Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 13, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-55838 | |
Entity Registrant Name | Wrap Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 98-0551945 | |
Entity Address, Address Line One | 1817 W 4th Street | |
Entity Address, City or Town | Tempe | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85281 | |
City Area Code | 800 | |
Local Phone Number | 583-2652 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | WRAP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 44,214,169 | |
Entity Central Index Key | 0001702924 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 4,934,000 | $ 5,330,000 |
Short-term investments | 10,000,000 | 13,949,000 |
Accounts receivable and contract assets, net | 4,321,000 | 2,830,000 |
Inventories, net | 5,816,000 | 3,975,000 |
Prepaid expense and other current assets | 762,000 | 775,000 |
Total current assets | 25,833,000 | 26,859,000 |
Property and equipment, net | 533,000 | 758,000 |
Operating lease right-of-use asset, net | 205,000 | 285,000 |
Intangible assets, net | 3,319,000 | 2,569,000 |
Goodwill, net | 1,611,000 | 0 |
Other assets | 166,000 | 100,000 |
Total assets | 31,667,000 | 30,571,000 |
Current liabilities: | ||
Accounts payable | 1,546,000 | 1,419,000 |
Accrued liabilities | 1,128,000 | 1,463,000 |
Customer deposits | 2,000 | 0 |
Deferred revenue- short term | 189,000 | 166,000 |
Operating lease liability - short term | 116,000 | 108,000 |
Warrants – short term | 7,834,000 | 0 |
Total current liabilities | 10,815,000 | 3,156,000 |
Long-term liabilities: | ||
Deferred revenue- long term | 176,000 | 167,000 |
Operating lease liability - long term | 105,000 | 193,000 |
Total long-term liabilities | 281,000 | 360,000 |
Total liabilities | 11,096,000 | 3,516,000 |
Commitments and Contingencies | ||
Stockholders' equity: | ||
Preferred stock | 0 | 0 |
Common stock - 150,000,000 authorized; par value $0.0001 per share; 43,289,236 and 41,175,993 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 4,000 | 4,000 |
Additional paid-in capital | 97,919,000 | 94,333,000 |
Accumulated deficit | (79,388,000) | (67,376,000) |
Accumulated other comprehensive loss | 0 | 94,000 |
Total stockholders' equity | 20,571,000 | 27,055,000 |
Total liabilities and stockholders' equity | 31,667,000 | 30,571,000 |
Convertible Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock | $ 2,036,000 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Preferred Stock, Shares Authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares, Outstanding (in shares) | 43,289,236 | 41,175,993 |
Common stock, shares issued (in shares) | 43,289,236 | 41,175,993 |
Convertible Preferred Stock [Member] | ||
Preferred Stock, Shares Authorized (in shares) | 10,000 | 10,000 |
Preferred Stock, Par or Stated Value Per Share (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Issued (in shares) | 10,000 | 0 |
Preferred Stock, Shares Outstanding (in shares) | 10,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues: | ||||
Product sales | $ 3,248 | $ 1,612 | $ 4,897 | $ 4,042 |
Other revenue | 383 | 89 | 647 | 422 |
Total revenues | 3,631 | 1,701 | 5,544 | 4,464 |
Cost of revenues | 1,454 | 790 | 2,347 | 2,430 |
Gross profit | 2,177 | 911 | 3,197 | 2,034 |
Operating expenses: | ||||
Selling, general and administrative | 4,317 | 3,586 | 12,604 | 11,952 |
Research and development | 610 | 1,236 | 2,683 | 4,210 |
Total operating expenses | 4,927 | 4,822 | 15,287 | 16,162 |
Loss from operations | (2,750) | (3,911) | (12,090) | (14,128) |
Other income (expense): | ||||
Interest income | 90 | 34 | 413 | 36 |
Change in fair value of warrant liabilities | 117 | 0 | 117 | 0 |
Other | (6) | 12 | (25) | 10 |
Total other income (expense) | (33) | 46 | 271 | 46 |
Net loss | (2,783) | (3,865) | (11,819) | (14,082) |
Less: Convertible preferred stock dividends | (193) | 0 | (193) | 0 |
Net loss attributable to common stockholders | $ (2,976) | $ (3,865) | $ (12,012) | $ (14,082) |
Net loss per basic and diluted common share (in dollars per share) | $ (0.07) | $ (0.09) | $ (0.29) | $ (0.34) |
Weighted average common shares used to compute net loss per basic and diluted common share (in shares) | 42,652,481 | 41,086,285 | 41,914,512 | 40,955,234 |
Comprehensive loss: | ||||
Net loss | $ (2,783) | $ (3,865) | $ (11,819) | $ (14,082) |
Net unrealized gain (loss) on short-term investments | 0 | 73 | 0 | 62 |
Comprehensive loss | $ (2,783) | $ (3,792) | $ (11,819) | $ (14,020) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Balance (in shares) at Dec. 31, 2021 | 40,851,945 | |||||
Balance at Dec. 31, 2021 | $ 4 | $ 91,025 | $ (49,759) | $ (6) | $ 41,264 | |
Share-based compensation expense | $ 0 | (2,628) | 0 | 0 | (2,628) | |
Dividends on convertible preferred stock | 0 | |||||
Common shares issued upon vesting of restricted stock units (in shares) | 218,133 | |||||
Net loss | $ 0 | 0 | (14,082) | 0 | (14,082) | |
Common shares issued upon exercise of stock options (in shares) | 55,500 | |||||
Common shares issued upon exercise of stock options | $ 0 | 83 | 0 | 0 | 83 | |
Share-based compensation expense | 0 | 2,628 | 0 | 0 | 2,628 | |
Net unrealized gain (loss) on short-term investments | 0 | 0 | 0 | 62 | 62 | |
Net loss for the period | $ 0 | 0 | (14,082) | 0 | (14,082) | |
Balance (in shares) at Sep. 30, 2022 | 41,125,578 | |||||
Balance at Sep. 30, 2022 | $ 4 | 93,736 | (63,841) | 56 | 29,955 | |
Balance (in shares) at Jun. 30, 2022 | 40,992,161 | |||||
Balance at Jun. 30, 2022 | $ 4 | 92,856 | (59,976) | (17) | 32,867 | |
Share-based compensation expense | $ 0 | (872) | 0 | 0 | (872) | |
Common shares issued upon vesting of restricted stock units (in shares) | 127,917 | |||||
Common shares issued upon vesting of restricted stock units | $ 0 | 0 | 0 | 0 | 0 | |
Net loss | $ 0 | 0 | (3,865) | 0 | (3,865) | |
Common shares issued upon exercise of stock options (in shares) | 5,500 | |||||
Common shares issued upon exercise of stock options | $ 0 | 8 | 0 | 0 | 8 | |
Share-based compensation expense | 0 | 872 | 0 | 0 | 872 | |
Net unrealized gain (loss) on short-term investments | 0 | 0 | 0 | 73 | 73 | |
Net loss for the period | $ 0 | 0 | (3,865) | 0 | (3,865) | |
Balance (in shares) at Sep. 30, 2022 | 41,125,578 | |||||
Balance at Sep. 30, 2022 | $ 4 | 93,736 | (63,841) | 56 | 29,955 | |
Balance (in shares) at Dec. 31, 2022 | 41,175,993 | 0 | ||||
Balance at Dec. 31, 2022 | $ 4 | $ 0 | 94,333 | (67,376) | 94 | 27,055 |
Share-based compensation expense | 0 | 0 | (1,648) | 0 | 0 | (1,648) |
Dividends on convertible preferred stock | $ 0 | $ 0 | 0 | (193) | (193) | |
Convertible preferred stock issued, net of offering costs (in shares) | 0 | 10,000 | ||||
Convertible preferred stock issued, net of offering costs | $ 0 | $ 2,036 | 0 | 0 | 0 | 2,036 |
Common shares issued upon vesting of restricted stock units (in shares) | 862,993 | 0 | ||||
Common shares issued upon vesting of restricted stock units | $ 0 | $ 0 | 0 | 0 | 0 | 0 |
Issuance of common stock for acquisition (in shares) | 1,250,000 | 0 | ||||
Issuance of common stock for acquisition | $ 0 | $ 0 | 1,938 | 0 | 0 | 1,938 |
Net loss | $ 0 | $ 0 | 0 | (11,819) | 0 | $ (11,819) |
Common shares issued upon exercise of stock options (in shares) | 250 | 0 | 250 | |||
Common shares issued upon exercise of stock options | $ 0 | $ 0 | 0 | 0 | 0 | $ 0 |
Share-based compensation expense | 0 | 0 | 1,648 | 0 | 0 | 1,648 |
Settlement – US Treasury bills | 0 | 0 | 0 | 0 | (94) | (94) |
Net unrealized gain (loss) on short-term investments | 0 | |||||
Net loss for the period | $ 0 | $ 0 | 0 | (11,819) | 0 | (11,819) |
Balance (in shares) at Sep. 30, 2023 | 43,289,236 | 10,000 | ||||
Balance at Sep. 30, 2023 | $ 4 | $ 2,036 | 97,919 | (79,388) | 0 | 20,571 |
Balance (in shares) at Jun. 30, 2023 | 41,910,687 | |||||
Balance at Jun. 30, 2023 | $ 4 | 0 | 96,182 | (76,411) | 0 | 19,775 |
Share-based compensation expense | 0 | 0 | (201) | (1) | 0 | (202) |
Dividends on convertible preferred stock | $ 0 | $ 0 | 0 | (193) | 0 | (193) |
Convertible preferred stock issued, net of offering costs (in shares) | 0 | 2,036 | ||||
Convertible preferred stock issued, net of offering costs | $ 10,000 | 0 | 0 | 0 | 2,036 | |
Common shares issued upon vesting of restricted stock units (in shares) | 128,549 | 0 | ||||
Common shares issued upon vesting of restricted stock units | $ 0 | $ 0 | 0 | 0 | 0 | 0 |
Issuance of common stock for acquisition (in shares) | 1,250,000 | 0 | ||||
Issuance of common stock for acquisition | $ 0 | $ 0 | 1,938 | 0 | 0 | 1,938 |
Net loss | 0 | 0 | 0 | (2,783) | 0 | (2,783) |
Share-based compensation expense | 0 | 0 | 201 | 1 | 0 | 202 |
Net unrealized gain (loss) on short-term investments | 0 | |||||
Net loss for the period | $ 0 | $ 0 | 0 | (2,783) | 0 | (2,783) |
Balance (in shares) at Sep. 30, 2023 | 43,289,236 | 10,000 | ||||
Balance at Sep. 30, 2023 | $ 4 | $ 2,036 | $ 97,919 | $ (79,388) | $ 0 | $ 20,571 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Cash Flows From Operating Activities: | |||||
Net loss | $ (2,783) | $ (3,865) | $ (11,819) | $ (14,082) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||
Depreciation and amortization | 675 | 574 | |||
Share-based compensation | 1,648 | 2,628 | |||
Warranty provision | (8) | 55 | |||
Change in fair value of warrant liabilities | 117 | 0 | 117 | 0 | |
Non-cash lease expense | 80 | 75 | |||
Provision for doubtful accounts | (48) | 61 | |||
Accounts receivable | (1,353) | 1,576 | |||
