Axon Enterprise (AXON) 10-K risk factor changes: FY2021 vs FY2020

We are materially dependent on acceptance of our products by law enforcement markets, [removed: both domestic and international.][added: throughout the world.]

In the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] we derived a significant portion of our revenues from sales of TASER brand devices and related cartridges, and expect to depend on sales of these products for a significant portion of our revenue for the foreseeable future.

If we are unable to develop scalable solutions that can [removed: consistently] be [added: consistently] configured for customers with minimal effort, or if we are unable to [removed: build out] [added: grow] a professional services team that can consistently configure our products to meet the requirements of large numbers of customers in a timely and cost-effective manner, our ability to broadly scale our cloud-based productivity and real-time operations SaaS solutions could be negatively impacted, and our deployment costs could negatively impact our operating results.

While we have some patent protection in certain key areas of our CED, Axon device and SaaS technology, [removed: it is possible that] new technology may result in competing products that operate outside our patents and could present significant competition for our products, which could adversely affect our business, financial results and competitive position.

[removed: If we do not competitively price] our [removed: products, meet the requirements of our] distributors or end-users, provide adequate marketing support, or comply with the terms of our distribution arrangements, our distributors may fail to aggressively market our products or may terminate their relationships with us.

These transactions involve significant challenges and risks including that the transaction does not advance our business strategy, expected synergies are not achieved, we do not realize a satisfactory return on our investment, we experience difficulty in the integration or coordination of new employees, business systems, and technology, we incur unanticipated liabilities or impairments, or [removed: there is a diversion of] management’s attention [added: is diverted] from our other businesses.

A disruption or failure of our systems or operations in the event of a major earthquake, weather event, fire, explosion, failure to contain hazardous materials, industrial accident, [added: utility failure,] cyber-attack, terrorist attack, public health crisis, or other catastrophic event could cause delays in completing sales, providing services, or performing other mission-critical functions.

[removed: This contagious disease outbreak, which has continued to spread throughout the United States and world,] [added: The COVID-19 global pandemic] has adversely affected workforces, economies, and financial markets globally, [removed: leading] [added: and led] to an economic downturn.

[removed: COVID-19-related] [added: As a result, the ongoing pandemic continues to present various] risks that may affect our operations and financial [removed: results include,] [added: results, including,] but [removed: are] not limited to:

| | ● | Economic slowdowns that negatively affect municipal and state tax collections and put pressure on law enforcement budgets that in turn increases the risk that our customers will be unable to appropriate funds for existing or future contracts with us; this could also affect customer demand and ability to pay, cause decreases in sales, and negatively impact the realizability of our accounts and notes receivable and contract [removed: assets] [added: assets;] |

| | ● | Costs incurred to shut down and decontaminate our facilities if the virus is [removed: detected] [added: detected;] |

Specifically, we depend on suppliers of sub-assemblies, machined parts, injection molded plastic parts, printed circuit boards, custom wire fabrications and other miscellaneous customer parts for our [added: products.]

A [added: real or perceived] security breach could also result in a loss of confidence in the security of our service, disrupt our business, damage our reputation, lead to legal liability, negatively impact our future sales and significantly harm our growth prospects, operating results and financial condition.

Interruptions in our service, or loss or corruption of digital evidence, may reduce our revenue, cause us to issue credits or pay penalties, cause customers to file litigation against us, cause customers to terminate their [added: subscriptions and adversely affect our renewal rates and our ability to attract new customers.]

| | ● | Import and export requirements, tariffs, trade disputes and barriers, [added: product certification requirements,] and customs classifications that may prevent us from offering products or providing services to a particular market or obtaining necessary parts and components to manufacture products, which may lead to decreased sales and may increase our operating costs. |

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations in the United Kingdom and the EU, and we [added: may incur additional costs or need to make operational changes as we adapt to potentially divergent regulatory frameworks.]

[added: Some government agency orders may also be canceled or] substantially delayed due to budgetary, political or other scheduling delays, which frequently occur in connection with the acquisition of products by such agencies, and such cancellations may accelerate or be more severe than we have experienced historically.

We maintain the majority of our cash and cash equivalents accounts at [removed: four] [added: three] depository institutions.

As of December 31, [removed: 2020,] [added: 2021,] the aggregate balances in such accounts [added: at these three institutions] were [removed: $145.1] [added: $347.3] million.

[removed: Fluctuations in foreign] currency could result in a change in the U.S. dollar value of our foreign denominated assets and liabilities including accounts receivable.

If our products, services, or technologies were found to infringe a third-party’s proprietary rights, we could be forced to [added: discontinue use of the protected technology or] enter into costly royalty or licensing agreements in order to be able to sell our [removed: products or discontinue use of the protected technology.][added: products.]

We could also be required to pay substantial damages, fines or other penalties, indemnify customers or distributors, [added: cease the manufacture, use, or sale of infringing products or processes, make proprietary source code]

[removed: cease the manufacture, use, or sale of infringing products or processes,] [added: publicly available,] and/or expend significant resources to develop or acquire non-infringing technologies.

Our current research and development focus on developing software-based products, including that which is related to artificial [removed: intelligence,] [added: intelligence or virtual reality,] increases this risk.

For additional discussion of this matter, refer to Note [removed: 10] [added: 11] to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

_Federal regulation of sales in the U.S.:_ Our [added: currently offered] CEDs are not firearms regulated by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, but our consumer products are regulated by the U.S. Consumer Product Safety Commission.

Although there are currently no federal laws restricting sales of our core [added: currently offered] CED products in the U.S., future federal regulation could adversely affect sales of our products.

_Federal regulation of international sales:_ Our CEDs are considered a “crime control” product by the U.S. DOC for export directly from the [removed: U.S] [added: U.S.] which requires us to obtain an export license from the DOC for the export of our CED devices from the U.S. to any country other than Canada.

If we do not competitively price our products, meet the requirements of

Although the severity of the pandemic has lessened with the rollout of vaccines and travel restrictions, remote working and schooling and social distancing requirements have been lifted or eased in varying degrees in varying locations throughout the United States and the world, continuing surges and variants have caused certain restrictions to be re-implemented in varying degrees and in varying locations.

The severity and duration of the pandemic, including future surges and variants, is impossible to predict.

We have unique equity incentives designed to attract and retain long-term employees.

We utilize these plans to align pay and performance and drive shareholder returns while reducing near-term cash expenditures.

Our equity incentives and ongoing stock and option grants are subject to having sufficient shares approved by our shareholders.

If we are unable to obtain shareholder approval, we may be unable to attract and retain top talent.

The competition for our key employees is intense and market competition for top talent has increased since our introduction of our innovative performance-based stock compensation plans in 2018.

Global economic conditions could materially adversely affect our revenue and results of operations.

Our inability to offset price inflation in our materials, components, shipping, or labor through increased prices to customers with long-term fixed contracts and formula-based or long-term fixed price contracts with suppliers could adversely affect our business, financial condition and results of operations.

