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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Organization and Business Description</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Wrap Technologies, Inc., a Delaware
corporation (the “<i>Company</i>”), is a publicly traded company listed on the Nasdaq Capital Market (“<i>Nasdaq</i>”)
under the trading symbol “WRTC”. The Company is a developer of security products designed for use by law enforcement
and security personnel. The Company’s first product is the BolaWrap® 100 remote restraint device that discharges an
eight-foot bola style Kevlar® tether to entangle a subject at a range of 10-25 feet. The principal markets for the Company’s
proprietary products are in North and South America, Europe, Middle East and Asia.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Basis of Presentation and Use of
Estimates</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company’s unaudited interim financial
statements and related notes included herein have been prepared in accordance with accounting principles generally accepted in
the United States of America (“<i>US GAAP</i>”) for interim financial information and in accordance with Article 8
of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“<i>SEC</i>”). The
condensed balance sheet at December 31, 2019 was derived from audited financial statements but 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 statements
reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for the 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 interim 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, 2019. Results
of operations for interim periods are not necessarily indicative of the results of operations for a full year.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions (e.g., stock-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible
assets, warranty reserve, accrued costs and recognition and measurement of contingencies) that affect the reported amounts of assets
and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported
amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Where necessary, the prior year’s
information has been reclassified to conform to the current year presentation.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Concentrations of Risk and Uncertainties</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Credit Risk</i> – Financial
instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash and cash equivalents
and accounts receivable from customers. The Company maintains its cash deposits at two domestic financial institutions. The Company
is exposed to credit risk in the event of default by a financial institution to the extent that cash and cash equivalents are in
excess of the amount insured by the Federal Deposit Insurance Corporation. The Company places its cash and cash equivalents with
high-credit quality financial institutions. To date, the Company has not experienced any losses on its cash and cash equivalents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Concentrations of Accounts Receivable
and Revenue</i> – The Company has recently commenced sales activities with a limited number of customers. The Company may
experience concentrations in both accounts receivable and revenue due to the timing of sales and collections of related payments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Concentration of Suppliers</i> –
The Company relies on a limited number of component suppliers and contract suppliers. In particular, a single supplier is currently
the sole manufacturer of the Company’s laser assembly with some parts sole sourced from other suppliers. If supplier shortages
occur, or quality problems arise, then production schedules could be significantly delayed or costs significantly increased, which
could in turn have a material adverse effect on the Company’s financial condition, results of operation and cash flows.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Impact of COVID-19</i> - In March
2020, the World Health Organization declared the outbreak of a novel coronavirus (“<i>COVID-19</i>”) as a pandemic
which continues to spread throughout the United States and the World. The COVID-19 pandemic has impacted and could further impact
our operations and the operations of our customers and suppliers as a result of quarantines, facility closures, illnesses, and
travel and logistics restrictions. The extent to which the COVID-19 pandemic further impacts our business, results of operations,
and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but
not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our
customers and suppliers and the remedial actions and stimulus measures adopted by federal, state, and local governments, and to
what extent normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, the Company may
continue to experience adverse impacts to its business as a result of any economic recession or depression that has occurred or
may occur in the future.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Stock-Based Compensation</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company follows the fair value recognition
provisions issued by the Financial Accounting Standards Board (“<i>FASB</i>”) in Accounting Standards Codification
(“<i>ASC</i>”) Topic 718, Stock Compensation (“<i>ASC 718</i>”) and has adopted Accounting Standards Update
(“<i>ASU</i>”) 2018-07 for stock-based transactions with non-employees. Stock-based compensation expense recognized
during the three and six months ended June 30, 2020 includes stock option and restricted stock unit compensation expense. <font style="background-color: white">The
grant date fair value of stock options is determined using the Black-Scholes option-pricing model.</font> The grant date is the
date at which an employer and employee or non-employee reach a mutual understanding of the key terms and conditions of a stock-based
payment award. <font style="background-color: white">The Black-Scholes option-pricing model requires inputs including the market
price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding,
the implied stock volatilities of several publicly-traded peers over the expected term of stock options, risk-free interest rate
and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date
fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant.
The fair value of stock-based compensation is amortized to compensation expense over the vesting term.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Revenue Recognition</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (“<i>ASU 2014-09</i>”) and ASC Subtopic 340-40, Other Assets and Deferred Costs
- Contracts with Customers (“<i>ASC 340-40</i>”), (collectively, “<i>Topic 606</i>”). On January 1, 2018,
the Company adopted Topic 606 and, as it had no prior revenue or contracts with customers, there was no transition required nor
any impact on prior results. ASU 2014-09 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. See Note 2 for additional information.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Accounts Receivable and Allowance
for Doubtful Accounts</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company’s policy is to evaluate
the collectability of accounts receivable based on an assessment of the collectability of specific customer accounts and then record
an allowance for doubtful accounts to reduce the receivables to an amount that management reasonably estimates will be collected.
