Second Quarter 2021 Summary
- Net sales of
$1.9 million , growth of 132% year-over-year - Gross margin impacted by one-time non-cash
$0.7 million planned product line improvement expense - Trained agencies increased to over 800, growth of 85% from
December 31, 2020 - Certified officer instructors increased to over 2,800, up 106% from
December 31, 2020 - Generated
$12.0 million of cash through exercise of 1.8 million warrants Glenn Hickman appointed Chief Operating Officer
Management Commentary –
“We delivered another strong and steady quarter of performance while continuing to expand our worldwide presence as a leader in modern police technology. We had our first quarter with over
“During the second quarter, we also appointed
Three Months Ended | Six Months Ended | ||||||||||||||||
Unaudited | |||||||||||||||||
(Amounts in thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||||
Total revenues | $ | 1,934 | $ | 833 | $ | 3,476 | $ | 1,522 | |||||||||
Net sales growth (1) | 132 | % | 1,300 | % | 128 | % | 759 | % | |||||||||
Gross margin rate | (3) (2) | % | 32 | % | 16 (2) | % | 36 | % | |||||||||
Net loss | $ | (7,799 | ) | $ | (2,816 | ) | $ | (13,228 | ) | $ | (5,162 | ) | |||||
Net loss per basic and diluted share | $ | (0.20 | ) | $ | (0.09 | ) | $ | (0.35 | ) | $ | (0.17 | ) |
(1) As compared to the prior-year period.
(2) Excluding one-time expenses of
SECOND QUARTER 2021 FINANCIAL AND OPERATIONS HIGHLIGHTS
- Generated revenue of
$1.9 million for 2Q21, 132% growth as compared to 2Q20. - 27% sequential revenue increase as compared to
$1.5 million in 1Q21. - The pandemic is expected to continue to impact sales efforts both in the
U.S. and internationally. Our sales pipeline remains robust and active, as evidenced by our backlog which was$0.7 million at the end of 2Q21.
Gross Profit
- Incurred one-time costs of
$0.7 million related to the planned transition of production lines. - Generated
$0.1 million of gross loss for 2Q21. - Excluding the
$0.7 million product line exit expense, gross profit would have been$0.7 million , or 36%. This was down from 1Q21 gross margin of 39% and up from the 32% for 2Q20. - We anticipate our gross margins to fluctuate as we ramp our revenue base and continue to enhance our product offering.
- Based on current initiatives, we expect gross margins to generally improve in future periods.
Selling, General and Administrative (SG&A) Expense
- SG&A expense increased
$4.0 million in 2Q21 compared to 2Q20. - Increase was driven primarily by a
$1.5 million increase in non-cash share-based compensation related mostly to board of director compensation,$1.0 million in compensation and consultancy costs as we ramp our sales force and training teams, and$0.4 million of public reporting expenditures. - Travel expense was up modestly during 2Q21, but remain under historical norms. There was virtually no travel in the prior-year quarter due to COVID-19.
Research and Development (R&D) Expense
- R&D expense increased
$0.6 million in 2Q21 to$1.2 million compared to 2Q20. - We expect to continue to invest in R&D as we expand important research initiatives in response to identified market opportunities, including further development of our virtual training platform.
Capital Structure and Liquidity
- Cash, cash equivalents and short-term investments were
$43.0 million at end of 2Q21 compared to$37.0 million at 1Q21, representing 84% of total assets. - Generated
$12.0 million of cash during the quarter through the exercise of 1.8 million warrants.
Outlook
As international travel remains limited we continue to expect near-term headwinds to our growth. We anticipate this to continue through the remainder of 2021. Accordingly, near-term growth rates are difficult to project.
Webcast and Earnings Conference Call
The Company will host a live Zoom video webcast for investors and other interested parties beginning at
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:
Vice President of Investor Relations
(612) 834-1804
pmanley@wrap.com
About
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
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 adjusted gross margin, 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
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
Condensed Consolidated Balance Sheets | |||||||
(unaudited - dollars in thousands) | |||||||
2021 | 2020 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 13,050 | $ | 16,647 | |||
Short-term investments | 30,002 | 24,994 | |||||
Accounts receivable, net | 2,623 | 1,871 | |||||
Inventories, net | 2,837 | 2,655 | |||||
Prepaid expenses and other current assets | 824 | 760 | |||||
Total current assets | 49,336 | 46,927 | |||||
Property and equipment, net | 508 | 357 | |||||
Operating lease right-of-use asset, net | 93 | 139 | |||||
Intangible assets, net | 1,395 | 1,397 | |||||
Other assets, net | 9 | 13 | |||||
Total assets | $ | 51,341 | $ | 48,833 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 2,190 | $ | 1,953 | |||
Customer deposits | 10 | 2 | |||||
Deferred revenue | 186 | 16 | |||||
Operating lease liability - short term | 94 | 94 | |||||
Business acquisition liability - short term | 97 | 275 | |||||
