Wrap Reports Fourth Quarter 2020 Results

TEMPE, Ariz., March 04, 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 SummaryNet 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: WRAPFull Year 2020 SummaryNet 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 1,360Management 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.” ^{(1)   As compared to the prior year period.}Net SalesGenerated 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 ProfitGenerated $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) ExpenseSG&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) ExpenseR&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.InventoryInventory 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 LiquidityCash, 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 HIGHLIGHTSNet SalesGenerated $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 ProfitGenerated $1.3 million of gross profit in 2020. Our gross margin for 2020 was 34%.
Selling, General and Administrative (SG&A) ExpenseSG&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) ExpenseR&D expense increased $0.6 million in 2020 due to increased staffing.
Non-Cash Stock Compensation ExpenseOperating expense included $2.2 million of non-cash stock compensation expense in 2020 compared to $1.5 million in 2019.
OutlookWe 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 CallThe 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 LinkParticipants 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.ContactInvestors and Media:
Paul M. Manley
Vice President of Investor Relations
(612) 834-1804
pmanley@wrap.comAbout Wrap TechnologiesWRAP 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 InformationIncluded 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 InformationBolaWrap, 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 StatementThis 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.