WRAP TECHNOLOGIES, INC.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant [ ]
Check
the appropriate box:
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[
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Preliminary
Proxy Statement
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[
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Confidential,
for Use of the SEC Only (as permitted by
Rule 14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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[
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Definitive
Additional Materials
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[
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Soliciting
Material Pursuant to 14a-12
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WRAP TECHNOLOGIES, INC.
(Name
of Registrant as Specified in Its Charter)
_________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X]
No fee required.
[
] Fee computed on table below
per Exchange Act Rules 14a-6(i)(4) and 0-11.
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of each class of securities to which transaction
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
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4.
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Proposed
maximum aggregate value of transaction:
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fee paid:
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[
] Fee paid previously
with preliminary materials.
[
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is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
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Amount
Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Party:
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Date
Filed:
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Wrap Technologies, Inc.
1817 W 4
th
Street
Tempe, Arizona 85281
(800) 583-2652
April 20
, 2020
Dear
Stockholders,
You are cordially
invited to attend the 2020 Annual Meeting of Stockholders (the
“
Annual Meeting” or
“Meeting”
) of Wrap Technologies, Inc. (the
“
Company
”), to
be held virtually
on June 5, 2020 at
10:30 A.M., Pacific Time.
After careful consideration and taking into
consideration the guidance from the Center for Disease Control and
Prevention and the World Health Organization, this year’s
Annual Meeting will be a virtual meeting to be conducted via live
audio webcast due to the difficulties arising from the coronavirus
disease (COVID-19) including travel restrictions and the need
to protect the Company’s employees, stockholders and the
community. In lieu of having a physical location for the Meeting,
our virtual format will use technology to provide our stockholders
the rights and opportunities to participate in the virtual Meeting
similar to what they would have as if the Meeting were in-person.
Stockholders may attend the Annual Meeting, vote their shares and
submit questions electronically during the Meeting via live audio
webcast by visiting
https://livewebinar.com/wrap-technologies
.
As always, we encourage you to vote your shares prior to the Annual
Meeting.
Details of the
business to be conducted at the Annual Meeting are described in
both the Notice of Internet Availability of Proxy Materials (the
“
Notice
”) you
received in the mail, and in this Proxy Statement. We have also
made a copy of our Annual Report on Form 10-K for the year ended
December 31, 2019 (“
Annual
Report
”) which is also available with this Proxy
Statement. We encourage you to read our Annual Report as it
includes our audited financial statements and provides information
about our business and services.
As part of our efforts to conserve environmental resources and
prevent unnecessary corporate expense, we have elected to provide
access to our proxy materials over the Internet, rather than
mailing paper copies. We believe that providing our proxy materials
over the Internet increases the ability of our stockholders to
access the information they need, while lowering the costs of our
Annual Meeting and conserving natural resources.
Regardless of whether
you plan to virtually attend the Annual
Meeting,
please
read this Proxy Statement and vote your shares by Internet,
telephone or e-mail as promptly as possible.
Please
refer to the Notice for instructions on submitting your vote.
Voting promptly will save us additional expense in further
soliciting proxies and will ensure that your shares are represented
at the Annual Meeting.
Our Board of
Directors has unanimously approved the proposals set forth in the
Proxy Statement and we recommend that you vote in favor of each
such proposal.
Lastly, if you
decide to attend the Annual Meeting and wish to modify your vote,
you may revoke your proxy and vote virtually at the
Meeting.
The Meeting can be
accessed by visiting
https://livewebinar.com/wrap-technologies
where you will be
able to listen to the Meeting live, where stockholders can submit
questions and vote online. Submitting your proxy does not affect
your right to vote live at the Annual Meeting if you decide to
virtually attend the Annual Meeting. You are urged to submit your
proxy as soon as possible, regardless of whether or not you expect
to attend the Annual Meeting.
If your shares are held in street name through
your bank or broker, you should vote as instructed on your proxy
card. The virtual Meeting will begin promptly at 10:30 A.M.,
Pacific Time.
We encourage you to access the Meeting prior
to the start time. Online check-in will begin at 10:00 A.M.,
Pacific Time, and we recommend that you allow ample time for the
check-in process.
If you experience
any technical difficulties during the check-in time or during the
Annual Meeting or have trouble accessing the Annual Meeting’s
website, please call 877-285-8605.
We look forward to your
virtual attendance at the Meeting.
Sincerely,
/s/ Scot
Cohen
Scot
Cohen
Chair of the
Board
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YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the Annual
Meeting. However, to ensure your representation at the Annual
Meeting, you are urged to vote by Internet, telephone or e-mail as
soon as possible. Returning your proxy will help us assure that a
quorum will be present at the Annual Meeting and avoid the
additional expense of duplicate proxy solicitations. Any
stockholder attending the Annual Meeting may vote during the Annual
Meeting, even if he or she has returned a proxy.
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Wrap Technologies, Inc.
1817 W 4
th
Street
Tempe, Arizona 85281
(800) 583-2652
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on
June 5
,
2020
Dear
Stockholders of Wrap Technologies, Inc.:
We are
pleased to invite you to attend the 2020 Annual Meeting of
Stockholders (the “
Annual
Meeting
”) of Wrap Technologies, Inc., a Delaware
corporation (the “
Company
”)
on June 5, 2020 at 10:30 A.M., Pacific
Time
, via virtual meeting, which will be conducted via live
audio webcast, and accessed at
https://livewebinar.com/wrap-technologies
for
the following purposes:
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1.
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to
elect five directors to our Board of Directors, each to serve until
our next annual meeting of stockholders, or until their respective
successor is duly elected and qualified;
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2.
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to
approve an amendment to our 2017 Equity Compensation Plan (the
“
2017 Plan
”) to
increase the number of shares of Company common stock, par value
$0.0001 per share (“
Common
Stock
”), available for issuance thereunder from 4.1
million shares to
6
million
shares (the “
Plan
Amendment
”), and ratify all issuances made thereunder
to date;
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3.
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to
ratify the appointment of
Rosenberg
Rich Baker Berman, P.A.
as our independent auditors for the
year ending December 31, 2020; and
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4.
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to vote
upon such other matters as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
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These
matters are more fully discussed in this Proxy
Statement.
We have elected to
provide access to our proxy materials primarily over the Internet,
pursuant to the Securities and Exchange Commission’s
“notice and access” rules. We believe this process
expedites stockholders’ receipt of proxy materials, while
lowering the costs of our Annual Meeting and conserving natural
resources. We intend to mail a Notice of Internet Availability of
Proxy Materials (the “
Notice
”)
to each of our stockholders entitled to notice of and to vote at
the virtual Annual Meeting on or about April 23, 2019, which will
contain instructions for accessing this Proxy Statement, our Annual
Report on Form 10-K for the fiscal year ended December 31, 2019
(“
Annual
Report
”) and voting
instructions. The Notice will also include instructions on how you
can receive a paper copy of your proxy materials. This Proxy
Statement and the Annual Report are both available online
at:
www.colonialstock.com/wrap2020
.
The
close of business on April 9, 2020 (the “
Record Date
”) has been fixed as
the Record Date for the determination of stockholders entitled to
notice of, and to vote at, the Annual Meeting or any adjournments
or postponements thereof. Only holders of record of our Common
Stock at the close of business on the Record Date are entitled to
notice of, and to vote at, the Annual Meeting. A complete list of
stockholders entitled to vote at the Annual Meeting will be
available for examination by any of our stockholders for purposes
pertaining to the Annual Meeting at our corporate offices, located
at 1817 W 4
th
Street, Tempe,
Arizona 85281, during normal business hours for a period
of ten days prior to the Annual Meeting, and at the time
and place of the Annual Meeting.
-1-
Because the Annual Meeting is virtual and being conducted via live
webcast, stockholders will not be able to physically attend the
Annual Meeting in person. Participation in the live webcast will be
considered in person attendance. Details regarding how to
participate in the meeting online and the business to be conducted
at the Annual Meeting are more fully described in this Proxy
Statement.
You can
vote virtually during the Annual Meeting by use of a proxy card if
you receive a printed copy of our proxy materials, or via Internet
or telephone as indicated on the proxy card. If you hold shares of
our Common Stock as the stockholder of record, then you have the
right to vote those shares at the Annual Meeting. If you are a
beneficial owner and hold shares of our Common Stock in street
name, then you can vote the shares you beneficially own through the
online voting platform under a legal proxy from your bank,
brokerage firm, or other nominee and are not required to take any
additional action to obtain a legal proxy. Please follow the
instructions at
https://livewebinar.com/wrap-technologies
in
order to vote your shares during the Annual Meeting, whether you
hold your shares of record or in street name.
Whether or not you expect to attend the Annual Meeting, we urge you
to vote your shares as promptly as possible by Internet, telephone
or e-mail so that your shares may be represented and voted at the
Annual Meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING TO BE HELD ON
JUNE
5
, 2020: THE ANNUAL REPORT AND PROXY STATEMENT ARE AVAILABLE
ONLINE AT:
www.colonialstock.com/wrap2020
.
Our
Board of Directors recommends that you vote “FOR” each
of the director nominees identified in Proposal No. 1 and
“FOR” Proposal Nos. 2 and 3. Each of these Proposals
are described in detail in the accompanying Proxy
Statement.
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By
Order of the Board of Directors,
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/s/ Scot
Cohen
Scot
Cohen
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Chair
of the Board
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Tempe,
Arizona
April 20,
2020
-2-
Wrap Technologies, Inc.
1817 W 4
th
Street
Tempe, Arizona 85281
(800) 583-2652
PROXY STATEMENT
This
Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the “
Board
”) of Wrap Technologies,
Inc., a Delaware corporation (the “
Company
”), for use at the
Company’s 2020 Annual Meeting of Stockholders (the
“
Annual
Meeting
”) to be held on June 5, 2020 at 10:30 A.M.,
Pacific Time, via virtual meeting by accessing
https://livewebinar.com/wrap-technologies
,
and any adjournment or postponement thereof.
We have elected to
provide access to this year’s proxy materials primarily over
the Internet under the Securities and Exchange Commission’s
(“
SEC
”) “notice
and access” rules. We intend to mail a Notice of Internet
Availability of Proxy Materials (the “
Notice
”)
to each of our stockholders entitled to notice of and to vote at
the Annual Meeting on or about April 23, 2020, which will contain
instructions for accessing this Proxy Statement, our Annual Report
on Form 10-K for the fiscal year ended December 31, 2019
(“
Annual
Report
”) and voting
instructions. The Notice will also include instructions on how you
can receive a paper copy of your proxy
materials.
This
Proxy Statement and the Annual Report can also be accessed free of
charge online as of April 21, 2020 at:
www.colonialstock.com/wrap2020
.
