Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 29, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | WRAP TECHNOLOGIES, INC. | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Amendment Flag | false | |
Entity Central Index Key | 0001702924 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 0 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation, State or Country Code | DE | |
Entity File Number | 000-55838 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 35,385,246 | $ 16,983,864 |
Accounts receivable | 492,186 | 195,347 |
Inventories, net | 2,086,505 | 2,244,541 |
Prepaid expenses and other current assets | 280,270 | 250,947 |
Total current assets | 38,244,207 | 19,674,699 |
Property and equipment, net | 264,170 | 242,876 |
Operating lease right-of-use asset, net | 201,131 | 260,931 |
Intangible assets, net | 306,990 | 230,283 |
Other assets, net | 12,681 | 12,681 |
Total assets | 39,029,179 | 20,421,470 |
Current Liabilities: | ||
Accounts payable | 783,289 | 406,967 |
Accrued liabilities | 345,115 | 194,294 |
Customer deposits | 183,537 | 343,724 |
Deferred revenue | 2,484 | 2,684 |
Operating lease liability - short term | 113,954 | 128,131 |
Note payable to bank - short term | 159,815 | 0 |
Total current liabilities | 1,588,194 | 1,075,800 |
Operating lease liability - long term | 101,826 | 150,018 |
Note payable to bank - long term | 255,228 | 0 |
Total long-term liabilities | 357,054 | 150,018 |
Total liabilities | 1,945,248 | 1,225,818 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred stock - 5,000,000 authorized; par value $0.0001 per share; none issued and outstanding | 0 | 0 |
Common stock - 150,000,000 authorized; par value $0.0001 per share; 34,361,591 and 29,829,916 shares issued and outstanding each period, respectively | 3,436 | 2,983 |
Additional paid-in capital | 54,972,797 | 31,922,493 |
Accumulated deficit | (17,892,302) | (12,729,824) |
Total stockholders' equity | 37,083,931 | 19,195,652 |
Total liabilities and stockholders' equity | $ 39,029,179 | $ 20,421,470 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, authorized | 150,000,000 | 150,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, issued | 34,361,591 | 29,829,916 |
Common stock, outstanding | 34,361,591 | 29,829,916 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 832,592 | $ 59,444 | $ 1,522,029 | $ 177,255 |
Cost of revenues | 564,970 | 35,695 | 970,782 | 96,915 |
Gross profit | 267,622 | 23,749 | 551,247 | 80,340 |
Operating expenses: | ||||
Selling, general and administrative | 2,537,547 | 1,481,187 | 4,677,797 | 2,669,063 |
Research and development | 577,478 | 516,213 | 1,110,956 | 891,032 |
Total operating expenses | 3,115,025 | 1,997,400 | 5,788,753 | 3,560,095 |
Loss from operations | (2,847,403) | (1,973,651) | (5,237,506) | (3,479,755) |
Other income (expense): | ||||
Interest income | 30,578 | 61,777 | 75,096 | 87,187 |
Other | 322 | (2,200) | (68) | (2,287) |
Other income (expense) | 30,900 | 59,577 | 75,028 | 84,900 |
Net loss | $ (2,816,503) | $ (1,914,074) | $ (5,162,478) | $ (3,394,855) |
Net loss per basic common share | $ (0.09) | $ (0.07) | $ (0.17) | $ (0.12) |
Weighted average common shares used to compute net loss per basic common share | 31,241,470 | 27,848,421 | 30,749,532 | 27,606,514 |
Product Sales | ||||
Revenues: | ||||
Total revenues | $ 823,164 | $ 48,948 | $ 1,497,777 | $ 162,901 |
Other Revenue | ||||
Revenues: | ||||
Total revenues | $ 9,428 | $ 10,496 | $ 24,252 | $ 14,354 |
Condensed Statements of Stockho
Condensed Statements of Stockholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2018 | 27,364,607 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 2,736 | $ 16,791,254 | $ (4,404,336) | $ 12,389,654 |
Sale of common stock and warrants at $6.50 per share in public offering, net of issuance costs, shares | 1,923,076 | |||
Sale of common stock and warrants at $6.50 per share in public offering, net of issuance costs, amount | $ 192 | 11,351,022 | 11,351,214 | |
Common shares issued upon exercise of warrants at $3.00 per share, shares | 62,150 | |||
Common shares issued upon exercise of warrants at $3.00 per share, amount | $ 6 | 186,444 | 186,450 | |
Common shares issued upon exercise of warrants at $5.00 per share, shares | 274,167 | |||
Common shares issued upon exercise of warrants at $5.00 per share, amount | $ 28 | 1,370,807 | 1,370,835 | |
Common shares issued upon exercise of stock options, shares | 16,250 | |||
Common shares issued upon exercise of stock options, amount | $ 2 | 24,373 | 24,375 | |
Stock-based compensation expense | 600,898 | 600,898 | ||
Net loss for the period | (3,394,855) | (3,394,855) | ||
Ending balance, shares at Jun. 30, 2019 | 29,640,250 | |||
Ending balance, amount at Jun. 30, 2019 | $ 2,964 | 30,324,798 | (7,799,191) | 22,528,571 |
Beginning balance, shares at Mar. 31, 2019 | 27,364,607 | |||
Beginning balance, amount at Mar. 31, 2019 | $ 2,736 | 17,018,301 | (5,885,117) | 11,135,920 |
Sale of common stock and warrants at $6.50 per share in public offering, net of issuance costs, shares | 1,923,076 | |||
Sale of common stock and warrants at $6.50 per share in public offering, net of issuance costs, amount | $ 192 | 11,351,022 | 11,351,214 | |
Common shares issued upon exercise of warrants at $3.00 per share, shares | 62,150 | |||
Common shares issued upon exercise of warrants at $3.00 per share, amount | $ 6 | 186,444 | 186,450 | |
Common shares issued upon exercise of warrants at $5.00 per share, shares | 274,167 | |||
Common shares issued upon exercise of warrants at $5.00 per share, amount | $ 28 | 1,370,807 | 1,370,835 | |