There was no allowance for doubtful accounts recorded at December 31, 2019. At June 30, 2020 the Company had an allowance of $10,140
resulting in part from global uncertainty resulting from the COVID-19 virus. Accounts that are deemed uncollectible will be written
off against the allowance for doubtful accounts. If a major customer’s creditworthiness deteriorates, or actual defaults
exceed our historical experience, such estimates could change and impact our future reported financial results.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Inventories</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Inventories are valued at the lower
of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method.
Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers<i>.</i> The Company evaluates
the need for reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for the Company’s
products. At June 30, 2020 and the Company had a reserve for obsolescence of $48,000 related to parts expected to be displaced
by product improvement initiatives.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Loss per Share</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Basic loss per common share is computed
by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted
net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s
losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock
options, restricted stock units and warrants exercisable or issuable for a total of 10,018,461 shares of Common Stock were outstanding
at June 30, 2020. These securities are not included in the computation of diluted net loss per common share for the periods presented
as their inclusion would be antidilutive due to losses incurred by the Company.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Income Taxes</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Until its conversion to a corporation
on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income
taxes. Instead, its losses were included in the income tax returns of the member partners. No income tax expense was recorded for
period ended June 30, 2020 due to losses incurred.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Deferred tax assets and liabilities
are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial
reporting purposes.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company maintains a valuation allowance
with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing
the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current
period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward
period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change
in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in
income in the year of the change in estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><u>Recent Issued Accounting Guidance</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Effective the First Quarter of 2020:</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">In August 2018, the FASB issued ASU
No. 2018-13, Fair Value Measurement (“<i>Topic 820</i>”): Disclosure Framework - Changes to the Disclosure Requirements
for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, to improve the effectiveness
of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. This
ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after
December 15, 2019. The adoption of this standard in the first quarter ended March 31, 2020 had no impact on the Company’s
financial statements or disclosures.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Other Pronouncements:</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">In December 2019, the FASB
issued Accounting Standards Update 2019-12, <i>Income Taxes (Topic </i>740<i>): Simplifying the Accounting for Income
Taxes </i>(“<i>ASU 2019-12</i>”), 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 also clarifies and
amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December
15, 2020, with early adoption permitted. We do not expect that the adoption of this ASU will have a significant impact on
our financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company enters into contracts that
include various combinations of products, accessories and services, such as training, each of which are generally distinct and
are accounted for as separate performance obligations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">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 (“<i>SSP</i>”) of each distinct good or service in a contract.
The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. 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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Performance obligations to deliver products
and accessories are generally satisfied at the point in time the Company ships the product, as this is when the customer obtains
control of the asset under our standard terms and conditions. Periodically, certain customers request bill and hold transactions
for future delivery as scheduled and designated by them. In such cases, revenue is not recognized until after control, title and
risk of ownership has transferred which is generally when the customer has requested such transaction under normal billing and
payment terms and has been notified that the product (i) has been completed according to customer specifications, (ii) has passed
our quality control inspections, and (iii) has been tagged and packed for shipment, separated from our inventory and ready for
physical transfer to the customer. The value associated with custodial storage services is deemed immaterial in the context
of such contracts and in total, and accordingly, none of the transaction price is allocated to such service.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company has elected to recognize
shipping costs as an expense in cost of revenue when control has transferred to the customer. The revenue and cost of training
associated with a customer contract are recognized when the training is completed, generally following delivery of related products.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The timing of revenue recognition may
differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers
are invoiced, and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a
contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. At June 30, 2020 the Company had
deferred revenue of $2,484 related to future training and extended warranties.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company recognizes an asset if there
are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to
the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for
any such underlying performance obligations. The Company had no such assets at June 30, 2020 and December 31, 2019. The Company
will apply the practical expedient to expense any sales commissions related to performance obligations with an amortization of
one year or less when incurred within selling, general and administrative expense.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">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:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Finished goods</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">719,104</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">653,323</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Work in process</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">22,149</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">413</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Raw materials</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,393,252</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,590,805</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,134,505</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,244,541</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Less allowance for obsolescence</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(48,000</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Inventories - net</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,086,505</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,244,541</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At June 30, 2020 the Company established a reserve