Voting
The
specific proposals to be considered and acted upon at our Annual
Meeting are each described in this Proxy Statement. Only
holders of our common stock, par value $0.0001 per share
(“
Common
Stock
’’), as of the close of business on April
9, 2020 (the “
Record
Date
”) are entitled to notice of and to vote at the
Annual Meeting. On the Record Date, there were
30,076,610
shares of Common Stock issued
and outstanding. Each holder of Common Stock is entitled to one
vote for each share held as of the Record Date.
Quorum
In order for any business to be conducted at the
Annual Meeting, a quorum must be present. The presence at the
Annual Meeting, either in attendance virtually or by proxy, of
holders of the Company’s Common Stock entitled to vote and
representing at least a majority of the Company’s outstanding
voting power will constitute a quorum for the transaction of
business. If you submit a properly executed proxy, regardless of
whether you abstain from voting on one or more matters, your shares
will be counted as present at the Annual Meeting for the purpose of
establishing a quorum. Shares that constitute broker non-votes will
also be counted as present at the Annual Meeting for the purpose of
establishing a quorum. If a quorum is not present at the scheduled
time of the Annual Meeting, the stockholders who are present may
adjourn the Annual Meeting until a quorum is present. The time and
place of the adjourned Annual Meeting will be announced at the time
the adjournment is taken, and no other notice will be given. An
adjournment will have no effect on the business that may be
conducted at the Annual Meeting.
Required Vote for Approval
Proposal No. 1: Election of Directors.
Directors are elected by a plurality
vote.
This means that the five director nominees who receive
the greatest number of affirmative votes cast at the Annual Meeting
by the shares present, either in attendance virtually or by proxy
and entitled to vote, will be elected.
Abstentions and broker non-votes will have no
effect on the outcome of the election of the
directors.
Proposal No. 2:
Plan Amendment, and Ratification of all Issuances Made Thereunder
to Date.
To approve the
amendment to our 2017
Equity Compensation Plan (the
“
2017 Plan
”)
to increase
the number of shares of Common Stock authorized for issuance
thereunder from 4.1 million shares to 6 million shares (the
“
Plan
Amendment
’), and to ratify
all issuances made thereunder to date, the number of votes cast
“FOR” must exceed the number of votes cast
“AGAINST” this Proposal.
A properly executed proxy marked
“ABSTAIN” will not be voted, although it will be
counted as present and entitled to vote for purposes of the
Proposal. Accordingly, an abstention will have the effect of a
vote against this Proposal. A broker or nominee will not have
discretionary authority to vote on this Proposal because it is
considered a non-routine matter. Accordingly, broker non-votes will
have no effect on the outcome of this Proposal.
-3-
Proposal No. 3: Ratification of Appointment of
Auditors.
To ratify the
appointment of
Rosenberg Rich
Baker Berman, P.A.
as our independent
auditors for the fiscal year ending December 31, 2020, the number
of votes cast “FOR” must exceed the number of votes
cast “AGAINST” this Proposal.
A properly executed proxy marked
“ABSTAIN” will not be voted, although it will be
counted as present and entitled to vote for purposes of the
Proposal. Accordingly, an abstention will have the effect of a
vote against this Proposal. A broker or other nominee will
generally have discretionary authority to vote on this Proposal
because it is considered a routine matter, and therefore we do not
expect broker non-votes with respect to this Proposal. However, any
broker non-votes received will have no effect on the outcome of
this Proposal.
Broker Non-Votes
A
“broker non-vote” occurs when a nominee (typically a
broker or bank) holding shares for a beneficial owner (typically
referred to as shares being held in “street name”)
submits a proxy for the Annual Meeting, but does not vote on a
particular proposal because the nominee has not received voting
instructions from the beneficial owner and does not have
discretionary authority to vote the shares with respect to that
proposal.
Brokers
and other nominees may vote on “routine” proposals on
behalf of beneficial owners who have not furnished voting
instructions, subject to the rules applicable to broker nominees
concerning transmission of proxy materials to beneficial owners,
and subject to any proxy voting policies and procedures of those
firms. The ratification of the independent registered public
accountants, for example, is a routine proposal. Brokers and other
nominees may not vote on “non-routine” proposals,
unless they have received voting instructions from the beneficial
owner. The election of directors and approval of the Plan Amendment
are considered “non-routine” proposals. This means that
brokers and other firms must obtain voting instructions from the
beneficial owner to vote on these matters; otherwise they will not
be able to cast a vote for such “non-routine” proposal.
If your shares are held in the name of a broker, bank or other
nominee, please follow their voting instructions so you can
instruct your broker on how to vote your shares.
Voting and Revocation of Proxies
If your
proxy is properly returned to the Company, the shares represented
thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If you return your proxy without
specifying how the shares represented thereby are to be voted, the
proxy will be voted (i)
FOR
the election of the five
director nominees named in this proxy statement, (ii)
FOR
the Plan Amendment, and ratification
of all issuances made under our 2017 Plan to date,
(iii)
FOR
ratification of the appointment
of Rosenberg Rich Baker Berman, P.A. as our independent auditors
for the current fiscal year, and (iv) at the discretion of the
proxy holders on any other matter that may properly come before the
Annual Meeting or any adjournment or postponement
thereof.
You may
revoke or change your proxy at any time before the Annual Meeting
by (i) filing, with our Corporate Secretary at our executive
offices, located at 1817 W 4
th
Street, Tempe,
Arizona 85281, a notice of revocation or another signed proxy with
a later date or (ii) by voting online at the virtual Annual
Meeting. Attendance at the virtual Annual Meeting by itself will
not revoke a proxy. Shares can be voted at the Annual Meeting only
if the holder is present or represented by proxy. If you are a
stockholder whose shares are not registered in your own name, you
will need additional documentation from your broker or record
holder to vote personally at the Annual Meeting.
No Appraisal Rights
The stockholders of the Company have no dissenter’s or
appraisal rights in connection with any of the proposals described
herein.
Solicitation
We will
bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of the Notice, as well as the
preparation and posting of this Proxy Statement, the Annual Report
and any additional solicitation materials furnished to the
stockholders. Copies of any solicitation materials will be
furnished to brokerage houses, fiduciaries and custodians holding
shares in their names that are beneficially owned by others so that
they may forward this solicitation material to such beneficial
owners. In addition, we may reimburse such persons for their costs
in forwarding the solicitation materials to such beneficial owners.
The original solicitation of proxies may be supplemented by a
solicitation by telephone, e-mail or other means by our directors,
officers or employees. No additional compensation will be paid to
these individuals for any such services. Except as described above,
we do not presently intend to solicit proxies other than by e-mail,
telephone and mail.
-4-
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
Our
Bylaws provide that
that the
number of
directors that constitute the entire Board of Directors (the
“
Board
”)
shall be fixed from time to time by resolution adopted by a
majority of the entire Board, but that in no event shall the number
be less than three. A director elected by the Board to fill a
vacancy shall serve for the remainder of the term of that director
and until the director’s successor is duly elected and
qualified. Our Board currently consists of five directors, each of
whom has been nominated by our Nominating and Governance Committee
for election at the Annual Meeting. The five director nominees for
election at the Annual Meeting consist of: Scot Cohen, Patrick
Kinsella, David Norris, Michael Parris and Wayne
Walker.
Each director nominee, if elected at the Annual
Meeting, will hold office for a one-year term until the next annual
meeting of stockholders or until their successor is duly elected,
unless prior thereto the director resigns, or the director’s
office becomes vacant by reason of death or other cause. If
any such person is unable or unwilling to serve as a director
nominee at the date of the Annual Meeting or any postponement or
adjournment thereof, the proxies may be voted for a substitute
director nominee, designated by the proxy holders or by the present
Board to fill such vacancy, or for the balance of those director
nominees named without nomination of a substitute, and the Board
may be reduced accordingly. The Board has no reason to believe
that any of such director nominees will be unwilling or unable to
serve if elected as a director.
Required Vote and Recommendation
The
election of directors requires the affirmative vote of a plurality
of the voting shares present virtually or represented by proxy and
entitled to vote during the Annual Meeting. The five nominees
receiving the highest number of affirmative votes will be elected.
Abstentions and broker non-votes will
have no effect on the outcome of the election of the
directors.
Unless otherwise instructed or unless authority
to vote is withheld, shares represented by executed proxies will be
voted “FOR” the election of the director nominees
listed above.
The
Board recommends that the stockholders vote “
FOR
” the election of
Messrs. Cohen, Kinsella, Norris, Parris and Walker.
Director Nominees
The
following section sets forth certain information regarding the
nominees for election as directors of the Company. Other than
director nominee, David Norris who is the son of Elwood G. Norris,
the Company's Chief Technology Officer and a former director, there
are no family relationships between any of the directors and the
Company’s executive officers.
BOARD OF DIRECTORS
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Name
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Age
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Positions
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Independent
|
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Scot
Cohen
|
51
|
Executive Chair
|
|
|
Patrick
Kinsella
|
66
|
Director
|
X
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|
David
Norris
|
54
|
Director
and Chief Executive Officer
|
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Michael
Parris
|
61
|
Director
|
X
|
|
Wayne
Walker
|
61
|
Director
|
X
|
Scot
Cohen
cofounded the Company
with Mr. James Barnes and Mr. Elwood Norris in March 2016, and
currently serves as its Executive Chair since July 2017. Prior to
that, he served as a Manager until the Company’s
incorporation in March 2017 at which time he was appointed to serve
as the Company’s Corporate Secretary until January 2018. Mr.
Cohen has over 20 years of experience in institutional asset
management, wealth management, and capital markets. He
currently manages several operating partnerships that actively
invest in the energy sector in addition to maintaining an active
investment portfolio in various public companies, early stage
private companies, hedge funds and alternative assets including
real estate. Some of these include serving as Principal of the
Iroquois Capital Opportunity Fund, a closed end private equity fund
he founded in 2010 which focuses on investments in North American
oil and gas assets;as the Manager of V3 Capital, LLC, an investor
in public and private companies that he also founded in 2015; and
was the co-founder of Iroquois Capital Investment Group, LLC. Mr.
Cohen currently sits on the board of directors of Charlie’s
Holding, Inc., and serves as Executive Chair of the Board of Petro
River Oil Corp. since 2012. Mr. Cohen earned his Bachelor of
Science degree from Ohio University.
-5-
The
Board believes Mr. Cohen’s success with multiple private
investment firms, his extensive contacts within the investment
community and financial expertise strengthens the Company’s
efforts to raise capital to fund the continued implementation of
its business plan.
Patrick Kinsella
was
appointed as a director of the Company in November 2018.
Mr. Kinsella previously served as an adjunct professor at the
USC Marshall School of Business, from August 2011 to December 2019.
In 2014, he was appointed as a director and the Chairman of the
Audit Committee of PennyMac Financial Services, Inc.