Inventories | (1,780) | (1,396) | |||
Prepaid expense and other current assets | 13 | 268 | |||
Accounts payable | (67) | (834) | |||
Operating lease liability | (80) | (65) | |||
Customer deposits | 2 | (43) | |||
Accrued liabilities and other | (322) | 175 | |||
Warranty settlement | (8) | (63) | |||
Deferred revenue | 32 | 35 | |||
Net cash used in operating activities | (12,918) | (11,036) | |||
Changes in assets and liabilities: | |||||
Provision for doubtful accounts | (48) | 61 | |||
Cash Flows From Investing Activities: | |||||
Purchase of short-term investments | (6,145) | (23,119) | |||
Proceeds from maturities of short-term investments | 10,000 | 33,300 | |||
Capital expenditures for property and equipment | (133) | (201) | |||
Net cash paid for acquisition of Intrensic | (551) | 0 | |||
Cash outlay for deposits | (66) | (3) | |||
Net cash provided by investing activities | 2,768 | 9,844 | |||
Cash Flows From Financing Activities: | |||||
Proceeds from exercise of stock options | 0 | 83 | |||
Proceeds from issuance of warrants and convertible preferred stock, net of offering costs | 9,754 | 0 | |||
Net cash provided by financing activities | 9,754 | 83 | |||
Net decrease in cash and cash equivalents | (396) | (1,109) | |||
Cash and cash equivalents, beginning of period | 5,330 | 4,937 | $ 4,937 | ||
Change in unrealized gain on short-term investments | (94) | 62 | |||
Net assets acquired from acquisition | 147 | 0 | |||
Warrant liabilities | (7,834) | 0 | |||
Dividends on convertible preferred stock | (193) | (193) | 0 | ||
Right-of-use asset and liability recorded during period | 0 | 260 | |||
Cash and cash equivalents, end of period | 4,934 | 3,828 | 4,934 | 3,828 | 5,330 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||
us-gaap_CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations | $ 4,934 | $ 3,828 | 4,934 | 3,828 | $ 5,330 |
Convertible Preferred Stock [Member] | |||||
Cash Flows From Financing Activities: | |||||
Issuance of common stock for acquisition | (2,036) | 0 | |||
Intrensic, LLC [Member] | |||||
Cash Flows From Financing Activities: | |||||
Issuance of common stock for acquisition | (1,938) | 0 | |||
Patents and Trademarks [Member] | |||||
Cash Flows From Investing Activities: | |||||
Investment in patents and trademarks | (277) | (133) | |||
Intangibles Other than Patents and Trademarks [Member] | |||||
Cash Flows From Investing Activities: | |||||
Investment in patents and trademarks | $ (60) | $ 0 |
Note 1 - Organization, Summary
Note 1 - Organization, Summary of Significant Accounting Policies and Recent Developments | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | 1. ORGANIZATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT DEVELOPMENTS Organization and Business Description Wrap Technologies, Inc., a Delaware corporation (the “ Company we us our Common Stock Nasdaq Basis of Presentation The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“ SEC U.S. GAAP Annual Report Where necessary, the prior year’s information has been reclassified to conform to the current year presentation. Principles of Consolidation The Company has two VR Business Combinations The Company accounts for its business combinations under the provisions of Accounting Standards Codification ("ASC") Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of the acquired intangible assets was determined using a method which reflects the present value of the operating cash flows generated by this asset after taking into account the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. Certain adjustments to the assessed fair values of the assets and liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Goodwill Goodwill represents the difference, if any, between the aggregate consideration paid for an acquisition and the fair values of the underlying net assets and liabilities assumed from an acquired business. Goodwill is not amortized, but instead is tested for impairment. The Company tests goodwill for impairment on an annual basis during the fourth quarter, or more frequently if conditions indicate that such impairment could exist. The Company evaluates qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and whether it is necessary to perform goodwill impairment process. Definite-lived Intangible Assets Definite-lived intangible assets represent certain trade names, patents, licenses, software, acquired technology and customer relationships. Definite-lived intangible assets are recorded at cost less any accumulated amortization and accumulated impairment losses, if any. Definite-lived intangible assets acquired through the business combination are measured at fair value at the acquisition date. The Company amortizes these acquired definite-lived intangibles assets with a finite life on a straight-line basis, over 6 years for technology; 7 years for customer relationships; and 8 years for trademarks and trade names. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 expense 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 revenue and expense during the reporting period. Actual results could materially differ from those estimates. Warrants The Company accounts for warrants as liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for the warrants issued in accordance with the guidance contained in ASC 815-40-15-7C, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations. Convertible Preferred Stocks The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 480 and ASC 815 to determine if those instruments or embedded components of those instruments qualify as derivatives and are subject to bifurcation accounting. The Company determines that the economic characteristics and risks of the embedded derivative instrument are clearly and closely related to the economic characteristics and risks of the host contract. The convertible instruments are accounted for as a single hybrid instrument. Additionally, the convertible instruments do not have any redemption features that would preclude permanent equity classification in accordance with the guidance contained in ASC 480-10-S99. The Company issued the Warrants, which are classified as liabilities and measured at fair value on a recurring basis, and Convertible Preferred Stocks in one transaction. The issuance proceeds were allocated by using the with-and-without method. Under this method, The Company first allocated the issuance proceeds to the Warrants based on their initial fair value measurement, and then allocated the remaining proceeds to the Convertible Preferred Stocks. Loss per Share Basic loss per share (EPS) is computed by dividing net loss, less any dividends, accretion or decretion, redemption or induced conversion, if any, on our Series A Convertible Preferred Stock, by the weighted average number of shares outstanding during the reported period. In computing diluted EPS, we adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A Convertible Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A Convertible Preferred Stock to its redemption price, or recorded upon a redemption or induced conversion, if any. We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of the Series A Convertible Preferred Stock, restricted stock units, and stock options. Stock options and restricted stock units exercisable or issuable for a total of 2,668,750 and 6,396,277 shares of Common Stock were outstanding at September 30, 2023, and 2022, respectively. 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. Recent Issued Accounting Guidance The Company has reviewed 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. In July 2023, the SEC adopted the final rule under SEC Release No. 33-11216, Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, requiring disclosure of material cybersecurity incidents on Form 8-K and periodic disclosure of a registrant’s cybersecurity risk management, strategy and governance in annual reports. Regulation S-K Item 6 disclosure requirements under this rule will be effective for us in the fourth quarter of 2023. Incident disclosure requirements in Form 8-K will be effective for us on June 15, 2024. We are still evaluating for any impact on our financial statement disclosures from the adoption of this final rule. Recent Developments On August 9, 2023, the Company entered into a Membership Interest Purchase Agreement (the “ Purchase Agreement Intrensic Sellers Membership Interests Intrensic Closing Purchase Price Intrensic Acquisition Kevin Mullins, a director of the Company and the Company’s Chief Executive Officer, owns approximately 9.53% of the Membership Interests, and as such, has a financial interest in the Intrensic Acquisition. |
Note 2 - Revenue and Product Co