Our suppliers may fail to deliver components according to schedules, prices, quality and volumes that are acceptable to us, or we may be unable to manage these components effectively.

Our products contain many parts purchased globally from numerous suppliers, including single-source direct suppliers, which exposes us to multiple potential sources of component shortages.

Unexpected changes in business

conditions, materials pricing, labor issues, wars, trade policies, natural disasters, health epidemics such as the global COVID-19 pandemic, trade and shipping disruptions, port congestions and other factors beyond our or our suppliers’ control could also affect these suppliers’ ability to deliver components to us or to remain solvent and operational.

We have used alternative parts to mitigate the challenges caused by these shortages, but there is no guarantee we may be able to continually do so as we scale production to meet projected future sales activity.

Additionally, if our suppliers do not accurately forecast and effectively allocate production or if they are not willing to allocate sufficient production to us, or they decommit to us previously agreed to supply levels, it may reduce our access to components and require us to search for new suppliers.

The unavailability of any component or supplier could result in production delays, as well as impact our ability to fulfill our obligations under customer contracts.

While we believe that we will be able to secure additional or alternate sources for most of our components, there is no assurance that we will be able to do so quickly or at all.

As the scale of our hardware production increases, we will also need to accurately forecast, purchase, warehouse and transport components at high volumes to our manufacturing facilities.

If we are unable to accurately match the timing and quantities of component purchases to our actual needs, we may incur unexpected production disruption, storage, transportation and write-off costs, which may harm our business and operating results.

Fluctuations in foreign

In March 2020 the World Health Organization declared coronavirus (or “COVID-19”) a global pandemic.

| --- | --- | --- |

| | ● | Existing and potential increased costs relating to personal protective equipment, which we are sourcing for our employees and customers; |

products.

subscriptions and adversely affect our renewal rates and our ability to attract new customers.

may incur additional costs or need to make operational changes as we adapt to potentially divergent regulatory frameworks.

The competition for our key employees is intense.

Some government agency orders may also be canceled or

This section discusses our results of operations for the year ended December 31, [removed: 2020] [added: 2021] as compared to the year ended December 31, [removed: 2019.][added: 2020.]

For a discussion and analysis of the year ended December 31, [removed: 2019,] [added: 2020,] compared to the same period in [removed: 2018] [added: 2019] please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] filed with the SEC on February [removed: 27, 2020.][added: 26, 2021.]

Our revenues for the year ended December 31, [removed: 2020] [added: 2021] were [removed: $681.0] [added: $863.4] million, an increase of [removed: $150.1] [added: $182.4] million, or [removed: 28.2%,] [added: 26.8%,] from the prior year.

We had a loss from operations of [removed: $14.2] [added: $168.1] million compared to [removed: $6.4] [added: $14.2] million in the prior year.

The higher loss from operations was primarily the result of increased stock compensation expense for our CEO Performance Award and [removed: XSPP awards and an increase in legal expenses.][added: XSPP.]

For the year ended December 31, [removed: 2020,] [added: 2021,] we recorded net loss of [removed: $1.7] [added: $60.0] million compared to net [removed: income] [added: loss] of [removed: $0.9] [added: $1.7] million for the prior year.

For the year ending December 31, [removed: 2021,] [added: 2022,] we expect revenue of [removed: $740 million to $780 million.][added: approximately $1 billion.]

We anticipate capital expenditures of approximately [removed: $65] [added: $135] million to [removed: $70] [added: $160] million in [removed: 2021,] [added: 2022,] including approximately [removed: $25 million in support of capacity expansion and automation of TASER device and cartridge manufacturing, approximately $20] [added: $85] million for development of our [removed: planned new] manufacturing [removed: and office] facility [added: and campus] in Scottsdale, Arizona, [added: approximately $40 million to support capacity expansion] and [added: automation of TASER devices, and] the remainder on [added: additional] investments to support our continued growth.

[removed: This contagious disease outbreak, which has continued to spread throughout the United States and world,] [added: The COVID-19 pandemic] has adversely affected workforces, economies, and financial markets globally, [removed: leading] [added: and led] to an economic downturn.

[removed: In response to the pandemic, Axon has] [added: We have] taken a number of [removed: actions:][added: actions in response to the pandemic:]

| | ● | We previously took steps to diversify our supply chain and global manufacturing footprint, which have positioned us well to manage through the pandemic. [removed: Thus far, we have been able to produce and ship our critical core products with little to no interruption.] |

| | ● | In light of our broad geographic supplier base both domestic and international, we are continuously monitoring our supply chain to manage through potential impacts, [removed: finding] [added: identifying] alternate sources as well as shipping / logistic [removed: options as available or] [added: sources and] working with foreign regulators to ensure that our suppliers can provide parts. |

| | ● | We have [removed: pivoted] [added: continued] our shareholder engagement [removed: to] [added: in] a [added: primarily] virtual format. |

We believe that our [removed: existing liquidity and other] sources of funding will be sufficient to satisfy our currently anticipated cash requirements including capital expenditures, working capital requirements, potential acquisitions or [removed: strategic investments] [added: investments, income] and [added: payroll tax payments for net-settled stock awards, and] other liquidity requirements through at least the next 12 months.

| Net sales from products | | $ | [removed: 500,250] [added: 608,525] | | [removed: 73.5] [added: 70.5] | % | ​ | $ | [removed: 399,474] [added: 500,250] | | [removed: 75.3] [added: 73.5] | % |

| Net sales from services | ​ | | [removed: 180,753] [added: 254,856] | | [removed: 26.5] [added: 29.5] | ​ | ​ | | [removed: 131,386] [added: 180,753] | | [removed: 24.7] [added: 26.5] | ​ |

| Net sales | ​ | | [removed: 681,003] [added: 863,381] | | 100.0 | ​ | ​ | | [removed: 530,860] [added: 681,003] | | 100.0 | ​ |

| Cost of product sales | ​ | | [removed: 224,131] [added: 260,098] | | [removed: 32.9] [added: 30.1] | ​ | ​ | | [removed: 190,683] [added: 224,131] | | [removed: 35.9] [added: 32.9] | ​ |

| Cost of service sales | ​ | | [removed: 40,541] [added: 62,373] | | [removed: 6.0] [added: 7.2] | ​ | ​ | | [removed: 32,891] [added: 40,541] | | [removed: 6.2] [added: 6.0] | ​ |

| Cost of sales | ​ | | [removed: 264,672] [added: 322,471] | | [removed: 38.9] [added: 37.3] | ​ | ​ | | [removed: 223,574] [added: 264,672] | | [removed: 42.1] [added: 38.9] | ​ |

| Gross margin | ​ | | [removed: 416,331] [added: 540,910] | | [removed: 61.1] [added: 62.7] | ​ | ​ | | [removed: 307,286] [added: 416,331] | | [removed: 57.9] [added: 61.1] | ​ |

