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Wrap Technologies, Inc.

(WRTC / NasdaqGS / $3.36)

March 23, 2020

 

Business Overview

 

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BolaWrap 100 is a patented remote restraint device that is designed to safely fire a tether at a subject to wrap him up and keep him from fleeing. It is a shoot-and-swarm device that has laser-line aiming and fires an 8-foot Kevlar tether to wrap legs and/or arms from a distance of 10-25 feet. Small barbs secure the tether. The propellant is a 9mm fractional blank. The device can be reloaded in less than 5 seconds. The product is regulated in the U.S. as a firearm.

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The BolaWrap 100 is sold to law enforcement agencies only. The cost is approximately $800 per unit and $30 per single-use cartridge. Third-party suppliers provide various parts, components, and subassemblies, and the Company performs the final assembly and testing at its facility in Tempe, Arizona.

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The product is expected to reduce the risk of lawsuits. Competitive can devices inflict pain, severe bodily injury, and/or death.

 

 

Competitive Landscape

 

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Pain compliance tools: pepper spray, rubber bullets, bean bag shotguns, Taser, baton, etc.

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Lethal devices: guns.

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The Company has considerable intellectual property, including issued and pending patents in both the U.S. and other countries, trademarks, trade craft, and trade secrets. R&D initiatives will focus on new versions of the existing product and new security technologies.

 

 

Growth Opportunities

 

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The primary initial marketing targets are U.S. law enforcement agencies at the Federal, state, and local levels. The company has also begun to address a sizable international market.

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The Company is building relationships with existing independent regional police equipment distributors, while using its internal business development resources to support those distributors as well as to market to large agencies. The Company is pursuing the international market through use of distributors selling into dozens of countries.

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Non-police markets, including military policing personnel, private security workers, and correctional facility guards, represent longer-term opportunities.

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The Company outlines a number of risks to its business in its 10K filing for 2019, and these are hereby incorporated by reference.

 

 

Management

 

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The backgrounds of the Executive Management and Directors are outlined on the WRTC web site. The individuals have significant experience in law enforcement and related businesses, as well as in corporate finance and capital markets.

 

 

Financials

 

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Income Statement (12 months through 12/31/19 vs. 12/31/18)

 

Revenue: 656,071 vs. 18,830

Gross profit: 276,774 vs. 4,539

Operating expense: 8,890,450 vs. 3,342,173

Operating income (loss): (8,613,676) vs. (3,337,634)

Other income (expense): 288,188 vs. 1,199

Net income (loss): (8,325,488) vs. (3,336,435)

Net income (loss) per basic and diluted common share: (0.29) vs. (0.14)

 

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Balance Sheet (12/31/19)

 

Cash & equivalents: 16,983,864

Current assets: 19,674,699

Current liabilities: 1,075,800

Long-term lease liability: 150,018

Stockholders equity: 19,195,652

Common shares outstanding (03/09/20): 30,044,241

Options, warrants, & rights outstanding (12/31/19): 3,236,837

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The Company is obligated to pay 4% royalties on revenue from products employing the licensed device technology until the earlier of (i) such date that royalties reach $1 million or (ii) September 30, 2026.

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In June 2019, the Company raised approximately $11.35 million net cash proceeds from a follow-on offering of common shares. The exercise of previously issued warrants and options accounted from an additional $2.14 net proceeds during 2019.

 

 

Valuation Considerations

 

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According to Statistics MRC, the non-lethal weapons market was $6.3 billion in 2016 and is expected to reach more than $11 billion in 2023.

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The Company is well funded, with working capital at year-end 2019 of $18,598,899.

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The stock, with a market cap of approximately $101 million, is more than 55% below its peak earlier this year.

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The impact from COVID-19 remains an uncertainty.In addition, the 10-K filing for 2019 details a number of risk factors, and these are hereby incorporated by reference.

 

 

Contact

 

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Executive offices: 1817 W 4th Street, Tempe, Arizona 85281; Phone: 800 583 2652

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Investor contact: Investor Relations, IR@wraptechnologies.com; Phone: 800 583 2652,

 

WRTC Web Site

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TickerBuzz, LLC ("TickerBuzz"), a Florida limited liability company is the author of this Profile. TickerBuzz is not and does not act as a broker-dealer, investment advisor, placement agent, or crowdfunding portal. Furthermore, it does not offer any securities, nor does it provide any investment advice or analysis. The source material for this Profile is the Company presentation materials. Certain information, particularly information relating to future performance and other business matters, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. TickerBuzz cautions that these forward-looking statements are subject to numerous assumptions, risks, and uncertainties that may change over time and cause actual results to differ materially from the results discussed herein. The forward-looking statements are neither predictions nor guarantees of future events or performance. TickerBuzz has no obligation to update any forward-looking statements after they are made, except as required by applicable law. All of this information is intended for discussion purposes only, is not a solicitation to buy or sell any security, and must not be relied upon for financial, legal, tax, or any other professional advice. This company has not paid TickerBuzz any compensation for publication of this Profile, and the analyst who wrote this report does not own a position in any WRTC securities. Analyst: William J. Ritger.

 

 

TickerBuzz, LLC

 

Contact: William J. Ritger, writger@gmail.com, 561.891.1903

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