Note 2 - Revenue and Product Costs | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Revenue from Contract with Customer [Text Block] | 2. REVENUE AND PRODUCT COSTS Revenue consists of product revenue and other revenue. Product sales include BolaWrap products and accessories. Other revenue includes VR revenue, service, training and shipping revenue. 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 quality control inspections, and (iii) has been tagged and packed for shipment, separated from other 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 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. 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. The Company may 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. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, a deferred revenue liability is recorded. The Company recognizes these contract liabilities as revenue after all revenue recognition criteria are met. The table below details the activity in our contract liabilities during the nine months ended September 30, 2023. Customer Deferred Deposits Revenue Balance at January 1, 2023 $ - $ 333 Additions, net 2 229 Transfer to revenue - (197 ) Balance at September 30, 2023 $ 2 $ 365 Current portion $ 2 $ 189 Long-term portion $ - $ 176 At September 30, 2023, the Company’s deferred revenue of $365 consisted of $199 related to VR, $6 related to training and $160 related to BolaWrap extended warranties and services. At December 31, 2022, the Company’s deferred revenue of $333 consisted of $198 related to VR, $11 related to training and $124 related to BolaWrap extended warranties and services. Estimated costs for the Company’s standard warranty, generally one-year, are charged to cost of products sold when revenue is recorded for the related product. Royalties are also charged to the cost of products sold. |
Note 3 - Financial Instruments
Note 3 - Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Fair Value Disclosures [Text Block] | 3. FINANCIAL INSTRUMENTS Assets and liabilities recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheets and assets and liabilities measured at fair value on a non-recurring basis or disclosed at fair value, are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value and requires certain disclosures about how fair value is determined. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 Level 2 Level 3 The Company’s short-term investments consisting of U.S. Treasury bill securities and Certificate of Deposits are classified as Level 1 because they are valued using quoted market prices. The following table shows the Company’s short-term investments by significant investment category as of September 30, 2023, and December 31, 2022. As of September 30, 2023 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: Certificate of Deposits 10,000 - - 10,000 Total Financial Assets $ 10,000 $ - $ - $ 10,000 As of December 31, 2022 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: U.S. Treasury securities in short-term investments 9,849 100 - 9,949 Certificate of Deposits 4,000 - - 4,000 Total Financial Assets $ 13,849 $ 100 $ - $ 13,949 Unrealized gains or losses resulting from our short-term investments are recorded in accumulated other comprehensive gain or loss as they are classified as available for sale. During the three and nine months ended September 30, 2023, no The warrant liabilities are measured at fair value on a recurring basis. The subsequent measurement of the warrant liabilities as of September 30, 2023, is classified as Level 3 due to the use of an observable market quote in a non-active market and the management’s assumption of the expected stock price volatility. The following table presents the fair value in the beginning of the period, the changes in the fair value, and the fair value at the end of the period of warrant liabilities (in thousands): Level 3: September 30, 2023 December 31, 2022 Fair value at inception or the beginning of the period $ 7,717 - Change in fair value of warrant liabilities 117 - Fair value as of September 30, 2023 $ 7,834 - The Company uses the modified Black-Scholes option pricing model to determine the fair value of warrant liabilities. The following table summarizes the assumptions used to compute the fair value of Warrants: As of September 30, 2023 As of December 31, 2022 Expected stock price volatility 100 % - % Risk-free interest rate 4.49 % - % Dividends yield 0 % - % Expected life of warrants 4.75 - Exercise price $ 1.45 $ - Our other financial instruments also include accounts receivable, accounts payable, accrued liabilities and business acquisition liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the balance sheet. |
Note 4 - Inventories
Note 4 - Inventories | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | 4. INVENTORIES 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: September 30, 2023 December 31, 2022 Finished goods $ 2,921 $ 2,293 Work in process - - Raw materials 2,895 1,682 Inventories - net $ 5,816 $ 3,975 |
Note 5 - Property and Equipment
Note 5 - Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Property, Plant and Equipment Disclosure [Text Block] | 5. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: September 30, 2023 December 31, 2022 Production and lab equipment $ 536 $ 513 Tooling 505 448 Computer equipment 587 531 Furniture, fixtures and improvements 190 181 1,818 1,673 Accumulated depreciation (1,285 ) (915 ) Property and equipment, net $ 533 $ 758 Depreciation expense was $122 and $358 for the three and nine months ended September 30, 2023, respectively, and $121 and $359 for the three and nine months ended September 30, 2022, respectively. |
Note 6 - Intangible Assets and
Note 6 - Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Goodwill and Intangible Assets Disclosure [Text Block] | 6. INTANGIBLE ASSETS AND GOODWILL Intangible Assets, net Intangible assets, net consisted of the following: September 30, 2023 December 31, 2022 Amortizable intangible assets: Patents $ 841 $ 575 Trademarks 241 150 Purchased software and technology 2,452 1,962 Customer Relationships 160 - 3,694 2,687 Accumulated amortization (778 ) (462 ) Total amortizable 2,916 2,225 Indefinite life assets (non-amortizable) 403 344 Total intangible assets, net $ 3,319 $ 2,569 Amortization expense was $150 and $317 for the three and nine months ended September 30, 2023, respectively, and $72 and $215 for the three and nine months ended September 30, 2022, respectively. At September 30, 2023, future amortization expense is as follows: 2023 (3 months) $ 164 2024 655 2025 650 2026 427 2027 180 Thereafter 840 Total estimated amortization expense $ 2,916 Goodwill The table below summarizes the changes in the carrying amount of goodwill: Balance at January 1, 2023 $ - Acquired goodwill 1,611 Balance at September 30, 2023 $ 1,611 |
Note 7 - Accounts Payable and A
Note 7 - Accounts Payable and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable includes $122 and $127 due to related party Syzygy Licensing, LLC (“ Syzygy Accrued liabilities consist of the following: September 30, 2023 December 31, 2022 Patent and legal costs $ 61 $ 135 Accrued compensation 786 1,100 Warranty costs 109 125 Taxes and other 172 103 Total $ 1,128 $ 1,463 Accrued compensation includes $139 and $1,022 in employee bonuses and commissions payable at September 30, 2023 and December 31, 2022, respectively. Changes in our estimated product warranty costs were as follows: Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 125 $ 96 Warranty settlements (8 ) (63 ) Release of warranty provision (8 ) 55 Balance, end of period $ 109 $ 88 |
Note 8 - Warrants
Note 8 - Warrants | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Warrants [Text Block] | 8. WARRANTS On June 29, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain directors of the Company and certain accredited and institutional investors (collectively, the “Investors”), pursuant to which it agreed to sell to the Investors in a private placement (the “Offering”): (i) warrants to acquire up to an aggregate of 6,896,553 shares of Common Stock (the “Warrants”) and (ii) Series A Convertible Preferred Stock (Note 9). The warrants are exercisable six months after issuance at an exercise price of $1.45 per share, subject to adjustment, and expire five |
Note 9 - Stockholders' Equity
Note 9 - Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Equity [Text Block] | 9. STOCKHOLDERS' EQUITY The Company’s authorized capital consists of 150,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $0.0001 per share (“ Preferred Stock On July 3, 2023, the Company filed a Certificate of Designations (the “ Series A COD Series A Preferred Conversion Shares Conversion Price On June 29, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain directors of the Company and certain accredited and institutional investors (collectively, the “Investors”), pursuant to which it agreed to sell to the Investors in a private placement (the “Offering”): (i) the Warrants Note 8 and (ii) an aggregate of 10,000 shares of the Company’s newly designated Series A Convertible Preferred Stock, with par value $0.0001 per share and a stated value of $1,000 per share, initially convertible into up to 6,896,553 shares of the Company’s common stock, par value $0.0001 per share at a conversion price of $1.45 per share, subject to customary adjustments and price-based as defined in the Series A Certificate of Designations (the “Convertible Preferred Stocks”). The customary adjustments include: (i) additional amounts related to declared and unpaid Dividends and any other unpaid amounts due and payable and (ii) make-whole amounts related to the accrual of any additional dividends that would have accrued up to the date of conversion including the one-year anniversary from the date of conversion. Each preferred stock has a stated value of $1,000 per share, and holders thereof are entitled to cumulative dividends of 8% per annum on the stated value, payable quarterly in arrears, subject to adjustment upon the occurrence of certain events in accordance with the terms of the Convertible Preferred Stocks. The holders of Convertible Preferred Stocks have no voting rights on account of the Convertible Preferred Stocks, other than with respect to certain matters affecting the rights of the Convertible Preferred Stocks. $2,036 of the aggregate gross proceeds was allocated to the Convertible Preferred Stocks. In September 2023, the Company authorized and declared $193 dividend which was an accrued in accounts payable as of September 30, 2023. |
