You should read the following discussion in conjunction with the financialstatements and other financial information included elsewhere in this QuarterlyReport on Form 10-Q (this "Report") and with our audited financial statementsand other information presented in our Annual Report on Form 10-K for the yearended December 31, 2020. The following discussion may contain forward-lookingstatements that reflect our plans, estimates and beliefs. Words such as"expect," "anticipate," "intend," "plan," "believe," "seek," "estimate,""continue," "may," "will," "could," "would," or the negative or plural of suchwords and similar expressions or variations of such words are intended toidentify forward-looking statements, but are not the only means of identifyingforward-looking statements. Such forward-looking statements are subject to anumber of risks, uncertainties, assumptions and other factors that could causeactual results and the timing of certain events to differ materially from futureresults expressed or implied by the forward-looking statements. Factors thatcould cause or contribute to these differences include, but are not limited to,those discussed below and elsewhere in this Report and in our other SEC filings,including particularly matters set forth under Part I, Item 1A (Risk Factors) ofour Annual Report on Form 10-K. Furthermore, such forward-looking statementsspeak only as of the date of this Quarterly Report. Except as required by law,we undertake no obligation to update any forward-looking statements to reflectevents or circumstances after the date of such statements. For purposes ofManagement's Discussion and Analysis within this Report, all monetary amountsare stated in thousands except for par values and per share amounts, unlessotherwise stated.OverviewWe are a global public safety technology and services company organized in March2016 delivering modern policing solutions to law enforcement and securitypersonnel. We began product sales of our first public safety product, theBolaWrap 100 remote restraint device, in late 2018. In October 2021 we releaseda new generation product, the BolaWrap 150. The BolaWrap 150 is electronicallydeployed and is more robust, smaller, lighter and simpler to deploy than theBolaWrap 100 that is being phased out.The immediate addressable domestic market for our solutions consists ofapproximately 900,000 full-time sworn law enforcement officers at over 15,300federal, state and local law enforcement agencies and over 12 million policeofficers in over 100 countries we are targeting globally. We are also exploringother domestic markets, including military and private security. Ourinternational focus is on countries with the largest police forces. The 100largest international police agencies are estimated to have over 12.1 millionlaw enforcement personnel. According to Statistics MRC, a market researchconsulting firm, we participate in a segment of the non-lethal products globalmarket expected to grow to $11.85 billion by 2023.

We focus our efforts on the following products, services and solutions:

We focus significant resources on research and development innovations and continue to enhance our products and plan to introduce new products. We believe we have established a strong branding and market presence globally and have established significant competitive advantages in our markets.

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Business Outlook and Challenges

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Impact of COVID-19 and Social Unrest on our Business

? Greater funding challenges for our customer base, which may adversely affect

timing of anticipated contracts and new customer sales;

? Disruption to our supply chain caused by distribution and other logistical

issues, which may further delay our ability to deliver product to customers

beyond 2021; and

? Potential decrease in productivity of our employees or those of our customers

? the duration and scope of the challenges created by the COVID-19 pandemic or

by ongoing social unrest;

? governmental, business and individuals' actions that have been and continue to

be taken in response to these events;

? the impact of the COVID-19 pandemic and social unrest on economic activity and

? the degree to which our employees or those of our customers or suppliers

Critical Accounting Policies and Estimates

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Segment and Related Information

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Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

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Selling, General and Administrative Expense

The largest driver of this increase was related to an increase of $624 in share-based compensation, related to incentives for management and employees.

The increase in SG&A expense was partially offset by a $296 decrease in advertising and promotional product expense resulting from reduced demonstration product costs and a planned shift in production efforts to a new generation product.

Research and Development Expense

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Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

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Selling, General and Administrative Expense

SG&A expense for the nine months ended September 30, 2021 increased by $8,277 compared to the nine months ended September 30, 2020.

The largest driver of this increase was related to an increase of $2,329 in share-based compensation, of which $1,397 was for director compensation. The remaining $932 was incentive for management and employees.

Research and Development Expense

Liquidity and Capital Resources

During the nine months ended September 30, 2021 we received $13,726 of proceeds from the exercise of previously issued stock purchase warrants and from the exercise of stock options.

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Our future capital requirements, cash flows and results of operations could be affected by, and will depend on, many factors, some of which are currently unknown to us, including, among other things:

? The impact and effects of the global outbreak of the COVID-19 pandemic, and

other potential pandemics or contagious diseases or fear of such outbreaks;

? Decisions regarding staffing, development, production, marketing and other

? Costs, timing and outcome of planned production and required customer and

? Costs, timing and outcome of any future warranty claims or litigation against

Principal factors that could affect our ability to obtain cash from external sources including from exercise of outstanding warrants and options include:

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

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During the nine months ended September 30, 2021, we used $30,014 of cash to purchase short-term investments and we had proceeds from maturities of short-term investments of $25,000. We purchased $25,000 of short-term investments during the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, we received $12,048 from previously issued stock purchase warrants and $1,678 in proceeds from the exercise of previously issued stock options, and repaid $275 in debt relating to the acquisition of NSENA in December 2020.

Contractual Obligations and Commitments

We are committed to aggregate lease payments on our facility lease of $24 in 2021 and $58 in 2022.

At September 30, 2021 the Company was committed for approximately $713 for future component deliveries and contract services that are generally subject to modification or rescheduling in the normal course of business.

We do not believe that inflation has had a material impact on our business, revenue or operating results during the periods presented.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the period ended September 30, 2021, or subsequently thereto, that we believe are of potential significance to our financial statements.

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WRAP TECHNOLOGIES, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) - marketscreener.com