0001654954-21-004801 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2021	Apr. 28, 2021
Cover [Abstract]
Entity Registrant Name	WRAP TECHNOLOGIES, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Amendment Flag	false
Entity Central Index Key	0001702924
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		37,948,413
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation, State or Country Code	DE
Entity File Number	000-55838
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1

Condensed Balance Sheets - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 2,000	$ 16,647
Short-term investments	35,000	24,994
Accounts receivable, net	2,212	1,871
Inventories, net	3,580	2,655
Prepaid expenses and other current assets	769	760
Total current assets	43,561	46,927
Property and equipment, net	463	357
Operating lease right-of-use asset, net	114	139
Intangible assets, net	1,404	1,397
Other assets, net	8	13
Total assets	45,550	48,833
Current Liabilities:
Accounts payable	2,400	1,232
Accrued liabilities	593	721
Customer deposits	5	2
Deferred revenue	172	16
Operating lease liability - short term	91	94
Note payable to bank - short term	175	275
Total current liabilities	3,436	2,340
Operating lease liability - long term	32	56
Business acquisition liability - long term	23	23
Total long-term liabilities	55	79
Total liabilities	3,491	2,419
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock - 5,000,000 authorized; par value $0.0001 per share; none issued and outstanding	0	0
Common stock - 150,000,000 authorized; par value $0.0001 per share; 37,711,698 and 37,554,162 shares issued and outstanding each period, respectively	4	4
Additional paid-in capital	72,777	71,705
Accumulated deficit	(30,739)	(25,310)
Accumulated other comprehensive gain	17	15
Total stockholders' equity	42,059	46,414
Total liabilities and stockholders' equity	$ 45,550	$ 48,833

Condensed Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, authorized	150,000,000	150,000,000
Common stock, par value	$ .0001	$ .0001
Common stock, issued	37,711,698	37,554,162
Common stock, outstanding	37,711,698	37,554,162

Condensed Statements of Operations - USD ($)	3 Months Ended
Condensed Statements of Operations - USD ($)	Mar. 31, 2021	Mar. 31, 2020
Revenues:
Total revenues	$ 1,542	$ 690
Cost of revenues	937	406
Gross profit	605	284
Operating expenses:
Selling, general and administrative	4,978	2,140
Research and development	1,065	534
Total operating expenses	6,043	2,674
Loss from operations	(5,438)	(2,390)
Other income (expense):
Interest income	2	44
Other	7	0
Other income (expense)	9	44
Net loss	$ (5,429)	$ (2,346)
Net loss per basic common share	$ (0.14)	$ (0.08)
Weighted average common shares used to compute net loss per basic common share	37,618,629	29,976,825
Comprehensive loss:
Net loss	$ (5,429)	$ (2,346)
Net unrealized gain on short-term investments	2	0
Comprehensive loss	(5,427)	(2,346)
Product Sales
Revenues:
Total revenues	1,427	675
Other Revenue
Revenues:
Total revenues	$ 115	$ 15

Condensed Statements of Stockholders Equity - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Gain	Total
Beginning balance, shares at Dec. 31, 2019	29,829,916
Beginning balance, amount at Dec. 31, 2019	$ 3	$ 31,923	$ (12,730)	$ 0	$ 19,196
Common shares issued upon exercise of warrants at $3.00 per share, shares	11,783
Common shares issued upon exercise of warrants at $3.00 per share, amount	$ 0	35			35
Common shares issued upon exercise of warrants at $5.00 per share, shares	119,400
Common shares issued upon exercise of warrants at $5.00 per share, amount	$ 0	597			597
Common shares issued upon exercise of stock options, shares	112,625
Common shares issued upon exercise of stock options, amount	$ 0	169			169
Common shares issued for services, amount					0
Share-based compensation expense		467			467
Net unrealized gain on short-term investments					0
Net loss for the period			(2,346)		(2,346)
Ending balance, shares at Mar. 31, 2020	30,073,724
Ending balance, amount at Mar. 31, 2020	$ 3	33,191	(15,076)	0	18,118
Beginning balance, shares at Dec. 31, 2020	37,554,162
Beginning balance, amount at Dec. 31, 2020	$ 4	71,705	(25,310)	15	46,414
Common shares issued upon exercise of stock options, shares	75,000
Common shares issued upon exercise of stock options, amount	$ 0	113			113
Common shares issued upon vesting of restricted stock units, shares	64,660
Common shares issued upon vesting of restricted stock units, amount	$ 0				0
Common shares issued for services, shares	17,876
Common shares issued for services, amount	$ 0	100			100
Share-based compensation expense		859			859
Net unrealized gain on short-term investments				2	2
Net loss for the period			(5,429)		(5,429)
Ending balance, shares at Mar. 31, 2021	37,711,698
Ending balance, amount at Mar. 31, 2021	$ 4	$ 72,777	$ (30,739)	$ 17	$ 42,059

Condensed Statements of Cash Flows - USD ($)	3 Months Ended
Condensed Statements of Cash Flows - USD ($)	Mar. 31, 2021	Mar. 31, 2020
Cash Flows From Operating Activities:
Net loss	$ (5,429)	$ (2,346)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	104	25
Gain on sale of assets	(1)	0
Warranty provision	(2)	14
Non-cash lease expense	25	30
Share-based compensation	859	467
Common shares issued for services	100	0
Provision for doubtful accounts	0	10
Changes in assets and liabilities:
Accounts receivable	(341)	(198)
Inventories	(924)	(44)
Prepaid expenses and other current assets	(9)	(94)
Accounts payable	1,168	43
Operating lease liability	(26)	(31)
Customer deposits	3	(149)
Accrued liabilities and other	(136)	35
Warranty settlement	9	0
Deferred revenue	156	0
Net cash used in operating activities	(4,444)	(2,238)
Cash Flows From Investing Activities:
Purchase of short-term investments	(25,003)	0
Proceeds from maturities of short-term investments	15,000	0
Capital expenditures for property and equipment	(160)	(20)
Investment in patents and trademarks	(56)	(34)
Proceeds from long-term deposits	3	0
Net cash used in investing activities	(10,216)	(54)
Cash Flows From Financing Activities:
Proceeds from exercise of warrants	0	632
Proceeds from exercise of stock options	113	169
Repayment of debt	(100)	0
Net cash provided by financing activities	13	801
Net decrease in cash and cash equivalents	(14,647)	(1,491)
Cash and cash equivalents, beginning of period	16,647	16,984
Cash and cash equivalents, end of period	$ 2,000	$ 15,493