Common shares issued upon exercise of stock options, shares | 16,250 | |||
Common shares issued upon exercise of stock options, amount | $ 2 | 24,373 | 24,375 | |
Stock-based compensation expense | 373,851 | 373,851 | ||
Net loss for the period | (1,914,074) | (1,914,074) | ||
Ending balance, shares at Jun. 30, 2019 | 29,640,250 | |||
Ending balance, amount at Jun. 30, 2019 | $ 2,964 | 30,324,798 | (7,799,191) | 22,528,571 |
Beginning balance, shares at Dec. 31, 2019 | 29,829,916 | |||
Beginning balance, amount at Dec. 31, 2019 | $ 2,983 | 31,922,493 | (12,729,824) | 19,195,652 |
Sale of common stock and warrants at $6.00 per share in public offering, net of issuance costs, shares | 2,066,667 | |||
Sale of common stock and warrants at $6.00 per share in public offering, net of issuance costs, amount | $ 207 | 11,666,999 | 11,667,206 | |
Common shares issued upon exercise of warrants at $3.00 per share, shares | 150,504 | |||
Common shares issued upon exercise of warrants at $3.00 per share, amount | $ 15 | 439,973 | 439,988 | |
Common shares issued upon exercise of warrants at $5.00 per share, shares | 1,851,003 | |||
Common shares issued upon exercise of warrants at $5.00 per share, amount | $ 185 | 8,868,263 | 8,868,448 | |
Common shares issued upon exercise of warrants at $6.50 per share, shares | 83,693 | |||
Common shares issued upon exercise of warrants at $6.50 per share, amount | $ 8 | 543,997 | 544,005 | |
Common shares issued upon exercise of stock options, shares | 293,250 | |||
Common shares issued upon exercise of stock options, amount | $ 29 | 514,846 | 514,875 | |
Common shares issued upon vesting of restricted stock units, shares | 86,558 | |||
Common shares issued upon vesting of restricted stock units, amount | $ 9 | (9) | 0 | |
Stock-based compensation expense | 1,016,235 | 1,016,235 | ||
Net loss for the period | (5,162,478) | (5,162,478) | ||
Ending balance, shares at Jun. 30, 2020 | 34,361,591 | |||
Ending balance, amount at Jun. 30, 2020 | $ 3,436 | 54,972,797 | (17,892,302) | 37,083,931 |
Beginning balance, shares at Mar. 31, 2020 | 30,073,724 | |||
Beginning balance, amount at Mar. 31, 2020 | $ 3,007 | 33,191,001 | (15,075,799) | 18,118,209 |
Sale of common stock and warrants at $6.00 per share in public offering, net of issuance costs, shares | 2,066,667 | |||
Sale of common stock and warrants at $6.00 per share in public offering, net of issuance costs, amount | $ 207 | 11,666,999 | 11,667,206 | |
Common shares issued upon exercise of warrants at $3.00 per share, shares | 138,721 | |||
Common shares issued upon exercise of warrants at $3.00 per share, amount | $ 14 | 404,625 | 404,639 | |
Common shares issued upon exercise of warrants at $5.00 per share, shares | 1,731,603 | |||
Common shares issued upon exercise of warrants at $5.00 per share, amount | $ 173 | 8,271,275 | 8,271,448 | |
Common shares issued upon exercise of warrants at $6.50 per share, shares | 83,693 | |||
Common shares issued upon exercise of warrants at $6.50 per share, amount | $ 8 | 543,997 | 544,005 | |
Common shares issued upon exercise of stock options, shares | 180,625 | |||
Common shares issued upon exercise of stock options, amount | $ 18 | 345,920 | 345,938 | |
Common shares issued upon vesting of restricted stock units, shares | 86,558 | |||
Common shares issued upon vesting of restricted stock units, amount | $ 9 | (9) | 0 | |
Stock-based compensation expense | 548,989 | 548,989 | ||
Net loss for the period | (2,816,503) | (2,816,503) | ||
Ending balance, shares at Jun. 30, 2020 | 34,361,591 | |||
Ending balance, amount at Jun. 30, 2020 | $ 3,436 | $ 54,972,797 | $ (17,892,302) | $ 37,083,931 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (5,162,478) | $ (3,394,855) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 52,586 | 12,573 |
Warranty provision | 18,909 | 3,503 |
Inventory write-off | (48,000) | (65,012) |
Non-cash lease expense | 59,800 | 22,211 |
Share-based compensation | 1,016,235 | 600,898 |
Provision for doubtful accounts | 10,140 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (306,979) | (26,863) |
Inventories | 206,036 | (1,032,308) |
Prepaid expenses and other current assets | (29,323) | (71,182) |
Accounts payable | 376,322 | 183,478 |
Operating lease liability | (62,369) | (20,893) |
Customer deposits | (193,019) | 0 |
Accrued liabilities and other | 165,425 | 59,416 |
Deferred revenue | (200) | 3,357 |
Net cash used in operating activities | (3,896,915) | (3,725,677) |
Cash Flows From Investing Activities: | ||
Capital expenditures for property and equipment | (68,584) | (108,616) |
Investment in patents and trademarks | (82,003) | (68,501) |
Long-term deposits | 0 | (11,169) |
Net cash used in investing activities | (150,587) | (188,286) |
Cash Flows From Financing Activities: | ||
Sale of common stock and warrants | 12,400,002 | 12,499,994 |
Offering costs paid on sale of common stock and warrants | (732,796) | (1,148,780) |
Proceeds from exercise of warrants | 10,250,532 | 1,557,285 |
Offering costs paid on exercise of warrants | (398,091) | 0 |
Proceeds from exercise of stock options | 514,875 | 24,375 |
Proceeds from bank note | 414,362 | 0 |
Net cash provided by financing activities | 22,448,884 | 12,932,874 |
Net decrease in cash and cash equivalents | 18,401,382 | 9,018,911 |
Cash and cash equivalents, beginning of period | 16,983,864 | 12,358,896 |
Cash and cash equivalents, end of period | 35,385,246 | 21,377,807 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Right-of-use assets and liabilites recorded during period | 0 | 341,000 |