Note 10 - Share-based Compensat
Note 10 - Share-based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Share-Based Payment Arrangement [Text Block] | 10. SHARE-BASED COMPENSATION On March 31, 2017 , Plan , The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided. In April 2023 the Company recognized severance acceleration of $178 of share-based compensation expense resulting from the resignation of the Company’s Chief Executive Officer and Chief Operating Officer due to a reduction in force that resulted in changes in the composition of the executives of the Company. In January 2022 the Company recognized severance acceleration of $242 of share-based compensation expense resulting from the resignation of the Company’s Chief Executive Officer as part of a management transition plan. Stock Options The following table summarizes stock option activity for the nine months ended September 30, 2023: Weighted Average Options on Common Shares Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding January 1, 2023 5,491,399 $ 3.72 5.96 $ 92 Granted 60,000 $ 1.34 Exercised (250 ) $ 1.50 Forfeited, cancelled, expired (3,329,476 ) $ 5.54 Outstanding September 30, 2023 2,221,673 $ 3.56 7.65 $ 10 Exercisable September 30, 2023 1,033,504 $ 4.37 7.02 $ - At September 30, 2023, there were 1,529,275 service-based stock options outstanding, and 692,398 performance-based stock options outstanding, which performance-based stock options were granted in April 2022 to the Company’s former Chief Executive Officer and President, subject to future market capitalization targets. 1,207,698 of the 2,221,673 stock options granted included in the table above were granted in April 2022 outside the Plan as an employment inducement grant but are subject to the terms and conditions of the Plan. The Company uses the Black-Scholes option pricing model to determine the fair value of service-based options granted. The following table summarizes the assumptions used to compute the fair value of options granted to employees and non-employees: For the Nine Months Ended September 30, 2023 2022 Expected stock price volatility 49 % 49 % Risk-free interest rate 3.64 % 1.17 % Expected dividend yield 0 % 0 % Expected life of options 6.66 3.46 Weighted-average fair value of options granted $ 0.55 $ 1.25 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 Company records forfeitures as they are incurred. 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 The Company used the Monte Carlo Simulation Model to value at the grant date the aggregate of 1,614,230 market condition performance options granted in April 2022 to the Company’s former Chief Executive Officer and President. The assumptions used in the Monte Carlo Simulation were stock price on date of grant of $2.89, contract term of 10 years, expected volatility of 49% and risk-free interest rate of 2.9%. Vesting is based on sustained market capitalization of $250 million, $500 million and $1 billion and resulted in implied service periods ranging from approximately 4 to 7 years. At September 30, 2023, 921,832 of the 1,614,230 market condition performance options granted in April 2022 were cancelled. Stock option expense was $(169) and $399 for the three and nine months ended September 30, 2023, respectively, and $308 and $1,448 for the three and nine months ended September 30, 2022, respectively. Restricted Stock Units The Plan provides for the grant of restricted stock units (“ RSUs Service-Based RSU's Weighted Average Grant Date Fair Value Weighted Average Vesting Period (Years) Unvested at January 1, 2023 922,057 $ 2.88 2.11 Granted - service based 686,394 $ 1.33 Vested (862,993 ) $ 2.87 Forfeited and cancelled (298,381 ) $ 2.47 Unvested at September 30, 2023 447,077 $ 2.00 1.74 RSU expense was $ (33) Share-Based Compensation Expense The Company recorded share-based compensation for options and RSUs in its statements of operations for the relevant periods as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Selling, general and administrative $ (149 ) $ 700 $ 1,404 $ 2,180 Research and development (53 ) 172 244 448 Total share-based expense $ (202 ) $ 872 $ 1,648 $ 2,628 As of September 30, 2023, total estimated compensation cost of stock options granted and outstanding but not yet vested was $1,168 which is expected to be recognized over the weighted average period of 2.73 years. As of September 30, 2023, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $757 which is expected to be recognized over the weighted average period of 1.61 years. |
Note 11 - Defined Contribution
Note 11 - Defined Contribution Plan | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Defined Contribution Plan [Text Block] | 11. DEFINED CONTRIBUTION PLAN The Company has a defined contribution savings plan for all eligible U.S. employees established under the provisions of Section 401(k) of the Internal Revenue Code. This plan was formed on January 1, 2022. Eligible employees may contribute a percentage of their salary subject to certain limitations. The Company’s contributions for each of the three and nine months ended September 30, 2023, and year ended December 31, 2022, was $0. |
Note 12 - Commitments and Conti
Note 12 - Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | 12. COMMITMENTS AND CONTINGENCIES Related Party Technology License Agreement The Company is obligated to pay royalties and 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 stockholder/consultant Mr. Elwood Norris and stockholder/consultant Mr. James Barnes. 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 in royalties or until September 30, 2026 , Service Provider Agreement Pursuant to the Professional Services and Technology Acquisition Agreement (the “ Agreement Service Provider Technology, Services, and License Purchase Commitments At September 30, 2023, the Company was committed for approximately $1,690 for future component deliveries that are generally subject to modification or rescheduling in the normal course of business. Indemnifications and Guarantees Our officers and directors are indemnified as to personal liability as provided by the Delaware law and the Company’s articles and bylaws. The Company may also undertake indemnification obligations in the ordinary course of business related to its operations. The Company is unable to estimate with any reasonable accuracy the liability that may be incurred pursuant to any such indemnification obligations now or in the future. Because of the uncertainty surrounding these circumstances, the Company’s current or future indemnification obligations could range from immaterial to having a material adverse impact on its financial position and its ability to continue in the ordinary course of business. The Company has no liabilities recorded for such indemnities. Regulatory Agencies The Company is subject to oversight from regulatory agencies regarding firearms that arise in the ordinary course of its business. Litigation The Company is subject to litigation and other claims in the ordinary course of business. The Company records a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed and adjusted to include the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events pertaining to a particular matter. At September 30, 2023, we had no provision for liability under existing litigation. |
Note 13 - Related Party Transac
Note 13 - Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Related Party Transactions Disclosure [Text Block] | 13. RELATED PARTY TRANSACTIONS Commencing in October 2017 the Company began reimbursing Mr. Elwood Norris, a former officer, current 10% stockholder and consultant of the Company, $1.5 per month on a month-to-month basis for laboratory facility expense, for an aggregate of $4.5 and $13.5 during the three and nine months ended September 30, 2023, and 2022, respectively. Mr. Norris retired as the Company’s Chief Technology Officer effective September 30, 2021, and commencing July 1, 2021, was engaged as a month-to-month consultant. Mr. Norris was paid a monthly fee of $7.5 per month for aggregate consulting payments of $22.5 and $67.5 during each of the three and nine months ended September 30, 2023, and 2022. On June 29, 2023, we entered into the Purchase Agreement with certain investors, including Mr. Scot Cohen, the Executive Chairman of the Company, and V4, an entity over which Mr. Cohen exercises control and whose securities are beneficially owned by Mr. Cohen (the “ Affiliated Offering Affiliated Proceeds Stockholder Approval On August 9, 2023, the Company entered into the Purchase Agreement with Intrensic and the Sellers, including Kevin Mullins, a director of the Company and its Chief Executive Officer. Under the terms of the Purchase Agreement, the Company agreed to purchase, and Sellers, including Mr. Mullins, agreed to sell, 100% of the Membership Interests of Intrensic for the following consideration: (i) $554 in cash, subject to adjustment based upon the outstanding indebtedness of Intrensic and Intrensic’s working capital; and (ii) 1,250,000 shares of Common Stock of the Company. Kevin Mullins owns approximately 9.53% of the Membership Interests, and as such, has a financial interest in the sale of Intrensic to the Company. See Notes 1, 7 and 12 for additional information on related party transactions and obligations. |