(“
PennyMac
”).
Prior to his retirement as a senior audit partner in May 2013,
Mr. Kinsella spent over 37 years at with KPMG LLP serving
clients generally concentrated in the financial services sector,
including banks, thrifts, mortgage companies, automotive finance
companies, alternative investment companies and real estate
companies. Mr. Kinsella received a Bachelor of Science Degree
in Accounting from California State University, Northridge, and is
a licensed certified public accountant in the State of
California.
The Board believes that Mr. Kinsella’s extensive
experience in providing professional accounting and auditing
services and his experience serving as Chair of the Audit Committee
of PennyMac is an asset to the Board.
David
Norris
was appointed as a
director of the Company and the Company’s President in
January 2018, and was promoted to the Company’s Chief
Executive Officer in December 2018. Prior to joining the Company,
he served in senior executive roles at privately held loanDepot,
Inc. from April 2014 to December 2017, during which time it rapidly
expanded into the fifth largest mortgage lender in the United
States. Most recently, he served as Chief Revenue Officer of
loanDepot, with prior executive positions including President and
Chief Operating Officer. In October 2012, Mr. Norris was appointed
as Chief Executive Officer of Greenlight Financial Services, which
was sold to Nationstar Mortgage in May 2013, whereupon he served as
President of Direct Lending and Chief Marketing Officer until
February 2014. Mr. Norris also previously served as President at
LendingTree, Inc. and Discover Home Loans. In addition, Mr.
Norris’ career includes executive and management roles at
Toshiba America Information Systems, Qualcomm Personal Electronics
and American Technology Corporation. His early career was as a
probation officer in San Diego for five years. Mr. Norris earned
his Bachelor of Science degree in business administration from
University of Phoenix in 1993.
The
Board believes that Mr. Norris’ significant executive
experience in rapidly growing businesses and a background in
developing, launching and manufacturing new products makes him a
valued member of the Board.
Michael
Parris
was appointed as a director of the Company in
November 2017.
Mr. Parris has been a
partner at Perry Rogers Partners Inc. (“
Perry
Rogers
”), a sports
management firm, since 1996, where he primarily oversees the SHAQ
Brand and other strategic alliances. His role at Perry Rogers
encompasses business development, worldwide brand management,
marketing and public relations. Prior to joining Perry Rogers, Mr.
Parris had a successful career in law enforcement with the Newark
Police Department in Newark, New Jersey rising to the rank of
Lieutenant. During his career in law enforcement, he worked and
commanded several specialized units, including Homicide, Robbery,
and Internal Affairs. Mr. Parris holds a Bachelor of Science degree
in Business Management from the University of
Phoenix.
The Board believes that
given his
background in law enforcement and
worldwide marketing and brand experience, Mr. Parris’
broad experience and insights into the market served by the Company
enhances the Board and the Company
.
Wayne
Walker
was appointed as a
director of the Company in November 2018. Mr. Walker has more than
25 years of experience in corporate law, governance and corporate
restructuring, including working 15 years at the DuPont Company in
the Securities and Bankruptcy group, where he worked in the
Corporate Secretary’s office and served as Senior Counsel. In
2003, Mr. Walker founded Walker Nell Partners, Inc.
(“
Walker Nell
”), an international business consulting
firm providing corporate governance and restructuring, fiduciary
services, litigation support, and other services to client
corporations and law firms, where he continues to serve as the
president. In his role at Walker Nell, he has served on a number of
corporate boards including of BridgeStreet Worldwide (global
housing provider), Last Call Operating Companies (owner of national
restaurants brands Fox & Hound, Champps and Bailey’s Bar
and Grill) and Seaborne Airlines (a regional carrier in the
Caribbean). Wayne currently serves on the board of the
Pitcairn Company, a multi-family office wealth management firm,
where he chairs the Compensation Committee. He has also been active
on various charitable boards and currently serves as Vice President
of Board of Education of the City of Philadelphia. He is the former
Chairman of the Board of Trustees of National Philanthropic Trust,
a public charity that holds over $11.0 billion of assets under
management, and the Board of Directors for Humanity International,
a global non-profit, non-governmental housing organization. He
holds a Bachelor of Arts Degree from Loyola University New Orleans
and a Juris Doctorate from Catholic University of America. He also
studied finance for non-financial managers at the University of
Chicago’s Graduate School of
Business.
The
Board believes that Mr. Walker’s substantial knowledge and
more than 25 years of experience in corporate governance,
restructuring and corporate litigation enhances the Board’s
corporate governance and related experience.
-6-
Director Nominations
The
Board nominates directors for election at each annual meeting of
stockholders, appoints new directors to fill vacancies when they
arise, and has the responsibility to identify, evaluate and recruit
qualified director candidates to the Board for such nomination or
appointment.
The
Board identifies director nominees by first considering those
current members of the Board who are willing to continue service.
Current members of the Board with skills and experience that are
relevant to our business and who are willing to continue service
are considered for re-election, balancing the value of continuity
of service by existing members of the Board with that of obtaining
a new perspective. Director nominees are selected by a majority of
the members of the Board. Although the Company does not have a
formal diversity policy, in considering the suitability of director
nominees, the Board considers such factors as it deems appropriate
to develop a Board that is diverse in nature and comprised of
experienced and seasoned advisors. Factors considered by the Board
include judgment, knowledge, skill, diversity, integrity,
experience with businesses and other organizations of comparable
size, including experience in law enforcement, the use of force
product industry, intellectual property, business, corporate
governance, marketing, finance, administration or public service,
the relevance of a candidate’s experience to our needs and
experience of other Board members, experience with accounting rules
and practices, the desire to balance the considerable benefit of
continuity with the periodic injection of the fresh perspective
provided by new members, and the extent to which a candidate would
be a desirable addition to the Board and any committees of the
Board.
A
stockholder who wishes to suggest a prospective director nominee
for the Board may notify the Corporate Secretary of the Company in
writing with any supporting material the stockholder considers
appropriate. Director nominees suggested by stockholders are
considered in the same way as director nominees recommended by
other sources.
Director Independence
Our Board has reviewed the independence of our
directors based on the listing standards of the Nasdaq Stock Market
(“
Nasdaq
”). Based on this review, the Board of
Directors determined that Messrs. Kinsella, Parris and Walker are
independent, as defined in Rule 5605(a)(2) of the Nasdaq Rules. In
making this determination, our Board considered the relationships
that each of these non-employee directors has with us and all other
facts and circumstances our Board deemed relevant in determining
their independence.
Board Meetings
Directors
hold office until the next annual meeting of the stockholders or
until their successors have been elected or appointed and duly
qualified. Vacancies on the Board that are created by the
retirement, resignation or removal of a director, may be filled by
the vote of the majority of the remaining members of the Board,
with such new director serving the remainder of the term or until
his/her successor shall be elected and qualified.
The
Board is elected by and is accountable to our
stockholders. The Board establishes Company policy and
provides strategic direction, oversight, and control. The
Board met three times during the year ended December 31, 2019 and
all incumbent directors attended at least 75% of the aggregate
number of meetings of the Board and of the committees on which each
of the directors served.
Committees of the Board of Directors
Our
Board currently has three standing committees which consist of the
Audit Committee, Compensation Committee and Nominating and
Governance Committee.
Our Board has
adopted written charters for each of the foregoing committee,
copies of which are publicly available on our website at
www.wraptechnologies.com
under the
“Investors” tab
.
Our Board may establish other committees from time to time as it
deems necessary or appropriate. The chart below reflects the
standing committees of our Board and the composition of each
committee.
|
|
Committees
|
||
|
Director Name
|
Audit
|
Compensation
|
Nominating and Governance
|
|
Scot Cohen
|
|
|
|
|
Patrick Kinsella
|
CC
|
X
|
X
|
|
David Norris
|
|
|
|
|
Michael Parris
|
X
|
X
|
X
|
|
Wayne Walker
|
X
|
CC
|
CC
|
CC – Committee Chair
X – Member
-7-
Audit Committee
The
Audit Committee assists our Board in fulfilling its legal and
fiduciary obligations in matters involving our accounting,
auditing, financial reporting, internal control and legal
compliance functions by approving the services performed by our
independent accountants and reviewing their reports regarding our
accounting practices and systems of internal accounting controls.
The Audit Committee also oversees the audit efforts of our
independent accountants and takes those actions as it deems
necessary to satisfy that the accountants are independent of
management. The Audit Committee currently consists of Messrs.
Kinsella, Parris and Walker, each of whom is a non-management
member of our Board that we believe meets the criteria for
independence under the applicable Nasdaq Rules and SEC rules and
regulations. Mr. Kinsella is also our designated Audit Committee
financial expert, as defined under SEC rules. We believe that
the composition of our Audit Committee meets the criteria for
independence under the applicable Nasdaq Rules and SEC rules and
regulations, and the functioning of our Audit Committee complies
with the applicable Nasdaq Rules and SEC rules and
regulations.
The
Audit Committee met four times during the year ended December 31,
2019, with all members of the Audit Committee in
attendance. The Audit Committee met with our Chief Financial
Officer and with our independent registered public accounting firm
and evaluated the responses by the Chief Financial Officer, both to
the facts presented and to the judgments made by our independent
registered public accounting firm.
Compensation Committee
The
Compensation Committee determines our general compensation policies
and the compensation provided to our directors and officers. The
Compensation Committee also reviews and determines bonuses for our
officers and other employees. In addition, the Compensation
Committee reviews and determines equity-based compensation for our
directors, officers, employees and consultants and administers our
2017 Plan. The Compensation Committee currently consists of
Messrs. Kinsella, Parris and Walker, each of whom is a
non-management member of our Board of Directors that we believe
meets the criteria for independence under the applicable Nasdaq
Rules and SEC rules and regulations. We believe that the
composition of our Compensation Committee meets the criteria for
independence under the applicable Nasdaq Rules and SEC rules and
regulations, and the functioning of our Compensation Committee
complies with the applicable Nasdaq Rules and SEC rules and
regulations.
In March 2019, the Compensation Committee,
retained RCL Compensation Consulting (“
RCL
”) as its independent compensation
consultant in connection with the compensation paid to executive
officers and to review director compensation. RCL does not provide
any material services to management or the Board and has determined
that RCL does not have any business or personal relationships with
any member of the Board or management.
In
determining executive compensation, the Compensation Committee
obtains input and advice from RCL, and reviews recommendations from
our Chief Executive Officer with respect to the performance metrics
or objectives as it pertains to the compensation paid to our other
executive officers. The Board of Directors, upon recommendation
from the Compensation Committee, reviews and approves the
compensation paid to the Company’s Chief Executive Officer
and other executive officers.
The
Compensation Committee, formed in November 2018, met four times
during the year ended December 31, 2019, with all members of the
Compensation Committee in attendance.
