions (e.g., stock-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible assets, warranty reserve, accrued expense and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period.

Actual results could materially differ from those estimates.

2 unchanged sentences

Diluted net loss per Common Share reflects the potential dilution of securities that could share in the earnings of an entity.

The Company’s losses for the periods presented cause the inclusion of potential Common Stock instruments outstanding to be antidilutive.

Stock options, restricted stock units and warrants exercisable or issuable for a total of 6,146,636 shares of Common Stock were outstanding at June 30, 2021.

The Company’s losses for the periods presented cause the inclusion of potential Common Stock instruments outstanding to be antidilutive.

Stock options, restricted stock units and warrants exercisable or issuable for a total of 5,397,165 shares of Common Stock were outstanding at September 30, 2021.

These securities are not included in the computation of diluted net loss per common share for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company.

2 unchanged sentences

(in thousands, except per share and share amounts)

Exit Activity Expenses

During the second quarter ended June 30, 2021 the Company recorded $ 747 of product line exit costs related to the planned wind down and closure of the BolaWrap 100 product line related to a shift in production efforts to a new generation product requiring continued development, new tooling, new production equipment and processes and additional licensing.

Exit Activity Expense

During the second quarter ended June 30, 2021 the Company recorded $ 747 of product line exit costs related to the wind down and closure of the BolaWrap 100 product line related to a shift in production efforts to a new BolaWrap 150 generation product requiring new tooling, new production equipment and processes and additional licensing.

These non-cash inventory costs included end of life raw material write offs of $ 531 and tooling retirement costs of $ 106 .

An additional $ 110 has been recorded in accrued liabilities as a reserve for estimated non-cancelable raw material purchase commitments.

These cost were recorded as a component of cost of revenues.

There was no such expense recorded during the three and six months ended June 30, 2020.

An additional $ 110 was recorded in accrued liabilities as a reserve for estimated non-cancelable raw material purchase commitments.

This reserve was applied against raw material purchases and as a $ 56 obsolescence allowance during the three months ended September 30, 2021.

The $ 747 of exit costs were recorded as a component of cost of revenues.

There was no such expense recorded during the prior year.

Development and start-up expense of new products are expensed as incurred except for capitalized equipment and tooling.

1 unchanged sentence

Adopted the First Quarter of 2021:

In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740 ):

Simplifying the Accounting for Income Taxes (“ ASU 2019-12 ”), which is intended to simplify various aspects related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application.

We adopted ASU 2019-12 in the first quarter ended March 31, 2021 and it did not have a significant impact on our financial statements.

December 2019, 

the FASB issued Accounting Standards Update 

2019 - 12,  

Income Taxes (Topic  

Simplifying the Accounting for Income Taxes  (“

2019 - 12 ”), which is intended to simplify various aspects related to accounting for income taxes.

2019 - 12  removes certain exceptions to the general principles in Topic 

740 and also clarifies and amends existing guidance to improve consistent application.

We adopted ASU 

2019 - 12  in the first quarter ended March 31, 2021 and it did not have a significant impact on our financial statements.

Other Pronouncements:

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity “(Subtopic 815-40”):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under current U.S.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020 - 06,  

Debt —

Debt with Conversion and Other Options ( “

Subtopic 470 - 20 ”

) and Derivatives and Hedging —

Contracts in Entity ’

s Own Equity “

(Subtopic 815 - 40 ”

Accounting for Convertible Instruments and Contracts in an Entity ’

s Own Equity , which simplifies accounting for convertible instruments by removing major separation models required under current U.S.

The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas.

3 unchanged sentences

REVENUE AND PRODUCT EXPENSE

On January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from contracts with customers (“Topic 606”) and, as it had no prior revenue or contracts with customers, there was no transition required nor any impact on prior results.

On January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from contracts with customers ( “

Topic 606 ”

) and, as it had no prior revenue or contracts with customers, there was no transition required nor any impact on prior results.

Topic 606 requires entities to recognize revenue through the application of a five -step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations.

2 unchanged sentences

For contracts with a single performance obligation, the entire transaction price is allocated to the single performance obligation.

For contracts with multiple performance obligations, the Company allocates the contract transaction price to each performance obligation using the Company’s estimate of the standalone selling price (“ SSP ” or “SSPs” ) of each distinct good or service in a contract.

