View Filing Data

Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2019	Mar. 09, 2020	Jun. 28, 2019
Document and Entity Information
Entity Registrant Name	WRAP TECHNOLOGIES, INC.
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Amendment Flag	false
Entity Central Index Key	0001702924
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		30,044,241
Entity Public Float			$ 79,544,812
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Interactive data current	Yes

Condensed Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 16,983,864	$ 12,358,896
Accounts receivable	195,347	4,396
Inventories, net	2,244,541	158,267
Prepaid expenses and other current assets	250,947	114,863
Total current assets	19,674,699	12,636,422
Property and equipment, net	242,876	30,373
Operating lease right-of-use asset, net	260,931	0
Intangible assets, net	230,283	118,715
Other assets, net	12,681	1,512
Total assets	20,421,470	12,787,022
Current Liabilities:
Accounts payable	406,967	232,915
Accrued liabilities	194,294	68,453
Customer deposits	343,724	0
Deferred revenue	2,684	0
Operating lease liability- short term	128,131	0
Deferred and accrued officer compensation	0	96,000
Total current liabilities	1,075,800	397,368
Operating lease liability - long term	150,018	0
Total liabilities	1,225,818	397,368
Commitments and contingencies (Note 11)
Stockholders' Equity:
Preferred stock - 5,000,000 authorized; par value $0.0001 per share; none issued and outstanding	0	0
Common stock - 150,000,000 authorized; par value $0.0001 per share; 29,829,916 and 27,364,607 shares issued and outstanding each period, respectively	2,983	2,736
Additional paid in capital	31,922,493	16,791,254
Accumulated deficit	(12,729,824)	(4,404,336)
Total stockholders' equity	19,195,652	12,389,654
Total liabilities and stockholders' equity	$ 20,421,470	$ 12,787,022

Condensed Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, authorized	150,000,000	150,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, issued	29,829,916	27,364,607
Common stock, outstanding	29,829,916	27,364,607

Condensed Statements of Operations - USD ($)	12 Months Ended
Condensed Statements of Operations - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Revenues:
Product sales	$ 656,071	$ 18,830
Other revenue	40,719	4,320
Total revenues	696,790	23,150
Cost of revenues	420,016	18,611
Gross profit	276,774	4,539
Operating Expenses:
Selling, general and administrative	6,653,465	2,607,397
Research and development	2,236,985	734,776
Total expenses	8,890,450	3,342,173
Loss from operations	(8,613,676)	(3,337,634)
Other Income (Expense):
Interest income	291,494	2,912
Interest expense	0	(1,304)
Other	(3,306)	(409)
Other income (expense)	288,188	1,199
Net loss	$ (8,325,488)	$ (3,336,435)
Net loss per basic and diluted common share	$ (0.29)	$ (0.14)
Weighted average common shares used to compute net loss per basic and diluted common share	28,652,625	23,578,291

Condensed Statement of Stockholders' Equity - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2017	22,803,533
Beginning balance, amount at Dec. 31, 2017	$ 2,280	$ 4,137,936	$ (1,067,901)	$ 3,072,315
Sale of common stock and warrants at $3.00 per share and placement agent warrants in private offering, net of issuance costs, shares	4,561,074
Sale of common stock and warrants at $3.00 per share and placement agent warrants in private offering, net of issuance costs, amount	$ 456	12,140,330		12,140,786
Share-based compensation expense		512,988		512,988
Net loss for the period			(3,336,435)	(3,336,435)
Ending balance, shares at Dec. 31, 2018	27,364,607
Ending balance, amount at Dec. 31, 2018	$ 2,736	16,791,254	(4,404,336)	12,389,654
Sale of common stock and warrants at $6.50 per share and placement agent warrants in public offering, net of issuance costs, shares	1,923,076
Sale of common stock and warrants at $6.50 per share and placement agent warrants in public offering, net of issuance costs, amount	$ 192	11,351,022		11,351,214
Common shares issued upon exercise of warrants at $3.00 per share, shares	127,649
Common shares issued upon exercise of warrants at $3.00 per share, amount	$ 13	382,934		382,947
Common shares issued upon exercise of warrants at $5.00 per share, net of issuance costs, shares	345,834
Common shares issued upon exercise of warrants at $5.00 per share, net of issuance costs, amount	$ 35	1,700,469		1,700,504
Common shares issued upon exercise of stock options, shares	38,750
Common shares issued upon exercise of stock options, amount	$ 4	58,121		58,125
Share-based compensation expense		1,536,096		1,536,096
Common shares issued for services, shares	30,000
Common shares issued for services, amount	$ 3	102,597		102,600
Net loss for the period			(8,325,488)	(8,325,488)
Ending balance, shares at Dec. 31, 2019	29,829,916
Ending balance, amount at Dec. 31, 2019	$ 2,983	$ 31,922,493	$ (12,729,824)	$ 19,195,652

Condensed Statements of Cash Flows - USD ($)	12 Months Ended
Condensed Statements of Cash Flows - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Cash Flows From Operating Activities:
Net loss	$ (8,325,488)	$ (3,336,435)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	46,945	21,875
Warranty provision	13,495	0
Inventory write-off	(193,506)	0
Non-cash lease expense	80,069	0
Share-based compensation	1,536,096	512,988
Common shares issued for services	102,600	0
Changes in assets and liabilities:
Accounts receivable	(190,951)	(4,396)
Inventories	(1,892,768)	(27,075)
Prepaid expenses and other current assets	(136,084)	(63,982)
Accounts payable	174,052	196,750
Operating lease liability	(62,851)	0
Customer deposits	343,724	0
Accrued liabilities and other	112,346	8,139
Deferred compensation	(96,000)	0
Deferred revenue	2,684	0
Net cash used in operating activities	(8,485,637)	(2,692,136)
Cash Flows From Investing Activities:
Capital expenditures for property and equipment	(256,742)	(14,225)
Investment in patents and trademarks	(114,274)	(120,070)
Long-term deposits	(11,169)	0
Net cash used in investing activities	(382,185)	(134,295)
Cash Flows From Financing Activities:
Sale of common stock and warrants	12,499,994	13,683,222
Offering costs paid on sale of stock and warrants	(1,148,780)	(1,542,436)
Proceeds from exercise of warrants	2,112,117	0
Offering costs paid on exercise of warrants	(28,666)	0
Proceeds from exercise of stock options	58,125	0
Payment of notes payable	0	(39,435)
Net cash provided by financing activities	13,492,790	12,101,351
Net increase in cash and cash equivalents	4,624,968	9,274,920
Cash and cash equivalents, beginning of period	12,358,896	3,083,976
Cash and cash equivalents, end of period	16,983,864	12,358,896
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Interest paid	0	1,304
Prepaid insurance financed with note payable	0	39,435
Right-of-use assets and liabilites recorded during period	341,000	0
Issuance costs relating to warrants issued to public offering selling agent	$ 205,894	$ 664,427

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business Description

Wrap Technologies, Inc., a Delaware corporation (the “Company”), is a publicly traded company listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “WRTC”. The Company is a developer of security products designed for use by law enforcement and security personnel. The Company’s first product is the BolaWrap® 100 remote restraint device that discharges an eight-foot bola style Kevlar® tether to entangle a subject at a range of 10-25 feet. The principal markets for the Company’s proprietary products are in North and South America, Europe, Middle East and Asia.

Basis of Presentation and Use of Estimates

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions (e.g., share-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible assets, warranty reserve, accrued costs and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Public and Private Offerings

In December 2017, the Company completed a self-underwritten public offering raising gross proceeds of approximately $3.49 million from the sale of 2,328,533 shares of Common Stock at $1.50 per share. Three officers of the Company purchased 40,000 shares of the offering for $60,000.