| Sales, general and administrative | ​ | | [removed: 307,286] [added: 515,007] | | [removed: 45.1] [added: 59.7] | ​ | ​ | | [removed: 212,959] [added: 307,286] | | [removed: 40.1] [added: 45.1] | ​ |

| Research and development | ​ | | [removed: 123,195] [added: 194,026] | | [removed: 18.1] [added: 22.5] | ​ | ​ | | [removed: 100,721] [added: 123,195] | | [removed: 19.0] [added: 18.1] | ​ |

| Total operating expenses | ​ | | [removed: 430,481] [added: 709,033] | | [removed: 63.2] [added: 82.2] | ​ | ​ | | [removed: 313,680] [added: 430,481] | | [removed: 59.1] [added: 63.2] | ​ |

| [removed: Income (loss)] [added: Loss] from operations | ​ | | [removed: (14,150)] [added: (168,123)] | | [removed: (2.1)] [added: (19.5)] | ​ | ​ | | [removed: (6,394)] [added: (14,150)] | | [removed: (1.2)] [added: (2.1)] | ​ |

| Interest and other income, net | ​ | | [removed: 7,859] [added: 26,748] | | [removed: 1.1] [added: 3.1] | ​ | ​ | | [removed: 8,464] [added: 7,859] | | [removed: 1.6] [added: 1.1] | ​ |

| [removed: Income (loss)] [added: Loss] before provision for income taxes | ​ | | [removed: (6,291)] [added: (141,375)] | | [removed: (1.0)] [added: (16.4)] | ​ | ​ | | [removed: 2,070] [added: (6,291)] | | [removed: 0.4] [added: (1.0)] | ​ |

| Provision for (benefit from) income taxes | ​ | | [removed: (4,567) | | (0.7) | ​] [added: (81,357)] | ​ | | [removed: 1,188 | | 0.2 | ​] [added: (4,567)] |

| Net income (loss) | [added: ​] | $ | [removed: (1,724) | | (0.3) | %] [added: (60,018)] | ​ | $ | [removed: 882 | | 0.2 | %] [added: (1,724)] |

| United States | | $ | [removed: 535,079] [added: 686,914] | | [removed: 79] [added: 80] | % | ​ | $ | [removed: 446,100] [added: 535,079] | | [removed: 84] [added: 79] | % |

| Other Countries | ​ | | [removed: 145,924] [added: 176,467] | | [removed: 21] [added: 20] | ​ | ​ | | [removed: 84,760] [added: 145,924] | | [removed: 16] [added: 21] | ​ |

| Total | ​ | $ | [removed: 681,003] [added: 863,381] | | 100 | % | ​ | $ | [removed: 530,860] [added: 681,003] | | 100 | % |

International revenue in [removed: 2020] [added: 2021] increased [removed: substantially] compared to [removed: 2019,] [added: 2020,] driven by strength in all of our international [removed: regions] [added: regions, particularly in the Americas] and [removed: most notably within EMEA.][added: EMEA regions.]

[removed: In the Software and Sensors segment, service revenue also] includes other recurring cloud-hosted software revenue and related professional services.

For the Years Ended December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

Net sales by product line were as follows for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] (dollars in thousands):

| ​ | ​ | [removed: 2020] [added: 2021] | | | | ​ | [removed: 2019] [added: 2020] | | | | ​ | Change | | ​ | Change | |

| Axon Evidence and cloud services | ​ | | [removed: 2,935] [added: 9,159] | | [removed: 0.4] [added: 1.1] | ​ | | [removed: 704] [added: 2,935] | | [removed: 0.1] [added: 0.4] | ​ | | [removed: 2,231] [added: 6,224] | | [removed: 316.9] [added: 212.1] | ​ |

| Axon Evidence and cloud services | ​ | | [removed: 176,797] [added: 246,005] | | [removed: 26.0] [added: 28.5] | ​ | | [removed: 130,265] [added: 176,797] | | [removed: 24.5] [added: 26.0] | ​ | | [removed: 46,532] [added: 69,208] | | [removed: 35.7] [added: 39.1] | ​ |

| ​ | | [removed: 2020] [added: 2021] | | [removed: 2019] [added: 2020] | | Change | | Change | |

In addition, operating expenses were higher in 2021 primarily due to an increase in headcount; these other cost increases were largely offset by higher revenue.

2022 Outlook

| | ● | We hosted several onsite vaccination clinics for our employees and their family members. |

| ​ | ​ | 2021 | | | | | ​ | 2020 | | | | |

| Net loss | | $ | (60,018) | | (7.0) | % | ​ | $ | (1,724) | | (0.3) | % |

| ​ | ​ | 2021 | | | | ​ | ​ | 2020 | | | | |

In the Software and Sensors segment, service revenue also

| TASER 7 | ​ | $ | 135,906 | | 15.7 | % | $ | 107,506 | | 15.8 | % | $ | 28,400 | | 26.4 | % |

| TASER X26P | ​ | | 40,629 | | 4.7 | ​ | | 41,724 | | 6.1 | ​ | | (1,095) | | (2.6) | ​ |

| TASER X2 | ​ | | 58,081 | | 6.7 | ​ | | 60,107 | | 8.8 | ​ | | (2,026) | | (3.4) | ​ |

| TASER Consumer devices | ​ | | 7,132 | | 0.8 | ​ | | 9,407 | | 1.4 | ​ | | (2,275) | | (24.2) | ​ |

| Cartridges | ​ | | 152,842 | | 17.8 | ​ | | 115,193 | | 16.9 | ​ | | 37,649 | | 32.7 | ​ |

| Extended warranties | ​ | | 24,125 | | 2.8 | ​ | | 20,754 | | 3.0 | ​ | | 3,371 | | 16.2 | ​ |

| Other | ​ | | 9,053 | | 1.0 | ​ | | 8,926 | | 1.3 | ​ | | 127 | | 1.4 | ​ |

| TASER segment | ​ | | 436,927 | | 50.6 | ​ | | 366,552 | | 53.7 | ​ | | 70,375 | | 19.2 | ​ |

| Axon Body | ​ | | 75,484 | | 8.8 | ​ | | 57,150 | | 8.4 | ​ | | 18,334 | | 32.1 | ​ |

| Axon Flex | ​ | | 4,155 | | 0.5 | ​ | | 4,082 | | 0.6 | ​ | | 73 | | 1.8 | ​ |

| Axon Fleet | ​ | | 24,319 | | 2.8 | ​ | | 20,108 | | 3.0 | ​ | | 4,211 | | 20.9 | ​ |

| Axon Dock | ​ | | 24,441 | | 2.8 | ​ | | 19,723 | | 2.9 | ​ | | 4,718 | | 23.9 | ​ |