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business Description

Wrap Technologies, Inc., a Delaware corporation (the “Company”, “we”, “us”, and “our”), is a publicly traded company with our Common Stock, par value $0.0001 per share (“Common Stock”), listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “WRAP”. The Company is a developer and supplier of public safety products and training services for law enforcement and security personnel. The Company’s primary product is the BolaWrap® remote restraint device. The principal markets for the Company’s proprietary products and services are in North and South America, Europe, Middle East and Asia.

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”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the accompanying financial statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the footnotes. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 4, 2021. The accompanying condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated balance sheet at December 31, 2020 contained in the above referenced Form 10-K. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Where necessary, the prior year’s information has been reclassified to conform to the current year presentation.

Principles of Consolidation

The Company has one wholly-owned subsidiary, Wrap Reality, Inc., formed in December 2020, and has commenced selling its virtual reality training system primarily targeting law enforcement and security agencies. The condensed consolidated financial statements include the accounts of this subsidiary after elimination of intercompany transactions and accounts.

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 costs and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Loss per Share

Basic loss per common share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, restricted stock units and warrants exercisable or issuable for a total of 8,031,842 shares of Common Stock were outstanding at March 31, 2021. 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

Adopted the First Quarter of 2021:

In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 in the first quarter ended March 31, 2021 and it did not have a significant impact on our financial statements.

Other Pronouncements:

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity “(Subtopic 815-40”): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

The Company has reviewed other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations.

REVENUE AND PRODUCT COSTS

3 Months Ended

Mar. 31, 2021

Revenues:

REVENUE AND PRODUCT COSTS

On January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from contracts with customers (“Topic 606”) and, as it had no prior revenue or contracts with customers, there was no transition required nor any impact on prior results. Topic 606 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations.

The Company enters into contracts that include various combinations of products, accessories, software and services, each of which are generally distinct and are accounted for as separate performance obligations.

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in Topic 606. For contracts with a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract transaction price to each performance obligation using the Company’s estimate of the standalone selling price (“SSP”) of each distinct good or service in a contract. The Company determines standalone selling prices based on the relative standalone selling price. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in Topic 606. For contracts with a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts with multiple performance obligations, the Company allocates the contract transaction price to each performance obligation using the Company’s estimate of the standalone selling price (“SSP”) of each distinct good or service in a contract. The Company determines standalone selling prices based on the relative stand alone selling price. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

Most of the Company’s products and accessories are sold through domestic and international distributors. Performance obligations to deliver products and accessories are generally satisfied at the point in time the Company ships the product, as this is when the customer obtains control of the asset under our standard terms and conditions. Periodically, certain customers request bill and hold transactions for future delivery as scheduled and designated by them. In such cases, revenue is not recognized until after control, title and risk of ownership has transferred which is generally when the customer has requested such transaction under normal billing and payment terms and has been notified that the product (i) has been completed according to customer specifications, (ii) has passed 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 Company has elected to recognize shipping costs as an expense in cost of revenue when control has transferred to the customer.

Time-based virtual reality system contracts generally include setup, training and the use of software and hardware for a fixed term, generally one to five years and support and upgrade services during the same period. The Company does not sell time-based arrangements without setup, training and support services and therefore revenues for the entire arrangement are recognized on a straight-line basis over the term. When hardware is bundled and not sold separately the Company allocates the contract transaction price to each performance obligation using the SSP of each distinct good and service in the contract.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. At March 31, 2021 the Company’s deferred revenue totaled $172, of which $137 related to virtual reality training and $35 related to extended product warranties. At December 31, 2020 the Company’s deferred revenue totaled $16, of which $14 related to virtual reality training and $2 related to extended product warranties.

The Company may also receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability.

The Company recognizes an asset if there are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for any such underlying performance obligations. The Company had no such assets at March 31, 2021 and December 31, 2020. The Company applies the practical expedient to expense any sales commissions related to performance obligations with an amortization of one year or less when incurred within selling, general and administrative expense.

Estimated costs for the Company’s standard one-year warranty are charged to cost of products sold when revenue is recorded for the related product. Royalties are also charged to cost of products sold.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2021

Financial Instruments, Owned, at Fair Value [Abstract]

FAIR VALUE MEASUREMENTS

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—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Instruments Measured at Fair Value on a Recurring Basis

The Company’s cash equivalent Money Market Funds and short-term investments consisting of U.S. Treasury bill securities are classified as Level 1 because they are valued using quoted market prices.

The following table shows the Company’s cash and cash equivalents, Money Market Funds and short-term investments by significant investment category as of March 31, 2021 and December 31, 2020.