SSPs ”) of each distinct good or service in a contract.

The Company determines SSPs based on the relative SSP.

3 unchanged sentences

(in thousands, except per share and share amounts)

Most of the Company’s products and accessories are sold through domestic and international distributors.

Periodically, certain customers request bill and hold transactions for future delivery as scheduled and designated by them.

In such cases, revenue is not recognized until after control, title and risk of ownership has transferred which is generally when the customer has requested such transaction under normal billing and payment terms and has been notified that the product (i) has been completed according to customer specifications, (ii) has passed quality control inspections, and (iii) has been tagged and packed for shipment, separated from other inventory and ready for physical transfer to the customer.

The value associated with custodial storage services is deemed immaterial in the context of such contracts and in total, and accordingly, none of the transaction price is allocated to such service.

Most of the Company’s products and accessories are sold through domestic and international distributors.

Performance obligations to deliver products and accessories are generally satisfied at the point in time the Company ships the product, as this is when the customer obtains control of the asset under our standard terms and conditions. Periodically, certain customers request bill and hold transactions for future delivery as scheduled and designated by them.

The Company has elected to recognize shipping costs as an expense in cost of revenue when control has transferred to the customer.

5 unchanged sentences

A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing.

At June 30, 2021 the Company’s deferred revenue totaled $ 186 , of which $ 105 related to virtual reality training and $ 81 related to BolaWrap extended product warranties and training services.

At December 31, 2020 the Company’s deferred revenue totaled $ 16 , of which $ 14 related to virtual reality training and $ 2 related to extended product warranties.

At September 30, 2021 the Company’s deferred revenue totaled $ 240 , of which $ 152 related to virtual reality training and $ 88 related to BolaWrap extended product warranties and training services.

At December 31, 2020 the Company’s deferred revenue totaled $ 16 , of which $ 14 related to virtual reality training and $ 2 related to extended product warranties.

The Company may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer.

2 unchanged sentences

These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for any such underlying performance obligations.

The Company had no such assets at June 30, 2021 and December 31, 2020.

The Company had no such assets at September 30, 2021 and December 31, 2020.

The Company applies the practical expedient to expense any sales commissions related to performance obligations with an amortization of one year or less when incurred within selling, general and administrative expense.

Estimated expense for the Company’s standard one-year warranty are charged to cost of products sold when revenue is recorded for the related product.

Estimated expense for the Company’s standard one -year warranty are charged to cost of products sold when revenue is recorded for the related product.

Royalties are also charged to cost of products sold.

5 unchanged sentences

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity.

The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1 —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2— Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities;

Level 3— Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The three -level hierarchy for the inputs to valuation techniques is briefly summarized as follows: 

Level 1 —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities;

Level 3 —Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Wrap Technologies, Inc.

2 unchanged sentences

Instruments Measured at Fair Value on a Recurring Basis

The Company’s cash equivalent Money Market Funds and short-term investments consisting of U.S.

Treasury bill securities are classified as Level 1 because they are valued using quoted market prices.

The following table shows the Company’s cash and cash equivalents, Money Market Funds and short-term investments by significant investment category as of June 30, 2021 and December 31, 2020.

As of June 30, 2021

The Company’s cash equivalent Money Market Funds and short-term investments consisting of U.S.

Treasury bill securities are classified as Level 

1 because they are valued using quoted market prices.

The following table shows the Company’s cash and cash equivalents, Money Market Funds and short-term investments by significant investment category as of 

September 30, 2021 and December 31, 2020.

As of September 30, 2021

Money Market Funds

$ 1,535  

Treasury securities considered cash equivalents

Treasury securities in short-term investments

29,993  

30,004  

Total Financial Assets

$ 31,528  

$ 31,539  

As of December 31, 2020

Money Market Funds

$ 6,035  

Treasury securities considered cash equivalents

Treasury securities in short-term investments

24,979  

24,994  

Total Financial Assets

$ 41,012  

$ 41,027  

Unrealized gains or losses resulting from our short-term investments are recorded in accumulated other comprehensive gain or loss.

As of June 30, 2021, $ 13 was recorded to accumulated other comprehensive gain.

As of September 30, 2021, $ 11 was recorded to accumulated other comprehensive gain.