| Extended warranties | ​ | | 33,686 | | 3.9 | ​ | | 24,408 | | 3.6 | ​ | | 9,278 | | 38.0 | ​ |

| Other | ​ | | 18,364 | | 2.1 | ​ | | 12,183 | | 1.8 | ​ | | 6,181 | | 50.7 | ​ |

| Software and Sensors segment | ​ | | 426,454 | | 49.4 | ​ | | 314,451 | | 46.3 | ​ | | 112,003 | | 35.6 | ​ |

| Total net sales | ​ | $ | 863,381 | | 100.0 | % | $ | 681,003 | | 100.0 | % | $ | 182,378 | | 26.8 | % |

| TASER 7 | | 90,348 | | 77,451 | | 12,897 | | 16.7 | % |

| TASER X26P | | 30,083 | | 37,391 | | (7,308) | | (19.5) | % |

| TASER X2 | | 38,620 | | 43,407 | | (4,787) | | (11.0) | % |

| TASER Consumer devices | | 26,958 | | 33,158 | | (6,200) | | (18.7) | % |

| Cartridges | | 4,945,927 | | 3,714,291 | | 1,231,636 | | 33.2 | % |

| Axon Body | | 181,663 | | 182,538 | | (875) | | (0.5) | % |

| Axon Flex | | 7,828 | | 8,962 | | (1,134) | | (12.7) | % |

| Axon Fleet | | 11,264 | | 11,304 | | (40) | | (0.4) | % |

| Axon Dock | | 25,584 | | 25,422 | | 162 | | 0.6 | % |

Cartridge revenue increased due to

increased unit sales.

Consumer devices revenue decreased $2.3 million or 24.2% driven by a decrease in retail sales due to a shift in consumer shopping behaviors, as well as lower average selling prices, and higher sales during the prior year due to civil unrest.

TASER 7 revenue for 2021 was impacted by approximately $35.0 million for orders that were scheduled to ship prior to December 31, 2021, but could not be fulfilled due to the delayed receipt of a manufacturing component for our TASER 7 devices.

We expect to recognize this revenue during the first half of 2022.

Sales of our Axon Body 3 camera drove most of the $18.3 million increase in Axon Body revenue and the $4.7 million increase in Axon Dock revenue.

Other revenue increased $6.2 million or 50.7% due to increases in signal sidearm and signal performance power magazine (SPPM) attributable to increased sales of our TASER 7 devices.

Axon Body revenue was impacted by approximately $15.5 million for orders that were scheduled to ship prior to December 31, 2021, but could not be fulfilled due to supply chain constraints for our Axon Body 3 devices.

Remaining cost increases were primarily attributable to the increase in unit sales and an increase in headcount.

These cost increases were largely offset by higher revenue and improved gross margin.

2021 Outlook

We anticipate that revenue for the three months ending March 31, 2021 will reflect approximately 12% growth as compared to the three months ended March 31, 2020.

In late 2019, COVID-19 was first detected in Wuhan, China.

In March 2020 the World Health Organization declared COVID-19 a global pandemic.

_Customer support:_

| | ● | Free access to Axon Citizen cloud software to all public law enforcement agencies in 2020 to enable social distancing; |

| --- | --- | --- |

| | ● | A partnership with the National Police Foundation to provide personal protective equipment (“PPE”) for first responders; |

| --- | --- | --- |

| | ● | An online support center for our customers, www.axon.com/covid-19-support-center; and |

| --- | --- | --- |

| | ● | Our annual Axon Accelerate user conference was held virtually in late August 2020. |

| --- | --- | --- |

| | ● | Curbed all non-essential travel at the beginning of March; |

| --- | --- | --- |

| --- | --- | --- |

| | ● | Mitigating contamination risk in our facilities through staggered shifts, the use of PPE, increased distancing, cleaning standards that exceed CDC guidance, and paying or subsidizing certain high-risk employees while they stay at home. |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| | o | Our annual meeting was held virtually on May 29, 2020, and we anticipate holding our 2021 annual meeting virtually; |

| | o | We completed a follow-on equity offering in June 2020 for which all related marketing was conducted virtually; and |

| | o | We will continue to participate in several upcoming investor conferences utilizing video conferencing. All investor materials and events are available at investor.axon.com. |

We are in a strong liquidity position, with substantial cash and investments on hand, which are discussed in more detail under Liquidity and Capital Resources.

Our expenses for the year ended December 31, 2020 increased by approximately $4.1 million for costs related to the pandemic.

We expect ongoing increased costs related to the mitigation of contamination risk at our facilities.

We expect these incremental costs will continue to be partially offset by savings on travel and events and other cost-savings measures.

We have elected to participate in the social security deferral program offered under the Coronavirus Aid, Relief, and Economic Security Act, whereby we deferred payment of the employer portion of all social security taxes that would otherwise have been payable from March 27, 2020 through December 31, 2020.

Payment of the deferred amount is due 50% on December 31, 2021 and 50% on December 31, 2022.

| ​ | ​ | 2020 | | | | | ​ | 2019 | | | | |

| ​ | ​ | 2020 | | | | ​ | ​ | 2019 | | | | |

| TASER 7 | ​ | $ | 107,506 | | 15.8 | % | $ | 56,652 | | 10.7 | % | $ | 50,854 | | 89.8 | % |

| TASER X26P | ​ | | 41,724 | | 6.1 | ​ | | 52,524 | | 9.9 | ​ | | (10,800) | | (20.6) | ​ |

| TASER X2 | ​ | | 60,107 | | 8.8 | ​ | | 55,920 | | 10.5 | ​ | | 4,187 | | 7.5 | ​ |

| TASER Pulse | ​ | | 9,407 | | 1.4 | ​ | | 4,089 | | 0.8 | ​ | | 5,318 | | 130.1 | ​ |

| Cartridges | ​ | | 115,193 | | 16.9 | ​ | | 85,987 | | 16.2 | ​ | | 29,206 | | 34.0 | ​ |

| Extended warranties | ​ | | 20,754 | | 3.0 | ​ | | 18,074 | | 3.4 | ​ | | 2,680 | | 14.8 | ​ |

| Other | ​ | | 8,926 | | 1.3 | ​ | | 7,711 | | 1.5 | ​ | | 1,215 | | 15.8 | ​ |

Based on investment positions as of December 31, [removed: 2020,] [added: 2021,] a hypothetical 100 basis point increase in interest rates across all maturities would result in a [removed: $1.7] [added: $0.5] million decline in the fair market value of the portfolio.

Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit, which totaled $6.1 million at December 31, [removed: 2020.][added: 2021.]

At December 31, [removed: 2020,] [added: 2021,] there was no amount outstanding under the line of credit, and the available borrowing under the line of credit was $43.9 million.

All of our cash equivalents and investments are treated as “available-for-sale”.

We report available-for-sale investments at fair value as of each balance sheet date and record any unrealized gains or losses as a component of stockholders’ equity.