Nominating and
Governance Committee
The
Nominating and Governance Committee is responsible for making
recommendations to our Board of Directors regarding candidates for
directorships and the size and composition of our Board. In
addition, the Nominating and Governance Committee is responsible
for overseeing our corporate governance guidelines and reporting
and making recommendations to the full Board of Directors
concerning corporate governance matters. The Nominating and
Governance Committee currently consists of Messrs. Kinsella, Parris
and Walker.
The
Nominating and Governance Committee held one meeting during the
year ended December 31, 2019, with all members of the Nominating
and Governance Committee in attendance.
Board Role in Risk Assessment
Management,
in consultation with outside professionals, as applicable,
identifies risks associated with the Company’s operations,
strategies and financial statements. Risk assessment will also be
performed through periodic reports received by the Audit Committee
from management, counsel and the Company’s independent
registered public accountants relating to risk assessment and
management. Audit Committee members meet privately in executive
sessions with representatives of the Company’s independent
registered public accountants. The Board also provides risk
oversight through its periodic reviews of the financial and
operational performance of the Company.
-8-
Board Leadership Structure
Currently,
our Chief Executive Officer is David Norris and the Executive Chair
of our Board is Scot Cohen. Our Board has determined that it
is in the best interests of the Board and the Company to maintain
separate the roles for the Chief Executive Officer and Chair of the
Board. Our Board believes this structure increases the
Board’s independence from management and, in turn, leads to
better monitoring and oversight of management. Although our Board
believes the Company is currently best served by separating the
role of Chair of the Board of Directors and Chief Executive
Officer, it will review and consider the continued
appropriateness of this structure at least annually.
Indemnification of Officers and Directors
As
permitted by the Delaware General Corporation Law, the
Company will indemnify its directors and officers against
expenses and liabilities they incur to defend, settle, or
satisfy any civil or criminal action
brought against them on account of their being or
having been Company directors or officers
unless, in any such action, they are adjudged to have acted
with gross negligence or willful misconduct.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and
Ethics (the “
Code
”) applicable to all of our employees,
including our principal executive officer, principal financial
officer and principal accounting officer. We will provide any
person, without charge, a copy of our Code upon written request to
Investor Relations, Wrap Technologies, Inc.,
at 1817 W
4
th
Street, Tempe, Arizona 85281
. A copy
of the Code is publicly available by visiting our website at
www.wraptechnologies.com
.
Stockholder Communications
If you
wish to communicate with the Board of Directors, you may send your
communication in writing to:
Wrap
Technologies, Inc.
1817 W 4
th
Street
Tempe, Arizona 85281
Attn:
Corporate Secretary
You
must include your name and address in the written communication and
indicate whether you are a stockholder of the Company. Our
Corporate Secretary will review any communication received from a
stockholder, and all material and appropriate communications from
stockholders will be forwarded to the appropriate director or
directors or committee of the Board of Directors based on the
subject matter.
Section 16(a) Beneficial Ownership Reporting
Compliances
Section 16(a) of the Securities Exchange Act of
1934, as amended (the “
Exchange
Act
”) requires our
officers, directors, and persons who beneficially own more than 10%
of our common stock to file reports of ownership and changes in
ownership with the SEC. Officers, directors, and
greater-than-ten-percent stockholders are also required by the SEC
to furnish us with copies of all Section 16(a) forms that they
file.
Based
solely on a review of copies of such reports furnished to our
Company and representation that no other reports were required
during the fiscal year ended December 31, 2019, we believe that all
persons subject to the reporting requirements pursuant to Section
16(a) filed the required reports on a timely basis with the
Securities and Exchange Commission.
-9-
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
Executive Officers
Our
executive officers are appointed by the Board and serve at the
discretion of the Board, subject to the terms of any employment
agreements they may have with the Company. The following is a brief
description of the present and past business experience of each of
the Company’s current executive officers.
|
Name
|
Age
|
Positions
|
|
David
Norris
|
54
|
Chief
Executive Officer
|
|
Thomas
P. Smith
|
52
|
President
|
|
James
A. Barnes
|
65
|
Chief Financial Officer, Corporate
Secretary
and
Treasurer
|
|
Elwood
G. Norris
|
81
|
Chief
Technology Officer
|
|
Michael
Rothans
|
58
|
Chief
Operating Officer
|
David Norris –
Please see Mr. Norris’ biography under “Board of
Directors” above.
Thomas P.
Smith
joined
the Company in March 2019 as President. Mr. Smith
co-founded TASER International (now Axon
Enterprise, Inc.) (“
TASER
”) in 1993. He served as President of TASER
until October 2006, and as Chairman of the Board of Directors of
TASER from October 2006 until he retired to pursue entrepreneurial
activities in February 2012. Amongst his most significant roles and
responsibilities at TASER, Mr. Smith managed domestic and
international export sales, significantly expanding the sale and
distribution of TASER’s products, including sales to more
than 17,200 federal, state and local law enforcement agencies in
over 100 countries. In 2012 he co-founded Achilles Technology
Solutions, LLC (“
Achilles
”), and through its wholly-owned subsidiary
ATS Armor, LLC (“
ATS Armor
”), which he co-founded in 2015, developed
products for law enforcement and military. Mr. Smith served as the
Managing Member of Achilles from 2012 to January 2020. In addition,
Mr. Smith served as the Managing Member of ATS Armor and ATS MER
(“
ATS
MER
”), a research and
development company acquired by Achilles in 2015 that was primarily
funded by government SBIR contracts, until March 2019 and February
2019, respectively. ATS Armor filed a petition for Chapter 7
Bankruptcy in March 2019, and ATS MER filed a petition for Chapter
7 Bankruptcy in February 2019. Mr. Smith holds a B.S. degree
in Ecology and Evolutionary Biology from the University of Arizona
and a M.B.A. degree from Northern Arizona
University.
James A.
Barnes
cofounded the Company
with Mr. Elwood Norris and Mr. Cohen in March 2016, and currently
serves as Chief Financial Officer, Secretary and Treasurer. He
served as Manager until the Company’s incorporation in March
2017 when he was appointed President and Chief Financial Officer.
He served as a member of the Company’s Board of Directors
from March 2017 to November 2018. In January 2018 he was appointed
to the additional positions of Secretary and Treasurer and resigned
as President. He has served as the President of Sunrise Capital,
Inc., a private venture capital and financial and regulatory
consulting firm, since 1984. He was Chief Financial Officer of
Parametric Sound Corporation (now Turtle Beach Corporation) from
2010 to February 2015, and from February 2015 to February 2017
served as Vice President Administration at Turtle Beach
Corporation. Since 1999, he has been Manager of Syzygy Licensing
LLC (“
SYZYGY
”), a private technology invention and
licensing company he owns with Mr. Elwood Norris. He previously
practiced as a certified public accountant and management
consultant with Ernst & Ernst, Touche Ross & Co., and as a
principal in J. McDonald & Co. Ltd., Phoenix, Arizona. He
graduated from the University of Nebraska with a Bachelor of Arts
Degree in Business Administration in 1976 and is a certified public
accountant (status: inactive).
Elwood
G. Norris
cofounded the Company
with Mr. Barnes and Mr. Cohen in March 2016 and currently serves as
the Company’s Chief Technology Officer. He served as a
director on the Company’s Board of Directors from March 2017
to January 2018. He was previously a director and President of
Parametric Sound Corporation (now Turtle Beach Corporation) from
2010 to February 2015, and from February 2015 to September 2016 he
served as Chief Scientist, a non-executive position, at Turtle
Beach. He was a director of LRAD Corporation (now Genasys Inc.)
from August 1980 to June 2010. He served as Chairman of LRAD
Corporation’s Board of Directors, an executive position, in
which he served in a technical advisory role and acted as a product
spokesman from September 2000 to April 2009. He is an inventor, and
has authored more than 80 U.S. patents, primarily in the fields of
electrical and acoustical engineering, and has been a frequent
speaker on innovation to corporations and government organizations.
He is the inventor of our BolaWrap technology. Mr. Elwood Norris is
a majority owner of Syzygy, but has no employment or management
relationship with Syzygy.
Michael Rothans
joined the Company in September 2017
as Senior Vice President of Business Development, a position that
he held until November 2018, at which point he was appointed as the
Company’s Chief Operating Officer. As Senior Vice President
of Business Development, he was responsible for engaging larger
police agencies across the United States. Prior to joining the
Company, Mr. Rothans served as a police officer and executive in
the Los Angeles County Sheriff’s Department for thirty-one
years, where he retired as the Assistant Sheriff overseeing the
department’s patrol operations in 2015. While there, he
worked in all aspects of law enforcement, including custody,
patrol, investigative, administrative, supervisory and management
roles. In addition, he was responsible for a nearly
one-billion-dollar budget and supervised over 6,000 sworn and
civilian personnel. Mr. Rothans received many commendations during
his career, including the Los Angeles County Sheriff’s
Department Distinguished Service Award in 1997 and 2010, the
Exemplary Service Award in 2001, 2005, and 2009, and, the
Meritorious Service Award in 2008. In addition, as Chair of the
Executive Force Review Committee responsible for reviewing all
Officer Involved Shootings and significant uses of force, he
developed invaluable knowledge about real world encounters between
police and the public. Mr. Rothans graduated from Loyola Marymount
University in 1984 with a Bachelor of Arts Degree in Political
Science, immediately after which he joined the police
academy.
-10-
There
are no arrangements or understandings between our Company and any
other person pursuant to which he was or is to be selected as a
director, executive officer or nominee. David Norris is the son of
Elwood G. Norris, the Company’s Chief Technology Officer and
a former director.