Our financial instruments also include accounts receivable, accounts payable, accrued liabilities and business acquisition liabilities.

5 unchanged sentences

Inventory is recorded at the lower of cost or net realizable value.

The cost of substantially all the Company’s inventory is determined by the FIFO cost method.

The cost of substantially all the Company’s inventory is determined by the FIFO cost method.

Inventories consisted of the following:

September 30,

Finished goods

$ 1,796  

$ 1,249  

Work in process

1 unchanged sentence

Inventories, net

As part of product line exit costs (see Note 1) end of life raw material costs aggregating $ 531 were written off during the quarter ended June 30, 2021.

Less allowance for obsolescence

( 56 )  

Inventories - net

$ 2,284  

$ 2,655  

As part of product line exit costs (see Note 1 ) end of life raw material costs aggregating $ 531 were written off during the quarter ended June 30, 2021 and an additional $ 54 was written off during the quarter ended September 30, 2021.

PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

September 30,

Production and lab equipment

2 unchanged sentences

Accumulated depreciation

( 335 )  

Property and equipment, net

Depreciation expense was $ 66 and $ 122 for the three and six months ended June 30, 2021 and was $ 25 and $ 47 for the three and six months ended June 30, 2020, respectively.

Depreciation expense was $ 69 and $ 191  for the three and nine months ended September 30, 2021 and was $ 35 and $ 82  for the three and nine months ended September 30, 2020, respectively.

As part of product line exit costs (see Note 1 ) unamortized production tooling costs of $ 106 were recorded during the quarter ended June 30, 2021.

4 unchanged sentences

Intangible assets consisted of the following:

September 30,

Amortizable intangible assets:

Purchased software

Accumulated amortization

( 138 )  

Total amortizable

1 unchanged sentence

Total intangible assets, net

Amortization expense was $ 49 and $ 97 for the three and six months ended June 30, 2021 and was $ 3 and $ 5 for the three and six months ended June 30, 2020, respectively.

At June 30, 2021, future amortization expense is as follows:

$ 1,772  

$ 1,397  

Amortization expense was $ 48 and $ 145  for the three and nine months ended September 30, 2021 and was $ 3 and $ 9  for the three and nine months ended September 30, 2020, respectively.

An impairment charge of $ 170 for purchased software was recorded in the quarter ended September 30, 2021.

At September 30, 2021, future amortization expense is as follows:

2021 (3 months)

Total estimated amortization expense

$ 1,428  

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable includes $ 119 and $ 53 due to related party Syzygy Licensing, LLC (“ Syzygy ”) as of June 30, 2021 and December 31, 2020, respectively.

Accounts payable includes $ 134 and $ 53 due to related party Syzygy Licensing, LLC (“

Syzygy ”) as of September 30, 2021 and December 31, 2020, respectively.

Accounts payable at December 31, 2020 also included $ 10 due to related party V3 Capital Partners, LLC.

1 unchanged sentence

Accrued liabilities consist of the following:

September 30,

Patent and legal costs

Accrued compensation

Raw material purchase reserve

Warranty costs

1 unchanged sentence

Taxes and other

Accrued liabilities

Product line exit expense (see Note 1) includes a reserve of $ 110 for non-cancelable raw material purchase commitments.

$ 1,366  

The Company adopted ASU 2016 - 02, Leases (Topic 842 ) on January 1, 2019 using the modified retrospective approach.

The Company has elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less.

Amortization of Right of Use operating lease assets was $ 20 and $ 46 for the three and six months ended June 30, 2020 and was $ 30 and $ 60 for the three and six months ended June 30, 2020, respectively.

Operating lease expense for capitalized operating leases included in operating activities was $ 23 and $ 50 for the three and six months ended June 30, 2021 and was $ 34 and $ 69 for the three and six months ended June 30, 2020, respectively.

Operating lease obligations recorded on the balance sheet at June 30, 2021 are:

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

Amortization of Right of Use operating lease assets was $ 21 and $ 67  for the three and nine months ended September 30, 2021 and was $ 31 and $ 91  for the three and nine months ended September 30, 2020, respectively.

Operating lease expense for capitalized operating leases included in operating activities was $ 23 and $ 73  for the three and nine months ended September 30, 2021 and was $ 34 and $ 103  for the three and nine months ended September 30, 2020, respectively. 