The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in interest and other income, net within the consolidated statements of operations.

When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses is made.

The credit-related impairment amount is recognized in the consolidated statements of operations.

Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account.

If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations.

All of our cash equivalents and investments are treated as “held-to-maturity.” Investments in fixed-rate interest-earning instruments carry a degree of interest rate risk as their market value may be adversely impacted due to a rise in interest rates.

As a result, we may suffer losses in principal if we sell securities that have declined in market value due to changes in

interest rates.

However, because we classify our debt securities as “held-to-maturity” based on our intent and ability to hold these instruments to maturity, no gains or losses are recognized due to changes in interest rates.

These securities are reported at amortized cost.

| | ● | Who we sell to - State and local [removed: police departments,] [added: law enforcement,] U.S. federal [added: civilian and defense] agencies, justice and court systems, [added: corrections,] fire departments and emergency medical services providers, consumers, and commercial enterprises such as private security firms and transportation [removed: services] [added: providers] |

Further information about our reportable segments and sales by geographic region is included in Notes 1 and [removed: 17] [added: 19] of the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

| | [removed: ●] [added: 1.] | [added: TASER: We develop smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force and aid consumers in personal protection. These tools include] TASER [removed: devices:] [added: devices, virtual reality training services and consumer devices.] Research has shown that TASER devices are the most effective less-than-lethal force option, with the lowest likelihood of injury to officers and assailants. Since our inception in 1993, TASER devices have been adopted by a majority of U.S. police departments and are used daily to help keep communities safe. [removed: The cloud-connected TASER CED (TASER 7) is our newest device.] We [removed: also sell TASER devices] [added: see opportunity] to [removed: consumers for] [added: create more effective and reliable] personal [removed: protection.] [added: protection for private individuals, and, thus, our consumer business is a growing area of investment. Our market penetration among consumers is virtually nil.] |

| | 2. | Sensors: Axon devices address many needs, including transparency, real-time situational awareness, and capturing evidence accurately and integrating with software workflows. Product categories within sensors [removed: include:] [added: include Axon body cameras, Axon Fleet in-car systems, and other devices that work with our software.] |

| | 3. | Software: Axon is building a suite of cloud-based, software-as-a-service (“SaaS”) solutions that integrate with our sensors and TASER devices to benefit customers and drive annual recurring revenue, which totaled [removed: $221.3] [added: $327.5] million(a) as of December 31, [removed: 2020. Our] [added: 2021. We have many] SaaS [removed: solutions] [added: solutions, which] can [removed: be] best [added: be] trisected [removed: into:] [added: into three categories: digital evidence management, productivity and real-time operations solutions. Axon Evidence is the world’s largest cloud-hosted public safety data repository of public safety video data and other types of digital evidence.] |

No customer represented more than 10% of total net sales for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] or [removed: 2018.][added: 2019.]

Axon has dedicated sales representatives for the 1,200 largest agencies, which account for [added: approximately] 70% [removed: to 80%] of U.S. law enforcement patrol officers.

We previously took steps to diversify our supply chain and global manufacturing footprint, which [removed: have] positioned us well to manage through the COVID-19 pandemic.

Thus far, we have been able to produce and ship our critical core [removed: products with little to no interruption.][added: products.]

We continue to adjust strategic inventory levels based on areas of risk [added: (Covid, geopolitical, governmental, etc.)] to mitigate potential supply disruptions.

In light of our broad domestic and international geographic supplier base, we are continuously monitoring our supply chain to manage through potential impacts, [removed: finding] [added: identifying] alternate [removed: sources as well as] shipping [removed: or] [added: /] logistic [removed: options as available or] [added: sources, and] working with foreign regulators to ensure that our suppliers can provide parts.

As of December 31, [removed: 2020,] [added: 2021,] we hold [removed: 223] [added: 253] U.S. patents, [removed: 89] [added: 91] U.S. registered trademarks, [removed: 137] [added: 155] international patents, and [removed: 333] [added: 383] international registered trademarks, and also have numerous patent and trademark applications pending.

_TASER for Law Enforcement, Corrections and Private Security Markets:_ Our CEDs compete with a variety of other less-lethal alternatives to firearms, including rubber bullets or rubber baton rounds, pepper spray, [added: pepper spray projectiles,] mace, traditional stun guns, hand-held remote restraint devices involving a tether, laser dazzlers that cause temporary blindness, stun grenades, long-range acoustic devices, police batons and night sticks.

[added: The design maturity of the TASER platform, as well as our] development and sale of a two-shot device, are also key competitive differentiators.

TASER [added: personal safety] devices are not stun guns, and have different capabilities, including NMI (neuro-muscular incapacitation) functionality.

The broader market for personal safety and home defense is far-reaching, and categories range from threat detection and accountability (dash and doorbell cameras), to home security (home alarms, locks, and response services) to personal defense (firearms, stun guns, TASER devices, pepper spray, tactical flashlights, and personal [removed: alarms).][added: alarms), to personal tracking and emergency notification mobile applications.]

_Sensors — Connected Cameras and Digital Evidence Management Software:_ The body-worn camera and in-car [removed: video/ALPR] [added: video/automatic license plate readers] market is highly competitive.

Our competition includes Motorola Solutions, [removed: WatchGuard, Edesix, and Vigilant, all three of which Motorola purchased in 2019,] Utility Associates, Getac, Panasonic Corp., Reveal Media, Coban Technologies, L3 Mobile-Vision, Digital Ally, Visual Labs, [removed: Intresnsic,] [added: Intrensic,] LLC, as well as Safety Vision, Rekor, and Genetec.

Key competitive factors in this market include product performance, product [removed: features,] [added: features (including live-streaming, GPS tracking, and pre-event buffering),] battery life, product quality and warranty, total cost of ownership, data security, data and information [removed: work flows,] [added: workflows,] company reputation and financial strength, and relationships with customers.

_Productivity and Real-Time Operations — [removed: RMS] [added: Records Management System (RMS)] and [removed: CAD:_] [added: Computer Aided Dispatch (CAD):_] The RMS and CAD markets are highly competitive and highly fragmented.

[removed: However, historical seasonal patterns, municipal] budgets or historical patterns of product introductions should not be considered reliable indicators of our future net sales or financial performance.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including, for example, laws and regulations related to: privacy and data protection, security, retention, and deletion; rights of publicity; content; intellectual property; regulation of our CEDs as firearms; advertising; [added: marketing; distribution; electronic contracts and other communications; competition; consumer protection; telecommunications; product liability; taxation; labor and employment; economic or other trade prohibitions or sanctions; securities; and online payment services.]

_Federal regulation of sales in the U.S.:_ Our [added: currently offered] CEDs are not firearms regulated by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, but our consumer products are regulated by the U.S. Consumer Product Safety Commission.

There are currently no federal laws restricting sales of our core [added: currently offered] CED products in the U.S.