	As of March 31, 2021
	Adjusted		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Level 1:
Money Market Funds	$	1,035	$	-	$	-	$	1,035
U.S. Treasury securities considered cash equivalents		-		-		-		-
U.S. Treasury securities in short-term investments		34,983		17		-		35,000
Total Financial Assets	$	36,018	$	17	$	-	$	36,035

	As of December 31, 2020
	Adjusted		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Level 1:
Money Market Funds	$	6,035	$	-	$	-	$	6,035
U.S. Treasury securities considered cash equivalents		9,998		-		-		9,998
U.S. Treasury securities in short-term investments		24,979		15		-		24,994
Total Financial Assets	$	41,012	$	15	$	-	$	41,027

Unrealized gains or losses resulting from our short-term investments are recorded in accumulated other comprehensive gain or loss. As of March 31, 2021, $17 was recorded to accumulated other comprehensive gain.

Our 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

INVENTORIES, NET

3 Months Ended

Mar. 31, 2021

Inventory Disclosure [Abstract]

INVENTORIES, NET

Inventory is recorded at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method. Inventories consisted of the following:

	March 31,		December 31,
	2021		2020
Finished goods	$	1,688	$	1,249
Work in process		26		64
Raw materials		1,866		1,342
Inventories, net	$	3,580	$	2,655

PROPERTY AND EQUIPMENT, NET

3 Months Ended

Mar. 31, 2021

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	March 31,			December 31,
	2021			2020
Production and lab equipment	$	148		$	148
Tooling		173			81
Computer equipment		249			180
Furniture, fixtures and improvements		160			165
		730			574
Accumulated depreciation		(267	)		(217	)
Property and equipment, net	$	463		$	357

Depreciation expense was $56 and $22 for the three months ended March 31, 2021 and 2020, respectively.

INTANGIBLE ASSETS, NET

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

Intangible assets consisted of the following:

	March 31,			December 31,
	2021			2020
Amortizable intangible assets:
Patents	$	304		$	280
Trademarks		115			84
Purchased software		662			662
Other		50			50
		1,131			1,076
Accumulated amortization		(71	)		(23	)
Total amortizable		1,060			1,053
Indefinite life assets (non-amortizable)		344			344
Total intangible assets, net	$	1,404		$	1,397

Amortization expense was $48 and $3 for the three months ended March 31, 2021 and 2020, respectively.

At March 31, 2021, future amortization expense is as follows:

2021 (9 months)	$	139
2022		152
2023		147
2024		147
2025		147
Thereafter		328
Total estimated amortization expense	$	1,060

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

3 Months Ended

Mar. 31, 2021

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable includes $104 and $53 due to related party Syzygy Licensing, LLC (“Syzygy”) as of March 31, 2021 and December 31, 2020, respectively. Accounts payable at December 31, 2020 also included $10,000 due to related party V3 Capital Partners, LLC. See Notes 12 and 13 for additional related party information.

Accrued liabilities consist of the following:

	March 31,		December 31,
	2021		2020
Patent and legal costs	$	70	$	65
Accrued compensation		443		563
Warranty costs		58		48
Consulting costs		-		2
Taxes and other		22		43
Accrued liabilities	$	593	$	721

LEASES

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

LEASES

The Company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective approach. The Company has elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less.

Amortization of Right of Use operating lease assets was $25 and $30 for the three months ended March 31, 2021 and 2020, respectively.

Operating lease expense for capitalized operating leases included in operating activities was $28 and $31 for the three months ended March 31, 2021 and 2020, respectively. Operating lease obligations recorded on the balance sheet at March 31, 2021 are:

Operating lease liability- short term	$	91
Operating lease liability - long term		32
Total Operating Lease Liability	$	123

Future lease payments included in the measurement of lease liabilities on the balance sheet at March 31, 2021 for future periods are as follows:

2021 (9 months)		72
2022		57
Total future minimum lease payments		129
Less imputed interest		(6	)
Total	$	123

The weighted average remaining lease term is 1.33 years and the weighted average discount rate is 7.0%.

The Company does not have any finance leases.

OTHER LIABILITIES

3 Months Ended

Mar. 31, 2021

Other Liabilities [Abstract]

OTHER LIABILITIES

The Company’s other liabilities at March 31, 2021 and December 31, 2020 included operating lease liabilities (see Note 8) and business acquisition liabilities totaling $198 of which $175 related to short term business liabilities and $23 related to contingent consideration recorded as a long-term business acquisition liability on our balance sheet.

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2021

Stockholders' equity:

STOCKHOLDERS' EQUITY

The Company’s authorized capital consists of 150,000,000 shares of Common Stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share (“Preferred Stock”).

Summary of Stock Purchase Warrants

The following table summarizes warrant activity during the three months ended March 31, 2021:

	Number		Average Purchase Price Per Share
Shares purchasable under outstanding warrants at December 31, 2020		3,206,910	$	6.36
Stock purchase warrants issued		-		-
Stock purchase warrants exercised		-		-
Shares purchasable under outstanding warrants at March 31, 2021		3,206,910	$	6.36

The Company has outstanding Common Stock purchase warrants as of March 31, 2021 as follows:

	Number of		Exercise Price
Description	Common Shares		Per Share		Expiration Date
Purchase Warrants		1,661,397	$	6.50	June 18, 2021
Agent Warrants		153,846	$	8.125	June 18, 2021
Purchase Warrants		1,391,667	$	6.00	June 1, 2022
		3,206,910

Subsequent Stock Issuance

In April 2021 the Company issued 25,000 shares valued at $139 for payment of legal services included in accounts payable at March 31, 2021.

SHARE-BASED COMPENSATION

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Stock Incentive Plan (the “Plan”) authorizing 2,000,000 shares of Company Common Stock for issuance as stock options and restricted stock units to employees, directors or consultants. In May 2019, the stockholders ratified an increase in the Plan authorizing an additional 2,100,000 shares of Common Stock and in June 2020 ratified a further authorization of 1,900,000 shares of Common Stock for a total of 6,000,000 shares subject to the Plan. At March 31, 2021 there were 545,055 shares of Common Stock available for grant under the Plan.