Operating lease obligations recorded on the balance sheet at September 30, 2021 are:

Operating lease liability- short term

1 unchanged sentence

Total Operating Lease Liability

Future lease payments included in the measurement of lease liabilities on the balance sheet at June 30, 2021 for future periods are as follows:

Future lease payments included in the measurement of lease liabilities on the balance sheet at September 30, 2021 for future periods are as follows:

2021 (3 months)

3 unchanged sentences

The Company does not have any finance leases.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

OTHER LIABILITIES

The Company’s other liabilities at June 30, 2021 included operating lease liabilities (see Note 8) and short-term business acquisition liabilities totaling $ 97 including $ 23 related to contingent consideration.

The Company’s other liabilities at September 30, 2021 consisted of operating lease liabilities (see Note 8 ).

Other liabilities at December 31, 2020 included operating lease liabilities (see Note 8 ) and business acquisition liabilities totaling $ 298 of which $ 275 related to short term business liabilities and $ 23 related to contingent consideration recorded as a long-term business acquisition liability on our balance sheet.

STOCKHOLDERS’ EQUITY

The Company’s authorized capital consists of 150,000,000 shares of Common Stock, par value $ 0.0001 per share, and 5,000,000 shares of preferred stock, par value $ 0.0001 per share (“ Preferred Stock ”).

During the quarter ended September 30, 2021 the Company eliminated the contingent consideration, a recurring Level 3 measurement, and recorded a $ 23 gain in other income.

STOCKHOLDERS ’

The Company’s authorized capital consists of 150,000,000 shares of Common Stock, par value $ 0.0001 per share, and 5,000,000 shares of preferred stock, par value $ 0.0001 per share (“

Preferred Stock ”).

Summary of Stock Purchase Warrants

The following table summarizes warrant activity during the six months ended June 30, 2021:

Average Price

The following table summarizes warrant activity during the nine months ended September 30, 2021:

Average Price Per Share

Shares purchasable under outstanding warrants at December 31, 2020

3,206,910  

$ 6.36  

Stock purchase warrants issued

Stock purchase warrants exercised

( 1,815,012 )

$ 6.64  

Stock purchase warrants expired

Shares purchasable under outstanding warrants at June 30, 2021

The Company has outstanding Common Stock purchase warrants as of June 30, 2021 as follows:

( 231 )  

$ 7.58  

Shares purchasable under outstanding warrants at September 30, 2021

1,391,667  

$ 6.00  

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

The Company has outstanding Common Stock purchase warrants as of September 30, 2021 as follows:

Exercise Price

2 unchanged sentences

Purchase Warrants

1,391,667  

$ 6.00  

SHARE-BASED COMPENSATION

On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Stock Incentive Plan (the “ Plan ”) authorizing 2,000,000 shares of Company Common Stock for issuance as stock options and restricted stock units to employees, directors or consultants.

On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Stock Incentive Plan (the “

Plan ”) authorizing 2,000,000 shares of Company Common Stock for issuance as stock options and restricted stock units to employees, directors or consultants.

In May 2019, the stockholders ratified an increase in the Plan authorizing an additional 2,100,000 shares of Common Stock and in June 2020 ratified a further authorization of 1,900,000 shares of Common Stock for a total of 6,000,000 shares subject to the Plan.

In June 2021, the stockholders ratified an increase in the 2017 Stock Incentive Plan authorizing an additional 1,500,000 shares of Common Stock to a total of 7,500,000 shares.

At June 30, 2021 there were 1,755,338 shares of Common Stock available for grant under the Plan.

At September 30, 2021 there were 1,667,338 shares of Common Stock available for grant under the Plan.

The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2021:

The following table summarizes stock option activity for the nine months ended September 30, 2021:

Weighted Average

Outstanding December 31, 2020

3,931,586  

$ 4.41  

982,500  

$ 5.57  

( 915,404 )  

$ 1.83  

Forfeited, cancelled, expired

Outstanding June 30, 2021

Exercisable June 30, 2021

Options outstanding at December 31, 2020 and June 30, 2021 include 100,000 of performance-based options exercisable at $5.46 per share with vesting based on achieving certain virtual reality revenue targets by December 1, 2024 .