Summary Compensation Table
The following table sets forth information
regarding the compensation awarded to or earned by the executive
officers listed below during the years ended December 31, 2019 and
2018. As an emerging growth company, we have opted to comply with
the reduced executive compensation disclosure rules applicable to
“smaller reporting companies,” as such term is defined
in the rules promulgated under the Securities Act of 1933, as
amended (the “
Securities
Act
”), which require
compensation disclosure for only our principal executive officer,
the two most highly compensated executive officers other than our
principal executive officer. Throughout this document, these three
officers are referred to as our “named executive
officers”.
|
|
|
|
|
Stock
|
Option
|
All Other
|
|
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Awards (1)
|
Awards (2)
|
Compensation
|
Total
|
|
|
|
|
|
|
|
|
|
|
David
Norris (3)
|
2019
|
$
180,000
|
$
-
|
$
618,325
|
$
-
|
$
-
|
$
798,325
|
|
Chief Executive Officer and Director
|
2018
|
$
120,000
|
$
-
|
$
-
|
$
268,238
|
$
-
|
$
388,238
|
|
|
|
|
|
|
|
|
|
|
Thomas
Smith (4)
|
2019
|
$
197,917
|
$
-
|
$
-
|
$
2,060,088
|
$
10,416
|
$
2,268,421
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
A. Barnes (5)
|
2019
|
$
180,000
|
$
-
|
$
123,666
|
$
-
|
$
-
|
$
303,666
|
|
Chief Financial Officer, Secretary and Treasurer
|
2018
|
$
120,000
|
$
-
|
$
-
|
$
74,056
|
$
-
|
$
194,056
|
|
(1)
|
Amounts
reported in this column do not reflect the amounts actually
received by our named executive officers. Instead, these amounts
reflect the aggregate grant date fair value of restricted stock
units granted to the named executive officers during the fiscal
year ended December 31, 2019, as computed in accordance with the
Financial Accounting Standards Board Accounting Standards
Codification 718 (“
ASC
718
”). Assumptions used in the calculation of these
amounts are included in the notes to our financial statements
included in our Annual Report. As required by SEC rules, the
amounts shown exclude the impact of estimated forfeitures related
to service-based vesting conditions.
|
|
(2)
|
Amounts
reported in this column do not reflect the amounts actually
received by our named executive officers. Instead, these amounts
reflect the aggregate grant date fair value of each stock option
granted to the named executive officers during each fiscal year, as
computed in accordance with the Financial Accounting Standards
Board Accounting Standards Codification 718 (“
ASC 718
”). Assumptions used in
the calculation of these amounts are included in the notes to our
financial statements included in our Annual Report. As required by
SEC rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. Our named
executive officers will only realize compensation to the extent the
trading price of our common stock is greater than the exercise
price of such stock options.
|
|
(3)
|
Mr.
Norris was appointed to serve as the Company’s President in
January 2018, and was promoted to the position of Chief Executive
Officer of the Company in December 2018. Effective January 16, 2020
his annual base compensation was increased to $300,000 per
year.
|
|
(4)
|
Mr. Smith became an employee and was appointed President in March
2019. Other compensation reflects consulting payments made during
2019 to Mr. Smith prior to joining the Company as an
employee.
|
|
|
|
|
(5)
|
Syzygy, an entity controlled by and partially owned by Mr. Barnes,
receives a royalty as described below in “
Certain Relationships and
Related Transactions
” in
consideration for the license of certain technology necessary for
the development of BolaWrap 100. Mr. Barnes’ participation in
royalty payments is unrelated to employment, not considered
executive compensation and not included in the table
above.
|
-11-
Employment Arrangements
We
have no employment letters or contracts with any named executive
officer.
Outstanding Equity Awards as of December 31, 2019
The
following table provides information regarding each unexercised
stock option to purchase our Common Stock and unvested shares
underlying Restricted Stock Units held by our named executive
officers as of December 31, 2019.
|
|
Option Awards
|
Stock Awards
|
|||||
|
|
|
Number of
|
Number of
|
|
|
Number of
|
Market Value
|
|
|
|
Securities
|
Securities
|
|
|
Shares of
|
of Shares of
|
|
|
|
Underlying
|
Underlying
|
|
|
Stock That
|
Stock That
|
|
|
|
Unexercised
|
Unexercised
|
Option
|
Option
|
Have Not
|
Have Not
|
|
|
Grant
|
Options (#)
|
Options (#)
|
Exercise
|
Expiration
|
Vested
|
Vested
|
|
Name
|
Date
|
Exercisable
|
Unexercisable
|
Price
|
Date
|
(#)
|
($)
|
|
|
|
|
|||||
|
David
Norris
|
5/23/2019
|
-
|
-
|
|
|
85,404
(1)
|
$
545,732
|
|
|
5/23/2018
|
395,833
|
104,167
(2)
|
$
1.50
|
5/23/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
Smith
|
3/18/2019
|
-
|
1,000,000
(3)
|
$
5.41
|
3/18/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
James
A. Barnes
|
5/23/2019
|
|
|
|
|
17,081
(4)
|
$
109,148
|
|
|
5/23/2018
|
150,000
|
-
(5)
|
$
1.50
|
5/23/2023
|
|
|
|
(1)
|
A total of 85,404 Restricted Stock Units were granted on May 23,
2019 with one-third vesting for 28,468 shares on May 23, 2020 with
the balance vesting ratably every six months over two additional
years with all vesting as of May 23, 2022, subject to continued
service. The market value is computed based on the closing market
price on December 31, 2019 of $6.39 per share.
|
|
|
|
|
|
|
(2)
|
50% of
a grant of 500,000 options vested on May 23, 2019 and the balance
monthly over 12 months thereafter
with
all vesting as of May 23, 2020, subject to continued
service
.
|
|
|
(3)
|
One-third of these options vest on March 18, 2020 with the balance
monthly over the following two years with all vesting as of March
18, 2022, subject to continued service.
|
|
(4)
|
A total of 17,081 Restricted Stock Units were granted on May 23,
2019 with one-third vesting for 5,694 shares on May 23, 2020 with
the balance vesting every six months over two additional years with
all vesting as of May 23, 2022, subject to continued service. The
market value is computed based on the closing market price on
December 31, 2019 of $6.39 per share.
|
|
|
|
|
(5)
|
Options vested on May 23, 2019.
|
Potential Payments Upon Termination, Death, Disability, or
Retirement
We
have no executive employee contracts at this time. Every officer
and employee are an at-will employee. The royalties payable to
Syzygy, partially owned and controlled by Mr. Barnes, are unrelated
to employment or their roles as officers, and will continue upon
any termination, death, disability or retirement.
Compensation Risks Assessment
As
required by rules adopted by the SEC, management has made an
assessment of our compensation policies and practices with respect
to all employees to determine whether risks arising from those
policies and practices are reasonably likely to have a material
adverse effect on us. In doing so, management considered various
features and elements of the compensation policies and practices
that discourage excessive or unnecessary risk taking. As a result
of the assessment, we have determined that our compensation
policies and practices do not create risks that are reasonably
likely to have material adverse effects.
-12-
NON-EXECUTIVE DIRECTOR COMPENSATION
The
following table sets forth the compensation awarded to, earned by,
or paid to each person who served as a director during the fiscal
year ended December 31, 2019, other than a director who also served
as an executive officer:
|
|
Fees
|
|
|
|
|
|
Earned
|
Stock
|
Option
|
|
|
|
or Paid in
|
Awards
|
Awards
|
|
|
Name
|
Cash ($) (1)
|
($) (2)
|
($) (3)
|
Total ($)
|
|
|
|
|
|
|
|
Michael
Parris
|
$
42,000
|
$
-
|
$
-
|
$
42,000
|
|
|
|
|
|
|
|
Patrick
Kinsella
|
$
42,000
|
$
-
|
$
-
|
$
42,000
|
|
|
|
|
|
|
|
Wayne
R. Walker
|
$
42,000
|
$
-
|
$
-
|
$
42,000
|
|
|
|
|
|
|
|
Scot
Cohen (4)
|
$
-
|
$
-
|
$
-
|
$
-
|
|
(1)
|
Each non-employee director was paid $3,500 per month during the
year ended December 31, 2019, which was paid on a quarterly basis,
for their services on the Board. The non-employee director fee for
2020 was increased in January 2020 to $57,500 per
annum.
|
|
(2)
|
No
stock awards were granted to non-employee directors during the year
ended December 31, 2019. In January 2020 each non-employee director
was granted restricted stock units for 10,070 shares vesting one
third in one year and the balance over the following two
years.
|
|
(3)
|
No
option awards were granted to non-employee directors during the
year ended December 31, 2019. As of December 31, 2019, the
aggregate number of shares of Common Stock underlying outstanding
options held by our non-employee directors were as follows: Mr.
Parris, 50,000 shares; Mr. Kinsella, 35,000 shares and Mr. Walker,
35,000 shares.
|
|
(4)
|
Mr. Cohen serves as an employee and Chair of the Board of
Directors. During the year ended December 31, 2019, he was paid
$120,000 for non-director services and did not receive any
compensation for his service as a director. He received no stock
award or option award during the year ended December 31,
2019.
Effective January 16, 2020, Mr. Cohen’s annual
compensation was increased to $200,000 per year and effective April
1, 2020 was modified to the rate of $120,000 per year. As of
December 31, 2019, the aggregate number of shares of Common Stock
underlying outstanding options held by Mr. Cohen was 150,000
shares.
In January 2020 he
was granted restricted stock units for 43,782 shares vesting one
third in one year and the balance over the following two years for
employee services.
|
PROPOSAL NO. 2
AMENDMENT TO OUR 2017 EQUITY COMPENSATION PLAN AND RATIFICATION OF
ALL ISSUANCES MADE THEREUNDER TO DATE
Background of Plan and Purpose of the Plan Amendment
The 2017 Plan was
adopted by our Board of Directors and approved by a majority of our
stockholders on March 31, 2017. The 2017 Plan reserved 2.0 million
shares of our Common Stock for issuance as one of four types of
equity incentive awards: (i) stock options, (ii) shares of Common
Stock, (iii) restricted stock awards, and (iv) restricted stock
units. The 2017 Plan permits the qualification of awards under the
2017 Plan as “performance-based compensation” within
the meaning of Section 162(m) of the Internal Revenue
Code.
On March 16, 2019, our
Board voted unanimously to adopt a Plan Amendment to provide for an
additional 2.1 million shares for grants under the 2017 Plan and
the increase was approved by the stockholders on May 23, 2019.
Accordingly, the total shares reserved under the 2017 Plan, as
amended, is 4.1 million shares of Common Stock.
-13-
As of April 9, 2020, a total of 3,555,671 shares are reserved for
issuance upon exercise of outstanding options or reserved for
restricted stock awards under the 2017 Plan. As a result of prior
exercises of 154,261 shares, we currently have 390,068 shares
available for issuance as stock options or other awards under the
2017 Plan. The proposed 2020 Plan Amendment will allow the Company
to maintain a sufficient pool of available shares for future grants
under the 2017 Plan.
The 2017 Plan provides for the issuance of
stock-based awards to attract and retain the services of
executives, other key employees and certain contractors. Keeping a
proportionate number of shares available for issuance under the
2017 Plan in relation to our issued and outstanding shares of
Common Stock provides the ability and flexibility to present
compensation packages that compare favorably with those offered by
other companies. As only 390,068 shares are currently
available for issuance under the 2017 Plan, on April 8, 2020 our
Board adopted a Plan Amendment to provide for an additional 1.9
million shares for future grants under the 2017 Plan.
Although we do not currently have any
definitive arrangements or agreements, either written or oral,
regarding the issuance of additional awards pursuant to the 2017
Plan either prior or subsequent to the effectiveness of the Plan
Amendment, we may issue additional awards under the 2017 Plan to
certain individuals prior to obtaining stockholder approval of the
Plan Amendment. In the event that we do issue additional awards
under the 2017 Plan prior to the effectiveness of the Plan
Amendment, all such issuances will be conditioned upon stockholder
approval of the Plan Amendment.