for obsolescence of $48,000 related to parts expected to be displaced by product improvement initiatives.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Property and equipment consisted
of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Laboratory equipment</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">55,645</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">44,454</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Tooling</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">77,459</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">59,004</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Computer equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">106,765</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">83,368</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Furniture, fixtures and improvements</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">144,323</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128,782</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">384,192</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">315,608</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Accumulated depreciation</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(120,022</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(72,732</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">264,170</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">242,876</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Depreciation expense was $24,793
and $47,290 for the three and six months ended June 30, 2020 and was $7,621 and $12,186 for the three and six months ended June
30, 2019, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Intangible assets consisted of the
following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Patents</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">242,202</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">176,425</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Trademarks</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">74,145</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">57,919</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">316,347</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">234,344</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Accumulated amortization</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(9,357</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(4,061</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">306,990</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">230,283</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Amortization expense was $2,695 and
$5,296 for the three and six months ended June 30, 2020 and was $203 and $387 for the three and six months ended June 30, 2019,
respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Accounts payable includes $28,481
and $18,809 due to related party Syzygy Licensing, LLC (“<i>Syzygy</i>”) as of June 30, 2020 and December 31, 2019,
respectively. Accounts payable at June 30, 2020 also included $185,000 due to related party V3 Capital Partners, LLC. See Notes
11 and 12 for additional related party information.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Accrued liabilities consist of the
following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Patent and legal costs</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">25,000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">9,851</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Accrued compensation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">264,311</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">144,193</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Warranty costs</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">32,832</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">13,923</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Consulting costs</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7,500</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Taxes and other</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,972</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">18,827</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">345,115</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">194,294</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Amortization of ROU operating lease
assets was $30,172 and $59,800 for the three and six months ended June 30, 2020 and was $16,432 and $22,211 for the three and six
months ended June 30, 2019, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Operating lease expense for capitalized
operating leases included in operating activities was $34,322 and $68,644 for the three and six months ended June 30, 2020 and
was $19,305 and $25,956 for the three and six months ended June 30, 2019, respectively. Operating lease obligations recorded on
the balance sheet at June 30, 2020 are:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%; text-align: justify"><font style="font-size: 8pt">Operating lease liability- short term</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">113,954</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Operating lease liability - long term</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">101,826</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Total Operating Lease Liability</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">215,780</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Future lease payments included in
the measurement of lease liabilities on the balance sheet at June 30, 2020 for future periods are as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%; text-align: justify"><font style="font-size: 8pt">Remainder of 2020 (six months)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">72,362</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">2021</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">101,406</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">2022</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">57,328</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 27pt; text-align: justify"><font style="font-size: 8pt">Total future minimum lease payments</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">231,096</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Less imputed interest</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(15,316</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">215,780</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The weighted average remaining lease
term is 1.9 years and the weighted average discount rate is 7.0%.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company does not have any finance
leases.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">On May 1, 2020, the Company received
loan proceeds of $414,362 from Bank of America, N.A., pursuant to the Paycheck Protection Program (the “<i>PPP Loan</i>”)
under Division A, Title 1 of the CARES Act, which was enacted March 27, 2020.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The PPP Loan, which was in the form
of a Promissory Note dated May 1, 2020 has a two-year term and bears interest at a rate of 1% per annum. Monthly principal and
interest payments are deferred for six months after the date of disbursement. Beginning seven months from the date of the PPP Note,
the Company is required to make monthly payments of principal and interest of approximately $23,320. The Company recorded accrued
interest of $681 at June 30, 2020. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The
Promissory Note contains events of default and other provisions customary for a loan of this type.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Under the terms of the CARES Act,
PPP Loan participants can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Under the terms
of the PPP, PPP loans and accrued interest are forgivable between eight weeks and twenty-four weeks, as long as the borrower uses
the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The
amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the eight-week period.