The Company has not recorded share-based compensation expense related to these options.

( 319,799 )  

$ 5.12  

Outstanding September 30, 2021  

3,678,883  

$ 5.30  

$ 4,335  

Exercisable September 30, 2021  

1,904,711  

$ 4.37  

$ 3,493  

Options outstanding at December 31, 2020 included 100,000 of performance-based options exercisable at $ 5.46 per share with vesting based on achieving certain virtual reality revenue targets by December 1, 2024.

These options were forfeited on September 30, 2021 and no share-based compensation expense was recorded related to these options during the period outstanding.

All other options are service-based.

The Company recorded $ 836  and $ 2,065  of stock option compensation expense for employees, directors and consultants for the 

three and nine months ended 

September 30, 2021, 

respectively.

The Company recorded $ 319  and $ 599  of stock option compensation expense for employees, directors and consultants for the 

three and nine  months ended 

September 30, 

2020,  respectively.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

The Company uses the Black-Scholes option pricing model to determine the fair value of the options granted.

The following table summarizes the assumptions used to compute the fair value of options granted to employees and non-employees:

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

Expected stock price volatility

Risk-free interest rate

0.90 %  

Forfeiture rate

2 unchanged sentences

Weighted-average fair value of options granted

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards.

The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available.

The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards.

$ 2.57  

$ 3.43  

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards.

The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available.

The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards.

The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price.

4 unchanged sentences

The Company calculates the expected life of the options using the Simplified Method for the employee stock options as the Company does not have sufficient historical data.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

Restricted Stock Units

The Plan provides for the grant of restricted stock units (“ RSUs” ).

The following table summarizes RSU activity under the Plan for the six months ended June 30, 2021:

The Plan provides for the grant of restricted stock units (“

RSUs ”).

The following table summarizes RSU activity under the Plan for the nine months ended September 30, 2021:

Weighted Average

1 unchanged sentence

Service-Based

Period (in Years)

Unvested at December 31, 2020

428,006  

$ 6.13  

Granted - service based

352,890  

$ 5.72  

( 421,407 )  

$ 5.63  

Forfeited and cancelled

Unvested at June 30, 2021

Subsequent Stock Exercises

During July 2021 through the date of this report a total of 526,303 outstanding stock options were exercised for cash proceeds of $ 908 .

( 32,874 )  

$ 6.10  

Unvested at September 30, 2021

326,615  

$ 6.34  

Compensation expense for RSUs was $ 467 and $ 2,245 for the three and nine months ended September 30, 2021, respectively.

Compensation expense for RSUs was $ 227  and $ 963  for the 

three  and 

nine  months ended 

September 30, 2020, 

respectively.

Share-Based Compensation Expense

The Company recorded share-based compensation for options and RSUs in its statements of operations for the relevant periods as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Selling, general and administrative

$ 1,093  

$ 3,722  

$ 1,393  

Research and development

Total share-based expense

As of June 30, 2021, total estimated compensation expense of stock options granted and outstanding but not yet vested was $ 4,983 which is expected to be recognized over the weighted average period of 2.4 years.

As of June 30, 2021, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $ 1,759 which is expected to be recognized over the weighted average period of 1.9 years.

$ 1,303  

$ 4,310  

$ 1,562  

As of September 30, 2021, total estimated compensation expense of stock options granted and outstanding but not yet vested was $ 4,300 which is expected to be recognized over the weighted average period of 2.3 years.

As of September 30, 2021, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $ 1,718 which is expected to be recognized over the weighted average period of 2.1 years.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Related Party Technology License Agreement

The Company is obligated to pay royalties and pay development and patent costs pursuant to that certain exclusive Amended and Restated Intellectual Property License Agreement dated as of September 30, 2016, by and between the Company and Syzygy (the “ Syzygy Agreement ”), a company owned and controlled by stockholders/officers Messrs.

Syzygy Agreement ”), a company owned and controlled by stockholders/officers Messrs.

Elwood Norris and James Barnes, both of whom are stockholders and officers of the Company.

The Syzygy Agreement provides for royalty payments of 4 % of revenue from products employing the licensed ensnarement device technology up to an aggregate of $ 1,000 in royalties or until September 30, 2026, whichever occurs earlier.