Issuance costs relating to warrants issued to public offering selling agent | $ 0 | $ 205,894 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Organization and Business Description Wrap Technologies, Inc., a Delaware corporation (the “ Company Nasdaq Basis of Presentation and Use of Estimates The Company’s unaudited interim financial statements and related notes included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“ US GAAP SEC The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions (e.g., stock-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible assets, warranty reserve, accrued costs and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Where necessary, the prior year’s information has been reclassified to conform to the current year presentation. Concentrations of Risk and Uncertainties Credit Risk Concentrations of Accounts Receivable and Revenue Concentration of Suppliers Impact of COVID-19 COVID-19 Stock-Based Compensation The Company follows the fair value recognition provisions issued by the Financial Accounting Standards Board (“ FASB ASC ASC 718 ASU The grant date fair value of stock options is determined using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs including the market price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding, the implied stock volatilities of several publicly-traded peers over the expected term of stock options, risk-free interest rate and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant. The fair value of stock-based compensation is amortized to compensation expense over the vesting term. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ ASU 2014-09 ASC 340-40 Topic 606 Accounts Receivable and Allowance for Doubtful Accounts The Company’s policy is to evaluate the collectability of accounts receivable based on an assessment of the collectability of specific customer accounts and then record an allowance for doubtful accounts to reduce the receivables to an amount that management reasonably estimates will be collected. There was no allowance for doubtful accounts recorded at December 31, 2019. At June 30, 2020 the Company had an allowance of $10,140 resulting in part from global uncertainty resulting from the COVID-19 virus. Accounts that are deemed uncollectible will be written off against the allowance for doubtful accounts. If a major customer’s creditworthiness deteriorates, or actual defaults exceed our historical experience, such estimates could change and impact our future reported financial results. Inventories Inventories are valued at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method. Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers . Loss per Share Basic loss per common share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, restricted stock units and warrants exercisable or issuable for a total of 10,018,461 shares of Common Stock were outstanding at June 30, 2020. These securities are not included in the computation of diluted net loss per common share for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company. Income Taxes Until its conversion to a corporation on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. Instead, its losses were included in the income tax returns of the member partners. No income tax expense was recorded for period ended June 30, 2020 due to losses incurred. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates. Recent Issued Accounting Guidance Effective the First Quarter of 2020: In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“ Topic 820 Other Pronouncements: In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic ): Simplifying the Accounting for Income Taxes ASU 2019-12 The Company has reviewed other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations. |
REVENUE AND PRODUCT COSTS
REVENUE AND PRODUCT COSTS | 6 Months Ended |
Jun. 30, 2020 | |
Revenues: | |
REVENUE AND PRODUCT COSTS | The Company enters into contracts that include various combinations of products, accessories and services, such as training, each of which are generally distinct and are accounted for as separate performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account in Topic 606. For contracts with a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract transaction price to each performance obligation using the Company’s estimate of the standalone selling price (“ SSP Performance obligations to deliver products and accessories are generally satisfied at the point in time the Company ships the product, as this is when the customer obtains control of the asset under our standard terms and conditions. Periodically, certain customers request bill and hold transactions for future delivery as scheduled and designated by them. In such cases, revenue is not recognized until after control, title and risk of ownership has transferred which is generally when the customer has requested such transaction under normal billing and payment terms and has been notified that the product (i) has been completed according to customer specifications, (ii) has passed our quality control inspections, and (iii) has been tagged and packed for shipment, separated from our inventory and ready for physical transfer to the customer. The value associated with custodial storage services is deemed immaterial in the context of such contracts and in total, and accordingly, none of the transaction price is allocated to such service. The Company has elected to recognize shipping costs as an expense in cost of revenue when control has transferred to the customer. The revenue and cost of training associated with a customer contract are recognized when the training is completed, generally following delivery of related