On October 30, 2018 the Company obtained gross cash proceeds of $13.68 million and net cash proceeds of approximately $12.14 million from the sale of 4,561,074 units (“Units”) for $3.00 per Unit in a private offering. Each Unit consisted of one share of common stock and one detachable two-year warrant to purchase one share of common stock at an exercise price of $5.00 per share.

On June 18, 2019, the Company consummated a June 2019 Follow-On Offering, pursuant to which a total of 1,923,076 Units were offered and sold at a public offering price of $6.50 per Unit. Each Unit sold consisted of one share of Common Stock and one detachable two-year warrant to purchase one share of Common Stock at an exercise price of $6.50 per share. The offering resulted in the Company’s receipt of gross cash proceeds of $12.5 million, or net cash proceeds of $11.35 million after deduction of commissions and offering costs.

Concentrations of Risk

Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash and cash equivalents and accounts receivable from customers. The Company maintains its cash deposits at two domestic financial institutions. The Company is exposed to credit risk in the event of default by a financial institution to the extent that cash and cash equivalents are in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company places its cash and cash equivalents with high-credit quality financial institutions. To date, the Company has not experienced any losses on its cash and cash equivalents.

Concentrations of Accounts Receivable and Revenue – The Company has recently commenced sales activities with a limited number of customers. The Company may experience concentrations in both accounts receivable and revenue due to the timing of sales and collections of related payments.

Concentration of Suppliers – The Company relies on a limited number of component suppliers and contract suppliers. In particular, a single supplier is currently the sole manufacturer of the Company’s laser assembly with some parts sole sourced from other suppliers. If supplier shortages occur, or quality problems arise, then production schedules could be significantly delayed or costs significantly increased, which could in turn have a material adverse effect on the Company’s financial condition, results of operation and cash flows.

Stock Based Compensation

The Company follows the fair value recognition provisions issued by the Financial Accounting Standards Board (“FASB”) in Accounting Standards Codification (“ASC”) Topic 718, Stock Compensation (“ASC 718”) and has adopted Accounting Standards Update (“ASU”) 2018-07 for share-based transactions with non-employees. Share-based compensation expense recognized during 2019 and 2018 includes stock option and restricted stock unit compensation expense. The grant date fair value of stock options is determined using the Black-Scholes option-pricing model. The grant date is the date at which an employer and employee or non-employee reach a mutual understanding of the key terms and conditions of a share-based payment award. The Black-Scholes option-pricing model requires inputs including the market price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding, the implied stock volatilities of several publicly-traded peers over the expected term of stock options, risk-free interest rate and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant. The fair value of share-based compensation is amortized to compensation expense over the vesting term.

Loss per Share

Basic loss per common share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, restricted stock units and warrants exercisable or issuable for a total of 9,857,457 and 7,084,681 shares of Common Stock were outstanding at December 31, 2019 and 2018, respectively. These securities are not included in the computation of diluted net loss per common share for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company.

Fair Value of Financial Instruments

The carrying amounts of cash, accounts receivable, accounts payable and accrued liabilities approximate fair values due to the short nature of these instruments.

Accounts Receivable and Allowance for Doubtful Accounts

The Company’s policy is to evaluate the collectability of accounts receivable based on an assessment of the collectability of specific customer accounts and then record an allowance for doubtful accounts to reduce the receivables to an amount that management reasonably estimates will be collected. There was no allowance for doubtful accounts recorded at December 31, 2019 or 2018. Accounts that are deemed uncollectible will be written off against the allowance for doubtful accounts. If a major customer’s creditworthiness deteriorates, or actual defaults exceed our historical experience, such estimates could change and impact our future reported financial results.

Inventories

Inventories are valued at the lower of cost or net realizable value. Prior to October 1, 2019 substantially all of the Company’s inventory was determined by the weighted average cost method which approximated the first in first out (FIFO) cost method. Effective October 1, 2019, with the change to a new computerized inventory system, the Company commenced identifying FIFO layers. The Company believes this transition change to FIFO will improve financial reporting by better reflecting the current value of inventory on the balance sheet, more closely aligning the flow of physical inventory with the accounting for the inventory and providing better matching of revenues and expenses. As the Company has only recently started selling products, and had limited purchase and sales activity, the weighted average method approximated FIFO and this change to FIFO had no material effect on the prior balance sheet, statement of operations or cash flows. Accordingly, no retrospective changes have been recorded.

Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers. The Company evaluates the need for reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for the Company’s products. At December 31, 2019 or 2018 the Company had no reserve for obsolescence.

Contract Manufacturers

The Company employs contract manufacturers for production of certain components and sub-assemblies. The Company may provide parts and components to such parties from time to time, but recognizes no revenue or markup on such transactions. During 2019 and 2018, the Company performed assembly of products in-house using components and sub-assemblies from a variety of contract manufacturers and suppliers.

Property, Equipment and Depreciation

Property and equipment is stated at cost. Depreciation on property and equipment is computed over the estimated useful lives of three years using the straight-line method. The Company intends, on any retirement or disposition of property and equipment, that the related cost and accumulated depreciation or amortization will be removed and a gain or loss recorded.

Intangible Assets

Intangible assets consisted of capitalized legal fees and filing costs related to obtaining patents and trademarks. Upon the Company’s first patent approval in July 2018 the Company commenced capitalizing patent and trademark costs. When a patent or trademark is issued the cost is amortized using the straight-line method over the estimated remaining lives which is 20 years from the initial filing. Trademarks are amortized on a straight-line basis over ten years, the estimated useful life of the assets.

Impairment of Long-Lived Assets

Long-lived assets and identifiable intangibles held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized and measured using the asset’s fair value. The Company did not recognize any impairment loss during the periods ended December 31, 2018 and 2019.

Classification and Valuation of Warrants

The Company accounts for warrants as either equity or liabilities based upon the characteristics and provisions of each particular instrument. Warrants valued and classified as equity are recorded as additional paid-in capital based on the issue date fair value and no further adjustment to valuation is made. As of December 31, 2019, the Company has no warrants or other derivative financial instruments that require separate accounting as liabilities and periodic revaluation. However, in accordance with ASC 480 changes in director and officer ownership or other factors in future periods could require reclassification of outstanding warrants as a liability with changes in value thereafter reflected in the statement of operations.

Advertising and Promotion Costs

The Company expenses advertising costs in the period in which they are incurred. The Company incurred advertising costs of $165,119 and $27,218 for the years ended December 31, 2019 and 2018, respectively. The Company incurred product promotion costs for demonstration products delivered to prospective customers of $433,172 and $192,484 for the years ended December 31, 2019 and 2018, respectively. Advertising and promotion costs are included in selling, general and administrative expenses in the accompanying statements of operations.

Research and Development Costs

Research and development costs consist primarily of contract development costs and experimental work materials and certain startup costs. Research and development costs with no alternative use are expensed as incurred.

Leases

At the commencement date of a lease, the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As its leases typically do not provide an implicit rate and due to lack of borrowing history or ability, the Company uses as its incremental borrowing rate a low-grade debt rate published by the Federal Reserve Bank. The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives. Lease liabilities are recorded as a current liability for the portion due within one year with the balance as a long-term liability. ROU assets are recorded as other asset, net.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and ASC Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”), (collectively, “Topic 606”). On January 1, 2018, the Company adopted Topic 606 and, as it had no prior revenue or contracts with customers, there was no transition required nor any impact on prior results. ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. See Note 2 for additional information.

Shipping and Handling Costs

Shipping and handling costs are included in cost of revenues. Shipping and handling costs invoiced to customers are included in revenue. Actual shipping and handling costs were $22,177 and $1,570 for the years ended December 31, 2019 and 2018, respectively. Actual revenues from shipping and handling were $21,414 and $670 for the years ended December 31, 2019 and 2018, respectively.