The Company recorded $ 68 and $ 119 for royalties incurred under the Syzygy Agreement during the three and six months ended June 30, 2021 and $ 28 and $ 53 incurred for the three and six months ended June 30, 2020, respectively.

The Company recorded $ 65 and $ 185 for royalties incurred under the Syzygy Agreement during the three and nine months ended September 30, 2021 and $ 37 and $ 90  incurred for the three and nine months ended September 30, 2020, respectively.

Purchase Commitments

At June 30, 2021 the Company was committed for approximately $ 1,005 for future component deliveries and contract services that are generally subject to modification or rescheduling in the normal course of business.

At September 30, 2021 the Company was committed for approximately $ 713 for future component deliveries and contract services that are generally subject to modification or rescheduling in the normal course of business.

Securities Litigation

On September 23, 2020, Carone Cobden filed a putative class action complaint against the Company, former Chief Executive Officer David Norris (“ Norris ”), Chief Financial Officer, James A.

Barnes (“ Barnes ”), and President, Thomas Smith (“ Smith ”) in the United States District Court for the Central District of California, docketed as Case No.

2-20-cv-08760-DMG-PVCx (the “ Cobden Complaint ”).

The Cobden Complaint alleges that the named defendants, in their capacities as officers of the Company, knowingly made false or misleading statements or omissions regarding trials of the Company’s BolaWrap product conducted by the Los Angeles Police Department (the “ BolaWrap Pilot Program ”).

The Cobden Complaint further alleges violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and defines the class period as July 31, 2020 through September 23, 2020.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

On September 23, 2020, Carone Cobden filed a putative class action complaint against the Company, former Chief Executive Officer David Norris (“

Norris ”), Chief Financial Officer, James A.

Barnes (“

Barnes ”), and President, Thomas Smith (“

Smith ”) in the United States District Court for the Central District of California, docketed as Case No.

2 - 20 -cv- 08760 -DMG-PVCx (the “

Cobden Complaint ”). The Cobden Complaint alleges that the named defendants, in their capacities as officers of the Company, knowingly made false or misleading statements or omissions regarding trials of the Company’s BolaWrap product conducted by the Los Angeles Police Department (the “

BolaWrap Pilot Program ”). 

The Cobden Complaint also alleges that the conduct of the named defendants artificially inflated the price of the Company’s traded securities, and that the disclosure of certain adverse information to the public led to a decline in the market value of the Company’s securities.  The Cobden Complaint further alleges violations of Sections 10 (b) and 20 (a) of the Exchange Act, and Rule 10b - 5 promulgated thereunder, and defines the class period as July 31, 2020 through September 23, 2020. 

On October 1, 2020, Joseph Mercurio filed a second putative class action complaint against the Company, Norris, Smith, and Barnes in the same court, which contains substantially the same factual allegations and legal claims as set forth in the Cobden Complaint, and is docketed as Case No.

2-20-cv-09030-DMG-PVCx (the “ Mercurio Complaint ”).

On October 15, 2020, Paula Earley filed a third putative class action complaint against the Company, Smith, Norris, Barnes, Chief Strategy Officer Mike Rothans (“Rothans”), and former Chief Executive Officer, Marc Thomas (“ Thomas ”) in the same court, which contains many of the same factual allegations and legal claims as set forth in the Cobden and Mercurio Complaints, but defines the class period as April 29, 2020 through September 23, 2020, and alleges additional false or misleading statements in connection with BolaWrap and the BolaWrap Pilot Program (the “ Earley Complaint ”).

2 - 20 -cv- 09030 -DMG-PVCx (the “

Mercurio Complaint ”).  On October 15, 2020, Paula Earley filed a third putative class action complaint against the Company, Smith, Norris, Barnes, Chief Strategy Officer Mike Rothans (“Rothans”), and former Chief Executive Officer, Marc Thomas (“

Thomas ”) in the same court, which contains many of the same factual allegations and legal claims as set forth in the Cobden and Mercurio Complaints, but defines the class period as April 29, 2020 through September 23, 2020, and alleges additional false or misleading statements in connection with BolaWrap and the BolaWrap Pilot Program (the “

Earley Complaint ”). 

The Earley Complaint is docketed as Case No.

2-20-cv-09444-DMG-PVCx.

On November 3, 2020, the Hon.

