Attached files
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| 8-K - CURRENT REPORT - WRAP TECHNOLOGIES, INC. | wrtc8k_mar42021.htm |
Exhibit 99.1
WRAP REPORTS FOURTH QUARTER 2020 RESULTS
TEMPE,
Arizona – March 4, 2021 (GLOBE NEWSWIRE) – Wrap
Technologies, Inc. (Nasdaq: WRAP) (the “Company”), a
global leader in innovative public safety technologies and
services, today announced results for its fourth quarter and fiscal
year ended December 31, 2020.
Fourth Quarter 2020 Summary
Net Sales of $1.4 million, Growth of 464%
Gross Margin of 33%
Cash, Cash Equivalents and Short-Term Investments of $41.6
million
Stock Symbol Changed to: WRAP
Full Year 2020 Summary
Net Sales of $3.9 million, Growth of 466%
Gross Margin of 34%
Sold Product to 15 New Countries – 36 Countries to
Date
Trained Agencies Increased to Over 450 Agencies
BolaWrap Certified Instructors Increased to 1,360
Management Commentary – Tom Smith, President
“As public safety experienced historic challenges in 2020,
WRAP adapted to a quickly-evolving market by putting increased
focus on building a global brand and broadening our impact as a
leader in de-escalation solutions and technology. As safe and
effective uses of BolaWrap increased in the United States, the
device has also been sold globally to 36 countries. Our
international business is only anticipated to grow, due to a
rapidly expanding pipeline and international distribution
network.”
“In the wake of global protests surrounding excessive use of
force, 2021 is expected to be a year focused on domestic police and
public safety reform, with an increased focus from community
groups, government organizations and the media on safer tactics and
tools. In Q4 2020, we completed the acquisition of NSENA, Inc. with
the expressed purpose of providing an immersive training solution
to a market that we believe is seeking fresh ideas towards police
education and training. We expect 2021 to be a year of continued
growth and insights as we pursue our goal of becoming the global
leader in de-escalation solutions and best
practices.”
|
|
Three
Months Ended
|
Year
Ended
|
||
|
|
December 31,
|
December
31,
|
||
|
(amounts
in thousands, except per share data)
|
2020
|
2019
|
2020
|
2019
|
|
Total
revenues
|
$1,415
|
$251
|
$3,944
|
$697
|
|
Net sales growth
(1)
|
464%
|
NM
% |
466%
|
NM
% |
|
Gross margin
rate
|
33%
|
34%
|
34%
|
40%
|
|
Net
loss
|
$(3,556)
|
$(2,543)
|
$(12,580)
|
$(8,325)
|
|
Net loss per
diluted share
|
$(0.10)
|
$(0.09)
|
$(0.37)
|
$(0.29)
|
(1)
As compared to the
prior year period.
-1-
FOURTH QUARTER 2020 FINANCIAL AND OPERATIONS
HIGHLIGHTS
Net Sales
●
Generated revenue
of $1.4 million for the 4Q20, 464% growth as compared to
4Q19.
●
40% sequential
increase as compared to the 3Q20 ($1.0 million).
●
The pandemic
impacted 2020 sales efforts both in the U.S. and internationally.
Our pipeline, however, is robust.
Gross Profit
●
Generated $0.5
million of gross profit for the 4Q20.
●
Gross margin was
33% for the 4Q20, a slight improvement compared to the 32% for
3Q20.
●
We continue to
expect our gross margins to be fluid as we ramp our revenue base
during this early-stage of growth.
●
Based on current
initiatives, we expect to improve gross margins in future
periods.
Selling, General and Administrative (SG&A) Expense
●
SG&A expense
increased $1.6 million in 4Q20 compared to 4Q19.
●
Increase was driven
primarily by a $0.8 million increase in compensation costs as we
ramp our sales force and training teams, and $0.4 million of
increased marketing and promotion expenditures.
Research and Development (R&D) Expense
●
R&D expense
increased 22% in 4Q20 to $0.7 million compared to
4Q19.
●
We expect our
R&D expense to increase in 2021 as we add staff and expand
important research initiatives in response to identified market
opportunities.
Inventory
●
Inventory increased
to $2.7 million at end of 4Q20, compared to $2.0 million at 3Q20 in
response to growing market opportunities.