The Company intends to use the loan proceeds for purposes consistent with the PPP, and anticipates that all or a majority of the
loan amount may be forgiven, but there is no assurance provided that the Company will obtain forgiveness of the PPP Loan in whole
or part.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">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 (“<i>Preferred Stock</i>”).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><u>2020 Follow-On Public Offering</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">On June 2, 2020, the Company consummated
a follow-on public offering, pursuant to which a total of 2,066,667 Units were offered and sold at the public offering price of
$6.00 per Unit. Each Unit sold consisted of one share of Common Stock and one detachable two-year warrant to purchase one share
of Common Stock at an exercise price of $6.00 per share. The offering resulted in the Company’s receipt of gross cash proceeds
of $12.4 million and net cash proceeds of $11.67 million after deduction of commissions and offering costs.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><u>Summary of Stock Purchase Warrants</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The following table summarizes warrant
activity during the six months ended June 30, 2020:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Average Purchase Price Per Share</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Shares purchasable under outstanding warrants at December 31, 2019</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">6,620,620</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.41</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Stock purchase warrants issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,066,667</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">6.00</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Stock purchase warrants exercised</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(2,085,200</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">4.92</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Shares purchasable under outstanding warrants at June 30, 2020</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,602,087</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">5.75</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">During the six months ended June
30, 2020 the Company received gross proceeds of $10,250,532 from the exercise of warrants and paid $398,091 as an agent fee to
facilitate exercise of certain warrants resulting in net proceeds of $9,852,441. The Company is obligated to pay an agent fee of
5% on certain warrant exercises facilitated by the agent through September 15, 2020.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company has outstanding Common
Stock purchase warrants as of June 30, 2020 as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Number of</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Exercise Price</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td>
<p style="border-bottom: black 0.75pt solid; font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Description</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Common Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Per Share</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Purchase Warrants (1)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">2,364,237</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.00</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Agent Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">177,954</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Purchase Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,839,383</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">6.50</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Agent Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">153,846</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">8.125</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Purchase Warrants</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,066,667</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">6.00</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,602,087</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">(1) Warrants to purchase 233,334
shares of common stock are held by a family trust of Elwood G. Norris, the Company’s Chief Technology Officer. Mr. Norris
exercised the 233,334 warrants in July 2020 for cash of $1,166,670.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Subsequent to June 30, 2020 a total
of <font style="background-color: yellow">___________ warrants</font>, including those of Mr. Norris, were exercised for gross
proceeds of <font style="background-color: yellow">$____________</font>.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">On March 31, 2017, the Company adopted,
and the stockholders approved the 2017 Stock Incentive Plan (the “<i>Plan</i>”) 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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><u>Stock Options</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The following table summarizes stock
option activity for the six months ended June 30, 2020:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Options on</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Remaining</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Aggregate</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Common</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Exercise</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Contractual</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Intrinsic</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Price</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Term</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Outstanding December 31, 2019</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,928,750</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">2.96</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.71</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in; text-align: justify"><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">381,336</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">4.37</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in; text-align: justify"><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(293,250</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">1.76</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in; text-align: justify"><font style="font-size: 8pt">Forfeited, cancelled, expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(50,000</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 51%; text-align: justify"><font style="font-size: 8pt">Outstanding June 30, 2020</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">2,966,836</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">3.26</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">4.08</font></td>
<td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">21,409,000</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Vested and exercisable at June 30, 2020</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,984,667</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.42</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3.09</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,999,867</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company uses the Black-Scholes
option pricing model to determine the fair value of the options granted.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="3" style="text-align: center"><font style="font-size: 8pt"><b>For the Six Months</b></font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="3" style="text-align: center"><font style="font-size: 8pt"><b>Ended June 30,</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 47%"> </td>
