Wrap Technologies, Inc. (Nasdaq: WRAP) (“Wrap” or the “Company”), a
global leader in innovative public safety technologies and
services, today announced results for the first quarter ended March
31, 2022.
First Quarter Summary
- Appointed TJ Kennedy as Chief Executive Officer and
Kevin Mullins as President
- Net Revenues of $1.6 million, compared with $1.5
million for prior year Q1
- Gross Margin of 42% compared with 39% for prior year
Q1
- Trained agencies increased to 1,040, growth of 68% from
March 31, 2021
- Certified officer instructors remain over 3,200, up 63%
from March 31, 2021
Commentary
TJ Kennedy, Chief Executive Officer of Wrap,
commented:
“Wrap is building momentum at the start of 2022,
with our revenues continuing to grow despite significant supply
chain headwinds. We leveraged almost $0.4 million in incentives
during Q1 to encourage upgrades to the new BolaWrap 150, and brand
awareness is continuing to grow across domestic and international
markets. We now have over 750 agencies with BolaWrap devices and
have delivered product to 53 countries. The appointments of myself
as Chief Executive Officer and Kevin Mullins as President last
month represent a critical milestone for Wrap as we move into the
next phase of the Company’s life cycle and growth. The two of us
have a shared passion for public safety and technology that saves
lives and are focused on accelerating sales of the BolaWrap 150 in
the near-term and diversifying Wrap’s suite of solutions and
services for global law enforcement over the long-term.”
“Over the next 90 days, we will be building a
strategic roadmap for Wrap and are assessing all facets of the
business to determine what is working well and where we can
improve. We will be looking closely at our go-to market strategy
for the BolaWrap 150 and Wrap Reality, in addition to potential
synergistic technologies and channel partnerships. Our plan is to
develop and release a strategic roadmap that will support enhanced
sales, increased innovation and diversification, and long-term
value creation.”
|
|
Three Months Ended |
|
Unaudited |
|
March 31, |
|
(Amounts in thousands,
except per share data) |
|
2022 |
|
|
2021 |
|
|
Total net revenues |
|
$ |
$1,599 |
|
|
$ |
|
1,542 |
|
|
Net sales growth (1) |
|
|
|
3.7 |
|
% |
|
|
123 |
|
% |
Gross margin rate |
|
|
|
42 |
|
% |
|
|
39 |
|
% |
Net loss |
|
$ |
($5,432 |
) |
|
$ |
($5,429 |
) |
|
Net loss per basic and diluted
share |
|
$ |
($0.13 |
) |
|
$ |
($0.14 |
) |
|
(1) As compared to the
prior-year period.
FIRST QUARTER 2022 FINANCIAL AND OPERATIONS
HIGHLIGHTS
Net Sales
- Generated net revenues of $1.6 million for 1Q22, 4% growth
compared to 1Q21.
- Incurred discounts of approximately $0.4 million during 1Q22 as
a result of promotional programs intended to encourage customers to
upgrade to the BolaWrap 150. Gross revenues prior to promotion
discounts and incentives were $1.99 million.
- International sales were 26% of total sales for 1Q22. This
compares to 61% for 1Q21.
- Backlog at the end of the 1Q22 was $0.5 million.
- We expect the pandemic to continue
to impact sales efforts on a diminishing basis both in the U.S. and
internationally.
Gross Profit
- Generated approximately $0.7
million of gross profit in 1Q22, 10% growth compared to 1Q21.
- We anticipate our gross margin to
fluctuate as we ramp our revenue base and transition to the higher
margin BolaWrap 150.
- We expect our recently released
upgraded model of our flagship product will contribute to gross
margin expansion over time.
Selling, General and Administrative
(SG&A) Expense
- SG&A expense decreased approximately $0.4 million in 1Q22
compared to 1Q21.
- Share-based compensation increased $0.3 million as a result of
termination and severance accelerations in 1Q22.
- We expect expenditures for SG&A expenses for the balance of
2022 to remain below the prior year due to active cost containment
efforts.
Research and Development (R&D)
Expense
- R&D expense increased approximately $0.4 million in 1Q22 to
$1.5 million, as compared to 1Q21, due primarily to the development
of the new BolaWrap 150, development of Wrap Reality, and other
R&D initiatives.
- We continue to invest in R&D as
we expand important research initiatives in response to identified
market opportunities, including further development of Wrap
Reality.
Capital Structure and
Liquidity
- As of March 31, 2022, we had cash,
cash equivalents and short-term investments of $30 million compared
to $35 million at year-end 2021.
- Working capital at the end of 1Q22
was $34 million.
- We expect our primary source of
future liquidity will be from the sale of products, exercise of
stock options and warrants and if required from future equity or
debt financings.
