Business Context and Reporting Period
Wrap Technologies, Inc. (WRTC) filed a Form 8-K on May 28, 2020, reporting the entry into a material definitive agreement. The company is incorporated in Delaware and trades on the Nasdaq Capital Market.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on a new contractual obligation.
Material Changes and Related Party Transaction
On May 28, 2020, the Company entered into a consulting agreement with V3 Capital Partners, LLC ("V3"), effective April 1, 2020. This is a related party transaction because Scot Cohen, the Company's Chair of the Board, is the sole managing member of V3.
- Services: V3 will provide consulting, strategic advisory, investor, shareholder, and marketing services focused on market capitalization and business development.
- Compensation: V3 will receive a monthly fee of $10,000 plus reimbursement of reasonable expenses.
- Performance Bonus: A cash bonus of $175,000 is payable if the Company consummates a financing or related transaction valued at $10.0 million or greater, provided V3's efforts are a material factor.
- Termination: The Company may terminate the agreement at any time for any reason with five days' prior written notice.
Management Commentary and Approval
The Company's Audit Committee approved the agreement and recommended it to the Board's independent directors. The Board evaluated the agreement by comparing the cost of these services to third-party alternatives and the unique value added by Mr. Cohen's expertise. The filing contains no forward-looking guidance, risk factors, or contingencies beyond the terms of this specific agreement.
Investor Verification Checklist
- Verify the total monthly cash outflow of $10,000 and its impact on current liquidity.
- Review the attached Exhibit 10.1 for specific definitions of "Qualified Financing" and the Board's discretion in determining material factors.
- Assess the potential liability of the $175,000 bonus contingent on future financing events.
- Confirm the independence of the Board members who approved this related party transaction.