<td style="border-bottom: black 1pt solid; width: 16%"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 18%; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="border-bottom: black 1pt solid; width: 1%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; width: 16%; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected stock price volatility</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">45%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">49%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Risk-free interest rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.42%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.41%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Forfeiture rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected dividend yield</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected life of options - years</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">                       6.03</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">                   3.50</font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 8pt">Weighted-average fair value of options granted</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">$1.86</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">$2.06</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><u>Restricted Stock Units</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Plan provides for the grant of
restricted rtock units (<i>RSUs</i>). On January 16, 2020 the Company granted 73,392 of service based RSUs to officers and directors
vesting over three years that convert to Common Stock as vesting occurs. On April 1, 2020 the Company granted 122,222 of service
based RSUs to employees vesting over three years that convert to Common Stock as vesting occurs. Also, on April 1, 2020 the Company
granted an officer 35,211 of performance based RSUs.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The following table summarizes RSU
activity under the Plan for the six months ended June 30, 2020:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Weighted Average</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Service-Based</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Grant Date</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Vesting</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>RSU's</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><font style="font-size: 8pt"><b>Period</b></font> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr>
<td style="vertical-align: bottom; width: 64%; text-align: justify"><font style="font-size: 8pt">Unvested at January 1, 2020</font></td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 0%"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 8pt">308,087</font></td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 0%"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 8pt">6.77</font></td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 12%"> </td>
<td style="width: 1%"> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Granted - service based</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">196,214</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">4.72</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt">3 Years</font></td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Granted - performance based</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">35,211</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">4.72</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Vested</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">(86,558</font></td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">)</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">7.24</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Forfeited and cancelled</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 8pt">(3,416</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">7.24</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">Unvested at June 30, 2020</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double; vertical-align: bottom"> </td>
<td style="border-bottom: black 1pt double; vertical-align: bottom; text-align: right"><font style="font-size: 8pt">449,538</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">5.62</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company recorded stock-based
compensation for options and RSUs in its statements of operations for the relevant periods as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>For the Three Months</b></font></td>
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>For the Six Months</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>Ended June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>Ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 50%; text-align: justify"><font style="font-size: 8pt">Selling, general and administrative</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">496,036</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">345,217</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">925,134</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">548,417</font></td>
<td style="width: 2%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Research and development</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">52,953</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">28,634</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">91,101</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">52,481</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Total stock-based expense</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">548,989</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">373,851</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">1,016,235</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">600,898</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">As of June 30, 2020, total estimated
compensation cost of stock options and RSUs granted but not yet vested was $4.0 million which is expected to be recognized over
the weighted average period of 2.1 years.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><i>Facility Leases</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">See Note 7.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><i>Related Party Technology License
Agreement</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company is obligated to pay royalties
and pay development and patent costs pursuant to an exclusive Amended and Restated Intellectual Property License Agreement dated
as of September 30, 2016 with Syzygy, a company owned and controlled by stockholders/officers Mr. Elwood Norris and Mr. James Barnes,
both of whom are stockholders and officers of the Company. The agreement provides for royalty payments of 4% of revenue from products
employing the licensed ensnarement device technology up to an aggregate of $1,000,000 in royalties or until September 30, 2026,
whichever occurs earlier. The Company recorded $28,481 and $53,467 for royalties incurred during the three and six months ended
June 30, 2020 and $2,231 and $6,719 incurred for the three and six months ended June 30, 2019, respectively</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify"><i>Purchase Commitments</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">At June 30, 2020 the Company was
committed for approximately $1.7 million for future component deliveries and contract services that are generally subject to modification
or rescheduling in the normal course of business.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Commencing in October 2017 the Company
began reimbursing Mr. Elwood Norris, an officer and stockholder of the Company, $1,500 per month on a month to month basis for
laboratory facility costs, for an aggregate of $9,000 during the six months ended June 30, 2020 and 2019, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">Commencing in April 2020 the Company
engaged V3 Capital Partners, LLC (“<i>V3</i>”), a company owned and controlled by Scot Cohen, the Company’s Executive
Chairman, to provide certain investor, shareholder and marketing services, in consideration for the payment to V3 of $10,000 per
month on a month to month basis. In addition, the Company agreed to pay V3 a bonus of $175,000 for assistance in a qualified financing
that was consummated in June 2020. This bonus was paid in July 2020.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">See Notes 6, 9 and 11 for additional