Warranty Reserves

The Company warrants its products and accessories to be free from defects in materials and workmanship for a period of one year from the date of purchase. The warranty is generally limited. The Company currently provides direct warranty service. International market warranties are generally similar to the U.S. market.

The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenues are recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period. The warranty reserve was $13,923 and $428 at December 31, 2019 and 2018. Actual warranty costs could differ from estimates.

Segment Information

The Company has one operating segment with one business activity, providing restraint solutions. The Company’s chief operating decision maker is its Chief Executive Officer, who manages operations for purposes of allocating resources.

Income Taxes

Until its conversion to a corporation on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. Instead, its losses were included in the income tax returns of the member partners. No income tax expense was recorded for the periods ended December 31, 2019 and 2018 due to losses incurred.

Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates.

Subsequent Events

Management has evaluated events subsequent to December 31, 2019 through the date the accompanying financial statements were filed with the Securities and Exchange Commission and noted that there have been no events or transactions which would affect the Company’s financial statements for the year ended December 31, 2019.

Recent Issued Accounting Guidance

Recently Adopted Accounting Pronouncement:

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. In July 2018, the FASB issued additional guidance which provided an additional transition method for adopting the updated guidance. Under the additional transition method, entities may elect to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. The Company adopted this standard on January 1, 2019 using this modified retrospective approach. The adoption of the standard resulted in the recognition of a ROU asset and lease liability of approximately $12,900 for one operating lease as of January 1, 2019, with no impact to retained earnings.

Effective the First Quarter of 2020:

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating the effect, if any, that ASU 2018-13 will have on its financial statements.

Other Pronouncements:

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

2. REVENUE AND PRODUCT COSTS

12 Months Ended

Dec. 31, 2019

Revenues:

REVENUE AND PRODUCT COSTS

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

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

Performance obligations to deliver products and accessories are generally satisfied at the point in time the Company ships the product, as this is when the customer obtains control of the asset under our standard terms and conditions. The Company has elected to recognize shipping costs as an expense in cost of revenue when control has transferred to the customer. The revenue and cost of training, when part of the performance obligations, is recognized when the training is completed, generally following delivery of related products.

The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. At December 31, 2018 the Company had no contract assets and no deferred revenue related to products or training for product delivered during the year. At December 31, 2019 the Company had deferred revenue of $2,684 related to future training.

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

The Company recognizes an asset if there are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for any such underlying performance obligations. The Company had no such assets at December 31, 2019 and December 31, 2018. The Company will apply the practical expedient to expense any sales commissions related to performance obligations with an amortization of one year or less when incurred within selling, general and administrative expense.

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

3. INVENTORIES, NET

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

INVENTORIES, NET

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

	December 31,
	2019		2018
Finished goods	$	653,323	$	82,313
Work in process		413		12,695
Raw materials		1,590,805		63,259
	$	2,244,541	$	158,267

During the year ended December 31, 2019 the Company wrote off $193,506 of raw material and scrap parts primarily due to startup production, model changes and improvements.

4. PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

	December 31,
	2019			2018
Laboratory equipment	$	44,454		$	13,980
Tooling		59,004			22,683
Computer equipment		83,368			12,608
Furniture, fixtures and improvements		128,782			9,595
		315,608			58,866
Accumulated depreciation		(72,732	)		(28,493	)
	$	242,876		$	30,373

Depreciation expense was $44,239 and $20,520 for the years ended December 31, 2019 and 2018, respectively.

5. INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

Intangible assets consisted of the following:

	December 31,
	2019			2018

Patents	$	176,425		$	111,160
Trademarks		57,919			8,910
		234,344			120,070
Accumulated amortization		(4,061	)		(1,355	)
	$	230,283		$	118,715

Amortization expense was $2,706 and $1,355 for the years ended December 31, 2019 and 2018, respectively.

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable includes $18,809 due to related party Syzygy Licensing, LLC (“Syzygy”). See Note 11.

Accrued liabilities consist of the following:

	December 31,
	2019		2018
Patent costs	$	6,851	$	11,600
Accrued compensation		144,193		55,493
Warranty costs		13,923		428
Taxes and other		29,327		932
	$	194,294	$	68,453

7. LEASES

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

LEASES

The Company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2019 using the modified retrospective approach. The Company has elected not to apply ASC Topic 842 to arrangements with lease terms of 12 months or less. The adoption of the standard resulted in the recognition of a ROU asset and lease liability of $12,900 for one operating lease as of January 1, 2019, with no impact to retained earnings. Prior year amounts have not been restated. That lease is for 1,890 square feet of improved office, assembly and warehouse space in Las Vegas, Nevada. In January 2019 the Company recorded an additional $17,101 ROU remeasurement asset and liability from an extension of the operating facility lease to December 31, 2020.

In March 2019 the Company recorded a $57,587 ROU asset and liability for a two-year facility operating lease for 1,906 square feet of improved office, assembly and warehouse space in Lake Forest, California expiring in February 2021.

In June 2019 the Company recorded a $253,412 ROU asset and liability for a 38-month facility operating lease for 11,256 square feet of improved office, assembly, training and warehouse space in Tempe, Arizona expiring in July 2022.

Due to lack of borrowing history or ability the Company used as its incremental borrowing rate a low-grade debt rate published by the Federal Reserve Bank and determined a discount rate of 7.5% for the remeasurement in January 2019, 6.8% for the March 2019 operating lease and 7.0% for the June 2019 operating lease. Management determined these are reasonable borrowing rates.

Amortization of ROU operating lease assets was $80,069 for the year ended December 31, 2019.

Operating lease expense for capitalized operating leases included in operating activities was $94,599 for the year ended December 31, 2019. Operating lease obligations recorded on the balance sheet at December 31, 2019 are:

Operating lease liability- short term	$	128,131
Operating lease liability - long term		150,018
Total Operating Lease Liability	$	278,149

Future lease payments included in the measurement of lease liabilities on the balance sheet at December 31, 2019 for future periods are as follows:

Table

2020	$	143,574
2021		101,406
2022		57,328
Total future minimum lease payments		302,308
Less imputed interest		(24,159	)
Total	$	278,149

The weighted average remaining lease term is 2.3 years and the weighted average discount rate is 7.0%.

The Company does not have any finance leases.

8. DEFERRED AND ACCRUED COMPENSATION

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

DEFERRED AND ACCRUED COMPENSATION

From March 2016 through February 2017, the Company accrued monthly compensation for the services of two officers in the aggregate amount of $7,000 per month payable to Syzygy. In March 2017 the Company accrued and deferred $6,000 compensation to each of the two officers. The balance payable to Syzygy of $84,000 and deferred compensation of an aggregate of $12,000 was paid in August 2019 without interest.

9. STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

Stockholders' Equity:

STOCKHOLDERS' EQUITY

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

2018 Private Offering

On October 30, 2018 the Company consummated a private offering of 4,561,074 units (“Units”) for $3.00 per Unit. Each Unit consists of one share of common stock and one detachable two-year warrant to purchase one share of common stock at an exercise price of $5.00 per share. The offering resulted in the receipt of gross cash proceeds of $13,683,222 and net cash proceeds of $12,140,786 after deduction of commissions and offering costs. One officer, Elwood G. Norris, purchased 333,334 of the Units for cash of $1,000,000 on the same terms.

In connection with the offering the Company also issued placement agent warrants exercisable for 456,107 shares of common stock for two years at an exercise price of $3.00 per share. The estimated fair value of these warrants was $664,427, as determined using the Black-Scholes methodology (assuming estimated volatility of 49%, risk-free interest rate of 2.84%, and expected dividend yield of 0.0%). This amount was recorded as both an increase to additional paid in capital and as a non-cash issuance cost of the offering.