products. The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced, and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. At June 30, 2020 the Company had deferred revenue of $2,484 related to future training and extended warranties. The Company may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability. The Company recognizes an asset if there are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for any such underlying performance obligations. The Company had no such assets at June 30, 2020 and December 31, 2019. The Company will apply the practical expedient to expense any sales commissions related to performance obligations with an amortization of one year or less when incurred within selling, general and administrative expense. Estimated costs for the Company’s standard one-year warranty are charged to cost of products sold when revenue is recorded for the related product. Royalties are also charged to cost of products sold. |
INVENTORIES, NET
INVENTORIES, NET | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | Inventory is recorded at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method. Inventories consisted of the following: June 30, December 31, 2020 2019 Finished goods $ 719,104 $ 653,323 Work in process 22,149 413 Raw materials 1,393,252 1,590,805 2,134,505 2,244,541 Less allowance for obsolescence (48,000 ) - Inventories - net $ 2,086,505 $ 2,244,541 At June 30, 2020 the Company established a reserve for obsolescence of $48,000 related to parts expected to be displaced by product improvement initiatives. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | Property and equipment consisted of the following: June 30, December 31, 2020 2019 Laboratory equipment $ 55,645 $ 44,454 Tooling 77,459 59,004 Computer equipment 106,765 83,368 Furniture, fixtures and improvements 144,323 128,782 384,192 315,608 Accumulated depreciation (120,022 ) (72,732 ) $ 264,170 $ 242,876 Depreciation expense was $24,793 and $47,290 for the three and six months ended June 30, 2020 and was $7,621 and $12,186 for the three and six months ended June 30, 2019, respectively. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | Intangible assets consisted of the following: June 30, December 31, 2020 2019 Patents $ 242,202 $ 176,425 Trademarks 74,145 57,919 316,347 234,344 Accumulated amortization (9,357 ) (4,061 ) $ 306,990 $ 230,283 Amortization expense was $2,695 and $5,296 for the three and six months ended June 30, 2020 and was $203 and $387 for the three and six months ended June 30, 2019, respectively. |
ACCOUNTS PAYABLE AND ACCRUED LI
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | Accounts payable includes $28,481 and $18,809 due to related party Syzygy Licensing, LLC (“ Syzygy Accrued liabilities consist of the following: June 30, December 31, 2020 2019 Patent and legal costs $ 25,000 $ 9,851 Accrued compensation 264,311 144,193 Warranty costs 32,832 13,923 Consulting costs 5,000 7,500 Taxes and other 17,972 18,827 $ 345,115 $ 194,294 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
LEASES | The Company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective approach. The Company has elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less. Amortization of ROU operating lease assets was $30,172 and $59,800 for the three and six months ended June 30, 2020 and was $16,432 and $22,211 for the three and six months ended June 30, 2019, respectively. Operating lease expense for capitalized operating leases included in operating activities was $34,322 and $68,644 for the three and six months ended June 30, 2020 and was $19,305 and $25,956 for the three and six months ended June 30, 2019, respectively. Operating lease obligations recorded on the balance sheet at June 30, 2020 are: Operating lease liability- short term $ 113,954 Operating lease liability - long term 101,826 Total Operating Lease Liability $ 215,780 Future lease payments included in the measurement of lease liabilities on the balance sheet at June 30, 2020 for future periods are as follows: Remainder of 2020 (six months) $ 72,362 2021 101,406 2022 57,328 Total future minimum lease payments 231,096 Less imputed interest (15,316 ) Total $ 215,780 The weighted average remaining lease term is 1.9 years and the weighted average discount rate is 7.0%. The Company does not have any finance leases. |
NOTES PAYABLE TO BANK
NOTES PAYABLE TO BANK | 6 Months Ended |
Jun. 30, 2020 | |
Notes Payable to Bank [Abstract] | |
NOTES PAYABLE TO BANK | On May 1, 2020, the Company received loan proceeds of $414,362 from Bank of America, N.A., pursuant to the Paycheck Protection Program (the “ PPP Loan The PPP Loan, which was in the form of a Promissory Note dated May 1, 2020 has a two-year term and bears interest at a rate of 1% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. Beginning seven months from the date of the PPP Note, the Company is required to make monthly payments of principal and interest of approximately $23,320. The Company recorded accrued interest of $681 at June 30, 2020. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains events of default and other provisions customary for a loan of this type. Under the terms of the CARES Act, PPP Loan participants can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Under the terms of the PPP, PPP loans and accrued interest are forgivable between eight weeks and twenty-four weeks, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period. The Company intends to use the loan proceeds for purposes consistent with the PPP, and anticipates that all or a majority of the loan amount may be forgiven, but there is no assurance provided that the Company will obtain forgiveness of the PPP Loan in whole or part. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' equity: | |