information on related party transactions and obligations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.25in; text-align: justify">The Company evaluated subsequent
events for their potential impact on the financial statements and disclosures through the date the financial statements were available
to be issued, and determined that, except as disclosed herein, no subsequent events occurred that were reasonably expected to impact
the financial statements presented herein.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Wrap Technologies, Inc., a Delaware
corporation (the “<i>Company</i>”), is a publicly traded company listed on the Nasdaq Capital Market (“<i>Nasdaq</i>”)
under the trading symbol “WRTC”. The Company is a developer of security products designed for use by law enforcement
and security personnel. The Company’s first product is the BolaWrap® 100 remote restraint device that discharges an
eight-foot bola style Kevlar® tether to entangle a subject at a range of 10-25 feet. The principal markets for the Company’s
proprietary products are in North and South America, Europe, Middle East and Asia.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company’s unaudited interim financial
statements and related notes included herein have been prepared in accordance with accounting principles generally accepted in
the United States of America (“<i>US GAAP</i>”) for interim financial information and in accordance with Article 8
of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“<i>SEC</i>”). The
condensed balance sheet at December 31, 2019 was derived from audited financial statements but 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 statements
reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for the 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 interim 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, 2019. Results
of operations for interim periods are not necessarily indicative of the results of operations for a full year.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions (e.g., stock-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible
assets, warranty reserve, accrued costs and recognition and measurement of contingencies) that affect the reported amounts of assets
and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported
amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Where necessary, the prior year’s
information has been reclassified to conform to the current year presentation.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Credit Risk</i> – Financial
instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash and cash equivalents
and accounts receivable from customers. The Company maintains its cash deposits at two domestic financial institutions. The Company
is exposed to credit risk in the event of default by a financial institution to the extent that cash and cash equivalents are in
excess of the amount insured by the Federal Deposit Insurance Corporation. The Company places its cash and cash equivalents with
high-credit quality financial institutions. To date, the Company has not experienced any losses on its cash and cash equivalents.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Concentrations of Accounts Receivable
and Revenue</i> – The Company has recently commenced sales activities with a limited number of customers. The Company may
experience concentrations in both accounts receivable and revenue due to the timing of sales and collections of related payments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Concentration of Suppliers</i> –
The Company relies on a limited number of component suppliers and contract suppliers. In particular, a single supplier is currently
the sole manufacturer of the Company’s laser assembly with some parts sole sourced from other suppliers. If supplier shortages
occur, or quality problems arise, then production schedules could be significantly delayed or costs significantly increased, which
could in turn have a material adverse effect on the Company’s financial condition, results of operation and cash flows.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Impact of COVID-19</i> - In March
2020, the World Health Organization declared the outbreak of a novel coronavirus (“<i>COVID-19</i>”) as a pandemic
which continues to spread throughout the United States and the World. The COVID-19 pandemic has impacted and could further impact
our operations and the operations of our customers and suppliers as a result of quarantines, facility closures, illnesses, and
travel and logistics restrictions. The extent to which the COVID-19 pandemic further impacts our business, results of operations,
and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but
not limited to the duration, spread, severity, and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our
customers and suppliers and the remedial actions and stimulus measures adopted by federal, state, and local governments, and to
what extent normal economic and operating conditions can resume. Even after the COVID-19 pandemic has subsided, the Company may
continue to experience adverse impacts to its business as a result of any economic recession or depression that has occurred or
may occur in the future.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company follows the fair value recognition
provisions issued by the Financial Accounting Standards Board (“<i>FASB</i>”) in Accounting Standards Codification
(“<i>ASC</i>”) Topic 718, Stock Compensation (“<i>ASC 718</i>”) and has adopted Accounting Standards Update
(“<i>ASU</i>”) 2018-07 for stock-based transactions with non-employees. Stock-based compensation expense recognized
during the three and six months ended June 30, 2020 includes stock option and restricted stock unit compensation expense. <font style="background-color: white">The
grant date fair value of stock options is determined using the Black-Scholes option-pricing model.</font> The grant date is the
date at which an employer and employee or non-employee reach a mutual understanding of the key terms and conditions of a stock-based
payment award. <font style="background-color: white">The Black-Scholes option-pricing model requires inputs including the market
price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding,
the implied stock volatilities of several publicly-traded peers over the expected term of stock options, risk-free interest rate
and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date
fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant.
The fair value of stock-based compensation is amortized to compensation expense over the vesting term.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (“<i>ASU 2014-09</i>”) and ASC Subtopic 340-40, Other Assets and Deferred Costs
- Contracts with Customers (“<i>ASC 340-40</i>”), (collectively, “<i>Topic 606</i>”). On January 1, 2018,
the Company adopted Topic 606 and, as it had no prior revenue or contracts with customers, there was no transition required nor
any impact on prior results. ASU 2014-09 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. See Note 2 for additional information.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company’s policy is to evaluate
the collectability of accounts receivable based on an assessment of the collectability of specific customer accounts and then record
an allowance for doubtful accounts to reduce the receivables to an amount that management reasonably estimates will be collected.
There was no allowance for doubtful accounts recorded at December 31, 2019. At June 30, 2020 the Company had an allowance of $10,140
resulting in part from global uncertainty resulting from the COVID-19 virus. Accounts that are deemed uncollectible will be written
off against the allowance for doubtful accounts. If a major customer’s creditworthiness deteriorates, or actual defaults
exceed our historical experience, such estimates could change and impact our future reported financial results.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Inventories are valued at the lower
of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method.
Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers<i>.</i> The Company evaluates
the need for reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for the Company’s
products. At June 30, 2020 and the Company had a reserve for obsolescence of $48,000 related to parts expected to be displaced
by product improvement initiatives.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Basic loss per common share is computed
by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted
net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s
losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock
options, restricted stock units and warrants exercisable or issuable for a total of 10,018,461 shares of Common Stock were outstanding
at June 30, 2020. These securities are not included in the computation of diluted net loss per common share for the periods presented
as their inclusion would be antidilutive due to losses incurred by the Company.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Until its conversion to a corporation
on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income
taxes. Instead, its losses were included in the income tax returns of the member partners. No income tax expense was recorded for
period ended June 30, 2020 due to losses incurred.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">Deferred tax assets and liabilities
are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial
reporting purposes.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">The Company maintains a valuation allowance
with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing
the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current
period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward
period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change
in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in
income in the year of the change in estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Effective the First Quarter of 2020:</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">In August 2018, the FASB issued ASU
No. 2018-13, Fair Value Measurement (“<i>Topic 820</i>”): Disclosure Framework - Changes to the Disclosure Requirements
for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, to improve the effectiveness
of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. This
ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after
December 15, 2019. The adoption of this standard in the first quarter ended March 31, 2020 had no impact on the Company’s
financial statements or disclosures.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify"><i>Other Pronouncements:</i></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">In December 2019, the FASB
issued Accounting Standards Update 2019-12, <i>Income Taxes (Topic </i>740<i>): Simplifying the Accounting for Income
Taxes </i>(“<i>ASU 2019-12</i>”), 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 also clarifies and
amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December
15, 2020, with early adoption permitted. We do not expect that the adoption of this ASU will have a significant impact on
our financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 9pt; text-align: justify">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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Finished goods</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">719,104</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">653,323</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Work in process</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">22,149</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">413</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Raw materials</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,393,252</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,590,805</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,134,505</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,244,541</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Less allowance for obsolescence</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(48,000</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Inventories - net</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,086,505</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,244,541</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Laboratory equipment</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">55,645</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">44,454</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Tooling</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">77,459</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">59,004</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Computer equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">106,765</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">83,368</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Furniture, fixtures and improvements</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">144,323</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">128,782</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">384,192</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">315,608</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Accumulated depreciation</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(120,022</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(72,732</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">264,170</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">242,876</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Patents</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">242,202</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">176,425</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Trademarks</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">74,145</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">57,919</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">316,347</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">234,344</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Accumulated amortization</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(9,357</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(4,061</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">306,990</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">230,283</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Patent and legal costs</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">25,000</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">9,851</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Accrued compensation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">264,311</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">144,193</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Warranty costs</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">32,832</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">13,923</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Consulting costs</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7,500</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Taxes and other</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">17,972</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">18,827</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">345,115</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">194,294</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%; text-align: justify"><font style="font-size: 8pt">Operating lease liability- short term</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">113,954</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Operating lease liability - long term</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">101,826</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in"><font style="font-size: 8pt">Total Operating Lease Liability</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">215,780</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 88%; text-align: justify"><font style="font-size: 8pt">Remainder of 2020 (six months)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">72,362</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">2021</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">101,406</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">2022</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">57,328</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 27pt; text-align: justify"><font style="font-size: 8pt">Total future minimum lease payments</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">231,096</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Less imputed interest</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(15,316</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">215,780</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Average Purchase Price Per Share</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Shares purchasable under outstanding warrants at December 31, 2019</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">6,620,620</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.41</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Stock purchase warrants issued</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,066,667</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">6.00</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Stock purchase warrants exercised</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(2,085,200</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">4.92</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Shares purchasable under outstanding warrants at June 30, 2020</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,602,087</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">5.75</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Number of</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Exercise Price</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td>
<p style="border-bottom: black 0.75pt solid; font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Description</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Common Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Per Share</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Purchase Warrants (1)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">2,364,237</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.00</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Agent Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">177,954</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Purchase Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,839,383</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">6.50</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Agent Warrants</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">153,846</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">8.125</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Purchase Warrants</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,066,667</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">6.00</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,602,087</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-align: justify">(1) Warrants to purchase 233,334