2019 Follow-On Public Offering

On June 18, 2019, the Company consummated the June 2019 Follow-On Offering, pursuant to which a total of 1,923,076 Units were offered and sold at the public offering price of $6.50 per Unit. Each Unit sold consisted of one share of Common Stock and one detachable two-year warrant to purchase one share of Common Stock at an exercise price of $6.50 per share. The offering resulted in the Company’s receipt of gross cash proceeds of $12.5 million, or net cash proceeds of $11.35 million after deduction of commissions and offering costs.

In connection with the June 2019 Follow-On Offering, the Company also issued placement agent warrants exercisable for 153,846 shares of Common Stock for two years at an exercise price of $8.125 per share. The estimated fair value of these warrants was $205,894, as determined using the Black-Scholes methodology (assuming estimated volatility of 49%, risk-free interest rate of 1.86%, and expected dividend yield of 0.0%). This amount was recorded as both an increase to additional paid in capital and as a non-cash issuance cost of the offering.

Summary of Stock Purchase Warrants

The following table summarizes warrant activity during the years ended December 31, 2018 and 2019:

	Number			Average Purchase Price Per Share
Stock purchase warrants issued October 30, 2018		5,017,181		$	4.82
Stock purchase warrants exercised		-
Shares purchasable under outstanding warrants at December 31, 2018		5,017,181		$	4.82
Stock purchase warrants issued		2,076,922		$	6.62
Stock purchase warrants exercised		(473,483	)	$	4.46
Shares purchasable under outstanding warrants at December 31, 2019		6,620,620		$	5.41

The Company determined that the warrants issued in connection with the 2018 Private Offering and the June 2019 Follow-On Offering should be classified as equity in accordance with ASC 480. However, changes in director and officer ownership or other factors in future periods could require reclassification of outstanding warrants as a liability with changes in value thereafter reflected in the statement of operations.

The Company has outstanding Common Stock purchase warrants as of December 31, 2019 as follows:

	Number of		Exercise Price
Description	Common Shares		Per Share		Expiration Date
Purchase Warrants (1)		4,215,240	$	5.00	October 30, 2020
Agent Warrants		328,458	$	3.00	October 30, 2020
Purchase Warrants		1,923,076	$	6.50	June 18, 2021
Agent Warrants		153,846	$	8.125	June 18, 2021

(1) 333,334 warrants are held by a family trust of officer Elwood G. Norris.

Subsequent to December 31, 2019 a total of 129,950 warrants were exercised for cash proceeds of $628,650.

10. SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

On March 31, 2017, the Company adopted and the stockholders approved the 2017 Stock Incentive Plan (the “Plan”) authorizing 2,000,000 shares of Company Common Stock for issuance as stock options and restricted stock units (“RSUs”) to employees, directors or consultants. In March 2019, the Board of the Company approved and in May 2019, the stockholders ratified, an increase in the Plan authorizing an additional 2,100,000 shares of Common Stock for a total of 4,100,000 shares. The Company generally recognizes share-based compensation expense on the grant date and over the period of vesting or period that services will be provided.

In October 2018 the Company granted consultant options outside of the Plan exercisable for 100,000 shares of common stock at an exercise price of $3.00 per share with 50% vesting ratably over 18 months and the balance vesting based on performance.

The following table summarizes stock option activity for the years ended December 31, 2018 and 2019:

				Weighted Average
	Options on					Remaining		Aggregate
	Common			Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding January 1, 2018		-			-
Granted		2,067,500		$	1.68
Exercised		-			-
Forfeited, cancelled, expired		-			-
Outstanding December 31, 2018		2,067,500		$	1.68		4.44
Granted		1,000,000			5.41		5.00
Exercised		(38,750	)		1.50		-
Forfeited, cancelled, expired		(100,000	)		1.50		-
Outstanding December 31, 2019		2,928,750		$	2.96		3.71	$10,031,388
Vested and exercisable at December 31, 2019		1,573,853		$	1.64		3.43	$7,479,791

Subsequent to December 31, 2019 a total of 84,375 options were exercised for cash proceeds of $126,562.

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

	Year Ended December 31,
	2019			2018
Expected stock price volatility		49	%	47% to 49%
Risk-free interest rate		2.41	%	2.67% to 2.99%
Forfeiture rate		0	%		0	%
Expected dividend yield		0	%		0	%
Expected life of options - years		3.50			2.75-5.00
Weighted-average fair value of options granted	$	2.06		$	0.72

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

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

The following table summarizes information about stock options outstanding at December 31, 2019:

				Average		Weighted				Weighted
				Remaining		Average				Average
Range of		Number		Contractual		Exercise		Number		Exercise
Exercise Prices		Outstanding		Life		Price		Exercisable		Price
$	1.50		1,708,750		3.4	$	1.50		1,448,853	$	1.50
$	3.00 - $3.61		220,000		4.07	$	3.23		125,000		3.83
$	5.41		1,000,000		4.22	$	5.41		-		-

During 2019 the Company granted a total of 308,087 service-based RSUs to employees and consultants vesting over three years that convert to Common Stock as vesting occurs. A summary is set forth below:

			Weighted Average
	Service-Based		Grant Date		Vesting
	RSU's		Fair Value		Period
Unvested at January 1, 2019		-
Granted		308,087	$	6.77	3 Years
Vested		-
Forfeited and cancelled		-
Unvested at December 31, 2019		308,087

The Company recorded stock-based compensation in its statements of operations for the relevant periods as follows:

	Year Ended December 31,
	2019		2018
Selling, general and administrative	$	1,410,095	$	417,151
Research and development		126,001		95,837
Total stock-based expense	$	1,536,096	$	512,988

As of December 31, 2019, total estimated compensation cost of stock options and RSUs granted but not yet vested was $3.5 million which is expected to be recognized over the weighted average period of 2.14 years.

11. COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Facility Leases

See Note 7.

Related Party Technology License Agreement

The Company is obligated to pay royalties and pay development and patent costs pursuant to an exclusive Amended and Restated Intellectual Property License Agreement dated as of September 30, 2016 with Syzygy, a company owned and controlled by stockholders/officers Mr. Elwood Norris and Mr. James Barnes. The agreement provides for royalty payments of 4% of revenue from products employing the licensed ensnarement device technology up to an aggregate of $1,000,000 in royalties or until September 30, 2026, whichever occurs earlier. The Company recorded $23,297 and $871 for royalties incurred during the years ended December 31, 2019 and 2018, respectively.

Purchase Commitments

At December 31, 2019 the Company was committed for approximately $82,000 for future component deliveries that are generally subject to modification or rescheduling in the normal course of business.

Indemnifications and Guarantees

Our officers and directors are indemnified as to personal liability as provided by the Delaware law and the Company’s articles and bylaws. The Company may also undertake indemnification obligations in the ordinary course of business related to its operations. The Company is unable to estimate with any reasonable accuracy the liability that may be incurred pursuant to any such indemnification obligations now or in the future. Because of the uncertainty surrounding these circumstances, the Company’s current or future indemnification obligations could range from immaterial to having a material adverse impact on its financial position and its ability to continue in the ordinary course of business. The Company has no liabilities recorded for such indemnities.

Regulatory Agencies

The Company may be subject to oversight from regulatory agencies regarding firearms that arise in the ordinary course of its business.

12. INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

Until its reverse recapitalization on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. The Company accounts for income taxes under ASC 740. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized.

The Company did not provide any current or deferred U.S. federal income tax provision or benefit for the periods presented because of operating losses since inception. As of December 31, 2019, the Company has federal net operating loss carryforwards of approximately $11,080,000 to reduce future taxable income that will expire beginning in 2038. Certain changes in stock ownership can result in a limitation on the amount of net operating loss and tax credit carryovers that can be utilized each year. As of December 31, 2019, management has not determined the extent of any such limitations, if any.

