wrap20240630

wrap20240630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 000-55838

Wrap Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware

98-0551945

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

1817 W 4th Street

Tempe, Arizona 85281

(Address of principal executive offices) (Zip Code)

(800) 583-2652

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	WRAP	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 11 2024, a total of 45,874,382 shares of the Registrant’s common stock, par value $0.0001 per share (“Common Stock”), were issued and outstanding.

WRAP TECHNOLOGIES, INC.

INDEX

		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	1
	Condensed Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023 (audited)	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2024 and 2023 (unaudited)	2
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2024 and 2023 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (unaudited)	5
	Notes to Condensed Consolidated Interim Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32

SIGNATURES		33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Wrap Technologies, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

	June 30, 2024 (unaudited)			December 31, 2023 (audited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,064		$	3,955
Short-term investments		2,500			7,500
Accounts receivable and contract assets, net		3,262			3,025
Inventories, net		6,489			5,794
Prepaid expense and other current assets		693			953
Total current assets		15,008			21,227
Property and equipment, net		292			509
Operating lease right-of-use asset, net		2,113			2,256
Intangible assets, net		2,526			2,648
Goodwill		1,610			1,610
Other assets		214			251
Total assets	$	21,763		$	28,501

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,138		$	1,110
Accrued liabilities		1,154			692
Customer deposits		-			1,002
Deferred revenue - short term		452			407
Operating lease liability - short term		621			616
Warrants		12,786			19,703
Total current liabilities		16,151			23,530

Long-term liabilities:
Deferred revenue - long term		133			137
Operating lease liability - long term		1,638			1,671
Total long-term liabilities		1,771			1,808
Total liabilities	$	17,922		$	25,338

Commitments and contingencies (Note 13)

Stockholders' equity:
Preferred stock - 5,000,000 authorized; par value $0.0001 per share; 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		-			-
Common stock - 150,000,000 authorized; par value $0.0001 per share; 45,793,112 and 43,855,503 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	$	4		$	4
Convertible Preferred Stock - 10,000 authorized, par value $0.0001 per share; 8,207 and 9,898 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		-			-
Additional paid-in capital		102,793			101,147
Accumulated deficit		(98,956	)		(97,988	)

Total stockholders' equity		3,841			3,163
Total liabilities and stockholders' equity	$	21,763		$	28,501

See accompanying notes to unaudited condensed consolidated interim financial statements.

Wrap Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)

	Three Months ended June 30,						Six Months ended June 30,
	2024			2023			2024			2023
Revenues:
Product sales	$	1,251		$	1,034		$	2,578		$	1,650
Other revenue		322			168			471			263
Total revenues		1,573			1,202			3,049			1,913
Cost of revenues		589			534			1,229			893
Gross profit		984			668			1,820			1,020

Operating expenses:
Selling, general and administrative		3,475			4,745			7,695			8,286
Research and development		679			1,002			1,434			2,073
Total operating expenses		4,154			5,747			9,129			10,359
Loss from operations		(3,170	)		(5,079	)		(7,309	)		(9,339	)

Other income (expense):
Interest Income		55			88			133			324
Change in fair value of warranty liabilities		2,738			-			6,917			-
Other		(8	)		(16	)		(9	)		(20	)
Total other income (expense), net		2,785			72			7,041			304
Net loss	$	(385	)	$	(5,007	)	$	(268	)	$	(9,035	)

Less: Convertible preferred stock dividends		(511	)		-			(700	)		-
Net loss attributable to common stockholders	$	(896	)	$	(5,007	)		(968	)	$	(9,035	)

Net loss per basic and diluted common share	$	(0.02	)	$	(0.12	)	$	(0.02	)-	$	(0.22	)
Weighted average common shares used to compute net loss per basic and diluted common share		45,324,917			41,709,718			44,740,183			41,483,669

Comprehensive loss:
Net loss	$	(385	)	$	(5,007	)		(268	)		(9,035	)
Comprehensive loss	$	(385	)	$	(5,007	)	$	(268	)	$	(9,035	)

See accompanying notes to unaudited condensed consolidated interim financial statements.

Wrap Technologies, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)

(unaudited)

Three Months Ended June 30, 2024

	Common Stock				Convertible Preferred Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive		Total Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Income (Loss)		Equity
Balance at April 1, 2024		44,373,107	$	4		9,798	$	-	$	102,539	$	(98,060	)	$	-	$	4,483

Share-based compensation expense				-		-		-		243		-			-		243
Dividends on convertible preferred stock				-		-		-

SEC Form 10-Q filed by Wrap Technologies Inc.