_Federal regulation of foreign national employees:_ Our [removed: intangible] CED [removed: production] [added: technology] is [removed: also] considered controlled “technology” by the U.S. DOC and is categorized as a “deemed export” for any foreign national employees exposed to the technology within the U.S. Consequently, we must obtain an export licenses from the DOC for any deemed export within the U.S. made to a foreign national employee exposed to the deemed controlled technology.

As of December 31, [removed: 2020,] [added: 2021,] the general public in Hawaii and Rhode Island is prohibited from possessing certain of our TASER-branded devices.

[added: Depending on these activities, regulations can include] business activity licensing and registration, import permits and recordkeeping, warehousing & storage security and permitting, and government reporting.

We manufacture [removed: and] [added: and, after receiving the required approvals, we] market [added: our] products in spectrum bands already made available by regulatory bodies.

We are subject to laws and regulations that dictate whether, how, and under what circumstances we can [added: collect,] transfer, process and/or receive certain data that is critical to our operations, including data shared between countries or regions in which we operate and data shared among our products and services.

The GDPR includes operational requirements for companies [added: that receive or process personal data of residents of the EU.]

As of December 31, [removed: 2020,] [added: 2021,] we had [removed: 1,710] [added: 2,148] full-time employees and [removed: 838] [added: 844] temporary employees (temporary employees include contractors, interns, and consultants).

The breakdown of our full-time employees by department was as follows: [removed: 260] [added: 215] direct manufacturing employees, [removed: 475] [added: 614] research and development employees, [removed: 458] [added: 381] administrative and [removed: manufacturing] support [removed: employees] [added: employees, 452 sales employees,] and [removed: 517] [added: 486] employees within [removed: sales, marketing, communications and training.][added: product support.]

As of December 31, [removed: 2020,] [added: 2021,] we had [removed: four] [added: six] affinity groups — Axon Allies for LGBTQ+ [removed: employees and allies,] [added: employees, APIA for Asian Pacific Islander employees, HOLA for Hispanic employees,] Axon Mosaic for Black employees, Axon Vets for service veterans, and Women at Axon.

In [removed: 2020,] [added: 2021,] we broadened our already strong support for our customers and the communities they are sworn to protect.

We added a Vice President of Community Impact to build and lead a team dedicated to listening to [removed: communities, seeking citizen feedback, and keeping them safe and informed on a variety of topics.]

[removed: We also] [added: In 2020, we] launched a company-wide R&D initiative that allowed employees to break from their regular responsibilities and solely focus on developing life-changing solutions to better protect citizens and law enforcement.

Internally, we [removed: took time] [added: continue] to listen to our employees with town hall [removed: sessions and, after intentional reflection, took action with employee affinity groups, provided] [added: sessions, provide] expert-led webinars for parents, and [removed: hosted] [added: host] community round tables.

| | _(b)_ | _Regrettable attrition is defined as rolling 12-month attrition of employees rated as [removed: “exceptional” or “exceeds”] [added: top performing] in the prior performance rating cycle._ |

Ginger is a 24/7 resource that includes individualized coaching via text in addition to access to [removed: article] [added: articles] and activities offering guidance on maintaining emotional balance throughout tumultuous times.

In 2021, we made investments for scale to expand our total addressable market along three axes — introducing new products, selling into new customer market segments, and adding sales channels to new geographic regions.

We believe we are serving a $52 billion total addressable market.

In recent years, we have been investing in sales personnel to capture new markets, including the U.S. federal government and military, departments of corrections, the fire and emergency medical services markets, and new geographies outside the U.S. In 2021, we continued to expand our presence in new markets by growing our dedicated sales teams in the Justice and Enterprise markets.

However, as we enter 2022 material availability still poses real risks to all businesses that manufacture products.

Supplier decommitments remain our largest area of risk and we have seen this practice increase over the course of the pandemic and global supply chain constraints.

We proactively manage our supply chain down to third tier suppliers to overcome material shortages as they arise.

These actions align to our strategic model to help meet strong product demand while also preparing us to stagger factory work schedules as needed, which enables us to meet compressed build schedules over short periods of time.

Our competition includes Motorola Solutions, Panasonic Corp., IBM, Oracle, FotoWare, Vidizmo, NICE, QueTel, OpenText, and FileOnQ among others.

Our Respond offering competes both with real-time operations platforms that ingest body camera video feeds, like Motorola’s CommandCentral Aware, Hitachi's Visualization Suite and Genetec's Citigraf as well as platforms that ingest video feeds exclusively from surveillance cameras, like Rave Mobile Safety, LiveEarth and Mutualink among others.

However, historical seasonal patterns, municipal

Subsequent to December 31, 2021, Hawaii lifted restrictions on possession related to TASER-branded devices.

Other countries have adopted chemical restrictions regulations, including the U.S., Canada, and Australia.

We continue to monitor and assess for compliance as the regulatory environment evolves both within the United States and in relevant international markets.

During fiscal 2021, the number of full-time employees increased by 438, primarily for sales and research and development resources.

We closed the year with our regrettable attrition rate(b) at 1.3%, under the annual goal of 2.5%.

More than 90% of employees reported feeling proud to work at Axon during this year’s employee engagement survey.

Each affinity group is inclusive of employees who identify as members of each community, as well as allies.

communities, seeking citizen feedback, and keeping them safe and informed on a variety of topics.

Additionally, we have a Wellness Incentive Program for our domestic employees that incentivizes healthy lifestyles.

The program rewards employees for completing a variety of well-being activities that help foster their financial wellness, mental health, social wellbeing, community engagement and nutrition.

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| | 1. | TASER: We develop smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force. These tools include: |

| --- | --- | --- |

| --- | --- | --- |

| | ● | VR and Training: We offer a suite of virtual reality ("VR") training services for public safety, delivered through our Axon Academy training platform. To obsolete bullets, we intend to drive training and adoption of best practices in modern policing. |

| --- | --- | --- |

| --- | --- | --- |

| | ● | Axon Body cameras, including Axon Body 3, an LTE-enabled camera with Global Positioning System ("GPS") capability and support for real-time awareness via our software. Our body cameras also include the Axon Flex sunglasses-or-brim-mounted camera. |

| --- | --- | --- |

| | ● | Axon Fleet in-car camera systems. We are investing in automated license plate reading (“ALPR”), which uses artificial intelligence (“AI”) to read license plates to apprehend criminals, find missing children, and recover stolen vehicles. We believe a key differentiator is that our AI-powered system is being built from the ground up using an ethical design and privacy-centric framework. |

| --- | --- | --- |

| | ● | Axon Air is Axon's unmanned aircraft program, which allows agencies to ingest data captured on drone devices directly into Axon Evidence. Axon Air is an important tool to help improve officer safety, provide tactical support, and manage evidence. |