In April 2021, the Board of the Company approved, subject to stockholder ratification, an increase in the Plan authorizing an additional 1,500,000 shares of Common Stock to a total of 7,500,000 shares.

The Company generally recognizes stock-based compensation expense on the grant date and over the period of vesting or period that services will be provided.

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2021:

				Weighted Average
	Options on					Remaining		Aggregate
	Common			Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding December 31, 2020		3,931,586		$	4.41		4.80
Granted		577,500		$	5.28
Exercised		(75,000	)	$	1.50
Forfeited, cancelled, expired		(10,000	)	$	5.42
Outstanding March 31, 2021		4,424,086		$	4.57		5.39	$	5,533,110
Exercisable March 31, 2021		2,116,917		$	2.86		2.49	$	5,181,463

Options outstanding at December 31, 2020 and March 31, 2021 include 100,000 of performance-based options exercisable at $5.46 per share with vesting based on achieving certain virtual reality revenue targets by December 1, 2024. The Company has not recorded share-based compensation expense related to these options. All other options are service-based.

The Company uses the Black-Scholes option pricing model to determine the fair value of the options granted. The following table summarizes the assumptions used to compute the fair value of options granted to employees and non-employees:

	For the Three Months
	Ended March 31,
	2021			2020
Expected stock price volatility		50	%		n/a
Risk-free interest rate		0.89	%		n/a
Forfeiture rate		0	%		n/a
Expected dividend yield		0	%		n/a
Expected life of options - years		5.70			n/a
Weighted-average fair value of options granted	$	2.42			n/a

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards. The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available. The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. The Company calculates the expected life of the options using the Simplified Method for the employee stock options as the Company does not have sufficient historical data.

Restricted Stock Units

The Plan provides for the grant of restricted stock units (“RSUs”). The following table summarizes RSU activity under the Plan for the three months ended March 31, 2021:

				Weighted Average		Weighted Average
	Service-Based			Grant Date		Vesting
	RSU's			Fair Value		Period
Unvested at December 31, 2020		428,006		$	6.13
Granted - service based		37,500		$	5.38
Vested		(64,660	)	$	4.72
Forfeited and cancelled		-
Unvested at March 31, 2021		400,846		$	6.29	2.18 Years

Subsequent Stock Awards

In April 2021 the Board of Directors granted a stock award pursuant to the Plan of 31,250 shares to each of its five directors with a grant date value of $5.56 per share for prior services. Stock expense of $869 will be recognized as of the grant date.

In April 2021 the Board of Directors granted each of its four non-executive directors an RSU grant of 10,882 shares vesting during the balance of 2021 with a grant date value of $5.56 per share. The $242 total stock compensation expense will be recognized over the 2021 vesting period.

Also, in April 2021 the Board of Directors granted Scot Cohen, the Company’s Executive Chairman, a ten-year stock option exercisable for 100,000 shares of Common Stock at an exercise price of $5.56 per share vesting during the balance of 2021. The $254 stock compensation expense will be recognized over the 2021 vesting period.

Upon the appointment of four additional new directors in April 2021 the Board of Directors granted each new director a stock option exercisable for 30,000 shares of Common Stock at an exercise price of $5.04 per share vesting over two years. The $292 total stock compensation expense will be recognized over the two-year vesting period. Each new director was also granted an RSU grant of 8,403 shares vesting during the balance of 2021 with a grant date value of $5.04 per share. The $169 total stock compensation expense will be recognized over the 2021vesting period.

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 March 31,
	2021		2020
Selling, general and administrative	$	602	$	429
Research and development		257		38
Total share-based expense	$	859	$	467

As of March 31, 2021, total estimated compensation cost of stock options granted and outstanding but not yet vested was $5,419 which is expected to be recognized over the weighted average period of 2.7 years. As of March 31, 2021, total estimated compensation cost of RSUs granted and outstanding but not yet vested was $2,027 which is expected to be recognized over the weighted average period of 2.2 years.

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Facility Leases

See Note 8.

Related Party Technology License Agreement

The Company is obligated to pay royalties and pay development and patent costs pursuant to that certain exclusive Amended and Restated Intellectual Property License Agreement dated as of September 30, 2016, by and between the Company and Syzygy (the “Syzygy Agreement”), a company owned and controlled by stockholders/officers Messrs. Elwood Norris and James Barnes, both of whom are stockholders and officers of the Company. The Syzygy Agreement provides for royalty payments of 4% of revenue from products employing the licensed ensnarement device technology up to an aggregate of $1,000,000 in royalties or until September 30, 2026, whichever occurs earlier. The Company recorded $51 and $25 for royalties under the Syzygy Agreement incurred during the three months ended March 31, 2021 and 2020, respectively.

Purchase Commitments

At March 31, 2021 the Company was committed for approximately $1,380 for future component deliveries and contract services that are generally subject to modification or rescheduling in the normal course of business.

Securities Litigation

On September 23, 2020, Carone Cobden filed a putative class action complaint against the Company, former Chief Executive Officer David Norris (“Norris”), Chief Financial Officer, James A. Barnes (“Barnes”), and President, Thomas Smith (“Smith”) in the United States District Court for the Central District of California, docketed as Case No. 2-20-cv-08760-DMG-PVCx (the “Cobden Complaint”). The Cobden Complaint alleges that the named defendants, in their capacities as officers of the Company, knowingly made false or misleading statements or omissions regarding trials of the Company’s BolaWrap product conducted by the Los Angeles Police Department (the “BolaWrap Pilot Program”). The Cobden Complaint also alleges that the conduct of the named defendants artificially inflated the price of the Company’s traded securities, and that the disclosure of certain adverse information to the public led to a decline in the market value of the Company’s securities. The Cobden Complaint further alleges violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and defines the class period as July 31, 2020 through September 23, 2020.