Note 14 - Major Customers and R
Note 14 - Major Customers and Related Information | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Concentration Risk Disclosure [Text Block] | 14. MAJOR CUSTOMERS AND RELATED INFORMATION For the three months ended September 30, 2023, revenue from two one For the nine months ended September 30, 2023, revenue from one one At September 30, 2023, accounts receivable from one one The following table summarizes revenue by geographic region. Revenue is attributed to countries based on customer’s delivery location: For the Three Months For the Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 Americas $ 1,347 $ 1,478 $ 3,225 $ 3,484 Europe, Middle East and Africa 2,284 220 2,320 435 Asia Pacific - 3 (1 ) 545 Total revenues $ 3,631 $ 1,701 $ 5,544 $ 4,464 |
Note 15 - Business Combination
Note 15 - Business Combination | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Business Combination Disclosure [Text Block] | 15. BUSINESS COMBINATION The Company entered into the Purchase Agreement with Intrensic and the Sellers with an effective date of August 9, 2023 (the (“Closing”). The Closing was consummated on August 16, 2023. Under the terms of the Purchase Agreement, the Company agreed to purchase, and Sellers agreed to sell the Membership Interests for the following consideration at Closing: (i) $554 in cash, subject to adjustment based upon the outstanding indebtedness of Intrensic and Intrensic’s working capital as of the Closing; and (ii) 1,250,000 shares of Common Stock of the Company valued at approximately $1,938. The Company assessed the historical financial information of Intrensic to determine if it would materially impact Wrap's historical financial statements for the purposes of disclosing proforma financial information. The Company determined that in the current or prior reporting periods the acquired business contributed immaterially to the Company’s financial statements . Therefore, a pro forma disclosure of the Company as if the business combination had occurred is not warranted under ASC 805. The preliminary purchase price is not finalized. The Company is still evaluating the impact of the income tax provision related to the acquisition and assessing the assumed contracts related to deferred revenue. The table below sets forth the preliminary allocation of the fair value of Intrensic’s net assets acquired and the corresponding line item in the Company’s consolidated balance sheet at the date of acquisition. Cash and cash equivalents $ 3 Accounts receivable 90 Inventory 61 Net property, plant and equipment - Technology 490 Customer relationships (included in Intangibles) 160 Trademarks and trade names (included in Intangibles) 80 Goodwill 1,611 Total assets $ 2,495 Liabilities 3 Equity 2,492 Total liabilities and equity $ 2,495 Purchase Price: Cash 554 Equity 1,938 Liabilities assumed 3 Total $ 2,495 Legal fees incurred in connection with the transaction totaled approximately $38 and have been expensed as incurred. |
Note 16 - Subsequent Events
Note 16 - Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | 16. SUBSEQUENT EVENTS Appointment of Executive Chairman On October 12, 2023, the Board of Directors (the “ Board Effective Date In connection with Mr. Cohen’s appointment as Executive Chairman, the Company and Mr. Cohen entered into an agreement on October 12, 2023 (the “ Agreement Base Salary The Agreement further provides for: ● A grant of that number of restricted shares (“ RSAs Closing Price Grant Date ● A nonqualified option to purchase up to that number of shares of Common Stock with a Grant Date fair value equal to $675,000 divided by the Closing Price (the “ Option ● A nonqualified option to purchase up to 2.25% of the number of shares of the Company’s Common Stock that are issued and outstanding (determined on a fully-diluted basis, including, without limitation, any shares issuable upon the conversion or exercise of any outstanding warrants or preferred stock) as of the Effective Date (the “ Performance Option The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by the full text of the Agreement, a copy of which is filed as Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on October 16, 2023. Resignations of Michael Parris and Wayne Walker Effective October 11, 2023 (the “ Mr Parris Resignation Date Mr. Walker Resignation Date Appointment of Rajiv Srinivasan and Timothy Szymanski On October 12, 2023, Rajiv Srinivasan and Timothy Szymanski were appointed to serve as members of the Board to fill the vacancies created as a result of the resignations of Messrs. Parris and Walker, until the Company’s next annual meeting of stockholders or until their respective successors are duly elected and qualified. Miami Office Lease The Company has entered into an 89-month lease for 4,487 square feet of office space in Miami, Florida, starting from November 1, 2023. This leasing arrangement aims to enhance the Company's footprint on the East Coast and in international markets. In accordance with the Subsequent Events Topic of the FASB ASC 855, we have evaluated subsequent events through the filing date and determined that no additional subsequent events occurred that were reasonably expected to impact the consolidated condensed financial statements presented herein. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Organization and Business Description [Policy Text Block] | Organization and Business Description Wrap Technologies, Inc., a Delaware corporation (the “ Company we us our Common Stock Nasdaq |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“ SEC U.S. GAAP Annual Report Where necessary, the prior year’s information has been reclassified to conform to the current year presentation. |
Consolidation, Policy [Policy Text Block] | Principles of Consolidation The Company has two VR |
Business Combinations Policy [Policy Text Block] | Business Combinations The Company accounts for its business combinations under the provisions of Accounting Standards Codification ("ASC") Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of the acquired intangible assets was determined using a method which reflects the present value of the operating cash flows generated by this asset after taking into account the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. Certain adjustments to the assessed fair values of the assets and liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill Goodwill represents the difference, if any, between the aggregate consideration paid for an acquisition and the fair values of the underlying net assets and liabilities assumed from an acquired business. Goodwill is not amortized, but instead is tested for impairment. The Company tests goodwill for impairment on an annual basis during the fourth quarter, or more frequently if conditions indicate that such impairment could exist. The Company evaluates qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and whether it is necessary to perform goodwill impairment process. |
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | Definite-lived Intangible Assets Definite-lived intangible assets represent certain trade names, patents, licenses, software, acquired technology and customer relationships. Definite-lived intangible assets are recorded at cost less any accumulated amortization and accumulated impairment losses, if any. Definite-lived intangible assets acquired through the business combination are measured at fair value at the acquisition date. The Company amortizes these acquired definite-lived intangibles assets with a finite life on a straight-line basis, over 6 years for technology; 7 years for customer relationships; and 8 years for trademarks and trade names. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 expense 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 revenue and expense during the reporting period. Actual results could materially differ from those estimates. |
Stockholders' Equity, Policy [Policy Text Block] | Warrants The Company accounts for warrants as liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for the warrants issued in accordance with the guidance contained in ASC 815-40-15-7C, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations. Convertible Preferred Stocks The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 480 and ASC 815 to determine if those instruments or embedded components of those instruments qualify as derivatives and are subject to bifurcation accounting. The Company determines that the economic characteristics and risks of the embedded derivative instrument are clearly and closely related to the economic characteristics and risks of the host contract. The convertible instruments are accounted for as a single hybrid instrument. Additionally, the convertible instruments do not have any redemption features that would preclude permanent equity classification in accordance with the guidance contained in ASC 480-10-S99. The Company issued the Warrants, which are classified as liabilities and measured at fair value on a recurring basis, and Convertible Preferred Stocks in one transaction. The issuance proceeds were allocated by using the with-and-without method. Under this method, The Company first allocated the issuance proceeds to the Warrants based on their initial fair value measurement, and then allocated the remaining proceeds to the Convertible Preferred Stocks. |