Outlook
We expect our ability to make product demonstrations and conduct
training, especially in international markets, to ramp up
throughout 2022 as pandemic-related restrictions continue to ease.
We expect to see increased sales momentum throughout 2022 as we
raise awareness of all of the BolaWrap 150 enhancements. We expect
discount and promotional costs to decline after Q2 as we phase out
promotional upgrade offers and increase brand awareness. Near-term
growth is difficult to project; however, we continue to anticipate
that our growth will continue this year.
Webcast and Earnings Conference
Call
The Company will host an investor conference
call at 4:30 pm ET today to review its results. This call and all
supplemental information can be accessed on Wrap’s investor
relations website: https://wrap.com/investors/
The dial in information for the investor
conference call:
- PARTICIPANT DIAL IN (TOLL
FREE): 1-877-276-7742
- PARTICIPANT INTERNATIONAL
DIAL IN: 1-412-317-6582
- WEBCAST
LINK: Link to Wrap webcast
A recording of the conference call will be
available on the Company’s investor relations website.
Contact
Investors and Media:Paul M. ManleyVice President
of Investor Relations(612) 834-1804pmanley@wrap.com
About Wrap Technologies
Wrap Technologies (Nasdaq: WRAP) is a global
leader in innovative public safety technologies and services. Wrap
develops creative solutions to complex issues and empowers public
safety officials to protect and serve their communities through its
portfolio of advanced technology and training solutions.
Wrap’s BolaWrap Remote Restraint device is a
patented, hand-held pre-escalation and apprehension tool that
discharges a Kevlar® tether to temporarily restrain uncooperative
suspects and persons in crisis from a distance. Through its many
field uses and growing adoption by agencies across the globe,
BolaWrap is proving to be an effective tool to help law enforcement
safely detain persons without injury or the need to use higher
levels of force.
Wrap Reality, the Company’s virtual reality
training system, is a fully immersive training simulator and
comprehensive public safety training platform providing first
responders with the discipline and practice in methods of
de-escalation, conflict resolution, and use-of-force to better
perform in the field.
WRAP’s headquarters are 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 agencies and training, amounts of
non-cash stock-based compensation expense and gross revenues before
promotion discounts and incentives, 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 successfully 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, including the
acceptance of the BolaWrap 150; the risk that distributor and
customer orders for future deliveries are modified, rescheduled or
cancelled in the normal course of business; 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 impact resulting from geopolitical
conflicts and any resulting sanctions; the ability to obtain export
licenses for countries 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.
Wrap Technologies, Inc. |
Condensed Consolidated Balance Sheets |
(unaudited - dollars in thousands) |
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2022 |
|
|
|
2021 |
|
|
ASSETS |
|
|
|
|
Current
assets: |
|
|
|
|
Cash and cash equivalents |
$5,014 |
|
|
$4,937 |
|
|
Short-term investments |
|
24,956 |
|
|
|
29,983 |
|
|
Accounts receivable, net |
|
4,239 |
|
|
|
3,859 |
|
|
Inventories, net |
|
1,870 |
|
|
|
1,566 |
|
|
Prepaid expenses and other current assets |
|
735 |
|
|
|
868 |
|
|
Total current
assets |
|
36,814 |
|
|
|
41,213 |
|
|
Property and
equipment, net |
|
944 |
|
|
|
976 |
|
|
Operating lease
right-of-use asset, net |
|
362 |
|
|
|
51 |
|
|
Intangible assets,
net |
|
1,981 |
|
|
|
1,982 |
|
|
Other assets,
net |
|
11 |
|
|
|
9 |
|
|
Total
assets |
$40,112 |
|
|
$44,231 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
$2,546 |
|
|
$2,603 |
|
|
Customer deposits |
|
- |
|
|
|
43 |
|
|
Deferred revenue |
|
121 |
|
|
|
155 |
|
|
Operating lease liability - short term |
|
96 |
|
|
|
56 |
|
|
Total current
liabilities |
|
2,763 |
|
|
|