Summary Description of the 2017 Plan
The
2017 Plan is intended to (i) encourage ownership of shares by our
employees and directors and certain consultants to the Company;
(ii) induce them to work for the benefit of the Company; and (iii)
provide additional incentive for such persons to promote the
success of the Company.
Administration
The
Compensation Committee of the Board administers the 2017 Plan,
which permits the granting of equity awards to purchase up to 4.1
million shares of our Common Stock, which number will increase to
6
million shares of our Common
Stock on the day of the Annual Meeting, subject to the receipt of
stockholder approval of the Plan Amendment.
The
2017 Plan permits the Compensation Committee to grant
one of four types of
equity incentive awards: (i) stock options, (ii) shares of Common
Stock, (iii) restricted stock awards, and (iii) restricted stock
units.
The
Compensation Committee may delegate to a committee of one or more
members of the Board the authority to grant or amend awards to
participants other than senior executives of the Company who are
subject to Section 16 of the Exchange Act, or employees who are
“covered employees” within the meaning of Section
162(m) (“
Section
162(m
)”) of the Internal Revenue Code (the
“
IRS
Code
”). The Compensation
Committee includes at least
two
directors, each of whom qualifies as a non-employee director
pursuant to Rule 16b-3 of the Exchange Act, and an “outside
director” pursuant to Section 162(m).
The
Compensation Committee, or a committee delegated by the
Compensation Committee, will have the exclusive authority to
administer the 2017 Plan, including the power to determine
eligibility, the types and sizes of awards, the price and timing of
awards and the acceleration or waiver of any vesting restriction,
provided that the Compensation Committee will not have the
authority to accelerate vesting or waive the forfeiture of any
performance-based awards.
Eligibility
Persons
eligible to participate in the 2017 Plan include non-employee
members of the Board, certain consultants to the Company, and all
of the employees of the Company and its subsidiaries, as determined
by the Compensation Committee.
Awards
The
2017 Plan provides for the grant of (i) stock options,
(iii) Common Stock, (iv) restricted stock awards, and (v)
restricted stock units.
-14-
Changes in Capital Structure
In the
event of a dissolution or liquidation of the Company, then all
outstanding Stock Awards (as defined in the 2017 Plan) shall
terminate immediately prior to such event. In the event of
(i) a sale, lease or other disposition of all or substantially
all of the assets of the Company, (ii) a merger or
consolidation in which the Company is not the surviving corporation
or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash
or otherwise (individually, a “
Corporate Transaction
”), then any
surviving corporation or acquiring corporation shall assume any
Stock Awards outstanding under the 2017 Plan or shall substitute
similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the Corporate
Transaction) for those outstanding under the 2017
Plan. In the event any surviving corporation or
acquiring corporation refuses to assume such Stock Awards or to
substitute similar stock awards for those outstanding under the
2017 Plan, then with respect to Stock Awards held by Participants
whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock
Awards may be exercised) shall be accelerated in full, and the
Stock Awards shall terminate if not exercised (if applicable) at or
prior to the Corporate Transaction. With respect to any other
Stock Awards outstanding under the 2017 Plan, such Stock Awards
shall terminate if not exercised (if applicable) prior to the
Corporate Transaction. Notwithstanding the foregoing provisions of
this paragraph, Participants shall be allowed not less than six
months to exercise Stock Awards so vested.
In
addition, in such a case or in the event of any unusual or
nonrecurring transactions or events affecting the Company or of
changes in applicable laws, the Compensation Committee, may,
subject to the terms of the 2017 Plan, take any of the following
actions if it determines that such action is appropriate in order
to prevent the dilution or enlargement of benefits or potential
benefits intended to be made available under the 2017 Plan or with
respect to any award: (i) provide for either the termination,
purchase or replacement of the awards, (ii) provide that the awards
shall be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by
similar awards covering the stock of the successor or survivor
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices, (iii)
make adjustments in the number and type of shares of stock (or
other securities or property) subject to outstanding awards and/or
in the terms and conditions of (including the exercise price), and
the criteria included in, outstanding awards which may be granted
in the future, (iv) provide for the acceleration of vesting or
exercisability of the awards and (v) provide that the awards cannot
vest or be exercised after the event that triggers the
action.
Amendment and Termination
The
Compensation Committee, subject to approval of the full Board of
Directors, may terminate, amend, or modify the 2017 Plan at any
time;
provided
,
however
, that stockholder
approval must be obtained for any amendment to the extent necessary
or desirable to comply with any applicable law, regulation or stock
exchange rule, to increase the number of shares available under the
2017 Plan, to extend the exercise period for an option beyond ten
years from the date of grant or to allow a material increase in the
benefits or change the eligibility requirements under the 2017
Plan.
In no
event may an award be granted pursuant to the 2017 Plan on or after
the tenth anniversary of the effectiveness of the 2017
Plan.
U.S. Federal Income Tax Consequences
Under
the 2017 Plan, stock options may be granted which are intended to
qualify as Incentive Stock Options under Section 422 of the
Internal Revenue Code of 1986, or which are not intended to qualify
as Incentive Stock Options. In addition, direct grants of stock or
restricted stock may be awarded. Accordingly, the 2017 Plan is, in
part, a qualified plan for Federal income tax purposes. As such,
the Company is entitled to (a) withhold and deduct from future
wages of any participant, or make other arrangements for the
collection of, all legally required amounts necessary to satisfy
any and all federal, state and local withholding and
employment-related tax requirements attributable to an Incentive
Stock Option, including, without limitation, the grant, exercise or
vesting of, or payment of dividends with respect to, an Incentive
Stock Option or a disqualifying disposition of stock received upon
exercise of an Incentive Stock Option, or (b) require the
participant promptly to remit the amount of such withholding to the
Company before taking any action, including issuing any shares of
Common Stock, with respect to an Incentive Stock
Option.
Awards Granted Under the 2017 Plan
Because
grants under the 2017 Plan are subject to the discretion of the
Compensation Committee, awards under the 2017 Plan that may be made
in the future are not determinable. Future exercise prices for
options granted under the 2017 Plan are also not determinable
because they will be based upon the fair market value of the
Company’s common stock on the date of grant.
-15-
The
following table discloses all awards granted to the persons or
groups specified below under the current version of the 2017 Plan
during our most recently completed fiscal year ended December 31,
2019:
|
|
|
All Other
|
All Other
|
|
|
|
|
|
Stock Awards:
|
Option Awards:
|
Exercise
|
Grant
|
|
|
|
Number of
|
Number of
|
Price of
|
Date Fair
|
|
|
|
Shares of
|
Securities
|
Option
|
Value of
|
|
|
Grant
|
Stock or
|
Underlying
|
Awards
|
Option Awards
|
|
Name and Position
|
Date
|
Units (#)
|
Options (#)
|
($/Share) (1)
|
($) (2)
|
|
|
|
|
|
|
|
|
David Norris
, Chief Executive Officer
|
5/23/2019
|
85,404
|
-
|
-
|
$
618,325
|
|
Thomas Smith,
President
|
3/18/2019
|
-
|
1,000,000
|
$
5.41
|
$
2,060,088
|
|
James A.
Barnes
, Chief Financial
Officer, Secretary and Treasurer
|
5/23/2019
|
17,081
|
-
|
-
|
$
123,666
|
|
Michael
Rothans
, Chief Operating
Officer
|
5/23/2019
|
23,913
|
-
|
-
|
$
173,130
|
|
Non-Employee Directors
|
None
|
|
|
|
|
|
Employees and
Consultants
(excluding
executive officers)
|
Various
in 2019
|
181,689
|
-
|
-
|
$
1,171,128
|
|
(1)
|
Each option was granted at an exercise price equal to the fair
market value of our Common Stock on the grant date which was equal
to the closing price of a share of our Common Stock, as reported by
Nasdaq on the date of grant.
|
|
(2)
|
The
amounts reported do not reflect the amounts actually received by
the parties. Instead, these amounts reported reflect the aggregate
grant date fair value of all options and stock awards granted
during fiscal year ended December 31, 2019, as computed in
accordance with ASC 718. Assumptions used in the calculation of
these amounts are included in the notes to our financial statements
included in our Annual Report. As required by SEC rules, the
amounts shown exclude the impact of estimated forfeitures related
to service-based vesting conditions.
|
On April 1,
2020 the Board granted options on an aggregate of 306,336 shares
exercisable at $4.26 per share to four executive officers. These
options have a ten-year term and vest one-third at the end of one
year with the balance ratably over 24 months thereafter subject to
continued service. The Board also granted 35,211 performance based
restricted stock units to one executive officer vesting upon
achieving 2020 objectives as determined by the Board. The Board
granted an additional 122,222 service based restricted stock units
to non-executive employees that vest one-third at the end of one
year and the balance at six-month intervals over the following two
years. The price at grant of the restricted stock units was $4.26
per share.
As
noted above, although we do not currently have any definitive
arrangements or agreements, either written or oral, regarding the
issuance of additional awards pursuant to the 2017 Plan either
prior or subsequent to the effectiveness of the Plan Amendment, we
may issue additional awards under the 2017 Plan to certain
individuals prior to obtaining stockholder approval of the 2020
Plan Amendment. In the event that we do issue additional awards
under the 2017 Plan prior to the effectiveness of the Plan
Amendment, all such issuances will be conditioned upon stockholder
approval of the 2020 Plan Amendment.
A vote
in favor of this item will have the result of ratifying the
issuance of the options set forth in the table above as well as the
approval of the Plan Amendment.
-16-
Equity Compensation Plan Information
The
following table sets forth information as of December 31, 2019,
with respect to compensation plans (including individual
compensation arrangements) under which our equity securities are
authorized for issuance, aggregated as follows:
|
|
|
|
Number of securities
|
|
|
|
Weighted-
|
remaining available for
|
|
|
Number of securities to be
|
average exercise
|
future issuance under
|
|
|
issued upon exercise of
|
price of outstanding
|
equity compensation plans
|
|
|
outstanding
|
options, warrants
|
(excluding securities
|
|
|
options,
warrants
and rights
|
and
rights
|
reflected in column (a))
|
|
Plan Category
|
(a)
|
(b)
|
(c)
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
3,136,837
|
$
3.34
|
924,413
|
|
Equity
compensation plans not approved by security holders
|
100,000
|
$
3.00
|
-
|
|
Total
|
3,236,837
|
$
3.33
|
924,413
|
Vote Required
To approve Plan
Amendment and ratify the all issuances made under the 2017 Plan to
date, the number of votes cast “FOR” must exceed the
number of votes cast “AGAINST” this Proposal.