STOCKHOLDERS' EQUITY | The Company’s authorized capital consists of 150,000,000 shares of Common Stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share (“ Preferred Stock 2020 Follow-On Public Offering On June 2, 2020, the Company consummated a follow-on public offering, pursuant to which a total of 2,066,667 Units were offered and sold at the public offering price of $6.00 per Unit. Each Unit sold consisted of one share of Common Stock and one detachable two-year warrant to purchase one share of Common Stock at an exercise price of $6.00 per share. The offering resulted in the Company’s receipt of gross cash proceeds of $12.4 million and net cash proceeds of $11.67 million after deduction of commissions and offering costs. Summary of Stock Purchase Warrants The following table summarizes warrant activity during the six months ended June 30, 2020: Number Average Purchase Price Per Share Shares purchasable under outstanding warrants at December 31, 2019 6,620,620 $ 5.41 Stock purchase warrants issued 2,066,667 $ 6.00 Stock purchase warrants exercised (2,085,200 ) $ 4.92 Shares purchasable under outstanding warrants at June 30, 2020 6,602,087 $ 5.75 During the six months ended June 30, 2020 the Company received gross proceeds of $10,250,532 from the exercise of warrants and paid $398,091 as an agent fee to facilitate exercise of certain warrants resulting in net proceeds of $9,852,441. The Company is obligated to pay an agent fee of 5% on certain warrant exercises facilitated by the agent through September 15, 2020. The Company has outstanding Common Stock purchase warrants as of June 30, 2020 as follows: Number of Exercise Price Description Common Shares Per Share Purchase Warrants (1) 2,364,237 $ 5.00 Agent Warrants 177,954 $ 3.00 Purchase Warrants 1,839,383 $ 6.50 Agent Warrants 153,846 $ 8.125 Purchase Warrants 2,066,667 $ 6.00 6,602,087 (1) Warrants to purchase 233,334 shares of common stock are held by a family trust of Elwood G. Norris, the Company’s Chief Technology Officer. Mr. Norris exercised the 233,334 warrants in July 2020 for cash of $1,166,670. Subsequent to June 30, 2020 a total of ___________ warrants $____________ |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | On March 31, 2017, the Company adopted, and the stockholders approved the 2017 Stock Incentive Plan (the “ Plan The Company generally recognizes stock-based compensation expense on the grant date and over the period of vesting or period that services will be provided. Stock Options The following table summarizes stock option activity for the six months ended June 30, 2020: Weighted Average Options on Remaining Aggregate Common Exercise Contractual Intrinsic Shares Price Term Value Outstanding December 31, 2019 2,928,750 $ 2.96 3.71 Granted 381,336 $ 4.37 - Exercised (293,250 ) $ 1.76 - Forfeited, cancelled, expired (50,000 ) $ 3.00 - Outstanding June 30, 2020 2,966,836 $ 3.26 4.08 $ 21,409,000 Vested and exercisable at June 30, 2020 1,984,667 $ 2.42 3.09 $ 15,999,867 The Company uses the Black-Scholes option pricing model to determine the fair value of the options granted. For the Six Months Ended June 30, 2020 2019 Expected stock price volatility 45% 49% Risk-free interest rate 0.42% 2.41% Forfeiture rate 0% 0% Expected dividend yield 0% 0% Expected life of options - years 6.03 3.50 Weighted-average fair value of options granted $1.86 $2.06 Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards. The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available. The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. The Company calculates the expected life of the options using the Simplified Method for the employee stock options as the Company does not have sufficient historical data. Restricted Stock Units The Plan provides for the grant of restricted rtock units ( RSUs The following table summarizes RSU activity under the Plan for the six months ended June 30, 2020: Weighted Average Service-Based Grant Date Vesting RSU's Fair Value Period Unvested at January 1, 2020 308,087 $ 6.77 Granted - service based 196,214 $ 4.72 3 Years Granted - performance based 35,211 $ 4.72 Vested (86,558 ) $ 7.24 Forfeited and cancelled (3,416 ) $ 7.24 Unvested at June 30, 2020 449,538 $ 5.62 The Company recorded stock-based compensation for options and RSUs in its statements of operations for the relevant periods as follows: For the Three Months For the Six Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Selling, general and administrative $ 496,036 $ 345,217 $ 925,134 $ 548,417 Research and development 52,953 28,634 91,101 52,481 Total stock-based expense $ 548,989 $ 373,851 $ 1,016,235 $ 600,898 As of June 30, 2020, total estimated compensation cost of stock options and RSUs granted but not yet vested was $4.0 million which is expected to be recognized over the weighted average period of 2.1 years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Facility Leases See Note 7. Related Party Technology License Agreement The Company is obligated to pay royalties and pay development and patent costs pursuant to an exclusive Amended and Restated Intellectual Property License Agreement dated as of September 30, 2016 with Syzygy, a company owned and controlled by stockholders/officers Mr. Elwood Norris and Mr. James Barnes, both of whom are stockholders and officers of the Company. The agreement provides for royalty payments of 4% of revenue from products employing the licensed ensnarement device technology up to an aggregate of $1,000,000 in royalties or until September 30, 2026, whichever occurs earlier. The Company recorded $28,481 and $53,467 for royalties incurred during the three and six months ended June 30, 2020 and $2,231 and $6,719 incurred for the three and six months ended June 30, 2019, respectively Purchase Commitments At June 30, 2020 the Company was committed for approximately $1.7 million for future component deliveries and contract services that are generally subject to modification or rescheduling in the normal course of business. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Commencing in October 2017 the Company began reimbursing Mr. Elwood Norris, an officer and stockholder of the Company, $1,500 per month on a month to month basis for laboratory facility costs, for an aggregate of $9,000 during the six months ended June 30, 2020 and 2019, respectively. Commencing in April 2020 the Company engaged V3 Capital Partners, LLC (“ V3 See Notes 6, 9 and 11 for additional information on related party transactions and obligations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The Company evaluated subsequent events for their potential impact on the financial statements and disclosures through the date the financial statements were available to be issued, and determined that, except as disclosed herein, no subsequent events occurred that were reasonably expected to impact the financial statements presented herein. |
ORGANIZATION AND SUMMARY OF S_2
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Description | Wrap Technologies, Inc., a Delaware corporation (the “ Company Nasdaq |
Basis of Presentation and Use of Estimates | The Company’s unaudited interim financial statements and related notes included herein have been prepared in accordance with accounting principles generally accepted in the United States of America (“ US GAAP SEC The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions (e.g., stock-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible assets, warranty reserve, accrued costs and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Where necessary, the prior year’s information has been reclassified to conform to the current year presentation. |
Concentrations of Risk and Uncertainties | Credit Risk Concentrations of Accounts Receivable and Revenue Concentration of Suppliers Impact of COVID-19 COVID-19 |
Stock-Based Compensation | The Company follows the fair value recognition provisions issued by the Financial Accounting Standards Board (“ FASB ASC ASC 718 ASU The grant date fair value of stock options is determined using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs including the market price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding, the implied stock volatilities of several publicly-traded peers over the expected term of stock options, risk-free interest rate and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant. The fair value of stock-based compensation is amortized to compensation expense over the vesting term. |
Revenue Recognition | In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ ASU 2014-09 ASC 340-40 Topic 606 |
Accounts Receivable and Allowance for Doubtful Accounts | The Company’s policy is to evaluate the collectability of accounts receivable based on an assessment of the collectability of specific customer accounts and then record an allowance for doubtful accounts to reduce the receivables to an amount that management reasonably estimates will be collected. There was no allowance for doubtful accounts recorded at December 31, 2019. At June 30, 2020 the Company had an allowance of $10,140 resulting in part from global uncertainty resulting from the COVID-19 virus. Accounts that are deemed uncollectible will be written off against the allowance for doubtful accounts. If a major customer’s creditworthiness deteriorates, or actual defaults exceed our historical experience, such estimates could change and impact our future reported financial results. |
Inventories | Inventories are valued at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method. Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers . |
Loss per Share | Basic loss per common share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, restricted stock units and warrants exercisable or issuable for a total of 10,018,461 shares of Common Stock were outstanding at June 30, 2020. These securities are not included in the computation of diluted net loss per common share for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company. |
Income Taxes | Until its conversion to a corporation on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. Instead, its losses were included in the income tax returns of the member partners. No income tax expense was recorded for period ended June 30, 2020 due to losses incurred. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates. |
Recent Issued Accounting Guidance | Effective the First Quarter of 2020: In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“ Topic 820 Other Pronouncements: In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic ): Simplifying the Accounting for Income Taxes ASU 2019-12 The Company has reviewed other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations. |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | June 30, December 31, 2020 2019 Finished goods $ 719,104 $ 653,323 Work in process 22,149 413 Raw materials 1,393,252 1,590,805 2,134,505 2,244,541 Less allowance for obsolescence (48,000 ) - Inventories - net $ 2,086,505 $ 2,244,541 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | June 30, December 31, 2020 2019 Laboratory equipment $ 55,645 $ 44,454 Tooling 77,459 59,004 Computer equipment 106,765 83,368 Furniture, fixtures and improvements 144,323 128,782 384,192 315,608 Accumulated depreciation (120,022 ) (72,732 ) $ 264,170 $ 242,876 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible assets | June 30, December 31, 2020 2019 Patents $ 242,202 $ 176,425 Trademarks 74,145 57,919 316,347 234,344 Accumulated amortization (9,357 ) (4,061 ) $ 306,990 $ 230,283 |