| --- | --- | --- |

| | ● | Our sensors network works with our software to help to automatically ensure cameras are on when they are supposed to be on and send alerts within the network, including Signal Sidearm sensors that detect when a firearm has been removed from a holster, sensors that detect when a TASER device is unholstered or armed, when a vehicle lightbar is activated, or the vehicle door opens, and we are introducing new signal activation events based on location and dispatching. |

| --- | --- | --- |

| --- | --- | --- |

| | ● | Digital Evidence Management: Axon Evidence addresses the challenges presented by growing amounts of digital evidence via closed circuit television video, body worn camera video, in-car camera video, Internet of Things sensors and citizen-captured digital evidence. We make it easy to store, manage, redact and share evidence on one platform. Axon Evidence is the world’s largest cloud-hosted public safety data repository of public safety video data and other types of digital evidence. Products include: |

| --- | --- | --- |

| | o | Axon Evidence (Evidence.com) for managing, sharing and storing video, as well as hosting all types of digital evidence. |

| --- | --- | --- |

| | o | Axon Performance to help agencies ensure officers are adhering to policies and provides analytics on the effectiveness of body-worn camera programs. |

| --- | --- | --- |

| | o | Redaction Assistant to enable agencies to quickly redact videos using AI. |

| | ● | Productivity: Our productivity suite of tools is designed to reduce the time officers spend on administrative tasks and give command staff tools to make data-driven decisions. Our productivity-enhancing products include: |

| | o | Axon Records, an emerging cloud-based report-writing tool that modernizes records management systems ("RMS") by putting body camera video at the heart of incident records. |

| | o | Axon Standards, a use-of-force reporting module that can be easily adopted alongside an agency’s legacy RMS before an agency adopts the rest of Axon Records. |

| | o | Auto-transcribe, which uses AI to help agencies review massive amounts of video evidence to find what is pertinent to an investigation and quickly and accurately transcribe video so it can move through the justice system. |

| | ● | Real Time Operations. We are developing decision-making and communication tools that support real-time situational awareness through the sharing of information across myriad media, including voice, messaging, location mapping, and intelligence and evidence sharing. Products include: |

| | o | Respond for Devices, which allows agencies to receive alerts, to know the GPS location of their officers and what those officers are experiencing through live-video streaming. |

| | o | Respond for Dispatch, a computer-aided dispatch ("CAD") solution designed to empower everyone in public safety involved in incident response: dispatchers, call takers, command staff, patrol officers, firefighters and medical personnel. |

Internationally, we began focusing on a direct sales strategy in 2017, and we have made significant investments over the past three years in building out our international direct sales force, particularly in Asia, Australia, Europe, and South America.

In 2019, we added sales personnel to capture law enforcement-adjacent markets, such as the U.S. federal government and military, domestic and international departments of corrections, and the fire and emergency medical services markets.

In 2020, we also added dedicated sales personnel to support increased adoption of new products within law enforcement, specifically for Axon Air, AR / VR and Training, Axon Records, and Respond for Dispatch.

We have proactively built up a safety stock of raw and finished goods inventory aligned to our strategic model to help meet strong product demand while also preparing us to stagger factory work schedules as needed.

We are constantly innovating across all of our platforms, including on the TASER platform, and in 2020, we filed more patent applications related to TASER 7 alone than there are TASER patents expiring in the next few years due to age.

The design maturity of the TASER platform, as well as our

See discussion of litigation in Note [removed: 10] [added: 11] to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, which discussion is incorporated by reference herein.

For the fiscal year ended December [removed: 31, 2020][added: 31, 2021]

As of June 30, [removed: 2020,] [added: 2021,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $6.126] [added: $11.4] billion based on the closing sale price as reported on The NASDAQ Global Select Market.

The number of shares of the registrant’s common stock outstanding as of February 18, [removed: 2021] [added: 2022] was [removed: 63,783,849.][added: 70,931,874.]

Parts of the registrant’s definitive proxy statement for its [removed: 2021] [added: 2022] annual meeting of stockholders to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, [removed: 2020] [added: 2021] are incorporated by reference into Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2020][added: 2021]

| [Item 1A.](#Item1ARiskFactors_991490) | [Risk Factors](#Item1ARiskFactors_991490) | ​ | [removed: 12] [added: 11] |

| [Item 6.](#Item6SelectedFinancialData_44868) | [removed: [Selected Financial Data](#Item6SelectedFinancialData_44868)] [added: \[Reserved\]] | ​ | 27 |

| [Item 7A.](#Item7AQuantitativeandQualitativeDisclosu) | [Quantitative and Qualitative Disclosures About Market Risk](#Item7AQuantitativeandQualitativeDisclosu) | ​ | [removed: 45] [added: 46] |

| [Item 16.](#Item16Form10KSummary_628319) | [Form 10-K Summary](#Item16Form10KSummary_628319) | ​ | [removed: 95] [added: 96] |

| [Item 9C.](#Item9cDisclosureRegardingForeignJurisdic) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspection](#Item9cDisclosureRegardingForeignJurisdic) | ​ | 93 |

We also lease premises in [removed: Phoenix, Arizona;] [added: Phoenix and] Scottsdale, Arizona; [added: East Point, Georgia;] Charlotte, North Carolina; Topsfield, Massachusetts; [removed: Seattle,] [added: Seattle and Spokane,] Washington; [removed: Melbourne, Australia;] [added: Melbourne and] Sydney, Australia; Toronto, Canada; [removed: Daventry, England;] [added: Daventry and] London, England; Tampere, Finland; Frankfurt, Germany; Mumbai, India; Rome, Italy; Amsterdam, Netherlands; and Ho Chi Minh City, Vietnam.

In [removed: September] 2020, we purchased a parcel of land located in Scottsdale, Arizona on which we intend to construct a new manufacturing and office facility.

As of December 31, [removed: 2020,] [added: 2021,] there were [removed: 229] [added: 217] holders of record of our common stock.

During the year ended December 31, [removed: 2020,] [added: 2021,] no common shares were purchased under the program.

As of December 31, [removed: 2020,] [added: 2021,] $16.3 million remained available under the plan for future purchases.

The following stock performance graph compares the performance of our common stock to the NASDAQ Composite Index, [removed: Russell 3000 Index,] S&P 500 Index, and Russell 2000 Index.

The graph covers the period from December 31, [removed: 2015] [added: 2016] to December 31, [removed: 2020.][added: 2021.]

The graph assumes that the value of the investment in our stock and in each index was $100 at December 31, [removed: 2015,] [added: 2016,] and that all dividends were reinvested.