A properly executed proxy marked
“ABSTAIN” will not be voted, although it will be
counted as present and entitled to vote for purposes of the
Proposal. Accordingly, an abstention will have the effect of a
vote against this Proposal. A broker or nominee will not have
discretionary authority to vote on this Proposal because it is
considered a non-routine matter. Accordingly, broker non-votes will
have no effect on the outcome of this Proposal.
Unless
otherwise instructed on the proxy or unless authority to vote is
withheld, shares represented by executed proxies will be voted
“FOR” the adoption of the Plan Amendment.
Board of Directors Recommendation
The Board recommends a vote “FOR” the Plan Amendment
and ratification of all issuances made thereunder to
date.
-17-
PROPOSAL NO. 3
RATIFICATION OF THE APPOINTMENT OF
ROSENBERG RICH BAKER BERMAN, P.A. TO SERVE AS OUR
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL
YEAR
Upon
recommendation of the Audit Committee of the Board of Directors,
the Board appointed Rosenberg Rich Baker Berman, P.A.
(“
RRBB
”) as our
independent registered public accounting firm for the year ending
December 31, 2020, and hereby recommends that the stockholders
ratify such appointment.
The
Board may terminate the appointment of RRBB as the Company’s
independent registered public accounting firm without the approval
of the Company’s stockholders whenever the Board deems such
termination necessary or appropriate.
Representatives of
RRBB will be in attendance during the Annual Meeting or available
telephonically and will have an opportunity to make a statement if
they so desire and to respond to appropriate questions from
stockholders.
Audit Fees
The
following table presents fees billed by RRBB for professional
services rendered for the fiscal years ended December 31, 2019 and
2018:
|
|
2019
|
2018
|
|
Audit fees
(1)
|
$
38,000
|
$
25,500
|
|
Audit related fees
(2)
|
1,600
|
3,000
|
|
Tax fees
(3)
|
-
|
-
|
|
All other fees
(4)
|
-
|
-
|
|
Total
|
$
39,600
|
$
28,500
|
|
(1)
|
Audit Fees include fees and expenses for professional services
rendered in connection with the audit of our financial statements
for those years, reviews of the interim financial statements that
are normally provided by the independent registered public
accounting firm in connection with statutory and regulatory filings
or engagements.
|
|
(2)
|
Audit Related Fees consist of fees billed for assurance related
services that are reasonably related to the performance of the
audit or review of our financial statements and are not reported
under “Audit Fees”. Included in Audit Related Fees are
fees and expenses related to reviews of registration statements and
SEC filings other than annual reports on Form 10-K and quarterly
reports on Form 10-Q.
|
|
(3)
|
Tax Fees include the aggregate fees billed during the fiscal year
indicated for professional services for tax compliance, tax advice
and tax planning. No such fees were billed by RRBB for 2019 or
2018.
|
|
(4)
|
All Other Fees consist of fees for products and services other than
the services reported above. No such fees were billed by RRBB for
2019 or 2018.
|
-18-
Audit Committee Pre-Approval Policies and Procedures
All audit and non-audit services are pre-approved
by the Audit Committee, and were pre-approved by the full Board
prior to the formation of the Audit Committee in November 2018,
which considers, among other things, the possible effect of the
performance of such services on the registered public accounting
firm’s independence. The Audit Committee pre-approves the
annual engagement of the principal independent registered public
accounting firm, including the performance of the annual audit and
quarterly reviews for the subsequent fiscal year, and pre-approves
specific engagements for tax services performed by such firm. The
Audit Committee has also established pre-approval policies and
procedures for certain enumerated audit and audit related services
performed pursuant to the annual engagement agreement, including
such firm’s attendance at and participation at Audit
Committee and Board of Director meetings; services of such firm
associated with SEC registration statements, periodic reports and
other documents filed with the SEC or other documents issued in
connection with securities offerings, such as comfort letters and
consents; such firm’s assistance in responding to any SEC
comment letters; and consultations with such firm as to the
accounting or disclosure treatment of transactions or events and/or
the actual or potential impact of final or proposed rules,
standards or interpretations by the SEC, Public Company Accounting
Oversight Board (“
PCAOB
”), Financial Accounting Standards Board
(“
FASB
”), or other regulatory or standard-setting
bodies. The Audit Committee is informed of each service performed
pursuant to its pre-approval policies and
procedures.
The
Audit Committee has considered the role of RRBB, in providing
services to us for the year ended December 31, 2019 and has
concluded that such services are acceptable with such firm’s
independence.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements
with accountants on accounting and financial
disclosure.
Auditor Independence
Our Audit Committee and our full Board considered
that the work done for us in the years ended December 31, 2019 and
2018, respectively, by
RRBB
was performed while maintaining
the
independence of RRBB.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
Date:
March 10, 2020
The Audit Committee has reviewed and discussed
with management and
Rosenberg Rich Baker Berman,
P.A.
, our independent registered
public accounting firm, the audited consolidated financial
statements in the
Wrap Technologies, Inc.
Annual Report on Form 10-K for the year ended
December 31, 2019.
Rosenberg Rich
Baker Berman, P.A.
also provided the
Audit Committee with the written disclosures and the letter
required by the applicable requirements of the PCAOB regarding the
independent auditor’s communication with the Audit Committee
concerning independence. The Audit Committee has discussed with the
registered public accounting firm their independence from our
Company.
Based
on its discussions with management and the registered public
accounting firm, and its review of the representations and
information provided by management and the registered public
accounting firm, including as set forth above, the Audit Committee
recommended to our Board that the audited financial statements be
included in our Annual Report on Form 10-K for the year ended
December 31, 2019.
|
|
Respectfully Submitted,
Patrick
Kinsella, Committee Chair
Michael
Parris
Wayne
Walker
|
The information contained above under the caption
“
Report of the Audit Committee
of the Board of Directors
” shall not be deemed to be soliciting
material or to be filed with the SEC, nor shall such information be
incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, except to the extent that we specifically
incorporate it by reference into such filing.
Required Vote and Recommendation
Ratification of the
selection of Rosenberg Rich Baker Berman, P.A. as the
Company’s independent auditors for the fiscal year ending
December 31, 2019 requires the affirmative vote of a majority of
the shares present or represented by proxy and entitled to vote at
the Annual Meeting. Unless otherwise instructed on the proxy or
unless authority to vote is withheld, shares represented by
executed proxies will be voted “FOR” the ratification
of Rosenberg Rich Baker Berman, P.A. as the Company’s
independent auditors for the fiscal year ending December 31,
2020.
The Board recommends that stockholders vote “
FOR
” the ratification of
the selection of Rosenberg Rich Baker Berman, P.A. as our
independent auditors for the fiscal year ending December 31,
2020.
-19-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
As
of April 9, 2020, we had one class of voting stock outstanding:
Common Stock. The following table sets forth information concerning
shares of our Common Stock beneficially owned as of April 9, 2020
(unless otherwise noted), by:
●
each
person or entity known by us to be the beneficial owner of 5% or
more of the outstanding shares of Common Stock;
●
each
person currently serving as director; and
●
each of
our named executive officers.
The share amounts in the table below are based on 30,076,610 shares
of Common Stock issued and outstanding as of the Record Date. To
our knowledge, except as otherwise indicated in the footnotes
below, each person or entity has sole voting and investment power
with respect to the shares of Common Stock set forth opposite such
person’s or entity’s name. Beneficial ownership is
determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to the
securities.
|
|
Name and Address of
|
Amount and Nature of
|
Percent of
|
|
Title of Class
|
Beneficial Owner (1)
|
Beneficial Ownership
|
Class
|
|
|
|
|
|
|
Common
Stock
|
Elwood
G. Norris
|
6,452,457
(2)
|
21.1
%
|
|
|
|
|
|
|
Common
Stock
|
Scot
Cohen
|
5,409,906
(3)
|
17.9
%
|
|
|
|
|
|
|
Common
Stock
|
James
A. Barnes
|
2,401,394
(4)
|
7.9
%
|
|
|
|
|
|
|
Common
Stock
|
David
Norris
|
2,336,596
(5)
|
7.6
%
|
|
|
|
|
|
|
Common
Stock
|
Thomas
P. Smith
|
388,889
(6)
|
1.3
%
|
|
|
|
|
|
|
Common
Stock
|
Michael
Rothans
|
117,971
(7)
|
*
|
|
|
|
|
|
|
Common
Stock
|
Michael
Parris
|
248,000
(8)
|
*
|
|
|
|
|
|
|
Common
Stock
|
Patrick
Kinsella
|
56,250
(9)
|
*
|
|
|
|
|
|
|
Common
Stock
|
Wayne
R. Walker
|
26,250
(10)
|
*
|
|
|
|
|
|
|
Common
Stock
|
Iroquois
Capital Investment Group LLC
|
2,971,774
(11)
|
9.4
%
|
|
|
205
E 42nd Street, Flr 20
|
|
|
|
|
New
York, NY 10017
|
|
|
|
|
|
|
|
|
|
All
directors and executive
|
17,437,713
|
54.5
%
|
|
|
offices as a group (9 persons)
|
||
* less than 1%
__________________
|
(1)
|
Except as otherwise indicated, the business address for these
beneficial owners is c/o the Company, 1817 W 4
th
Street, Tempe, Arizona
85281.
|
|
(2)
|
Includes 850,904 shares held by Mr. Elwood Norris directly;
5,118,219 shares beneficially owned by Mr. Elwood Norris through
his family trust; 150,000 shares underlying stock options that may
be exercised within 60 days from April 9, 2020; and 333,334 shares
underlying warrants that may be exercised within 60 days from April
9, 2020.
|
|
(3)
|
Includes 5,259,906 shares held by Mr. Cohen and 150,000 shares
underlying stock options that may be exercised within 60 days from
April 9, 2020.
|
-20-
|
(4)
|
Includes 1,886,741 shares beneficially owned by Mr. Barnes through
a family trust; 358,959 shares beneficially owned by Mr. Barnes
through Sunrise Capital, Inc.; 150,000 shares underlying stock
options that may be exercised within 60 days from April 9, 2020;
and 5,694 shares underlying restricted stock units issuable within
60 days from April 9, 2020. Mr. Barnes is the President of Sunrise
Capital, Inc.
|
|
(5)
|
Consists of 1,808,128 shares beneficially owned by Mr. Norris
through a family trust; 500,000 shares underlying stock options
that may be exercised within 60 days from April 9, 2020; and 28,468
shares underlying restricted stock units issuable within 60 days
from April 9, 2020.
|
|
(6)
|
Consists of 388,889 shares underlying stock options that may be
exercised within 60 days from April 9, 2020.
|
|
(7)
|
Consists of 110,000 shares underlying stock options that may be
exercised within 60 days from April 9, 2020 and 7,971 shares
underlying restricted stock units issuable within 60 days from
April 9, 2020.
|
|
(8)
|
Consists of 198,000 shares held by Mr. Parris and 50,000 shares
underlying stock options that may be exercised within 60 days from
April 9, 2020.
|
|
|
|
|
(9)
|
Includes 26,250 shares underlying stock options that may be
exercised within 60 days from April 9, 2020.
|
|
|
|
|
(10)
|
Consists of 26,250 shares underlying stock options that may be
exercised within 60 days from April 9, 2020.
|
|
|
|
|
(11)
|
Based on information provided by the stockholder in a Schedule
13G/A filed with the SEC on February 14, 2020 beneficial ownership
consists of 874,237 shares and 639,844 shares underlying warrants
that may be exercised held by Iroquois Capital Investment Group LLC
(“
ICIG
”), and 463,436 shares and 994,257 shares
underlying warrants held by Iroquois Master Fund Ltd.