Gee consolidated the three above-mentioned cases under the caption In re Wrap Technologies, Inc.

2 - 20 -cv- 09444 -DMG-PVCx. 

On November 3, 2020, the Hon.

Gee consolidated the 

three above-mentioned cases under the caption 

In re Wrap Technologies, Inc.

Securities Exchange Act Litigation , Case No.

20-8760-DMG (PVCx) (the “ Securities Action ”).

On January 7, 2021, the Court appointed a lead plaintiff in the Securities Action, who designated its attorneys as lead counsel.

On January 21, 2021, Judge Gee ordered that a consolidated amended complaint be filed in the Securities Action on or before March 12, 2021, with defendants’ motion to dismiss to be filed on or before April 26, 2021, and a hearing on the motion to dismiss to be held on July 23, 2021.

20 - 8760 -DMG (PVCx) (the “

Securities Action ”). 

On January 7, 2021, the Court appointed a lead plaintiff in the Securities Action, who designated its attorneys as lead counsel. 

On January 21, 2021, Judge Gee ordered that a consolidated amended complaint be filed in the Securities Action on or before March 12, 2021, with defendants’

motion to dismiss to be filed on or before April 26, 2021, and a hearing on the motion to dismiss to be held on July 23, 2021. 

On March 12, 2021, lead plaintiff filed an amended complaint, naming the Company, Norris, Thomas, Smith, and Barnes as defendants.

Those defendants jointly filed a motion to dismiss on April 26, 2021.

Briefing on the motion to dismiss is now complete, and the motion is currently under submission before Judge Gee.

The Company believes that the Securities Action is without merit and will continue to vigorously defend against the claims raised therein.

Briefing on the motion to dismiss is now complete, and the motion is currently under submission before Judge Gee. The Company believes that the Securities Action is without merit and will continue to vigorously defend against the claims raised therein.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

Shareholder Derivative Litigation

1 unchanged sentence

Scot Cohen, Patrick Kinsella, Michael Parris, and Wayne Walker, alleging unjust enrichment, breach of fiduciary duty, waste of corporate assets, and contribution claims under the Securities Exchange Act of 1934, docketed as Case No.

2:20-cv-10444-DMG-PVCx (the “ Rammohan Complaint ”).

The Rammohan Complaint names the Company as a nominal defendant and recites many of the allegations set forth in the Securities Action relating to the BolaWrap Pilot Program.

2:20 -cv- 10444 -DMG-PVCx (the “

Rammohan Complaint ”). 

The Rammohan Complaint names the Company as a nominal defendant and recites many of the allegations set forth in the Securities Action relating to the BolaWrap Pilot Program. 

On January 20, 2021, Ray Westerman filed a second derivative complaint in the same court against the same parties, alleging breach of fiduciary duty and contribution claims under the Securities Exchange Act of 1934, docketed as Case No.

2:21-cv-00550-DMG-PVCx (the “ Westerman Complaint ”).

2:21 -cv- 00550 -DMG-PVCx (the “

Westerman Complaint ”). 

On January 22, 2021, Jesse Lowe filed a third derivative complaint in the same court against the same parties, alleging breach of fiduciary duty and asserting various claims under the Securities Exchange Act of 1934, docketed as Case No.

2:21-cv-00597-DMG-PVCx (the “ Lowe Complaint ”).

The above-mentioned derivative cases were each been transferred to Judge Gee as cases related to the Securities Action.

On February 16, 2021, Judge Gee issued an order consolidating these cases under the caption In re Wrap Technologies, Inc.

2:21 -cv- 00597 -DMG-PVCx (the “

Lowe Complaint ”). 

The above-mentioned derivative cases were each been transferred to Judge Gee as cases related to the Securities Action. 

On February 16, 2021, Judge Gee issued an order consolidating these cases under the caption 

In re Wrap Technologies, Inc.

Shareholder Derivative Litigation , Case No.

2:20-10444-DMG-PVCx, (the “ Derivative Action ”), and stayed the Derivative Action pending the resolution of the motion to dismiss in the Securities Action.

On March 9, 2021, the Lowe Complaint was designated as the operative complaint in the Derivative Action.

2:20 - 10444 -DMG-PVCx, (the “

Derivative Action ”), and stayed the Derivative Action pending the resolution of the motion to dismiss in the Securities Action. 