The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period. As a result of the change in future Federal statutory tax rates due to the passing of the Tax Cuts and Jobs Act of 2017, management has determined that the deferred tax assets and liabilities should not be valued at a federal statutory rate of 34% but rather at the rate in which the benefit of the deferred tax asset or liability will be realized by the Company. As such, the Federal statutory rate used to value the Company's deferred tax assets and liabilities is 21%.

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the periods ended December 31, 2018 and 2019 applicable under FASB ASC 740. The Company did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns for the Company remain open.

The provision for (benefit from) income taxes consists of the following:

	Year Ended December 31,
	2019			2018

Current tax benefit	$	-		$	-
Deferred tax benefit		1,800,000			678,000
Change in valuation allowance		(1,800,000	)		(678,000	)
Income tax benefit (provision)	$	-		$	-

A reconciliation of the provision for income taxes at the federal statutory rate of 21% to the Company’s provision for income tax is as follows:

	Year Ended December 31,
	2019			2018

Income taxes benefit computed at federal statutory rate	$	1,748,000		$	701,000
State income taxes, net of federal effect		114,000			-
Research tax credits		-			15,000
Permanent differences and other		(62,000	)		(38,000	)
Change in valuation allowance		(1,800,000	)		(678,000	)
Income tax benefit (provision)	$	-		$	-

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets and liabilities for the periods presented:

	December 31,
	2019			2018

Deferred tax assets:
Net operating losses	$	2,430,000		$	756,000
Research tax credits		26,000			23,000
Deferred compensation		-			20,000
Stock compensation		239,000			76,000
Accruals and other		9,000			-
		2,704,000			875,000
Deferred tax liabilities:
Depreciation and other		58,000			29,000
		58,000			29,000
Net deferred tax assets		2,646,000			846,000
Less valuation allowance		(2,646,000	)		(846,000	)
Net deferred taxes after valuation allowance	$	-		$	-

In accordance with ASU 2016-09, Compensation-Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting, the Company recognizes windfall tax benefits associated with the exercise of stock options as a component of tax expense (rather than equity). Accordingly, our federal and state operating loss carryforwards include windfall tax deductions from stock option exercises of approximately $144,000 during the year ended December 31, 2019.

13. MAJOR CUSTOMERS AND RELATED INFORMATION

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

MAJOR CUSTOMERS AND RELATED INFORMATION

Major Customers

For the year ended December 31, 2019, revenues from one distributor accounted for 22% of revenues with no other single customer accounting for more than 10% of total revenues. This customer accounted for 54% of accounts receivable at December 31, 2019. Sales were nominal for the year ended December 31, 2018 with a limited number of customers.

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

	Year Ended December 31,
	2019		2018
Americas	$	481,622	$	18,670
Europe, Middle East and Africa		116,547		-
Asia Pacific		98,621		4,480
	$	696,790	$	23,150

See Note 1 – Concentrations of Risks for information on reliance on suppliers.

14. RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2019

RELATED PARTY TRANSACTIONS

Commencing in October 2017 the Company commenced reimbursing officer Mr. Elwood Norris $1,500 per month on a month to month basis for laboratory costs for an aggregate of $18,000 each year during the years ended December 31, 2018 and 2019.

See Notes 6, 9 and 11 for additional related party transactions and information.