2,857 |
|
|
Long-term
liabilities |
|
436 |
|
|
|
110 |
|
|
Total
liabilities |
|
3,199 |
|
|
|
2,967 |
|
|
Stockholders'
equity |
|
36,913 |
|
|
|
41,264 |
|
|
Total liabilities and
stockholders' equity |
$40,112 |
|
|
$44,231 |
|
|
|
|
|
|
|
Wrap Technologies, Inc. |
Condensed Consolidated Statements of Operations and
Comprehensive Loss |
(unaudited - dollars In thousands, except share and per
share data) |
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Revenues: |
|
|
|
|
Product sales |
$1,462 |
|
|
$1,427 |
|
|
Other revenue |
|
137 |
|
|
|
115 |
|
|
Total revenues |
|
1,599 |
|
|
|
1,542 |
|
|
Cost of revenues |
|
932 |
|
|
|
937 |
|
|
Gross
profit |
|
667 |
|
|
|
605 |
|
|
|
|
|
|
|
Operating expenses
(i): |
|
|
|
|
Selling, general and administrative |
|
4,606 |
|
|
|
4,978 |
|
|
Research and development |
|
1,495 |
|
|
|
1,065 |
|
|
Total operating expenses |
|
6,101 |
|
|
|
6,043 |
|
|
Loss from operations |
|
(5,434 |
) |
|
|
(5,438 |
) |
|
|
|
|
|
|
Other income |
|
2 |
|
|
|
9 |
|
|
Net loss |
($5,432 |
) |
|
($5,429 |
) |
|
|
|
|
|
|
Net loss per basic common
share |
($0.13 |
) |
|
($0.14 |
) |
|
Weighted average common shares
used to compute net loss per basic common share |
|
40,907,266 |
|
|
|
37,618,629 |
|
|
|
|
|
|
|
Comprehensive
loss: |
|
|
|
|
Net loss |
($5,432 |
) |
|
($5,429 |
) |
|
Net unrealized gain on short-term investments |
|
(23 |
) |
|
|
2 |
|
|
Comprehensive loss |
($5,455 |
) |
|
($5,427 |
) |
|
|
|
|
|
|
(i) includes stock-based
compensation expense as follows: |
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Selling, general and
administrative |
$894 |
|
|
$602 |
|
|
Research and development |
|
135 |
|
|
|
257 |
|
|
Total share-based compensation expense |
$1,029 |
|
|
$859 |
|
|
Wrap Technologies, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(unaudited - dollars in thousands) |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
Cash Flows From
Operating Activities: |
|
|
|
|
|
Net loss |
|
($5,432 |
) |
|
($5,429 |
) |
|
Adjustments to reconcile net
loss to net cash |
|
|
|
|
|
used in operating activities: |
|
|
|
|
Depreciation and amortization |
|
183 |
|
|
|
104 |
|
|
Gain on sale of assets |
|
- |
|
|
|
(1 |
) |
|
Warranty provision |
|
12 |
|
|
|
(2 |
) |
|
Non-cash lease expense |
|
24 |
|
|
|
25 |
|
|
Share-based compensation |
|
1,029 |
|
|
|
859 |
|
|
Common shares issued for services |
|
- |
|
|
|
100 |
|
|
Provision for doubtful accounts |
|
18 |
|
|
|
- |
|
|
Changes in assets and liabilities: |
|
|
|
|
Accounts receivable |
|
|
(398 |
) |
|
|
(341 |
) |
|
Inventories |
|
|
(304 |
) |
|
|
(924 |
) |
|
Prepaid expenses and other current assets |
|
|
133 |
|
|
|
(9 |
) |
|
Accounts payable |
|
|
(51 |
) |
|
|
1,168 |
|
|
Operating lease liability |
|
|
(21 |
) |
|
|
(26 |
) |
|
Customer deposits |
|
|
(43 |
) |
|
|
3 |
|
|
Accrued liabilities and other |
|
|
37 |
|
|
|
(136 |
) |
|
Warranty settlement |
|
|
(54 |
) |
|
|
9 |
|
|
Deferred revenue |
|
|
17 |
|
|
|
156 |
|
|
Net cash used in operating
activities |
|
|
(4,850 |
) |
|
($4,444 |
) |
|
|
|
|
|
|
|
Cash Flows From
Investing Activities: |
|
|
|
|
|
Purchase of short-term
investments |
|
|
(4,996 |
) |
|
|
(25,003 |
) |
|
Proceeds from maturities of
short-term investments |
|
|
10,000 |
|
|
|
15,000 |
|
|
Capital expenditures for
property and equipment |
|
|
(81 |
) |
|
|
(160 |
) |
|
Investment in patents and
trademarks |
|
|
(69 |
) |
|
|
(56 |
) |
|
Investment in long-term
deposits |
|
|
(2 |
) |
|
|
|
Proceeds from long-term
deposits |
|
|
- |
|
|
|
3 |
|
|
Net cash used in
investing activities |
|
4,852 |
|
|
|
(10,216 |
) |
|
|
|
|
|
|
|
Cash Flows From
Financing Activities: |
|
|
|
|
|
Proceeds from exercise of
stock options |
|
|
75 |
|
|
|
113 |
|
|
Repayment of debt |
|
|
- |
|
|
|
(100 |
) |
|
Net cash provided by financing
activities |
|
|
75 |
|
|
|
13 |
|
|
|
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
|
77 |
|
|
|
(14,647 |
) |
|
Cash and cash
equivalents, beginning of period |
|
|
4,937 |
|
|
|
16,647 |
|
|
Cash and cash
equivalents, end of period |
|
$5,014 |
|
|
$2,000 |
|
|
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