Earnings Per Share, Policy [Policy Text Block] | Loss per Share Basic loss per share (EPS) is computed by dividing net loss, less any dividends, accretion or decretion, redemption or induced conversion, if any, on our Series A Convertible Preferred Stock, by the weighted average number of shares outstanding during the reported period. In computing diluted EPS, we adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A Convertible Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A Convertible Preferred Stock to its redemption price, or recorded upon a redemption or induced conversion, if any. We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of the Series A Convertible Preferred Stock, restricted stock units, and stock options. Stock options and restricted stock units exercisable or issuable for a total of 2,668,750 and 6,396,277 shares of Common Stock were outstanding at September 30, 2023, and 2022, respectively. 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. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Issued Accounting Guidance The Company has reviewed 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. In July 2023, the SEC adopted the final rule under SEC Release No. 33-11216, Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, requiring disclosure of material cybersecurity incidents on Form 8-K and periodic disclosure of a registrant’s cybersecurity risk management, strategy and governance in annual reports. Regulation S-K Item 6 disclosure requirements under this rule will be effective for us in the fourth quarter of 2023. Incident disclosure requirements in Form 8-K will be effective for us on June 15, 2024. We are still evaluating for any impact on our financial statement disclosures from the adoption of this final rule. |
Note 2 - Revenue and Product _2
Note 2 - Revenue and Product Costs (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] | Customer Deferred Deposits Revenue Balance at January 1, 2023 $ - $ 333 Additions, net 2 229 Transfer to revenue - (197 ) Balance at September 30, 2023 $ 2 $ 365 Current portion $ 2 $ 189 Long-term portion $ - $ 176 |
Note 3 - Financial Instruments
Note 3 - Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block] | As of September 30, 2023 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: Certificate of Deposits 10,000 - - 10,000 Total Financial Assets $ 10,000 $ - $ - $ 10,000 As of December 31, 2022 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: U.S. Treasury securities in short-term investments 9,849 100 - 9,949 Certificate of Deposits 4,000 - - 4,000 Total Financial Assets $ 13,849 $ 100 $ - $ 13,949 |
Fair Value, Liabilities Measured on Recurring Basis [Table Text Block] | Level 3: September 30, 2023 December 31, 2022 Fair value at inception or the beginning of the period $ 7,717 - Change in fair value of warrant liabilities 117 - Fair value as of September 30, 2023 $ 7,834 - |
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] | As of September 30, 2023 As of December 31, 2022 Expected stock price volatility 100 % - % Risk-free interest rate 4.49 % - % Dividends yield 0 % - % Expected life of warrants 4.75 - Exercise price $ 1.45 $ - |
Note 4 - Inventories (Tables)
Note 4 - Inventories (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | September 30, 2023 December 31, 2022 Finished goods $ 2,921 $ 2,293 Work in process - - Raw materials 2,895 1,682 Inventories - net $ 5,816 $ 3,975 |
Note 5 - Property and Equipme_2
Note 5 - Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Property, Plant and Equipment [Table Text Block] | September 30, 2023 December 31, 2022 Production and lab equipment $ 536 $ 513 Tooling 505 448 Computer equipment 587 531 Furniture, fixtures and improvements 190 181 1,818 1,673 Accumulated depreciation (1,285 ) (915 ) Property and equipment, net $ 533 $ 758 |
Note 6 - Intangible Assets an_2
Note 6 - Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | September 30, 2023 December 31, 2022 Amortizable intangible assets: Patents $ 841 $ 575 Trademarks 241 150 Purchased software and technology 2,452 1,962 Customer Relationships 160 - 3,694 2,687 Accumulated amortization (778 ) (462 ) Total amortizable 2,916 2,225 Indefinite life assets (non-amortizable) 403 344 Total intangible assets, net $ 3,319 $ 2,569 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | 2023 (3 months) $ 164 2024 655 2025 650 2026 427 2027 180 Thereafter 840 Total estimated amortization expense $ 2,916 |
Schedule of Goodwill [Table Text Block] | Balance at January 1, 2023 $ - Acquired goodwill 1,611 Balance at September 30, 2023 $ 1,611 |
Note 7 - Accounts Payable and_2
Note 7 - Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Schedule of Accrued Liabilities [Table Text Block] | September 30, 2023 December 31, 2022 Patent and legal costs $ 61 $ 135 Accrued compensation 786 1,100 Warranty costs 109 125 Taxes and other 172 103 Total $ 1,128 $ 1,463 |
Schedule of Product Warranty Liability [Table Text Block] | Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 125 $ 96 Warranty settlements (8 ) (63 ) Release of warranty provision (8 ) 55 Balance, end of period $ 109 $ 88 |
Note 10 - Share-based Compens_2
Note 10 - Share-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Share-Based Payment Arrangement, Option, Activity [Table Text Block] | Weighted Average Options on Common Shares Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding January 1, 2023 5,491,399 $ 3.72 5.96 $ 92 Granted 60,000 $ 1.34 Exercised (250 ) $ 1.50 Forfeited, cancelled, expired (3,329,476 ) $ 5.54 Outstanding September 30, 2023 2,221,673 $ 3.56 7.65 $ 10 Exercisable September 30, 2023 1,033,504 $ 4.37 7.02 $ - |
Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | For the Nine Months Ended September 30, 2023 2022 Expected stock price volatility 49 % 49 % Risk-free interest rate 3.64 % 1.17 % Expected dividend yield 0 % 0 % Expected life of options 6.66 3.46 Weighted-average fair value of options granted $ 0.55 $ 1.25 |
Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] | Service-Based RSU's Weighted Average Grant Date Fair Value Weighted Average Vesting Period (Years) Unvested at January 1, 2023 922,057 $ 2.88 2.11 Granted - service based 686,394 $ 1.33 Vested (862,993 ) $ 2.87 Forfeited and cancelled (298,381 ) $ 2.47 Unvested at September 30, 2023 447,077 $ 2.00 1.74 |
Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award [Table Text Block] | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Selling, general and administrative $ (149 ) $ 700 $ 1,404 $ 2,180 Research and development (53 ) 172 244 448 Total share-based expense $ (202 ) $ 872 $ 1,648 $ 2,628 |
Note 14 - Major Customers and_2
Note 14 - Major Customers and Related Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Disaggregation of Revenue [Table Text Block] | For the Three Months For the Nine Months Ended September 30, Ended September 30, 2023 2022 2023 2022 Americas $ 1,347 $ 1,478 $ 3,225 $ 3,484 Europe, Middle East and Africa 2,284 220 2,320 435 Asia Pacific - 3 (1 ) 545 Total revenues $ 3,631 $ 1,701 $ 5,544 $ 4,464 |
Note 15 - Business Combination
Note 15 - Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Notes Tables | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | Cash and cash equivalents $ 3 Accounts receivable 90 Inventory 61 Net property, plant and equipment - Technology 490 Customer relationships (included in Intangibles) 160 Trademarks and trade names (included in Intangibles) 80 Goodwill 1,611 Total assets $ 2,495 Liabilities 3 Equity 2,492 Total liabilities and equity $ 2,495 Purchase Price: Cash 554 Equity 1,938 Liabilities assumed 3 Total $ 2,495 |
Note 1 - Organization, Summar_2
Note 1 - Organization, Summary of Significant Accounting Policies and Recent Developments (Details Textual) | 9 Months Ended | ||||
Aug. 09, 2023 USD ($) shares | Sep. 30, 2023 $ / shares shares | Sep. 30, 2022 shares | Jul. 29, 2023 $ / shares | Dec. 31, 2022 $ / shares | |
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Number of Wholly-owned Subsidiaries | 1 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,668,750 | 6,396,277 | |||
Intrensic, LLC [Member] | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 100% | ||||
Payments to Acquire Businesses, Gross | $ | $ 553,588 | ||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 1,250,000 |
Note 2 - Revenue and Product _3
Note 2 - Revenue and Product Costs (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Contract with Customer, Liability | $ 365 | $ 333 |
Virtual Reality Training [Member] | ||
Contract with Customer, Liability | 199 | 198 |
Training [Member] | ||
Contract with Customer, Liability | 6 | 11 |
Extended Product Warranties [Member] | ||
Contract with Customer, Liability | $ 160 | $ 124 |
Note 2 - Revenue and Product _4
Note 2 - Revenue and Product Costs - Contract Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Balance | $ 333 | |
Balance | 365 | |
Current portion | 189 | $ 166 |
Long-term portion | 176 | $ 167 |
Customer Deposits [Member] | ||
Balance | 0 | |
Additions, net | 2 | |
Transfer to revenue | 0 | |
Balance | 2 | |
Current portion | 2 | |
Long-term portion | 0 | |
Deferred Revenue [Member] | ||
Balance | 333 | |
Additions, net | 229 | |
Transfer to revenue | (197) | |
Balance | 365 | |
Current portion | 189 | |
Long-term portion | $ 176 |