Capital Structure and Liquidity
●
Cash, cash
equivalents and short-term investments was $41.6 million at end of
4Q20 compared to $45.1 million at 3Q20, representing 85% of total
assets.
●
In December 2020 we
acquired NSENA, a virtual
reality-based training simulator business targeting law enforcement
and corrections. Our balance sheet at the end of 4Q20 reflected
$0.3 million of assumed debt related to the NSENA
acquisition.
FULL YEAR 2020 FINANCIAL AND OPERATIONS HIGHLIGHTS
Net Sales
●
Generated $3.9
million of revenue in 2020, a 466% increase over 2019. The reflects
the continued ramp of our business and adoption of our platform at
this early stage.
●
In spite of severe
travel restrictions and logistic challenges caused by COVID, our
international business accounted for 64% of 2020 revenue compared
to 28% in 2019, reflecting 1,188% growth.
●
We have sold
BolaWrap products to 36 countries, adding 15 new countries in 2020
in spite of travel restrictions.
●
The number of
international distributors grew from 16 at the end of 2019 to 35 at
the end of 2020.
Gross Profit
●
Generated $1.3
million of gross profit in 2020. Our gross margin for 2020 was
34%.
Selling, General and Administrative (SG&A) Expense
●
SG&A expense
increased $5.0 million in fiscal 2020, which reflects our
investment in our business during our initial ramp in sales and
production.
Research and Development (R&D) Expense
●
R&D expense
increased $0.6 million in 2020 due to increased
staffing.
Non-Cash Stock Compensation Expense
●
Operating expense
included $2.2 million of non-cash stock compensation expense in
2020 compared to $1.5 million in 2019.
-2-
Outlook
We
continue to expect near-term headwinds to our growth as
international travel remains limited. We expect this to continue
through at least the first half of 2021 then soften as we proceed
through the second half of 2021.
Webcast and Earnings Conference Call
The
Company will host a live Zoom video webcast for investors and other
interested parties beginning at 4:30 p.m. Eastern Time on Thursday,
March 4, 2021. The call will be hosted by Tom Smith, President; Jim
Barnes, CFO; and Paul Manley, VP of Investor
Relations.
WEBCAST
LINK: Webcast Registration
Link
Participants
may access the live webcast by visiting the Company’s
Investor Relations page at www.wrap.com. A
webcast replay of the call will be available on the Company’s
Investor Relations page within 24 hours of the live call
ending.
Contact
Investors
and Media:
Paul M.
Manley
Vice
President of Investor Relations
(612)
834-1804
pmanley@wrap.com
About Wrap Technologies
WRAP Technologies (Nasdaq: WRAP) is a global leader in innovating
public safety technologies and services that deliver advanced
solutions focused on avoiding escalation. The BolaWrap® Remote
Restraint device, WRAP’s first product, is a patented,
hand-held device that discharges a Kevlar® tether to
temporarily restrain from a safe distance. Through many field uses
and growing adoption by agencies across the globe, BolaWrap is
proving to be an effective tool to safely detain persons without
injury. WRAP Reality, the Company’s virtual reality training
system, is an immersive training simulator and comprehensive public
safety training platform designed to empower first responders with
the necessary knowledge to perform in the field. WRAP’s
headquarters are located in Tempe, Arizona. For more information,
please visit wrap.com.
Use of Non-GAAP Information
Included
in this press release are non-GAAP operational metrics regarding
distributors, agencies and training and amounts of non-cash
stock-based compensation expense, which the Company believes
provide helpful information to investors with respect to evaluating
the Company’s performance.
Trademark Information
BolaWrap,
Wrap and Wrap Reality are trademarks of Wrap Technologies, Inc. All
other trade names used herein are either trademarks or registered
trademarks of the respective holders.