ACCOUNTS PAYABLE AND ACCRUED _2
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | June 30, December 31, 2020 2019 Patent and legal costs $ 25,000 $ 9,851 Accrued compensation 264,311 144,193 Warranty costs 32,832 13,923 Consulting costs 5,000 7,500 Taxes and other 17,972 18,827 $ 345,115 $ 194,294 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Operating lease liabilities | Operating lease liability- short term $ 113,954 Operating lease liability - long term 101,826 Total Operating Lease Liability $ 215,780 |
Future lease payments | Remainder of 2020 (six months) $ 72,362 2021 101,406 2022 57,328 Total future minimum lease payments 231,096 Less imputed interest (15,316 ) Total $ 215,780 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders' equity: | |
Warrant activity | Number Average Purchase Price Per Share Shares purchasable under outstanding warrants at December 31, 2019 6,620,620 $ 5.41 Stock purchase warrants issued 2,066,667 $ 6.00 Stock purchase warrants exercised (2,085,200 ) $ 4.92 Shares purchasable under outstanding warrants at June 30, 2020 6,602,087 $ 5.75 |
Stock purchase warrants | Number of Exercise Price Description Common Shares Per Share Purchase Warrants (1) 2,364,237 $ 5.00 Agent Warrants 177,954 $ 3.00 Purchase Warrants 1,839,383 $ 6.50 Agent Warrants 153,846 $ 8.125 Purchase Warrants 2,066,667 $ 6.00 6,602,087 (1) Warrants to purchase 233,334 shares of common stock are held by a family trust of Elwood G. Norris, the Company’s Chief Technology Officer. Mr. Norris exercised the 233,334 warrants in July 2020 for cash of $1,166,670. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity | Weighted Average Options on Remaining Aggregate Common Exercise Contractual Intrinsic Shares Price Term Value Outstanding December 31, 2019 2,928,750 $ 2.96 3.71 Granted 381,336 $ 4.37 - Exercised (293,250 ) $ 1.76 - Forfeited, cancelled, expired (50,000 ) $ 3.00 - Outstanding June 30, 2020 2,966,836 $ 3.26 4.08 $ 21,409,000 Vested and exercisable at June 30, 2020 1,984,667 $ 2.42 3.09 $ 15,999,867 |
Assumptions used to to determine the fair value of the options granted | For the Six Months Ended June 30, 2020 2019 Expected stock price volatility 45% 49% Risk-free interest rate 0.42% 2.41% Forfeiture rate 0% 0% Expected dividend yield 0% 0% Expected life of options - years 6.03 3.50 Weighted-average fair value of options granted $1.86 $2.06 |
Service-based RSU activity | Weighted Average Service-Based Grant Date Vesting RSU's Fair Value Period Unvested at January 1, 2020 308,087 $ 6.77 Granted - service based 196,214 $ 4.72 3 Years Granted - performance based 35,211 $ 4.72 Vested (86,558 ) $ 7.24 Forfeited and cancelled (3,416 ) $ 7.24 Unvested at June 30, 2020 449,538 $ 5.62 |
Stock-based compensation | For the Three Months For the Six Months Ended June 30, Ended June 30, 2020 2019 2020 2019 Selling, general and administrative $ 496,036 $ 345,217 $ 925,134 $ 548,417 Research and development 52,953 28,634 91,101 52,481 Total stock-based expense $ 548,989 $ 373,851 $ 1,016,235 $ 600,898 |
ORGANIZATION AND SUMMARY OF S_3
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Allowance for doubtful accounts | $ 10,140 | |
Inventory write-off | $ (48,000) | $ (65,012) |
INVENTORIES, NET (Details)
INVENTORIES, NET (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 719,104 | $ 653,323 |
Work in process | 22,149 | 413 |
Raw materials | 1,393,252 | 1,590,805 |
Inventory, gross | 2,134,505 | 2,244,541 |
Less allowance for obsolescence | (48,000) | 0 |
Inventory, net | $ 2,086,505 | $ 2,244,541 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 384,192 | $ 315,608 |
Accumulated depreciation | (120,022) | (72,732) |
Property and equipment, net | 264,170 | 242,876 |
Laboratory Equipment | ||
Property and equipment, gross | 55,645 | 44,454 |
Tooling | ||
Property and equipment, gross | 77,459 | 59,004 |
Computer Equipment | ||
Property and equipment, gross | 106,765 | 83,368 |
Furniture, Fixtures and Improvements | ||
Property and equipment, gross | $ 144,323 | $ 128,782 |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 24,793 | $ 7,621 | $ 47,290 | $ 12,186 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Intangible assets, gross | $ 316,347 | $ 234,344 |
Accumulated amortization | (9,357) | (4,061) |
Intangible assets, net | 306,990 | 230,283 |
Patents | ||
Intangible assets, gross | 242,202 | 176,425 |
Trademarks | ||
Intangible assets, gross | $ 74,145 | $ 57,919 |
INTANGIBLE ASSETS, NET (Detai_2
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 2,695 | $ 203 | $ 5,296 | $ 387 |
ACCOUNTS PAYABLE AND ACCRUED _3
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Patent and legal costs | $ 25,000 | $ 9,851 |
Accrued compensation | 264,311 | 144,193 |
Warranty costs | 32,832 | 13,923 |
Consulting costs | 5,000 | 7,500 |
Taxes and other | 17,972 | 18,827 |
Accrued liabilities | $ 345,115 | $ 194,294 |
LEASES (Details)
LEASES (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Operating lease liability - short term | $ 113,954 | $ 128,131 |
Operating lease liability - long term | 101,826 | $ 150,018 |
Total operating lease liability | $ 215,780 |
LEASES (Details 1)
LEASES (Details 1) | Jun. 30, 2020USD ($) |
Leases [Abstract] | |
Remainder of 2020 (six months) | $ 72,362 |