On October 1, 2020, Joseph Mercurio filed a second putative class action complaint against the Company, Norris, Smith, and Barnes in the same court, which contains substantially the same factual allegations and legal claims as set forth in the Cobden Complaint, and is docketed as Case No. 2-20-cv-09030-DMG-PVCx (the “Mercurio Complaint”). On October 15, 2020, Paula Earley filed a third putative class action complaint against the Company, Smith, Norris, Barnes, Chief Strategy Officer Mike Rothans (“Rothans”), and former Chief Executive Officer, Marc Thomas (“Thomas”) in the same court, which contains many of the same factual allegations and legal claims as set forth in the Cobden and Mercurio Complaints, but defines the class period as April 29, 2020 through September 23, 2020, and alleges additional false or misleading statements in connection with BolaWrap and the BolaWrap Pilot Program (the “Earley Complaint”). The Earley Complaint is docketed as Case No. 2-20-cv-09444-DMG-PVCx.

On November 3, 2020, the Hon. Dolly M. Gee consolidated the three above-mentioned cases under the caption In re Wrap Technologies, Inc. Securities Exchange Act Litigation, Case No. 20-8760-DMG (PVCx) (the “Securities Action”). On January 7, 2021, the Court appointed a lead plaintiff in the Securities Action, who designated its attorneys as lead counsel. On January 21, 2021, Judge Gee ordered that a consolidated amended complaint be filed in the Securities Action on or before March 12, 2021, with defendants’ motion to dismiss to be filed on or before April 26, 2021, and a hearing on the motion to dismiss to be held on July 23, 2021. On March 12, 2021, lead plaintiff filed an amended complaint, naming the Company, Norris, Thomas, Smith, and Barnes as defendants. Those defendants jointly filed a motion to dismiss on April 26, 2021. The Company believes that the Securities Action is without merit and intends to vigorously defend against the claims raised therein.

Shareholder Derivative Litigation

On November 13, 2020, Naresh Rammohan filed a shareholder derivative action in the United States District Court for the Central District of California against Smith, Barnes, Rothans, Thomas, Norris, and Messrs. Scot Cohen, Patrick Kinsella, Michael Parris, and Wayne Walker, alleging unjust enrichment, breach of fiduciary duty, waste of corporate assets, and contribution claims under the Securities Exchange Act of 1934, docketed as Case No. 2:20-cv-10444-DMG-PVCx (the “Rammohan Complaint”). The Rammohan Complaint names the Company as a nominal defendant and recites many of the allegations set forth in the Securities Action relating to the BolaWrap Pilot Program. On January 20, 2021, Ray Westerman filed a second derivative complaint in the same court against the same parties, alleging breach of fiduciary duty and contribution claims under the Securities Exchange Act of 1934, docketed as Case No. 2:21-cv-00550-DMG-PVCx (the “Westerman Complaint”). On January 22, 2021, Jesse Lowe filed a third derivative complaint in the same court against the same parties, alleging breach of fiduciary duty and asserting various claims under the Securities Exchange Act of 1934, docketed as Case No. 2:21-cv-00597-DMG-PVCx (the “Lowe Complaint”).

The above-mentioned derivative cases were each been transferred to Judge Gee as cases related to the Securities Action. On February 16, 2021, Judge Gee issued an order consolidating these cases under the caption In re Wrap Technologies, Inc. Shareholder Derivative Litigation, Case No. 2:20-10444-DMG-PVCx, (the “Derivative Action”), and stayed the Derivative Action pending the resolution of the motion to dismiss in the Securities Action. On March 9, 2021, the Lowe Complaint was designated as the operative complaint in the Derivative Action. As with the Securities Action, the Company believes that the Derivative Action is without merit and intends to vigorously defend against the claims raised therein.

Other Legal Information

The Company may at times be involved in other litigation in the ordinary course of business. The Company will, from time to time, when appropriate in management’s estimation, record adequate reserves in the Company’s consolidated financial statements for pending litigation. Currently, other than described above there are no other pending material legal proceedings to which the Company is a party or to which any of its property is subject. At March 31, 2021 the Company had no provision for liability under existing litigation.

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2021

RELATED PARTY TRANSACTIONS

Commencing in October 2017 the Company began reimbursing Mr. Elwood Norris, an officer and stockholder of the Company, $1.5 per month on a month-to-month basis for laboratory facility costs, for an aggregate of $4.5 during the three months ended March 31, 2021 and 2020, respectively.

See Notes 7, 11 and 12 for additional information on related party transactions and obligations.

MAJOR CUSTOMERS AND RELATED INFORMATION

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

MAJOR CUSTOMERS AND RELATED INFORMATION

For the three months ended March 31, 2021, revenues from three distributors accounted for approximately 28%, 22% and 10% of revenues with no other single customer accounting for more than 10% of total revenues. At March 31, 2021, accounts receivable from three distributors accounted for 37%, 17% and 16% of accounts receivable with no other single customer accounting for more than 10% of the accounts receivable balance.

For the three months ended March 31, 2020, revenues from two distributors accounted for approximately 43% and 37% of revenues with no other single customer accounting for more than 10% of total revenues. These distributors accounted for 18% and 33% of accounts receivable at March 31, 2020.

The following table summarizes revenues by geographic region. Revenues are attributed to countries based on customer’s delivery location.