Cautionary Note on Forward-Looking Statements - Safe Harbor
Statement
This
press release contains “forward-looking statements”
within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995, including but
not limited to: statements regarding the Company’s overall
business; total addressable market; and, expectations regarding
future sales and expenses. Words such as “expect”,
“anticipate”, “should”,
“believe”, “target”, “project”,
“goals”, “estimate”,
“potential”, “predict”, “may”,
“will”, “could”, “intend”, and
variations of these terms or the negative of these terms and
similar expressions are intended to identify these forward-looking
statements. Moreover, forward-looking statements are subject to a
number of risks and uncertainties, many of which involve factors or
circumstances that are beyond the Company’s control. The
Company’s actual results could differ materially from those
stated or implied in forward-looking statements due to a number of
factors, including but not limited to: the Company’s ability
to successful implement training programs for the use of its
products; the Company’s ability to manufacture and produce
product for its customers; the Company’s ability to develop
sales for its new product solution; the acceptance of existing and
future products; the availability of funding to continue to finance
operations; the complexity, expense and time associated with sales
to law enforcement and government entities; the lengthy evaluation
and sales cycle for the Company’s product solution; product
defects; litigation risks from alleged product-related injuries;
risks of government regulations; the business impact of health
crises or outbreaks of disease, such as epidemics or pandemics; the
ability to obtain export licenses for counties outside of the US;
the ability to obtain patents and defend IP against competitors;
the impact of competitive products and solutions; and the
Company’s ability to maintain and enhance its brand, as well
as other risk factors mentioned in the Company’s most recent
annual report on Form 10-K, quarterly report on Form 10-Q, and
other SEC filings. These forward-looking statements are made as of
the date of this press release and were based on current
expectations, estimates, forecasts and projections as well as the
beliefs and assumptions of management. Except as required by law,
the Company undertakes no duty or obligation to update any
forward-looking statements contained in this release as a result of
new information, future events or changes in its
expectations.
-3-
Wrap Technologies, Inc.
Condensed Consolidated Balance Sheets
(unaudited - dollars in thousands)
|
|
December 31,
|
|
|
|
2020
|
2019
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash
and cash equivalents
|
$16,647
|
$16,984
|
|
Short-term
investments
|
24,994
|
-
|
|
Accounts
receivable, net
|
1,871
|
195
|
|
Inventories,
net
|
2,655
|
2,245
|
|
Prepaid
expenses and other current assets
|
760
|
251
|
|
Total current assets
|
46,927
|
19,675
|
|
Property and equipment, net
|
357
|
243
|
|
Operating lease right-of-use asset, net
|
139
|
261
|
|
Intangible assets, net
|
1,396
|
230
|
|
Other assets, net
|
13
|
13
|
|
Total assets
|
$48,832
|
$20,422
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Accounts
payable and accrued liabilities
|
$1,953
|
$601
|
|
Customer
deposits
|
2
|
344
|
|
Deferred
revenue
|
16
|
3
|
|
Operating
lease liability - short term
|
94
|
128
|
|
Note
payable to bank - short term
|
275
|
-
|
|
Total current liabilities
|
2,340
|
1,076
|
|
Long-term liabilities
|
79
|
150
|
|
Total liabilities
|
2,419
|
1,226
|
|
Stockholders' equity
|
46,413
|
19,196
|
|
Total liabilities and stockholders' equity
|
$48,832
|
$20,422
|
-4-
Wrap Technologies, Inc.
Condensed Consolidated Statements of Operations and Comprehensive
Loss
(unaudited - dollars In thousands, except share and per share
data)
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenues:
|
|
|
|
|
|
Product
sales
|
$1,382
|
$237
|
$3,868
|
$656
|
|
Other
revenue
|
33
|
14
|
76
|
41
|
|
Total
revenues
|
1,415
|
251
|
3,944
|
697
|
|
Cost
of revenues
|
942
|
165
|
2,601
|
420
|
|
Gross profit
|
473
|
86
|
1,343
|
277
|
|
|
|
|
|
|
|
Operating expenses (i):
|
|
|
|
|
|
Selling,
general and administrative
|
3,698
|
2,106
|
11,631
|
6,653
|
|
Research
and development
|
751
|
616
|
2,789
|
2,237
|
|
Total
operating expenses
|
4,449
|
2,722
|
14,420
|
8,890
|
|
Loss
from operations
|
(3,976)
|
(2,636)
|
(13,077)
|
(8,613)
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
Interest
income
|
2
|
95
|
83
|
291
|
|
Other
|
418
|
(2)
|
414
|
(3)
|
|
|
420
|
93
|
497
|
288
|
|
Net loss
|
$(3,556)
|
$(2,543)
|
$(12,580)
|
$(8,325)
|
|
|
|
|
|
|
|
Net
loss per basic common share
|
$(0.10)
|
$(0.09)
|
$(0.37)
|
$(0.29)
|
|
Weighted
average common shares used to compute net loss per basic common
share
|
37,399,195
|
29,704,067
|
33,846,338
|
28,652,625
|
|
|
|
|
|
|
|
Comprehensive loss:
|
|
|
|
|
|
Net
loss
|
$(3,556)
|
$(2,543)
|
$(12,580)
|
$(8,325)
|
|
Net
unrealized gain on short-term investments
|
8
|
-
|
15
|
-
|
|
Comprehensive
loss
|
$(3,548)
|
$(2,543)
|
$(12,565)
|
$(8,325)
|
|
(i)
includes stock-based compensation expense as follows:
|
|
|||
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Selling,
general and administrative
|
$564
|
$423
|
$1,957
|
$1,410
|
|
Research
and development
|
111
|
39
|
280
|
126
|
|
Total
stock-based compensation expense
|
$675
|
$462
|
$2,237
|
$1,536
|
-5-
|
|
|
|
|
|
|
Wrap Technologies, Inc.