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Organization and Business Description	Wrap Technologies, Inc., a Delaware corporation (the “Company”), is a publicly traded company listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “WRTC”. The Company is a developer of security products designed for use by law enforcement and security personnel. The Company’s first product is the BolaWrap® 100 remote restraint device that discharges an eight-foot bola style Kevlar® tether to entangle a subject at a range of 10-25 feet. The principal markets for the Company’s proprietary products are in North and South America, Europe, Middle East and Asia.
Basis of Presentation and Use of Estimates	The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions (e.g., share-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible assets, warranty reserve, accrued costs and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Public and Private Offerings	In December 2017, the Company completed a self-underwritten public offering raising gross proceeds of approximately $3.49 million from the sale of 2,328,533 shares of Common Stock at $1.50 per share. Three officers of the Company purchased 40,000 shares of the offering for $60,000. On October 30, 2018 the Company obtained gross cash proceeds of $13.68 million and net cash proceeds of approximately $12.14 million from the sale of 4,561,074 units (“Units”) for $3.00 per Unit in a private offering. Each Unit consisted of one share of common stock and one detachable two-year warrant to purchase one share of common stock at an exercise price of $5.00 per share. On June 18, 2019, the Company consummated a June 2019 Follow-On Offering, pursuant to which a total of 1,923,076 Units were offered and sold at a public offering price of $6.50 per Unit. Each Unit sold consisted of one share of Common Stock and one detachable two-year warrant to purchase one share of Common Stock at an exercise price of $6.50 per share. The offering resulted in the Company’s receipt of gross cash proceeds of $12.5 million, or net cash proceeds of $11.35 million after deduction of commissions and offering costs.
Concentrations of Risk	Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash and cash equivalents and accounts receivable from customers. The Company maintains its cash deposits at two domestic financial institutions. The Company is exposed to credit risk in the event of default by a financial institution to the extent that cash and cash equivalents are in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company places its cash and cash equivalents with high-credit quality financial institutions. To date, the Company has not experienced any losses on its cash and cash equivalents. Concentrations of Accounts Receivable and Revenue – The Company has recently commenced sales activities with a limited number of customers. The Company may experience concentrations in both accounts receivable and revenue due to the timing of sales and collections of related payments. Concentration of Suppliers – The Company relies on a limited number of component suppliers and contract suppliers. In particular, a single supplier is currently the sole manufacturer of the Company’s laser assembly with some parts sole sourced from other suppliers. If supplier shortages occur, or quality problems arise, then production schedules could be significantly delayed or costs significantly increased, which could in turn have a material adverse effect on the Company’s financial condition, results of operation and cash flows.
Stock Based Compensation	The Company follows the fair value recognition provisions issued by the Financial Accounting Standards Board (“FASB”) in Accounting Standards Codification (“ASC”) Topic 718, Stock Compensation (“ASC 718”) and has adopted Accounting Standards Update (“ASU”) 2018-07 for share-based transactions with non-employees. Share-based compensation expense recognized during 2019 and 2018 includes stock option and restricted stock unit compensation expense. The grant date fair value of stock options is determined using the Black-Scholes option-pricing model. The grant date is the date at which an employer and employee or non-employee reach a mutual understanding of the key terms and conditions of a share-based payment award. The Black-Scholes option-pricing model requires inputs including the market price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding, the implied stock volatilities of several publicly-traded peers over the expected term of stock options, risk-free interest rate and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant. The fair value of share-based compensation is amortized to compensation expense over the vesting term.
Loss per Share	Basic loss per common share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share reflects the potential dilution of securities that could share in the earnings of an entity. The Company’s losses for the periods presented cause the inclusion of potential common stock instruments outstanding to be antidilutive. Stock options, restricted stock units and warrants exercisable or issuable for a total of 9,857,457 and 7,084,681 shares of Common Stock were outstanding at December 31, 2019 and 2018, respectively. These securities are not included in the computation of diluted net loss per common share for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company.
Fair Value of Financial Instruments	The carrying amounts of cash, accounts receivable, accounts payable and accrued liabilities approximate fair values due to the short nature of these instruments.
Accounts Receivable and Allowance for Doubtful Accounts	The Company’s policy is to evaluate the collectability of accounts receivable based on an assessment of the collectability of specific customer accounts and then record an allowance for doubtful accounts to reduce the receivables to an amount that management reasonably estimates will be collected. There was no allowance for doubtful accounts recorded at December 31, 2019 or 2018. Accounts that are deemed uncollectible will be written off against the allowance for doubtful accounts. If a major customer’s creditworthiness deteriorates, or actual defaults exceed our historical experience, such estimates could change and impact our future reported financial results.
Inventories	Inventories are valued at the lower of cost or net realizable value. Prior to October 1, 2019 substantially all of the Company’s inventory was determined by the weighted average cost method which approximated the first in first out (FIFO) cost method. Effective October 1, 2019, with the change to a new computerized inventory system, the Company commenced identifying FIFO layers. The Company believes this transition change to FIFO will improve financial reporting by better reflecting the current value of inventory on the balance sheet, more closely aligning the flow of physical inventory with the accounting for the inventory and providing better matching of revenues and expenses. As the Company has only recently started selling products, and had limited purchase and sales activity, the weighted average method approximated FIFO and this change to FIFO had no material effect on the prior balance sheet, statement of operations or cash flows. Accordingly, no retrospective changes have been recorded. Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers. The Company evaluates the need for reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for the Company’s products. At December 31, 2019 or 2018 the Company had no reserve for obsolescence.
Contract Manufacturers	The Company employs contract manufacturers for production of certain components and sub-assemblies. The Company may provide parts and components to such parties from time to time, but recognizes no revenue or markup on such transactions. During 2019 and 2018, the Company performed assembly of products in-house using components and sub-assemblies from a variety of contract manufacturers and suppliers.
Property, Equipment and Depreciation	Property and equipment is stated at cost. Depreciation on property and equipment is computed over the estimated useful lives of three years using the straight-line method. The Company intends, on any retirement or disposition of property and equipment, that the related cost and accumulated depreciation or amortization will be removed and a gain or loss recorded.
Intangible Assets	Intangible assets consisted of capitalized legal fees and filing costs related to obtaining patents and trademarks. Upon the Company’s first patent approval in July 2018 the Company commenced capitalizing patent and trademark costs. When a patent or trademark is issued the cost is amortized using the straight-line method over the estimated remaining lives which is 20 years from the initial filing. Trademarks are amortized on a straight-line basis over ten years, the estimated useful life of the assets.
Impairment of Long-Lived Assets	Long-lived assets and identifiable intangibles held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized and measured using the asset’s fair value. The Company did not recognize any impairment loss during the periods ended December 31, 2018 and 2019.
Classification and Valuation of Warrants	The Company accounts for warrants as either equity or liabilities based upon the characteristics and provisions of each particular instrument. Warrants valued and classified as equity are recorded as additional paid-in capital based on the issue date fair value and no further adjustment to valuation is made. As of December 31, 2019, the Company has no warrants or other derivative financial instruments that require separate accounting as liabilities and periodic revaluation. However, in accordance with ASC 480 changes in director and officer ownership or other factors in future periods could require reclassification of outstanding warrants as a liability with changes in value thereafter reflected in the statement of operations.
Advertising and Promotion Costs	The Company expenses advertising costs in the period in which they are incurred. The Company incurred advertising costs of $165,119 and $27,218 for the years ended December 31, 2019 and 2018, respectively. The Company incurred product promotion costs for demonstration products delivered to prospective customers of $433,172 and $192,484 for the years ended December 31, 2019 and 2018, respectively. Advertising and promotion costs are included in selling, general and administrative expenses in the accompanying statements of operations.
Research and Development Costs	Research and development costs consist primarily of contract development costs and experimental work materials and certain startup costs. Research and development costs with no alternative use are expensed as incurred.
Leases	At the commencement date of a lease, the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As its leases typically do not provide an implicit rate and due to lack of borrowing history or ability, the Company uses as its incremental borrowing rate a low-grade debt rate published by the Federal Reserve Bank. The right-of-use (“ROU”) asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives. Lease liabilities are recorded as a current liability for the portion due within one year with the balance as a long-term liability. ROU assets are recorded as other asset, net.
Revenue Recognition	In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) and ASC Subtopic 340-40, Other Assets and Deferred Costs - Contracts with Customers (“ASC 340-40”), (collectively, “Topic 606”). On January 1, 2018, the Company adopted Topic 606 and, as it had no prior revenue or contracts with customers, there was no transition required nor any impact on prior results. ASU 2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations. See Note 2 for additional information.
Shipping and Handling Costs	Shipping and handling costs are included in cost of revenues. Shipping and handling costs invoiced to customers are included in revenue. Actual shipping and handling costs were $22,177 and $1,570 for the years ended December 31, 2019 and 2018, respectively. Actual revenues from shipping and handling were $21,414 and $670 for the years ended December 31, 2019 and 2018, respectively.
Warranty Reserves	The Company warrants its products and accessories to be free from defects in materials and workmanship for a period of one year from the date of purchase. The warranty is generally limited. The Company currently provides direct warranty service. International market warranties are generally similar to the U.S. market. The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenues are recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period. The warranty reserve was $13,923 and $428 at December 31, 2019 and 2018. Actual warranty costs could differ from estimates.
Segment Information	The Company has one operating segment with one business activity, providing restraint solutions. The Company’s chief operating decision maker is its Chief Executive Officer, who manages operations for purposes of allocating resources.
Income Taxes	Until its conversion to a corporation on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. Instead, its losses were included in the income tax returns of the member partners. No income tax expense was recorded for the periods ended December 31, 2019 and 2018 due to losses incurred. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates.
Subsequent Events	Management has evaluated events subsequent to December 31, 2019 through the date the accompanying financial statements were filed with the Securities and Exchange Commission and noted that there have been no events or transactions which would affect the Company’s financial statements for the year ended December 31, 2019.
Recent Issued Accounting Guidance	Recently Adopted Accounting Pronouncement: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. In July 2018, the FASB issued additional guidance which provided an additional transition method for adopting the updated guidance. Under the additional transition method, entities may elect to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. The Company adopted this standard on January 1, 2019 using this modified retrospective approach. The adoption of the standard resulted in the recognition of a ROU asset and lease liability of approximately $12,900 for one operating lease as of January 1, 2019, with no impact to retained earnings. Effective the First Quarter of 2020: In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement, to improve the effectiveness of fair value measurement disclosures by removing or modifying certain disclosure requirements and adding other requirements. This ASU is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company is currently evaluating the effect, if any, that ASU 2018-13 will have on its financial statements. Other Pronouncements: The Company has reviewed other recently issued, but not yet effective, accounting pronouncements and does not believe the future adoptions of any such pronouncements will be expected to cause a material impact on its financial condition or the results of operations.

3. INVENTORIES, NET (Tables)

12 Months Ended

Dec. 31, 2019

Inventory Disclosure [Abstract]

Schedule of inventories

	December 31,
	2019		2018
Finished goods	$	653,323	$	82,313
Work in process		413		12,695
Raw materials		1,590,805		63,259
	$	2,244,541	$	158,267

4. PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and equipment

	December 31,
	2019			2018
Laboratory equipment	$	44,454		$	13,980
Tooling		59,004			22,683
Computer equipment		83,368			12,608
Furniture, fixtures and improvements		128,782			9,595
		315,608			58,866
Accumulated depreciation		(72,732	)		(28,493	)
	$	242,876		$	30,373

5. INTANGIBLE ASSETS, NET (Tables)

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of intangible assets

	December 31,
	2019			2018

Patents	$	176,425		$	111,160
Trademarks		57,919			8,910
		234,344			120,070
Accumulated amortization		(4,061	)		(1,355	)
	$	230,283		$	118,715

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

Payables and Accruals [Abstract]

Summary of accrued liabilities

	December 31,
	2019		2018
Patent costs	$	6,851	$	11,600
Accrued compensation		144,193		55,493
Warranty costs		13,923		428
Taxes and other		29,327		932
	$	194,294	$	68,453

7. LEASES (Tables)

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Operating lease obligations

Operating lease liability- short term	$	128,131
Operating lease liability - long term		150,018
Total Operating Lease Liability	$	278,149

Future lease payments

2020	$	143,574
2021		101,406
2022		57,328
Total future minimum lease payments		302,308
Less imputed interest		(24,159	)
Total	$	278,149

9. STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2019

Stockholders' Equity:

Warrant activity

	Number			Average Purchase Price Per Share
Stock purchase warrants issued October 30, 2018		5,017,181		$	4.82
Stock purchase warrants exercised		-
Shares purchasable under outstanding warrants at December 31, 2018		5,017,181		$	4.82
Stock purchase warrants issued		2,076,922		$	6.62
Stock purchase warrants exercised		(473,483	)	$	4.46
Shares purchasable under outstanding warrants at December 31, 2019		6,620,620		$	5.41

Summary of stock purchase warrants

	Number of		Exercise Price
Description	Common Shares		Per Share		Expiration Date
Purchase Warrants (1)		4,215,240	$	5.00	October 30, 2020
Agent Warrants		328,458	$	3.00	October 30, 2020
Purchase Warrants		1,923,076	$	6.50	June 18, 2021
Agent Warrants		153,846	$	8.125	June 18, 2021

(1) 333,334 warrants are held by a family trust of officer Elwood G. Norris.

10. SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock option activity

				Weighted Average
	Options on					Remaining		Aggregate
	Common			Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value
Outstanding January 1, 2018		-			-
Granted		2,067,500		$	1.68
Exercised		-			-
Forfeited, cancelled, expired		-			-
Outstanding December 31, 2018		2,067,500		$	1.68		4.44
Granted		1,000,000			5.41		5.00
Exercised		(38,750	)		1.50		-
Forfeited, cancelled, expired		(100,000	)		1.50		-
Outstanding December 31, 2019		2,928,750		$	2.96		3.71	$10,031,388
Vested and exercisable at December 31, 2019		1,573,853		$	1.64		3.43	$7,479,791

Assumptions used to compute the fair value of options granted

	Year Ended December 31,
	2019			2018
Expected stock price volatility		49	%	47% to 49%
Risk-free interest rate		2.41	%	2.67% to 2.99%
Forfeiture rate		0	%		0	%
Expected dividend yield		0	%		0	%
Expected life of options - years		3.50			2.75-5.00
Weighted-average fair value of options granted	$	2.06		$	0.72

Stock options outstanding

				Average		Weighted				Weighted
				Remaining		Average				Average
Range of		Number		Contractual		Exercise		Number		Exercise
Exercise Prices		Outstanding		Life		Price		Exercisable		Price
$	1.50		1,708,750		3.4	$	1.50		1,448,853	$	1.50
$	3.00 - $3.61		220,000		4.07	$	3.23		125,000		3.83
$	5.41		1,000,000		4.22	$	5.41		-		-

Service-based RSU activity

			Weighted Average
	Service-Based		Grant Date		Vesting
	RSU's		Fair Value		Period
Unvested at January 1, 2019		-
Granted		308,087	$	6.77	3 Years
Vested		-
Forfeited and cancelled		-
Unvested at December 31, 2019		308,087

Stock-based compensation

	Year Ended December 31,
	2019		2018
Selling, general and administrative	$	1,410,095	$	417,151
Research and development		126,001		95,837
Total stock-based expense	$	1,536,096	$	512,988

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=65888546&loc=d3e21300-112643

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(28))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21553-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 480
-SubTopic 10
-Section S99
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65877616&loc=d3e177068-122764

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21488-112644

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 12: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(27))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21484-112644

Reference 14: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

12. INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Provision for (benefit from) income taxes

	Year Ended December 31,
	2019			2018

Current tax benefit	$	-		$	-
Deferred tax benefit		1,800,000			678,000
Change in valuation allowance		(1,800,000	)		(678,000	)
Income tax benefit (provision)	$	-		$	-

Reconciliation of the provision for income taxes

	Year Ended December 31,
	2019			2018

Income taxes benefit computed at federal statutory rate	$	1,748,000		$	701,000
State income taxes, net of federal effect		114,000			-
Research tax credits		-			15,000
Permanent differences and other		(62,000	)		(38,000	)
Change in valuation allowance		(1,800,000	)		(678,000	)
Income tax benefit (provision)	$	-		$	-

Deferred tax assets and liabilities

	December 31,
	2019			2018

Deferred tax assets:
Net operating losses	$	2,430,000		$	756,000
Research tax credits		26,000			23,000
Deferred compensation		-			20,000
Stock compensation		239,000			76,000
Accruals and other		9,000			-
		2,704,000			875,000
Deferred tax liabilities:
Depreciation and other		58,000			29,000
		58,000			29,000
Net deferred tax assets		2,646,000			846,000
Less valuation allowance		(2,646,000	)		(846,000	)
Net deferred taxes after valuation allowance	$	-		$	-

13. MAJOR CUSTOMERS AND RELATED INFORMATION (Tables)

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Summary of revenues by geographic region

	Year Ended December 31,
	2019		2018
Americas	$	481,622	$	18,670
Europe, Middle East and Africa		116,547		-
Asia Pacific		98,621		4,480
	$	696,790	$	23,150

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Antidilutive securities	9,857,457	7,084,681
Advertising costs	$ 165,119	$ 27,218
Product promotion costs	433,172	192,484
Shipping and handling costs	22,177	1,570
Revenues from shipping and handling	21,414	670
Warranty reserve	$ 13,923	$ 428

3. INVENTORIES, NET (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Finished goods	$ 653,323	$ 82,313
Work in process	413	12,695
Raw materials	1,590,805	63,259
Inventory	$ 2,244,541	$ 158,267

3. INVENTORIES, NET (Details Narrative) - USD ($)	12 Months Ended
3. INVENTORIES, NET (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Inventory write down	$ (193,506)	$ 0

4. PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Property and equipment, gross	$ 315,608	$ 58,866
Accumulated depreciation	(72,732)	(28,493)
Property and equipment, net	242,876	30,373
Laboratory Equipment
Property and equipment, gross	44,454	13,980
Tooling
Property and equipment, gross	59,004	22,683
Computer Equipment
Property and equipment, gross	83,368	12,608
Furniture and Fixtures
Property and equipment, gross	$ 128,782	$ 9,595

4. PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 44,239	$ 20,520

5. INTANGIBLE ASSETS, NET (Details) - USD ($)	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Intangible assets, gross		$ 234,344	$ 120,070
Accumulated amortization		(4,061)	(1,355)
Intangible assets, net		$ 230,283	118,715
Patents
Intangible assets, gross	$ 176,425		111,160
Trademarks
Intangible assets, gross	$ 57,919		$ 8,910

5. INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	12 Months Ended
5. INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 2,706	$ 1,355

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Accrued liabilities	$ 194,294	$ 68,453
Patent Costs
Accrued liabilities	6,851	11,600
Accrued Compensation
Accrued liabilities	144,193	55,493
Warranty Costs
Accrued liabilities	13,923	428
Other
Accrued liabilities	$ 29,327	$ 932

7. LEASES (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease liability- short term	$ 128,131	$ 0
Operating lease liability - long term	150,018	$ 0
Total operating lease liability	$ 278,149

7. LEASES (Details 1)	Dec. 31, 2019 USD ($)
Leases [Abstract]
2020	$ 143,574
2021	101,406
2022	57,328
Total future minimum lease payments	302,308
Less imputed interest	(24,159)
Total	$ 278,149

7. LEASES (Details Narrative)	12 Months Ended
7. LEASES (Details Narrative)	Dec. 31, 2019 USD ($)
Leases [Abstract]
Amortization of ROU operating lease assets	$ 80,069
Operating lease expense	$ 94,599
Weighted average remaining lease term	2 years 3 months 18 days
Weighted average discount rate	7.00%

