Balance Sheet Bolstered with $35.4 Million in Cash - Record Revenue of $833,000 and $1.5 Million Backlog
TEMPE, AZ / ACCESSWIRE / July 30, 2020 / Wrap Technologies, Inc. (the 'Company' or 'Wrap') (NASDAQ:WRTC), an innovator of modern policing solutions, reported results for the second quarter ended June 30, 2020.
Second Quarter and Recent Operational Highlights:
- Appointed Marc Thomas as Chief Executive Officer, effective July 30, 2020
- Increased cash position to $35.4 million at June 30, 2020 after closing $12.4 million financing with existing investors and receiving $9.2 million from the exercise of warrants during the quarter
- Subsequent to the quarter's end, received an additional $11 million of net proceeds from the exercise of warrants during July 2020
- Expanded international presence with an order for 21,600 BolaWrap cartridges from the Indonesian National Police force as well as orders for 200 BolaWrap devices and more than 2,600 cartridges and accessories from three countries in Asia; Q2 international shipments raise the total countries that have received BolaWrap products to 27
- In spite of the global pandemic, increased the number of agencies trained on BolaWrap to over 200 with over 750 training officers at those agencies certified as BolaWrap instructors qualified to train their departments
- Partnered with PoliceGrantsHelp.com to offer free grant funding assistance to law enforcement agencies looking to purchase BolaWrap products and accessories; to date, received applications from 50 agencies
- Conducted 80 demos, mostly via webinars, to over 100 agencies during the second quarter of 2020
- As of June 30, 2020, backlog totaled approximately $1.5 million, which the Company expects to recognize over the next twelve months
'During the second quarter of 2020, our team adapted to an unconventional operating environment, successfully increasing awareness of the BolaWrap, driving sales, and positioning Wrap for accelerated growth,' said David Norris, director of Wrap Technologies and former chief executive officer. 'Financially, the quarter was highlighted by a substantial increase in our cash position to $35.4 million as we successfully closed a $12.4 million financing arrangement with a group of our existing investors and received an additional $9.2 million during Q2 from the exercise of warrants. Thanks to our team's flexibility, we also achieved record revenues of $833,000, and we exited the quarter with a $1.5 million backlog, which indicates that our sales channel remained robust despite the complications caused by the coronavirus pandemic. Subsequent to the quarter's end, we also strengthened our leadership team with the appointment of Marc Thomas as our CEO, whose expertise will be integral to the next phase of Wrap's evolution.'
'Over the past few months, there has been an intent and extraordinary focus on our industry - on how police officers interact with the public, how they decide when to use force, and how they determine how much of it to apply. As the makers of the only technology that does not rely on pain to allow law enforcement officers to establish compliance with a non-compliant subject, we believe we are uniquely positioned to be part of the solution to help ensure all parties go home safely. With sales momentum building, our pipeline of opportunities expanding, an improved balance sheet, and an enhanced leadership team, we believe Wrap is in its strongest position to date, and we look forward to accelerating the Company's growth.'
During the quarter, Wrap tackled several challenges and adapted to an environment that was continually re-shaped by the COVID-19 pandemic. During the second quarter, Wrap's customers experienced staffing issues, limiting the Company's ability to demonstrate and train, which negatively impacted Q2 sales. In response, Wrap adapted by introducing tele-selling and webinar training. Given the initial success of these measures, the Company currently intends to continue leveraging these new measures. Additionally, Wrap curtailed most sales and training travel and reduced production personnel until late in the second quarter when some customers' locations domestically and internationally eased restrictions. At that time, the Company recommenced closing business prospects.
While Wrap's significant adjustments to operations resulted in sales growth during the second quarter, the pandemic's impact on future operations and results cannot be fully determined at this time.
Second Quarter 2020 Financial Results
Total revenue for the second quarter of 2020 increased to $833,000 from $59,000 in the second quarter of 2019. The increase in total revenue was due to adding established domestic and international distributors and expanded marketing, selling and training efforts.
Gross profit margin for the second quarter of 2020 was 32.1% compared to 40.0% in the second quarter of 2019. The change in gross profit margin was primarily due to minimal revenue in the prior year quarter and impacts on production due to COVID-19 restrictions in Arizona during the second quarter of 2020. Given the variability in margins from changes in sales channels, product mix and the volume of manufacturing, the Company does not believe historical gross profit margins should be relied upon as an indicator of future gross profit margins.
Total operating expense for the second quarter of 2020 increased to $3.1 million from $2.0 million in the second quarter of 2019. Each quarter included non-cash stock-based compensation of $549,000 and $374,000, respectively. The increase in total operating expense was due primarily to increased staffing and sales activities as the Company continues to scale operations for planned growth.
Net loss for the second quarter of 2020 totaled $2.8 million or $(0.09) per diluted share, compared to net loss of $1.9 million or $(0.07) per diluted share in the second quarter of 2019.
Balance Sheet and Financing Activities
Cash and cash equivalents totaled $35.4 million at June 30, 2020, compared to $17.0 million at December 31, 2019.
During the six months ended June 30, 2020 the Company received $11.7 million of net proceeds resulting from the consummation of a registered offering of common stock in June 2020, and obtained $10.4 million of net proceeds from the exercise of previously issued warrants and stock options. In July 2020, the Company received an additional $11 million of net proceeds from the exercise of warrants.
Use of Non-GAAP Information
Included in this press release are non-GAAP operational metrics regarding agencies, training, backlog 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. The Company considers backlog as an indicator of future revenues and uses it to support production planning. Backlog is a measure of purcha