(“
IMF
”). Iroquois Capital Management L.L.C.
(“
Iroquois
Capital
”) is the
investment manager of Iroquois Master Fund, Ltd.
(“
IMF
”). Consequently, Iroquois Capital has
voting control and investment discretion over securities held by
IMF. As President of Iroquois Capital, Mr. Richard Abbe makes
voting and investment decisions on behalf of Iroquois Capital in
its capacity as investment manager to IMF. Mr. Abbe shares
authority and responsibility for the investments made on behalf of
IMF with Ms. Kimberly Page, each of whom is a director of IMF. As a
result of the foregoing, Mr. Abbe and Mrs. Page may be deemed to
have beneficial ownership (as determined under Section 13(d) of the
Securities Exchange Act of 1934, as amended) of the securities held
by IMF. As President of Iroquois Capital, Mr. Abbe makes voting and
investment decisions on behalf of ICIG. As a result of the
foregoing, Mr. Abbe may be deemed to have beneficial ownership (as
determined under Section 13(d) of the Exchange Act) of the
securities held by ICIG.
|
Certain Relationships and Related Transactions
The
Company is obligated to pay royalties and development and patent
costs pursuant to an exclusive Amended and Restated Intellectual
Property License Agreement dated September 30, 2016 with Syzygy, a
company owned and controlled by stockholders and officers of the
Company, Mr. Elwood Norris and Mr. James Barnes. The agreement
provides for royalty payments of 4% of revenue from products
employing the licensed ensnarement device technology up to an
aggregate of $1,000,000 in royalties or until September 30, 2026,
whichever occurs earlier. During the years ended December 31, 2019
and 2018 the Company incurred royalties to Syzygy of $23,297 and
$871, respectively.
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 $18,000 during each of the years ended December 31,
2019 and 2018.
For
a director to be considered “independent,” the Board
must affirmatively determine that the director has no material
relationship with the Company (directly or as a partner,
stockholder or officer of an organization that has a relationship
with the Company). In each case, the Board considers all relevant
facts and circumstances. Our Board has affirmatively determined
that Messrs. Kinsella, Parris and Walker are independent
directors.
-21-
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports,
proxy statements and other information with the SEC. The periodic
reports and other information we have filed with the SEC, may be
inspected and copied at the SEC’s Public Reference Room at
100 F Street, N.E., Washington DC 20549. You may obtain information
as to the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. The SEC also maintains a Web site that contains
reports, proxy statements and other information about issuers, like
the Company, who file electronically with the SEC. The address of
that site is
www.sec.gov
.
Copies of these documents may also be obtained by writing our
secretary at the address specified above.
STOCKHOLDER PROPOSALS FOR THE 2021 ANNUAL MEETING OF
STOCKHOLDERS
Pursuant
to Rule 14a-8 under the Exchange Act, stockholder proposals to be
included in our next proxy statement must be received by us at our
executive offices no later than 90 days nor more than 120 days
prior to the first anniversary of the preceding year’s annual
meeting. A stockholder proposal not included in the Company’s
proxy statement for the 2020 Annual Meeting of Stockholders will be
ineligible for presentation at the meeting unless the stockholder
gives timely notice of the proposal in writing to the Corporate
Secretary of the Company at the executive offices of the Company.
To be timely, the Company must have received the
stockholder’s notice not less than 90 days nor more than 120
days in advance of the date the proxy statement was released to
stockholders in connection with the previous year’s annual
meeting of stockholders. However, if the date of the 2021 Annual
Meeting of Stockholders is changed by more than 30 days from the
date of this year’s Annual Meeting, the Company must receive
the stockholder’s notice no later than the close of business
on (i) the 90th day prior to such annual meeting and
(ii) the seventh day following the day on which public
announcement of the date of such meeting is first
made.
We
reserve the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not
comply with these and all other applicable
requirements.
HOUSEHOLDING OF PROXY MATERIALS
The SEC
has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements
and annual reports with respect to two or more stockholders sharing
the same address by delivering a single proxy statement and annual
report addressed to those stockholders. This process, which is
commonly referred to as “householding,” potentially
means extra convenience for stockholders and cost savings for
companies.
A
number of brokers with account holders who are stockholders of the
Company will be “householding” the Company’s
proxy materials. A single set of the Company’s proxy
materials will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your
broker that they will be “householding” communications
to your address, “householding” will continue until you
are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in
“householding” and would prefer to receive a separate
set of the Company’s proxy materials, please notify your
broker or direct a written request to the Company at 1817 W
4
th
Street, Tempe, Arizona 85281, or contact us at (800) 583-2652. The
Company undertakes to deliver promptly, upon any such oral or
written request, a separate copy of its proxy materials to a
stockholder at a shared address to which a single copy of these
documents was delivered. Stockholders who currently receive
multiple copies of the Company’s proxy materials at their
address and would like to request “householding” of
their communications should contact their broker, bank or other
nominee, or contact the Company at the above address or phone
number.
OTHER MATTERS
At the
date of this Proxy Statement, the Company knows of no other
matters, other than those described above, that will be presented
for consideration at the Annual Meeting. If any other business
should come before the Annual Meeting, it is intended that the
proxy holders will vote all proxies using their best judgment in
the interest of the Company and the stockholders.
The Notice, which we intend to mail to stockholders on or about
April 23, 2020, will contain instructions on how to access the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2019. The Annual Report, which includes audited
financial statements, does not form any part of the material for
the solicitation of proxies.
The
Board invites you to attend the Annual Meeting virtually. Whether
or not you expect to attend the Annual Meeting virtually, please
submit your vote by Internet, telephone or e-mail as promptly as
possible
so that your
shares will be represented at the Annual Meeting.
REGARDLESS
OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING
VIRTUALLY, PLEASE READ THE ACCOMPANYING PROXY STATEMENT AND
THEN VOTE BY INTERNET, TELEPHONE OR E-MAIL AS PROMPTLY AS
POSSIBLE. VOTING PROMPTLY WILL SAVE US ADDITIONAL
EXPENSE IN SOLICITING PROXIES AND WILL ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE ANNUAL MEETING.
By
Order of the Board of Directors,
/s/ Scot Cohen
Scot
Cohen
Chair of the Board
-22-
WRAP TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WRAP TECHNOLOGIES, INC.
FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS
The
undersigned revokes all previous proxies and constitutes and
appoints David Norris and James Barnes and each of them, his or her
true and lawful agent and proxy with full power of substitution in
each, to represent and to vote on behalf of the undersigned all of
the shares of Wrap Technologies, Inc. (the “
Company
”) which the undersigned
is entitled to vote at the Company’s 2020 Annual Meeting of
Stockholders (the “
Annual
Meeting
”), to be held virtually by accessing:
https://livewebinar.com/wrap-technologies
on
June 5, 2020 at 10:30 A.M., Pacific Time, and at any
adjournment(s) or postponement(s) thereof, upon the following
Proposals, each of which are more fully described in the Notice of
Annual Meeting of Stockholders and Proxy Statement for the Annual
Meeting (receipt of which is hereby acknowledged).
This proxy when properly executed, will be
voted in the manner directed herein by the undersigned stockholder.
If no direction is made, this proxy will be voted
FOR
each director nominee
identified in Proposal No. 1 and
FOR
Proposal No. 2 and Proposal
No. 3, each of which have been proposed by our Board, and in the
discretion of the proxy holder upon other matters as may properly
come before the Annual Meeting.
(continued and to be signed on reverse side)
|
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|
||||||||||||||||||||
|
1.
|
|
ELECTION
OF DIRECTORS
|
|
|
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
Director Nominees
:
|
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|
|
|
|
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|
||||||||||||
|
|
|
|
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|
|
|
|
FOR
|
|
WITHHELD
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
01
|
Scot
Cohen
|
☐
|
|
☐
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
02
|
Patrick
Kinsella
|
☐
|
|
☐
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
03
|
David
Norris
|
☐
|
|
☐
|
|
|
|
|
|
|
|||||||||
|
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|
|
|
|
|
04
|
Michael
Parris
|
☐
|
|
☐
|
|
|
|
|
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|
|||||||||
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|||||||||
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|
|
|
|
05
|
Wayne
Walker
|
☐
|
|
☐
|
|
|
|
|
|
|
|||||||||
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|
|||||||
|
2.
|
|
APPROVAL
OF AN AMENDMENT TO THE COMPANY’S 2017 EQUITY COMPENSATION
PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR POTENTIAL
ISSUANCE THEREUNDER FROM 4.1 MILLION TO 6 MILLION SHARES, AND
RATIFICATION OF ALL ISSUANCES MADE THEREUNDER TO DATE.
|
|
|
|
|
|
FOR
☐
|
|
AGAINST
☐
|
|
ABSTAIN
☐
|
|
|
|
|
|||||||||
|
3.
|
|
RATIFICATION
OF THE APPOINTMENT OF ROSENBERG RICH BAKER BERMAN, P.A. AS THE
COMPANY’S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2020.
|
|
|
|
|
|
FOR
☐
|
|
AGAINST
☐
|
|
ABSTAIN
☐
|
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|
|||||||||
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|||||||||
|
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|
IN THE
UNDERSIGNED’S DISCRETION, THE PROXY IS AUTHORIZED TO VOTE
UPON OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
|
|
|
|
|
|
||||||||||||||||||
|
|
☐
|
I
PLAN TO ATTEND THE ANNUAL MEETING VIRTUALLY.
|
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
|
Signature
of Stockholder _______________________ Signature of Stockholder
_________________________
(IF
HELD
JOINTLY)
|
|
Dated:
________________________________,
2020
|
Note: This proxy must be signed exactly as the name
appears hereon. When shares are held by joint tenants, both should
sign. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If the
signer is a partnership, please sign in partnership name by
authorized person.
TABLE OF CONTENTS