	For the Three Months
	Ended March 31,
	2021		2020
Americas	$	626	$	109
Europe, Middle East and Africa		877		309
Asia Pacific		39		272
	$	1,542	$	690

SUBSEQUENT EVENTS	3 Months Ended
SUBSEQUENT EVENTS	Mar. 31, 2021
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	See Notes 10 and 11 for subsequent stock and stock plan information. The Company evaluated other subsequent events for their potential impact on the financial statements and disclosures through the date the financial statements were available to be issued, and determined that, except as disclosed herein, no subsequent events occurred that were reasonably expected to impact the financial statements presented herein.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business Description	Wrap Technologies, Inc., a Delaware corporation (the “Company”, “we”, “us”, and “our”), is a publicly traded company with our Common Stock, par value $0.0001 per share (“Common Stock”), listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “WRAP”. The Company is a developer and supplier of public safety products and training services for law enforcement and security personnel. The Company’s primary product is the BolaWrap® remote restraint device. The principal markets for the Company’s proprietary products and services are in North and South America, Europe, Middle East and Asia.
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”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the accompanying financial statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the footnotes. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 4, 2021. The accompanying condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated balance sheet at December 31, 2020 contained in the above referenced Form 10-K. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. Where necessary, the prior year’s information has been reclassified to conform to the current year presentation.
Principles of Consolidation	The Company has one wholly-owned subsidiary, Wrap Reality, Inc., formed in December 2020, and has commenced selling its virtual reality training system primarily targeting law enforcement and security agencies. The condensed consolidated financial statements include the accounts of this subsidiary after elimination of intercompany transactions and accounts.
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 costs and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Loss per share	Basic loss per common share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, restricted stock units and warrants exercisable or issuable for a total of 8,031,842 shares of Common Stock were outstanding at March 31, 2021. 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	Adopted the First Quarter of 2021: In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. We adopted ASU 2019-12 in the first quarter ended March 31, 2021 and it did not have a significant impact on our financial statements. Other Pronouncements: In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (“Subtopic 470-20”) and Derivatives and Hedging—Contracts in Entity’s Own Equity “(Subtopic 815-40”): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures. The Company has reviewed other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations.

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2021

Financial Instruments, Owned, at Fair Value [Abstract]

Financial instruments

	As of March 31, 2021
	Adjusted		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Level 1:
Money Market Funds	$	1,035	$	-	$	-	$	1,035
U.S. Treasury securities considered cash equivalents		-		-		-		-
U.S. Treasury securities in short-term investments		34,983		17		-		35,000
Total Financial Assets	$	36,018	$	17	$	-	$	36,035

	As of December 31, 2020
	Adjusted		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Level 1:
Money Market Funds	$	6,035	$	-	$	-	$	6,035
U.S. Treasury securities considered cash equivalents		9,998		-		-		9,998
U.S. Treasury securities in short-term investments		24,979		15		-		24,994
Total Financial Assets	$	41,012	$	15	$	-	$	41,027

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

INVENTORIES, NET (Tables)

3 Months Ended

Mar. 31, 2021

Inventory Disclosure [Abstract]

Inventories

	March 31,		December 31,
	2021		2020
Finished goods	$	1,688	$	1,249
Work in process		26		64
Raw materials		1,866		1,342
Inventories, net	$	3,580	$	2,655

PROPERTY AND EQUIPMENT, NET (Tables)

3 Months Ended

Mar. 31, 2021

Property, Plant and Equipment [Abstract]

Property and equipment

	March 31,			December 31,
	2021			2020
Production and lab equipment	$	148		$	148
Tooling		173			81
Computer equipment		249			180
Furniture, fixtures and improvements		160			165
		730			574
Accumulated depreciation		(267	)		(217	)
Property and equipment, net	$	463		$	357

INTANGIBLE ASSETS, NET (Tables)

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

	March 31,			December 31,
	2021			2020
Amortizable intangible assets:
Patents	$	304		$	280
Trademarks		115			84
Purchased software		662			662
Other		50			50
		1,131			1,076
Accumulated amortization		(71	)		(23	)
Total amortizable		1,060			1,053
Indefinite life assets (non-amortizable)		344			344
Total intangible assets, net	$	1,404		$	1,397

Future amortization expense

2021 (9 months)	$	139
2022		152
2023		147
2024		147
2025		147
Thereafter		328
Total estimated amortization expense	$	1,060

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2021

Payables and Accruals [Abstract]

Accrued liabilities

	March 31,		December 31,
	2021		2020
Patent and legal costs	$	70	$	65
Accrued compensation		443		563
Warranty costs		58		48
Consulting costs		-		2
Taxes and other		22		43
Accrued liabilities	$	593	$	721

LEASES (Tables)

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Operating lease liabilities

Operating lease liability- short term	$	91
Operating lease liability - long term		32
Total Operating Lease Liability	$	123

Future lease payments

2021 (9 months)		72
2022		57
Total future minimum lease payments		129
Less imputed interest		(6	)
Total	$	123

STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2021

Stockholders' equity:

Warrant activity

	Number		Average Purchase Price Per Share
Shares purchasable under outstanding warrants at December 31, 2020		3,206,910	$	6.36
Stock purchase warrants issued		-		-
Stock purchase warrants exercised		-		-
Shares purchasable under outstanding warrants at March 31, 2021		3,206,910	$	6.36

Stock purchase warrants

	Number of		Exercise Price
Description	Common Shares		Per Share		Expiration Date
Purchase Warrants		1,661,397	$	6.50	June 18, 2021
Agent Warrants		153,846	$	8.125	June 18, 2021
Purchase Warrants		1,391,667	$	6.00	June 1, 2022
		3,206,910

SHARE-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock option activity

				Weighted Average
	Options on					Remaining		Aggregate
	Common			Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding December 31, 2020		3,931,586		$	4.41		4.80
Granted		577,500		$	5.28
Exercised		(75,000	)	$	1.50
Forfeited, cancelled, expired		(10,000	)	$	5.42
Outstanding March 31, 2021		4,424,086		$	4.57		5.39	$	5,533,110
Exercisable March 31, 2021		2,116,917		$	2.86		2.49	$	5,181,463