shares of common stock are held by a family trust of Elwood G. Norris, the Company’s Chief Technology Officer. Mr. Norris
exercised the 233,334 warrants in July 2020 for cash of $1,166,670.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Options on</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Remaining</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Aggregate</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Common</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Exercise</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Contractual</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>Intrinsic</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Shares</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Price</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Term</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Outstanding December 31, 2019</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,928,750</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">2.96</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.71</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in; text-align: justify"><font style="font-size: 8pt">Granted</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">381,336</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">4.37</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in; text-align: justify"><font style="font-size: 8pt">Exercised</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(293,250</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">1.76</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 0.25in; text-align: justify"><font style="font-size: 8pt">Forfeited, cancelled, expired</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(50,000</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="text-align: center"> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 51%; text-align: justify"><font style="font-size: 8pt">Outstanding June 30, 2020</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">2,966,836</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">3.26</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">4.08</font></td>
<td style="width: 2%; padding-bottom: 1.5pt"> </td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; width: 9%; text-align: right"><font style="font-size: 8pt">21,409,000</font></td>
<td style="width: 1%; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Vested and exercisable at June 30, 2020</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,984,667</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.42</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3.09</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,999,867</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="3" style="text-align: center"><font style="font-size: 8pt"><b>For the Six Months</b></font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="3" style="text-align: center"><font style="font-size: 8pt"><b>Ended June 30,</b></font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 47%"> </td>
<td style="border-bottom: black 1pt solid; width: 16%"> </td>
<td style="border-bottom: black 1pt solid; width: 1%"> </td>
<td style="border-bottom: black 1pt solid; width: 18%; text-align: center"><font style="font-size: 8pt"><b>2020</b></font></td>
<td style="border-bottom: black 1pt solid; width: 1%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; width: 16%; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected stock price volatility</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">45%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">49%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Risk-free interest rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.42%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.41%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Forfeiture rate</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected dividend yield</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0%</font></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected life of options - years</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">                       6.03</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">                   3.50</font></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: justify"><font style="font-size: 8pt">Weighted-average fair value of options granted</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">$1.86</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">$2.06</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Weighted Average</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Service-Based</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td colspan="2" style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Grant Date</b></font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt"><b>Vesting</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>RSU's</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Fair Value</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center; padding-bottom: 1.5pt; vertical-align: bottom"><font style="font-size: 8pt"><b>Period</b></font> </td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr>
<td style="vertical-align: bottom; width: 64%; text-align: justify"><font style="font-size: 8pt">Unvested at January 1, 2020</font></td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 0%"> </td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 8pt">308,087</font></td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 0%"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; width: 9%; text-align: right"><font style="font-size: 8pt">6.77</font></td>
<td style="vertical-align: bottom; width: 1%"> </td>
<td style="vertical-align: bottom; width: 12%"> </td>
<td style="width: 1%"> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Granted - service based</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">196,214</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">4.72</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: center"><font style="font-size: 8pt">3 Years</font></td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Granted - performance based</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">35,211</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">4.72</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Vested</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">(86,558</font></td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">)</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; text-align: right"><font style="font-size: 8pt">7.24</font></td>
<td style="vertical-align: bottom"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">  Forfeited and cancelled</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom"> </td>
<td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right"><font style="font-size: 8pt">(3,416</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt; text-align: right"><font style="font-size: 8pt">7.24</font></td>
<td style="vertical-align: bottom; padding-bottom: 1.5pt"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
<tr>
<td style="vertical-align: bottom; text-align: justify"><font style="font-size: 8pt">Unvested at June 30, 2020</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double; vertical-align: bottom"> </td>
<td style="border-bottom: black 1pt double; vertical-align: bottom; text-align: right"><font style="font-size: 8pt">449,538</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="vertical-align: bottom; padding-bottom: 3pt"><font style="font-size: 8pt">$</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt; text-align: right"><font style="font-size: 8pt">5.62</font></td>
<td style="vertical-align: bottom; padding-bottom: 3pt"> </td>
<td style="vertical-align: bottom"> </td>
<td> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>For the Three Months</b></font></td>
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>For the Six Months</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>Ended June 30,</b></font></td>
<td> </td>
<td> </td>
<td colspan="6" style="text-align: center"><font style="font-size: 8pt"><b>Ended June 30,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2020</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b> 2019</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 50%; text-align: justify"><font style="font-size: 8pt">Selling, general and administrative</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">496,036</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">345,217</font></td>
<td style="width: 2%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">925,134</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">548,417</font></td>
<td style="width: 2%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Research and development</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">52,953</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">28,634</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">91,101</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">52,481</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Total stock-based expense</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">548,989</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">373,851</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">1,016,235</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">600,898</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
10140
2134505
2244541
48000
0
47290
12186
24793
7621
5296
387
2695
203
25000
9851
5000
7500
215780
72362
101406
57328
231096
15316
59800
22211
30172
16432
68644
25956
34322
19305
P1Y10M24D
.0700
6602087
6620620
2066667
2085200
5.75
5.41
6.00
4.92
6602087
177954
1839383
153846
2066667
5.00
3.00
6.50
8.125
6.00
2966836
2928750
381336
239250
50000
1984667
3.26
2.96
4.37
1.76
3.00
2.42
P3Y8M16D
P4Y29D
P3Y1M2D
21409000
0
0
0
0
15999867
.4500
.4900
.0042
.0241
.0000
.0000
.0000
.0000
P6Y11D
P3Y6M
1.86
2.06
P3Y
449538
308087
196214
35211
86558
3416
5.62
6.77
4.72
4.72
7.24
7.24
4000000
P2Y1M6D
1700000
53467
6719
28481
2231
9000
9000
Warrants to purchase 233,334 shares of common stock are held by a family trust of Elwood G. Norris, the Company's Chief Technology Officer. Mr. Norris exercised the 233,334 warrants in July 2020 for cash of $1,166,670.