9. STOCKHOLDERS' EQUITY (Details) - $ / shares	12 Months Ended
9. STOCKHOLDERS' EQUITY (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Stockholders' Equity:
Warrants outstanding, beginning	5,017,181	5,017,181
Issued	2,076,922
Exercised	(473,483)	0
Warrants outstanding, ending	6,620,620	5,017,181
Average purchase price per share outstanding, beginning	$ 4.82	$ 4.82
Issued	6.62
Exercised	4.46	0.00
Average purchase price per share outstanding, ending	$ 5.41	$ 4.82

9. STOCKHOLDERS' EQUITY (Details 1)

12 Months Ended

Dec. 31, 2019

USD ($)

$ / shares

Purchase Warrants

Number of common shares | $

$ 4,215,240

^[1]

Exercise price per share | $ / shares

$ 5.00

Expiration date

Oct. 30, 2020

Agent Warrants

Number of common shares | $

$ 328,458

Exercise price per share | $ / shares

$ 3.00

Expiration date

Oct. 30, 2020

Purchase Warrants

Number of common shares | $

$ 1,923,076

Exercise price per share | $ / shares

$ 6.50

Expiration date

Jun. 18, 2021

Agent Warrants

Number of common shares | $

$ 153,846

Exercise price per share | $ / shares

$ 8.125

Expiration date

Jun. 18, 2021

[1]	333,334 warrants are held by a family trust of officer Elwood G. Norris.

9. STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Stockholders' Equity:
Common stock, authorized	150,000,000	150,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001

10. SHARE-BASED COMPENSATION (Details) - USD ($)	12 Months Ended
10. SHARE-BASED COMPENSATION (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Share-based Payment Arrangement [Abstract]
Number of options outstanding, beginning	2,067,500	0
Number of options granted	1,000,000	2,067,500
Number of options exercised	(38,750)	0
Number of options forfeited/cancelled/expired	(100,000)	0
Number of options outstanding, ending	2,928,750	2,067,500
Number of options vested and exercisable	1,573,853
Weighted average exercise price outstanding, beginning	$ 1.68	$ .00
Weighted average exercise price granted	5.41	1.68
Weighted average exercise price exercised	1.50	.00
Weighted average exercise price forfeited/cancelled/expired	1.50	.00
Weighted average exercise price outstanding, ending	2.96	$ 1.68
Weighted average exercise price vested and exercisable	$ 3.43
Weighted average remaining contractual term outstanding, beginning	4 years 5 months 28 days
Weighted average remaining contractual term granted	5 years
Weighted average remaining contractual term outstanding, ending	3 years 8 months 16 days
Weighted average remaining contractual term vested and exercisable	3 years 5 months 5 days
Aggregate intrinsic value outstanding	$ 10,031,388
Aggregate intrinsic value vested and exercisable	$ 7,479,791

10. SHARE-BASED COMPENSATION (Details 1) - $ / shares	12 Months Ended
10. SHARE-BASED COMPENSATION (Details 1) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Expected stock price volatility	49.00%
Risk-free interest rate	2.41%
Forfeiture rate	0.00%	0.00%
Expected dividend yield	0.00%	0.00%
Expected life of options - years	3 years 6 months
Weighted-average fair value of options granted	$ 2.06	$ .72
Minimum
Expected stock price volatility		47.00%
Risk-free interest rate		2.67%
Expected life of options - years		2 years 9 months
Maximum
Expected stock price volatility		49.00%
Risk-free interest rate		2.99%
Expected life of options - years		5 years

10. SHARE-BASED COMPENSATION (Details 2) - $ / shares	12 Months Ended
10. SHARE-BASED COMPENSATION (Details 2) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Number of options outstanding	2,928,750	2,067,500	0
Weighted average remaining contractual term outstanding	3 years 8 months 16 days
Weighted average exercise price outstanding	$ 2.96	$ 1.68	$ .00
Number exercisable	1,573,853
Weighted average exercise price exerciseable	$ 3.43
$1.50
Number of options outstanding	1,708,750
Weighted average remaining contractual term outstanding	3 years 4 months 24 days
Weighted average exercise price outstanding	$ 1.50
Number exercisable	1,448,853
Weighted average exercise price exerciseable	$ 1.50
$3.00 - $3.61
Number of options outstanding	220,000
Weighted average remaining contractual term outstanding	4 years 25 days
Weighted average exercise price outstanding	$ 3.23
Number exercisable	125,000
Weighted average exercise price exerciseable	$ 3.83
$5.41
Number of options outstanding	1,000,000
Weighted average remaining contractual term outstanding	4 years 2 months 19 days
Weighted average exercise price outstanding	$ 5.41
Number exercisable	0
Weighted average exercise price exerciseable	$ .00

10. SHARE-BASED COMPENSATION (Details 3)	12 Months Ended
10. SHARE-BASED COMPENSATION (Details 3)	Dec. 31, 2019 $ / shares shares
Share-based Payment Arrangement [Abstract]
Unvested service-based RSUs outstanding, beginning	0
Granted	308,087
Vested	0
Forfeited and cancelled	0
Unvested service-based RSUs outstanding, ending	308,087
Grant date fair value \| $ / shares	$ 6.77
Vesting period	3 years

10. SHARE-BASED COMPENSATION (Details 4) - USD ($)	12 Months Ended
10. SHARE-BASED COMPENSATION (Details 4) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Share-based compensation	$ 1,536,096	$ 512,988
Selling, General and Administrative
Share-based compensation	1,410,095	417,151
Research and Development
Share-based compensation	$ 126,001	$ 95,837

10. SHARE-BASED COMPENSATION (Details Narrative)	12 Months Ended
10. SHARE-BASED COMPENSATION (Details Narrative)	Dec. 31, 2019 USD ($) shares
Share-based Payment Arrangement [Abstract]
Service-based RSUs granted \| shares	308,087
Unrecognized compensation cost \| $	$ 3,500,000
Unrecognized compensation cost, period of recognition	2 years 1 month 20 days

11. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Royalties incurred	$ 23,297	$ 871
Purchase commitment	$ 82,000

12. INCOME TAXES (Details) - USD ($)	12 Months Ended
12. INCOME TAXES (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Current tax benefit	$ 0	$ 0
Deferred tax benefit	1,800,000	678,000
Change in valuation allowance	(1,800,000)	(678,000)
Income tax benefit (provision)	$ 0	$ 0

12. INCOME TAXES (Details 1) - USD ($)	12 Months Ended
12. INCOME TAXES (Details 1) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Income taxes benefit computed at federal statutory rate	$ 1,748,000	$ 701,000
State income taxes, net of federal effect	114,000	0
Research tax credits	0	15,000
Permanent differences and other	(62,000)	(38,000)
Change in valuation allowance	(1,800,000)	(678,000)
Income tax benefit (provision)	$ 0	$ 0

12. INCOME TAXES (Details 2) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net operating losses	$ 2,430,000	$ 756,000
Research tax credits	26,000	23,000
Deferred compensation	0	20,000
Stock compensation	239,000	76,000
Accruals and other	9,000	0
Deferred tax assets	2,704,000	875,000
Deferred tax liabilities:
Depreciation and other	58,000	29,000
Deferred tax liabilities	58,000	29,000
Net deferred tax assets	2,646,000	846,000
Less valuation allowance	(2,646,000)	(846,000)
Net deferred taxes after valuation allowance	$ 0	$ 0

12. INCOME TAXES (Details Narrative)	Dec. 31, 2019 USD ($)
Income Tax Disclosure [Abstract]
Operating loss carryforward	$ 11,080,000
Windfall tax deductions	$ 144,000

13. MAJOR CUSTOMERS AND RELATED INFORMATION (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenues	$ 696,790	$ 23,150
Americas
Revenues	481,622	18,670
Europe, Middle East and Africa
Revenues	116,547	0
Asia Pacific
Revenues	$ 98,621	$ 4,480

14. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Related Party Transactions [Abstract]
Payment to related party during period	$ 18,000	$ 18,000