Assumptions used to to determine the fair value of the options granted

	For the Three Months
	Ended March 31,
	2021			2020
Expected stock price volatility		50	%		n/a
Risk-free interest rate		0.89	%		n/a
Forfeiture rate		0	%		n/a
Expected dividend yield		0	%		n/a
Expected life of options - years		5.70			n/a
Weighted-average fair value of options granted	$	2.42			n/a

Service-based RSU activity

				Weighted Average		Weighted Average
	Service-Based			Grant Date		Vesting
	RSU's			Fair Value		Period
Unvested at December 31, 2020		428,006		$	6.13
Granted - service based		37,500		$	5.38
Vested		(64,660	)	$	4.72
Forfeited and cancelled		-
Unvested at March 31, 2021		400,846		$	6.29	2.18 Years

Stock-based compensation

	Three Months Ended March 31,
	2021		2020
Selling, general and administrative	$	602	$	429
Research and development		257		38
Total share-based expense	$	859	$	467

MAJOR CUSTOMERS AND RELATED INFORMATION (Tables)

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenues by geographic region

	For the Three Months
	Ended March 31,
	2021		2020
Americas	$	626	$	109
Europe, Middle East and Africa		877		309
Asia Pacific		39		272
	$	1,542	$	690

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended
	Mar. 31, 2021 shares
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Stock options, restricted stock units and warrants exercisable or issuable	8,031,842

REVENUE AND PRODUCT COSTS (Details Narrative) - USD ($)	Mar. 31, 2021	Dec. 31, 2020	Dec. 30, 2020
Deferred revenue	$ 172	$ 16
Virtual Reality Training
Deferred revenue	137		$ 14
Extended Product Warranties
Deferred revenue	$ 35	$ 2

FAIR VALUE MEASUREMENTS (Details) - Level 1 - USD ($)	3 Months Ended	12 Months Ended
FAIR VALUE MEASUREMENTS (Details) - Level 1 - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Adjusted cost	$ 36,018	$ 41,012
Unrealized gains	17	15
Unrealized losses	0	0
Market value	36,035	41,027
Money Market Funds
Adjusted cost	1,035	6,035
Unrealized gains	0	0
Unrealized losses	0	0
Market value	1,035	6,035
U.S. Treasury Securities Considered Cash Equivalents
Adjusted cost	0	9,998
Unrealized gains	0	0
Unrealized losses	0	0
Market value	0	9,998
U.S. Treasury Securities in Short-term Investments
Adjusted cost	34,983	24,979
Unrealized gains	17	15
Unrealized losses	0	0
Market value	$ 35,000	$ 24,994

FAIR VALUE MEASUREMENTS (Details Narrative)	3 Months Ended
FAIR VALUE MEASUREMENTS (Details Narrative)	Mar. 31, 2021 USD ($)
Financial Instruments, Owned, at Fair Value [Abstract]
Unrealized gains/losses on short-term investments	$ 17

INVENTORIES, NET (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Finished goods	$ 1,688	$ 1,249
Work in process	26	64
Raw materials	1,866	1,342
Inventory, net	$ 3,580	$ 2,655

PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Property and equipment, gross	$ 730	$ 574
Accumulated depreciation	(267)	(217)
Property and equipment, net	463	357
Laboratory Equipment
Property and equipment, gross	148	148
Tooling
Property and equipment, gross	173	81
Computer Equipment
Property and equipment, gross	249	180
Furniture, Fixtures and Improvements
Property and equipment, gross	$ 160	$ 165

PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 56	$ 22

INTANGIBLE ASSETS, NET (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Intangible assets, gross	$ 1,131	$ 1,076
Accumulated amortization	(71)	(23)
Total amortizable	1,060	1,053
Indefinite life assets (non-amortizable)	344	344
Intangible assets, net	1,404	1,397
Patents
Intangible assets, gross	304	280
Trademarks
Intangible assets, gross	115	84
Purchased Software
Intangible assets, gross	6,652	662
Other
Intangible assets, gross	$ 50	$ 50

INTANGIBLE ASSETS, NET (Details 1)	Mar. 31, 2021 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2021 (9 months)	$ 139
2022	152
2023	147
2024	147
2025	147
Thereafter	328
Total estimated amortization expense	$ 1,060

INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	3 Months Ended
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	Mar. 31, 2021	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 48	$ 3

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Patent and legal costs	$ 70	$ 65
Accrued compensation	443	563
Warranty costs	58	48
Consulting costs	0	2
Taxes and other	22	43
Accrued liabilities	$ 593	$ 721

LEASES (Details) - USD ($)	Mar. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease liability - short term	$ 91	$ 94
Operating lease liability - long term	32	$ 56
Total operating lease liability	$ 123

LEASES (Details 1)	Mar. 31, 2021 USD ($)
Leases [Abstract]
Remainder of 2021 (nine months)	$ 72
2022	57
Total future minimum lease payments	129
Less imputed interest	(6)
Total	$ 123

LEASES (Details Narrative) - USD ($)	3 Months Ended
LEASES (Details Narrative) - USD ($)	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Amortization of ROU operating lease assets	$ 25	$ 30
Operating lease expense	$ 28	$ 31
Weighted average remaining lease term	1 year 3 months 29 days
Weighted average discount rate	7.00%

STOCKHOLDERS' EQUITY (Details)	3 Months Ended
STOCKHOLDERS' EQUITY (Details)	Mar. 31, 2021 $ / shares shares
Stockholders' equity:
Warrants outstanding, beginning \| shares	3,206,910
Issued \| shares	0
Exercised \| shares	0
Warrants outstanding, ending \| shares	3,206,910
Average purchase price per share outstanding, beginning \| $ / shares	$ 6.36
Issued \| $ / shares	.00
Exercised \| $ / shares	.00
Average purchase price per share outstanding, ending \| $ / shares	$ 6.36