Total current liabilities | 2,577 | 2,340 | |||||
Long-term liabilities | 8 | 79 | |||||
Total liabilities | 2,585 | 2,419 | |||||
Stockholders' equity | 48,756 | 46,414 | |||||
Total liabilities and stockholders' equity | $ | 51,341 | $ | 48,833 |
Condensed Consolidated Statements of Operations and Comprehensive Loss | |||||||||||||||
(unaudited - dollars In thousands, except share and per share data) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenues: | |||||||||||||||
Product sales | $ | 1,852 | $ | 823 | $ | 3,278 | $ | 1,498 | |||||||
Other revenue | 82 | 10 | 198 | 24 | |||||||||||
Total revenues | 1,934 | 833 | 3,476 | 1,522 | |||||||||||
Cost of revenues: | |||||||||||||||
Products and services | 1,247 | 565 | 2,184 | 971 | |||||||||||
Product line exit expense | 747 | - | 747 | - | |||||||||||
Total cost of revenues | 1,994 | 565 | 2,931 | 971 | |||||||||||
Gross profit (loss) | (60 | ) | 268 | 545 | 551 | ||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 6,579 | 2,538 | 11,557 | 4,678 | |||||||||||
Research and development | 1,162 | 577 | 2,227 | 1,111 | |||||||||||
Total operating expenses | 7,741 | 3,115 | 13,784 | 5,789 | |||||||||||
Loss from operations | (7,801 | ) | (2,847 | ) | (13,239 | ) | (5,238 | ) | |||||||
Other income (expense): | |||||||||||||||
Investment income | 8 | 31 | 10 | 76 | |||||||||||
Other | (6 | ) | - | 1 | - | ||||||||||
2 | 31 | 11 | 76 | ||||||||||||
Net loss | $ | (7,799 | ) | $ | (2,816 | ) | $ | (13,228 | ) | $ | (5,162 | ) | |||
Net loss per basic and diluted common share | $ | (0.20 | ) | $ | (0.09 | ) | $ | (0.35 | ) | $ | (0.17 | ) | |||
Weighted average common shares used to compute net loss per basic and diluted common share | 38,162,526 | 31,241,470 | 37,938,873 | 30,749,532 | |||||||||||
Comprehensive loss: | |||||||||||||||
Net loss | $ | (7,799 | ) | $ | (2,816 | ) | $ | (13,228 | ) | $ | (5,162 | ) | |||
Net unrealized gain on short-term investments | (4 | ) | - | (2 | ) | - | |||||||||
Comprehensive loss | $ | (7,803 | ) | $ | (2,816 | ) | $ | (13,230 | ) | $ | (5,162 | ) | |||
(i) includes stock-based compensation expense as follows: | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Selling, general and administrative | $ | 2,027 | $ | 496 | $ | 2,629 | $ | 925 | |||||||
Research and development | 121 | 53 | 378 | 91 | |||||||||||
Total stock-based compensation expense | $ | 2,148 | $ | 549 | $ | 3,007 | $ | 1,016 |
Condensed Consolidated Statements of Cash Flows | ||||||||
(unaudited - dollars in thousands) | ||||||||
Six Months Ended | ||||||||
2021 | 2020 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net loss | $ | (13,228 | ) | $ | (5,162 | ) | ||
Adjustments to reconcile net loss to net cash | ||||||||
used in operating activities: | ||||||||
Depreciation and amortization | 219 | 52 | ||||||
Product line exit expense | 747 | - | ||||||
Gain on sale of assets | (11 | ) | - | |||||
Warranty provision | 10 | 19 | ||||||
Inventory obsolescence | - | (48 | ) | |||||
Non-cash lease expense | 46 | 60 | ||||||
Share-based compensation | 3,007 | 1,016 | ||||||
Common shares issued for services | 239 | - | ||||||
Provision for doubtful accounts | 46 | 10 | ||||||
Changes in assets and liabilities: | - | - | ||||||
Accounts receivable | (798 | ) | (307 | ) | ||||
Inventories | (713 | ) | 206 | |||||
Prepaid expenses and other current assets | (65 | ) | (29 | ) | ||||
Accounts payable | 48 | 376 | ||||||
Operating lease liability | (48 | ) | (62 | ) | ||||
Customer deposits | 8 | (193 | ) | |||||
Accrued liabilities and other | 53 | 165 | ||||||
Warranty settlement | 16 | - | ||||||
Deferred revenue | 170 | - | ||||||
Net cash used in operating activities | ($ | 10,254 | ) | $ | (3,897 | ) | ||
Cash Flows From Investing Activities: | ||||||||
Purchase of short-term investments | (25,009 | ) | - | |||||
Proceeds from maturities of short-term investments | 20,000 | - | ||||||
Capital expenditures for property and equipment | (367 | ) | (69 | ) | ||||
Investment in patents and trademarks | (96 | ) | (82 | ) | ||||
Proceeds from long-term deposits | 3 | - | ||||||
Net cash used in investing activities | (5,469 | ) | (151 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Sale of common stock and warrants | - | 12,400 | ||||||
Offering costs paid on sale of common stock and warrants | - | (733 | ) | |||||
Proceeds from exercise of warrants | 12,048 | 10,251 | ||||||
Offering costs paid on exercise of warrants | - | (398 | ) | |||||
Proceeds from exercise of stock options | 278 | 515 | ||||||
Proceeds from bank note | - | 414 | ||||||
Repayment of debt | (200 | ) | - | |||||
Net cash provided by financing activities | 12,126 | 22,449 | ||||||
Net increase (decrease) in cash and cash equivalents | (3,597 | ) | 18,401 | |||||
Cash and cash equivalents, beginning of period | 16,647 | 16,984 | ||||||
Cash and cash equivalents, end of period | $ | 13,050 | $ | 35,385 | ||||
Supplemental Disclosure of Non-Cash Investing | ||||||||
and Financing Activities: | ||||||||
Change in unrealized gain on short-term investments | $ | (2 | ) | $ | - |
Source:
2021 GlobeNewswire, Inc., source