2021 | 101,406 |
2022 | 57,328 |
Total future minimum lease payments | 231,096 |
Less imputed interest | (15,316) |
Total | $ 215,780 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Amortization of ROU operating lease assets | $ 30,172 | $ 16,432 | $ 59,800 | $ 22,211 |
Operating lease expense | $ 34,322 | $ 19,305 | $ 68,644 | $ 25,956 |
Weighted average remaining lease term | 1 year 10 months 24 days | 1 year 10 months 24 days | ||
Weighted average discount rate | 7.00% | 7.00% |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Stockholders' equity: | |
Warrants outstanding, beginning | shares | 6,620,620 |
Issued | shares | 2,066,667 |
Exercised | shares | (2,085,200) |
Warrants outstanding, ending | shares | 6,602,087 |
Average purchase price per share outstanding, beginning | $ / shares | $ 5.41 |
Issued | $ / shares | 6 |
Exercised | $ / shares | 4.92 |
Average purchase price per share outstanding, ending | $ / shares | $ 5.75 |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) | Jun. 30, 2020USD ($)$ / shares | |
Number of common shares | $ 6,602,087 | |
Purchase Warrants | ||
Number of common shares | $ 2,364,237 | [1] |
Exercise price per share | $ / shares | $ 5 | |
Agent Warrants | ||
Number of common shares | $ 177,954 | |
Exercise price per share | $ / shares | $ 3 | |
Purchase Warrants | ||
Number of common shares | $ 1,839,383 | |
Exercise price per share | $ / shares | $ 6.50 | |
Agent Warrants | ||
Number of common shares | $ 153,846 | |
Exercise price per share | $ / shares | $ 8.125 | |
Purchase Warrants | ||
Number of common shares | $ 2,066,667 | |
Exercise price per share | $ / shares | $ 6 | |
[1] | Warrants to purchase 233,334 shares of common stock are held by a family trust of Elwood G. Norris, the Company's Chief Technology Officer. Mr. Norris exercised the 233,334 warrants in July 2020 for cash of $1,166,670. |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares | Jun. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity: | ||
Common stock, authorized | 150,000,000 | 150,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of options outstanding, beginning | shares | 2,928,750 |
Number of options granted | shares | 381,336 |
Number of options exercised | shares | (239,250) |
Number of options forfeited/cancelled/expired | shares | (50,000) |
Number of options outstanding, ending | shares | 2,966,836 |
Number of options vested and exercisable | shares | 1,984,667 |
Weighted average exercise price outstanding, beginning | $ 2.96 |
Weighted average exercise price granted | 4.37 |
Weighted average exercise price exercised | 1.76 |
Weighted average exercise price forfeited/cancelled/expired | 3 |
Weighted average exercise price outstanding, ending | 3.26 |
Weighted average exercise price vested and exercisable | $ 2.42 |
Weighted average remaining contractual term outstanding, beginning | 3 years 8 months 16 days |
Weighted average remaining contractual term outstanding, ending | 4 years 29 days |
Weighted average remaining contractual term vested and exercisable | 3 years 1 month 2 days |
Aggregate intrinsic value outstanding, beginning | $ | $ 0 |
Aggregate intrinsic value granted | $ 0 |
Aggregate intrinsic value exercised | $ | $ 0 |
Aggregate intrinsic value forfeited/cancelled/expired | $ 0 |
Aggregate intrinsic value outstanding, ending | $ | $ 21,409,000 |
Aggregate intrinsic value vested and exercisable | $ | $ 15,999,867 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) - $ / shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Expected stock price volatility | 45.00% | 49.00% |
Risk-free interest rate | 0.42% | 2.41% |
Forfeiture rate | 0.00% | 0.00% |
Expected dividend yield | 0.00% | 0.00% |
Expected life of options - years | 6 years 11 days | 3 years 6 months |
Weighted-average fair value of options granted | $ 1.86 | $ 2.06 |
STOCK-BASED COMPENSATION (Det_3
STOCK-BASED COMPENSATION (Details 2) | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Unvested service-based RSUs outstanding, beginning | shares | 308,087 |
Vested | shares | (86,558) |
Forfeited and cancelled | shares | (3,416) |
Unvested service-based RSUs outstanding, ending | shares | 449,538 |
Grant date fair value, beginning | $ / shares | $ 6.77 |
Vested | $ / shares | 7.24 |
Forfeited and cancelled | $ / shares | 7.24 |
Grant date fair value, ending | $ / shares | $ 5.62 |
Vesting period | 3 years |
Service Based | |
Granted | shares | 196,214 |
Granted | $ / shares | $ 4.72 |
Performance Based | |
Granted | shares | 35,211 |
Granted | $ / shares | $ 4.72 |
STOCK-BASED COMPENSATION (Det_4
STOCK-BASED COMPENSATION (Details 3) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock-based compensation | $ 548,989 | $ 373,851 | $ 1,016,235 | $ 600,898 |
Selling, General and Administrative | ||||
Stock-based compensation | 496,036 | 345,217 | 925,134 | 548,417 |
Research and Development | ||||
Stock-based compensation | $ 52,953 | $ 28,634 | $ 91,101 | $ 52,481 |
STOCK-BASED COMPENSATION (Det_5
STOCK-BASED COMPENSATION (Details Narrative) | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Share-based Payment Arrangement [Abstract] | |
Estimated compensation cost of stock options and RSUs granted but not yet vested | $ 4,000,000 |
Estimated compensation cost of stock options and RSUs granted but not yet vested, recognition period | 2 years 1 month 6 days |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Royalties | $ 28,481 | $ 2,231 | $ 53,467 | $ 6,719 |
Purchase commitment | $ 1,700,000 | $ 1,700,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transactions [Abstract] | ||
Payment to related party during period | $ 9,000 | $ 9,000 |