STOCKHOLDERS' EQUITY (Details 1)	3 Months Ended
STOCKHOLDERS' EQUITY (Details 1)	Mar. 31, 2021 USD ($) $ / shares
Number of common shares	$ 3,206,910
Purchase Warrants
Number of common shares	$ 1,661,397
Exercise price per share \| $ / shares	$ 6.500
Expiration Date	Jun. 18, 2021
Agent Warrants
Number of common shares	$ 153,846
Exercise price per share \| $ / shares	$ 8.125
Expiration Date	Jun. 18, 2021
Purchase Warrants
Number of common shares	$ 1,391,667
Exercise price per share \| $ / shares	$ 6.000
Expiration Date	Jun. 01, 2022

STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Stockholders' equity:
Common stock, authorized	150,000,000	150,000,000
Common stock, par value	$ .0001	$ .0001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001

STOCK-BASED COMPENSATION (Details)	3 Months Ended
STOCK-BASED COMPENSATION (Details)	Mar. 31, 2021 USD ($) $ / shares shares
Share-based Payment Arrangement [Abstract]
Number of options outstanding, beginning \| shares	3,931,586
Granted \| shares	577,500
Exercised \| shares	(75,000)
Forfeited/cancelled/expired \| shares	(10,000)
Number of options outstanding, ending \| shares	4,424,086
Number of options vested and exercisable \| shares	2,116,917
Weighted average exercise price outstanding, beginning \| $ / shares	$ 4.41
Granted \| $ / shares	5.28
Exercised \| $ / shares	1.50
Forfeited/cancelled/expired \| $ / shares	5.42
Weighted average exercise price outstanding, ending \| $ / shares	4.57
Weighted average exercise price vested and exercisable \| $ / shares	$ 2.86
Weighted average remaining contractual term outstanding, beginning	4 years 9 months 18 days
Weighted average remaining contractual term outstanding, ending	5 years 4 months 20 days
Weighted average remaining contractual term vested and exercisable	2 years 5 months 26 days
Aggregate intrinsic value outstanding \| $	$ 5,533,110
Aggregate intrinsic value vested and exercisable \| $	$ 5,181,463

STOCK-BASED COMPENSATION (Details 1)	3 Months Ended
STOCK-BASED COMPENSATION (Details 1)	Mar. 31, 2021 $ / shares
Share-based Payment Arrangement [Abstract]
Expected stock price volatility	50.00%
Risk-free interest rate	0.89%
Forfeiture rate	0.00%
Expected dividend yield	0.00%
Expected life of options - years	5 years 8 months 12 days
Weighted-average fair value of options granted	$ 2.42

STOCK-BASED COMPENSATION (Details 2)	3 Months Ended
STOCK-BASED COMPENSATION (Details 2)	Mar. 31, 2021 $ / shares shares
Unvested service-based RSUs outstanding, beginning \| shares	428,006
Vested \| shares	(64,660)
Forfeited and cancelled \| shares	0
Unvested service-based RSUs outstanding, ending \| shares	400,846
Grant date fair value, beginning \| $ / shares	$ 6.13
Vested \| $ / shares	4.72
Forfeited and cancelled \| $ / shares	.00
Grant date fair value, ending \| $ / shares	$ 6.29
Vesting period	2 months 5 days
Service Based
Granted \| shares	37,500
Granted \| $ / shares	$ 5.38

STOCK-BASED COMPENSATION (Details 3) - USD ($)	3 Months Ended
STOCK-BASED COMPENSATION (Details 3) - USD ($)	Mar. 31, 2021	Mar. 31, 2020
Stock-based compensation	$ 859	$ 467
Selling, General and Administrative
Stock-based compensation	602	429
Research and Development
Stock-based compensation	$ 257	$ 38

STOCK-BASED COMPENSATION (Details Narrative)	3 Months Ended
STOCK-BASED COMPENSATION (Details Narrative)	Mar. 31, 2021 USD ($)
Share-based Payment Arrangement [Abstract]
Estimated compensation cost of stock options and RSUs granted but not yet vested	$ 5,419
Estimated compensation cost of stock options and RSUs granted but not yet vested, recognition period	2 years 8 months 12 days

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Royalties	$ 51	$ 25
Purchase commitment	$ 1,380

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Related Party Transactions [Abstract]
Payment to related party during period	$ 4,500	$ 4,500

MAJOR CUSTOMERS AND RELATED INFORMATION (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue by geographic region	$ 1,542	$ 690
Americas
Revenue by geographic region	626	109
Europe, Middle East and Africa
Revenue by geographic region	877	309
Asia Pacific
Revenue by geographic region	$ 39	$ 272

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=75031198&loc=d3e14064-108612

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 22
-Subparagraph (b)
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
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-Paragraph 1
-Subparagraph (SX 210.9-05(b)(2))
-URI http://asc.fasb.org/extlink&oid=120399901&loc=d3e537907-122884

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(1))
-URI http://asc.fasb.org/extlink&oid=120395209&loc=SL114868664-224227

+ Details

MAJOR CUSTOMERS AND RELATED INFORMATION (Details Narrative)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Distributor 1 \| Accounts receivable
Concentration risk	37.00%	18.00%
Distributor 1 \| Revenues
Concentration risk	28.00%	43.00%
Distributor 2 \| Accounts receivable
Concentration risk	17.00%	33.00%
Distributor 2 \| Revenues
Concentration risk	22.00%	37.00%
Distributor 3 \| Accounts receivable
Concentration risk	16.00%
Distributor 3 \| Revenues
Concentration risk	10.00%