On March 9, 2021, the Lowe Complaint was designated as the operative complaint in the Derivative Action. 

As with the Securities Action, the Company believes that the Derivative Action is without merit and will vigorously defend against the claims raised therein.

1 unchanged sentence

The Company may at times be involved in other litigation in the ordinary course of business.

The Company will, from time to time, when appropriate in management’s estimation, record adequate reserves in the Company’s consolidated financial statements for pending litigation.

Currently, other than described above there are no other pending material legal proceedings to which the Company is a party or to which any of its property is subject.

At June 30, 2021 the Company had no provision for liability under existing litigation.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

At September 30, 2021 the Company had no provision for liability under existing litigation.

RELATED PARTY TRANSACTIONS

Commencing in October 2017 the Company began reimbursing Mr.

Elwood Norris, a former officer and current stockholder of the Company, $1.5 per month on a month-to-month basis for laboratory facility expense , for an aggregate of $ 9 during the six months ended June 30, 2021 and 2020, respectively.

Elwood Norris, a former officer and current stockholder of the Company, $ 1.5 per month on a month-to-month basis for laboratory facility expense, for an aggregate of $ 13 during the nine months ended September 30, 2021 and 2020, respectively.

Effective July 1, 2021 Mr.

Norris commenced serving as a consultant to the Company and the facility rent costs are expected to continue during such consultancy.

Norris commenced serving as a consultant to the Company and the facility rent costs continue during such consultancy.

See Notes 7, 11 and 12 for additional information on related party transactions and obligations.

MAJOR CUSTOMERS AND RELATED INFORMATION

For the three months ended June 30, 2021, revenues from two distributors accounted for approximately 37 % and 22 % of revenues with no other single customer accounting for more than 10% of total revenues.

For the three months ended June 30, 2020, revenues from two distributors and one agency accounted for approximately 32 %, 19 % and 11 % of revenues with no other single customer accounting for more than 10% of total revenues.

For the six months ended June 30, 2021, revenues from four distributors accounted for approximately 20 %, 17 %, 13 % and 12 % of revenues with no other single customer accounting for more than 10% of total revenues.

For the six months ended June 30, 2020, revenues from four distributors accounted for approximately 22 %, 19 %, 18 % and 10 % of revenues with no other single customer accounting for more than 10% of total revenues.

At June 30, 2021, accounts receivable from three distributors accounted for 30 %, 28 % and 14 % of accounts receivable with no other single customer accounting for more than 10 % of the accounts receivable balance.

For the three months ended September 30, 2021, revenues from two distributors accounted for approximately 41 % and 29 % of revenues with no other single customer accounting for more than 10% of total revenues.

For the three months ended September 30, 2020, revenues from one distributor accounted for approximately 49 % of revenues with no other single customer accounting for more than 10% of total revenues.

For the nine months ended September 30, 2021, revenues from two distributors accounted for approximately 27 % and 21 % of revenues with no other single customer accounting for more than 10% of total revenues.

For the nine months ended September 30, 2020, revenues from three distributors accounted for approximately 39 %, 12 % and 11 % of revenues with no other single customer accounting for more than 10% of total revenues.

At September 30, 2021, accounts receivable from two distributors accounted for 45 % and 22 % of accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance.

Two distributors accounted for 28 % and 26 % of accounts receivable at December 31, 2020 with no other single customer accounting for more than 10% of the accounts receivable balance.

Wrap Technologies, Inc.

Notes to Unaudited Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

The following table summarizes revenues by geographic region.

Revenues are attributed to countries based on customer’s delivery location.

For the Three Months

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

$ 1,088  

$ 2,837  

Europe, Middle East and Africa

( 28 )  

$ 1,805  

$ 1,007  

$ 5,280  

$ 2,529  

SUBSEQUENT EVENTS

See Note 11 regarding stock options exercised between July 1, 2021 to the date of the filing of this Report.

In October 2021 we released 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 is being phased out.

The Company evaluated other subsequent events for their potential impact on the financial statements and disclosures through the date the financial statements were available to be issued, and determined that, except as disclosed herein, no subsequent events occurred that were reasonably expected to impact the financial statements presented herein.

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-Q

Item 1. Financial Statements