Note 3 - Financial Instrument_2
Note 3 - Financial Instruments (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
OCI, Debt Securities, Available-for-Sale, Unrealized Holding Gain (Loss), before Adjustment, after Tax | $ 0 | $ 73 | $ 0 | $ 62 |
Note 3 - Financial Instrument_3
Note 3 - Financial Instruments - Instruments by Significant Investment Category (Details) - Fair Value, Inputs, Level 1 [Member] - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Adjusted Cost | $ 10,000 | $ 13,849 |
Unrealized Gains | 0 | 100 |
Unrealized Losses | 0 | 0 |
Market Value | 10,000 | 13,949 |
US Treasury Securities in Short-term Investments [Member] | ||
Adjusted Cost | 9,849 | |
Unrealized Gains | 100 | |
Unrealized Losses | 0 | |
Market Value | 9,949 | |
Certificates of Deposit [Member] | ||
Adjusted Cost | 10,000 | 4,000 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Market Value | $ 10,000 | $ 4,000 |
Note 3 - Financial Instrument_4
Note 3 - Financial Instruments - (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Change in fair value of warrant liabilities | $ 117 | $ 0 | $ 117 | $ 0 | |
Fair Value, Inputs, Level 3 [Member] | |||||
Fair value | 7,717 | 0 | $ 0 | $ 0 | |
Change in fair value of warrant liabilities | 117 | 0 | |||
Fair value | $ 7,834 | $ 7,834 | $ 0 |
Note 3 - Financial Instrument_5
Note 3 - Financial Instruments - Fair Value Assumptions (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Measurement Input, Price Volatility [Member] | ||
Warrants, measurement input | 1 | 0 |
Measurement Input, Risk Free Interest Rate [Member] | ||
Warrants, measurement input | 0.0449 | 0 |
Measurement Input, Expected Dividend Rate [Member] | ||
Warrants, measurement input | 0 | 0 |
Measurement Input, Expected Term [Member] | ||
Warrants, measurement input | 4.75 | 0 |
Measurement Input, Exercise Price [Member] | ||
Warrants, measurement input | 1.45 | 0 |
Note 4 - Inventories - Summary
Note 4 - Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finished goods | $ 2,921 | $ 2,293 |
Work in process | 0 | 0 |
Raw materials | 2,895 | 1,682 |
Inventories - net | $ 5,816 | $ 3,975 |
Note 5 - Property and Equipme_3
Note 5 - Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Depreciation | $ 122 | $ 121 | $ 358 | $ 359 |
Note 5 - Property and Equipme_4
Note 5 - Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property and equipment, gross | $ 1,818 | $ 1,673 |
Accumulated depreciation | (1,285) | (915) |
Property and equipment, net | 533 | 758 |
Production and Lab Equipment [Member] | ||
Property and equipment, gross | 536 | 513 |
Tooling [Member] | ||
Property and equipment, gross | 505 | 448 |
Computer Equipment [Member] | ||
Property and equipment, gross | 587 | 531 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | $ 190 | $ 181 |
Note 6 - Intangible Assets an_3
Note 6 - Intangible Assets and Goodwill (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Amortization of Intangible Assets | $ 150 | $ 72 | $ 317 | $ 215 |
Note 6 - Intangible Assets an_4
Note 6 - Intangible Assets and Goodwill - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Amortizable intangible assets, gross | $ 3,694 | $ 2,687 |
Accumulated amortization | (778) | (462) |
Total amortizable | 2,916 | 2,225 |
Indefinite life assets (non-amortizable) | 403 | 344 |
Total intangible assets, net | 3,319 | 2,569 |
Patents [Member] | ||
Amortizable intangible assets, gross | 841 | 575 |
Trademarks [Member] | ||
Amortizable intangible assets, gross | 241 | 150 |
Computer Software, Intangible Asset [Member] | ||
Amortizable intangible assets, gross | $ 2,452 | $ 1,962 |
Note 6 - Intangible Assets an_5
Note 6 - Intangible Assets and Goodwill - Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
2023 (9 months) | $ 164 | |
2024 | 655 | |
2025 | 650 | |
2026 | 427 | |
2027 | 180 | |
Thereafter | 840 | |
Total amortizable | $ 2,916 | $ 2,225 |
Note 6 - Intangible Assets an_6
Note 6 - Intangible Assets and Goodwill - Schedule of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Balance | $ 0 |
Acquired goodwill | 1,611 |
Balance | $ 1,611 |
Note 7 - Accounts Payable and_3
Note 7 - Accounts Payable and Accrued Liabilities (Details Textual) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Former CEO Payable [Member] | ||
Employee-related Liabilities | $ 139 | |
Commissions Payable [Member] | ||
Employee-related Liabilities | $ 1,022 | |
Syzygy Licensing LLC [Member] | ||
Accounts Payable | $ 122 | $ 127 |
Note 7 - Accounts Payable and_4
Note 7 - Accounts Payable and Accrued Expenses - Summary of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Patent and legal costs | $ 61 | $ 135 |
Accrued compensation | 786 | 1,100 |
Warranty costs | 109 | 125 |
Taxes and other | 172 | 103 |
Total | $ 1,128 | $ 1,463 |
Note 7 - Accounts Payable and_5
Note 7 - Accounts Payable and Accrued Liabilities - Changes in Product Warranty Costs (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Balance | $ 125 | $ 96 |
Warranty settlements | (8) | (63) |
Warranty provision | (8) | 55 |
Balance | $ 109 | $ 88 |
Note 8 - Warrants (Details Text
Note 8 - Warrants (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Jul. 03, 2023 | Jun. 29, 2023 |
Registered Direct Offering [Member] | ||
Proceeds from Issuance or Sale of Equity | $ 10,000 | |
Proceeds from Issuance of Warrants | $ 7,717 | |
Warrants Issued in Registered Direct Offering [Member] | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 6,896,553 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |
Warrants and Rights Outstanding, Term | 5 years |
Note 9 - Stockholders' Equity (
Note 9 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | Jul. 29, 2023 | Jul. 03, 2023 | Sep. 30, 2023 | Dec. 31, 2022 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 | ||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | 0.0001 | $ 0.0001 | |
Proceeds from Issuance of Convertible Preferred Stock | $ 2,036 | |||
Dividends Payable, Amount Per Share (in dollars per share) | $ 193 | |||
Series A Preferred Stock [Member] | Registered Direct Offering [Member] | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | ||
Stock Issued During Period, Shares, New Issues | 10,000 | 10,000 | ||
Preferred Stock, Convertible, Conversion Price | $ 1.45 | $ 1.45 | ||
Preferred Stock, Dividend Rate, Percentage | 8% | 8% | ||
Preferred Stock, Stated Value Per Share | $ 1,000 | |||
Preferred Stock, Convertible, Shares Issuable | 6,896,553 |
Note 10 - Share-based Compens_3
Note 10 - Share-based Compensation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
Jun. 30, 2022 | Apr. 30, 2022 | Jan. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | May 31, 2019 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Mar. 31, 2017 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 2,221,673 | 2,221,673 | 5,491,399 | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 60,000 | |||||||||||
Share-Based Payment Arrangement, Expense | $ (202) | $ 872 | $ 1,648 | $ 2,628 | ||||||||
Performance Shares [Member] | Chief Executive Officer and President [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 1,207,698 | |||||||||||
Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0% | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 6 years 7 months 28 days | 3 years 5 months 15 days | ||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 49% | 49% | ||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 3.64% | 1.17% | ||||||||||
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | 1,168 | $ 1,168 | ||||||||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 8 months 23 days | |||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||
Share-Based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 757 | $ 757 | ||||||||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 1 year 7 months 9 days | |||||||||||
The 2017 Stock Incentive Plan [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 9,000,000 | 2,000,000 | ||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized | 1,500,000 | 1,500,000 | 1,900,000 | 2,100,000 | ||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 4,438,539 | 4,438,539 | ||||||||||
Share-Based Payment Arrangement, Accelerated Cost | $ 178 | $ 242 | ||||||||||
The 2017 Stock Incentive Plan [Member] | Service-based Options [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 1,529,275 | 1,529,275 | ||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number | 692,398 | 692,398 | ||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer and President [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross | 1,614,230 | 1,614,230 | ||||||||||
Share Price | $ 2.89 | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 10 years | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 49% | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.90% | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | 921,832 | |||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer and President [Member] | Minimum [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Requisite Service Period | 4 years | |||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer and President [Member] | Maximum [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Requisite Service Period | 7 years | |||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer and President [Member] | Share-Based Payment Arrangement, Tranche One [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vesting, Sustained Market Capitalization | $ 250,000 | |||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer and President [Member] | Share-Based Payment Arrangement, Tranche Two [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vesting, Sustained Market Capitalization | 500,000 | |||||||||||