|
||||
|
Condensed Consolidated Statements of Cash Flows
|
||||
|
(unaudited - dollars in thousands)
|
||||
|
|
Year Ended December 31,
|
|
|
|
2020
|
2019
|
|
Cash Flows From Operating Activities:
|
|
|
|
Net
loss
|
$(12,580)
|
$(8,325)
|
|
Adjustments
to reconcile net loss to net cash
|
||
|
used
in operating activities:
|
|
|
|
Depreciation
and amortization
|
163
|
47
|
|
Warranty
provision
|
30
|
13
|
|
Inventory
obsolescence
|
(68)
|
(194)
|
|
Non-cash
lease expense
|
122
|
80
|
|
Share-based
compensation
|
2,237
|
1,536
|
|
Debt
forgiveness income
|
(416)
|
-
|
|
Non-cash
interest expense
|
2
|
-
|
|
Common
shares issued for services
|
-
|
103
|
|
Provision
for doubtful accounts
|
10
|
-
|
|
Changes in assets and liabilities:
|
|
|
|
Accounts
receivable
|
(1,686)
|
(191)
|
|
Inventories
|
(343)
|
(1,893)
|
|
Prepaid
expenses and other current assets
|
(508)
|
(136)
|
|
Accounts
payable
|
825
|
174
|
|
Operating
lease liability
|
(128)
|
(63)
|
|
Customer
deposits
|
(342)
|
344
|
|
Accrued
liabilities and other
|
493
|
112
|
|
Deferred
compensation
|
-
|
(96)
|
|
Warranty
settlement
|
4
|
-
|
|
Deferred
revenue
|
(2)
|
3
|
|
Net
cash used in operating activities
|
(12,187)
|
(8,486)
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
Purchase
of short-term investments
|
(34,979)
|
-
|
|
Proceeds
from maturities of short-term investments
|
10,000
|
-
|
|
Capital
expenditures for property and equipment
|
(249)
|
(257)
|
|
Investment
in patents and trademarks
|
(129)
|
(114)
|
|
Purchase
of intangible assets
|
(544)
|
-
|
|
Business
acquisition
|
(210)
|
-
|
|
Long-term
deposits
|
-
|
(11)
|
|
Net
cash used in investing activities
|
(26,111)
|
(382)
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
Sale
of common stock and warrants
|
12,400
|
12,500
|
|
Offering
costs paid on sale of common stock and warrants
|
(733)
|
(1,149)
|
|
Proceeds
from exercise of warrants
|
26,191
|
2,112
|
|
Offering
costs paid on exercise of warrants
|
(1,016)
|
(28)
|
|
Proceeds
from exercise of stock options
|
705
|
58
|
|
Proceeds
from bank note
|
414
|
-
|
|
Net
cash provided by financing activities
|
37,961
|
13,493
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
(337)
|
4,625
|
|
Cash and cash equivalents, beginning of period
|
16,984
|
12,359
|
|
Cash and cash equivalents, end of period
|
$16,647
|
$16,984
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Investing
|
||
|
and Financing Activities:
|
|
|
|
Business
acquisition liability
|
$298
|
$-
|
|
Business
acquisition cost in deferred revenue
|
$15
|
$-
|
|
Change
in unrealized gain on short-term investments
|
$15
|
$-
|
|
Right-of-use
assets and liabilities recorded during period
|
$-
|
$341
|
|
Issuance
costs relating to warrants issued to public offering selling
agent
|
$-
|
$206
|
-6-