The 2017 Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer and President [Member] | Share-Based Payment Arrangement, Tranche Three [Member] | ||||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vesting, Sustained Market Capitalization | $ 1,000,000 | |||||||||||
The 2017 Stock Incentive Plan [Member] | Share-Based Payment Arrangement, Option [Member] | ||||||||||||
Share-Based Payment Arrangement, Expense | $ 169 | 308 | $ 399 | $ 1,448 | ||||||||
The 2017 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||||||||||
Share-Based Payment Arrangement, Expense | $ (33) | $ 564 | $ 1,249 | $ 1,180 |
Note 10 - Share-based Compens_4
Note 10 - Share-based Compensation - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Options on Common Shares, Outstanding (in shares) | shares | 5,491,399 | |
Outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 3.72 | |
Outstanding, remaining contractual term (Year) | 7 years 7 months 24 days | 5 years 11 months 15 days |
Outstanding, aggregate intrinsic value | $ | $ 10 | $ 92 |
Options on Common Shares, Granted (in shares) | shares | 60,000 | |
Granted, weighted average exercise price (in dollars per share) | $ / shares | $ 1.34 | |
Options on Common Shares, Exercised (in shares) | shares | (250) | |
Exercised, weighted average exercise price (in dollars per share) | $ / shares | $ 1.50 | |
Options on Common Shares, Forfeited, cancelled, expired (in shares) | shares | (3,329,476) | |
Forfeited, cancelled, expired, weighted average exercise price (in dollars per share) | $ / shares | $ 5.54 | |
Options on Common Shares, Outstanding (in shares) | shares | 2,221,673 | 5,491,399 |
Outstanding, weighted average exercise price (in dollars per share) | $ / shares | $ 3.56 | $ 3.72 |
Options on Common Shares, Exercisable (in shares) | shares | 1,033,504 | |
Exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 4.37 | |
Exercisable, remaining contractual term (Year) | 7 years 7 days | |
Exercisable, aggregate intrinsic value | $ | $ 0 |
Note 10 - Share-based Compens_5
Note 10 - Share-based Compensation - Summary of Stock Option Valuation Assumptions (Details) - Share-Based Payment Arrangement, Option [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Expected stock price volatility | 49% | 49% |
Risk-free interest rate | 3.64% | 1.17% |
Expected life of options (Year) | 6 years 7 months 28 days | 3 years 5 months 15 days |
Weighted-average fair value of options granted (in dollars per share) | $ 0.55 | $ 1.25 |
Note 10 - Share-based Compens_6
Note 10 - Share-based Compensation - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Awards other than options, unvested, beginning balance (in shares) | 922,057 | |
Awards other than options, unvested, weighted average grant date fair value, beginning balance (in dollars per share) | $ 2.88 | |
Weighted average vesting period (Year) | 1 year 8 months 26 days | 2 years 1 month 9 days |
Awards other than options, Granted (in shares) | 686,394 | |
Awards other than options, granted, weighted average grant date fair value (in dollars per share) | $ 1.33 | |
Awards other than options, Vested (in shares) | (862,993) | |
Awards other than options, vested, weighted average grant date fair value (in dollars per share) | $ 2.87 | |
Awards other than options, Forfeited and cancelled (in shares) | (298,381) | |
Awards other than options, forfeited and cancelled, weighted average grant date fair value (in dollars per share) | $ 2.47 | |
Awards other than options, unvested, beginning balance (in shares) | 447,077 | 922,057 |
Awards other than options, unvested, weighted average grant date fair value, beginning balance (in dollars per share) | $ 2 | $ 2.88 |
Note 10 - Share-based Compens_7
Note 10 - Share-based Compensation - Allocation of Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-Based Payment Arrangement, Expense | $ (202) | $ 872 | $ 1,648 | $ 2,628 |
Selling, General and Administrative Expenses [Member] | ||||
Share-Based Payment Arrangement, Expense | (149) | 700 | 1,404 | 2,180 |
Research and Development Expense [Member] | ||||
Share-Based Payment Arrangement, Expense | $ (53) | $ 172 | $ 244 | $ 448 |
Note 11 - Defined Contributio_2
Note 11 - Defined Contribution Plan (Details Textual) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | |
Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 0 | $ 0 | $ 0 |
Note 12 - Commitments and Con_2
Note 12 - Commitments and Contingencies (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Nov. 22, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2016 | |
Contractual Obligation | $ 1,690,000 | $ 1,690,000 | ||||
Professional Services and Technology Acquisition Agreement [Member] | ||||||
Payments to Acquire Businesses, Gross | $ 700,000 | |||||
Related Party Technology License Agreement [Member] | Syzygy Licensing LLC [Member] | ||||||
Royalty Payments, Percentage of Product Revenue | 4% | |||||
Maximum Royalties to Be Paid Under Agreement | $ 1,000 | |||||
Royalty Expense | 122,000 | $ 61,000 | 185,000 | $ 147,000 | ||
Royalty Guarantees, Commitments, Amount | $ 95,000 | $ 95,000 |
Note 13 - Related Party Trans_2
Note 13 - Related Party Transactions (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Aug. 09, 2023 | Jun. 29, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transaction, Amounts of Transaction | $ 4,500 | $ 13,500 | |||
Intrensic, LLC [Member] | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 100% | ||||
Payments to Acquire Businesses, Gross | $ 553,588 | ||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 1,250,000 | ||||
Mr. Elwood Norris [Member] | |||||
Reimbursement of Expenses to Related Party, Monthly Amount | 1,500 | ||||
Consulting Fees to Related Party, Monthly Amount | 7,500 | ||||
Mr. Elwood Norris [Member] | Consultant [Member] | |||||
Related Party Transaction, Amounts of Transaction | $ 22,500 | $ 67,500 | $ 67,500 | ||
Executive Chairman [Member] | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,068,966 | ||||
Proceeds from Issuance or Sale of Equity | $ 3,000,000 | ||||
Executive Chairman [Member] | Series A Preferred Stock [Member] | |||||
Stock Issued During Period, Shares, New Issues | 3,000 |
Note 14 - Major Customers and_3
Note 14 - Major Customers and Related Information (Details Textual) - Customer Concentration Risk [Member] | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue Benchmark [Member] | Distributors [Member] | |||||
Number of Major Customers | 2 | 3 | 3 | 1 | |
Revenue Benchmark [Member] | Distributor One [Member] | |||||
Concentration Risk, Percentage | 62% | 59% | 41% | 39% | |
Revenue Benchmark [Member] | Distributor Two [Member] | |||||
Concentration Risk, Percentage | 12% | ||||
Accounts Receivable [Member] | Distributors [Member] | |||||
Number of Major Customers | 3 | 1 | |||
Accounts Receivable [Member] | Distributor One [Member] | |||||
Concentration Risk, Percentage | 51% | 70% |
Note 14 - Major Customers and_4
Note 14 - Major Customers and Related Information - Disaggregation of Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | $ 3,631 | $ 1,701 | $ 5,544 | $ 4,464 |
Americas [Member] | ||||
Revenues | 1,347 | 1,478 | 3,225 | 3,484 |
Europe, Middle East and Africa [Member] | ||||
Revenues | 2,284 | 220 | 2,320 | 435 |
Asia Pacific [Member] | ||||
Revenues | $ 0 | $ 3 | $ (1) | $ 545 |
Note 15 - Business Combinatio_2
Note 15 - Business Combination (Details Textual) | Aug. 09, 2023 USD ($) |
Intrensic, LLC [Member] | |
Business Acquisition, Transaction Costs | $ 38 |
Note 15 - Business Combinatio_3
Note 15 - Business Combination - Schedule of Business Combination (Details) - USD ($) | Aug. 09, 2023 | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill | $ 1,611,000 | $ 0 | |
Intrensic, LLC [Member] | |||
Cash and cash equivalents | $ 3,000 | ||
Accounts receivable | 90,000 | ||
Inventory | 61,000 | ||
Net property, plant and equipment | 0 | ||
Goodwill | 1,611,000 | ||
Total assets | 2,495,000 | ||
Liabilities | 3,000 | ||
Equity | 2,492,000 | ||
Total liabilities and equity | 2,495,000 | ||
Payments to Acquire Businesses, Gross | 553,588 | ||
Equity | 1,938,000 | ||
Liabilities assumed | 3,000 | ||
Total | 2,495,000 | ||
Intrensic, LLC [Member] | Technology-Based Intangible Assets [Member] | |||
Intangible assets | 490,000 | ||
Intrensic, LLC [Member] | Customer Relationships [Member] | |||
Intangible assets | 160,000 | ||
Intrensic, LLC [Member] | Trademarks and Trade Names [Member] | |||
Intangible assets | $ 80,000 |
Note 16 - Subsequent Events (De
Note 16 - Subsequent Events (Details Textual) - Subsequent Event [Member] | Oct. 12, 2023 USD ($) | Nov. 01, 2023 ft² |
Office Space in Miami, Florida [Member] | ||
Lessee, Operating Lease, Term of Contract (Month) | 89 months | |
Area of Real Estate Property | ft² | 4,487 | |
Executive Chairman [Member] | ||
Salary and Wage, Officer, Excluding Cost of Good and Service Sold | $ 200,000 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Grant Date Fair Value | $ 675,000 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Expiration Period | 10 years | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Percentage of Outstanding Stock Maximum | 2.25% | |
Executive Chairman [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Granted | $ 675,000 |