[removed: ][added: ]

| ​ | | [removed: 2015 | | |] 2016 | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | [added: | 2021 | |]

| Axon Enterprise, Inc. | ​ | $ | 100.00 | ​ | $ | 109.32 | ​ | $ | 180.49 | ​ | $ | 302.31 | ​ | $ | 505.49 | ​ | $ | 647.69 |

| NASDAQ Composite | ​ | ​ | 100.00 | ​ | ​ | 129.64 | ​ | ​ | 125.96 | ​ | ​ | 172.18 | ​ | ​ | 249.51 | ​ | ​ | 304.85 |

| S&P 500 | ​ | ​ | 100.00 | ​ | ​ | 121.83 | ​ | ​ | 116.49 | ​ | ​ | 153.17 | ​ | ​ | 181.35 | ​ | ​ | 233.41 |

| Russell 2000 | ​ | ​ | 100.00 | ​ | ​ | 114.65 | ​ | ​ | 102.02 | ​ | ​ | 128.06 | ​ | ​ | 153.62 | ​ | ​ | 176.39 |

Note: Index data copyright NASDAQ OMX, Inc.; Russell Investments; and Standard and Poor’s, Inc. Used with permission.

All rights reserved.

We are transitioning from the Russell 3000 Index to the Russell 2000 Index, and adding the S&P 500 Index, based on the increase in our market capitalization.

| Axon Enterprise, Inc. | ​ | $ | 100.00 | ​ | $ | 140.20 | ​ | $ | 153.27 | ​ | $ | 253.04 | ​ | $ | 423.83 | ​ | $ | 708.68 |

| NASDAQ Composite | ​ | ​ | 100.00 | ​ | ​ | 108.87 | ​ | ​ | 141.13 | ​ | ​ | 137.12 | ​ | ​ | 187.44 | ​ | ​ | 271.64 |

| Russell 3000 | ​ | ​ | 100.00 | ​ | ​ | 112.74 | ​ | ​ | 136.56 | ​ | ​ | 129.40 | ​ | ​ | 169.54 | ​ | ​ | 204.95 |

| S&P 500 | ​ | ​ | 100.00 | ​ | ​ | 111.96 | ​ | ​ | 136.40 | ​ | ​ | 130.42 | ​ | ​ | 171.49 | ​ | ​ | 203.04 |

| Russell 2000 | ​ | ​ | 100.00 | ​ | ​ | 121.31 | ​ | ​ | 139.08 | ​ | ​ | 123.76 | ​ | ​ | 155.35 | ​ | ​ | 186.36 |

Not applicable.

| [Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019](#CONSOLIDATEDBALANCESHEETS_305970)] [added: 2020](#CONSOLIDATEDBALANCESHEETS_305970)] | ​ | 48 |

| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCOM)] [added: 2019](#CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCOM)] | ​ | 49 |

| [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUI)] [added: 2019](#CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUI)] | ​ | 50 |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_558214)] [added: 2019](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_558214)] | ​ | 51 |

| [Report of Grant Thornton LLP, Independent Registered Public Accounting Firm](#REPORTOFINDEPENDENTREGISTEREDPUBLICACCOU) [added: (PCAOB ID No. 248)] | ​ | [removed: 88] [added: 89] |

| ​ | [removed: ​] | [added: 2021 | | |] 2020 | | ​ | 2019 | |

| Cash and cash equivalents | ​ | $ | [added: 356,332 | ​ | $ |] 155,440 | ​ | $ | 172,250 |

| Short-term investments | ​ | | [removed: 406,525] [added: 14,510] | ​ | | [removed: 178,534] [added: 406,525] |

| Accounts and notes receivable, net of allowance of [removed: $2,105] [added: $2,203] and [removed: $1,567] [added: $2,105] as of December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019] [added: 2020] respectively | ​ | | [removed: 229,201] [added: 320,819] | ​ | | [removed: 146,878] [added: 229,201] |

| Contract assets, net | ​ | | [removed: 63,945] [added: 180,421] | ​ | | [removed: 38,102] [added: 63,945] |

| Prepaid expenses and other current assets | ​ | | [removed: 36,883] [added: 56,540] | ​ | | [removed: 34,866] [added: 36,883] |

| Total current assets | ​ | | [removed: 981,952] [added: 1,109,490] | ​ | | [removed: 609,475] [added: 981,952] |

| Property and equipment, net | ​ | | [removed: 105,494] [added: 138,457] | ​ | | [removed: 43,770] [added: 105,494] |

| Deferred tax assets, net | ​ | | [removed: 45,770] [added: 127,193] | ​ | | [removed: 27,688] [added: 45,770] |

| Intangible assets, net | ​ | | [removed: 9,448] [added: 15,470] | ​ | | [removed: 12,771] [added: 9,448] |

| Goodwill | ​ | | [removed: 25,205] [added: 43,592] | ​ | | [removed: 25,013] [added: 25,205] |

| Long-term investments | ​ | | [removed: 90,681] [added: 31,232] | ​ | | [removed: 45,499] [added: 90,681] |

| Long-term notes receivable, net | ​ | | [removed: 22,457] [added: 11,256] | ​ | | [removed: 31,598] [added: 22,457] |

| Long-term contract assets, net | ​ | ​ | [removed: 20,099] [added: 29,753] | ​ | ​ | [removed: 9,644] [added: 20,099] |

| Total assets | ​ | $ | [removed: 1,381,023] [added: 1,688,210] | ​ | $ | [removed: 845,639] [added: 1,381,023] |

| Accounts payable | ​ | $ | [removed: 24,142] [added: 32,220] | ​ | $ | [removed: 25,874] [added: 24,142] |

| Accrued liabilities | ​ | | [removed: 59,843] [added: 103,707] | ​ | | [removed: 45,001] [added: 59,843] |

| Current portion of deferred revenue | ​ | | [removed: 163,959] [added: 265,591] | ​ | | [removed: 117,864] [added: 163,959] |

| Customer deposits | ​ | | [removed: 2,956] [added: 10,463] | ​ | | [removed: 2,974] [added: 2,956] |

| Other current liabilities | ​ | | [removed: 5,431] [added: 6,540] | ​ | | [removed: 3,853] [added: 5,431] |

| Total current liabilities | ​ | | [removed: 256,331] [added: 418,521] | ​ | | [removed: 195,566] [added: 256,331] |

| Deferred revenue, net of current portion | ​ | | [removed: 111,222] [added: 185,721] | ​ | | [removed: 87,936] [added: 111,222] |

| Liability for unrecognized tax benefits | ​ | | [removed: 4,503] [added: 3,797] | ​ | | [removed: 3,832] [added: 4,503] |

| Long-term deferred compensation | ​ | | [removed: 4,732] [added: 5,679] | ​ | | [removed: 3,936] [added: 4,732] |

| Deferred tax liabilities, net | ​ | ​ | [removed: 649] [added: 811] | ​ | ​ | [removed: 354] [added: 649] |

| Other long-term liabilities | ​ | | [removed: 27,331] [added: 25,832] | ​ | | [removed: 10,520] [added: 27,331] |

| Total liabilities | ​ | | [removed: 404,768] [added: 640,361] | ​ | | [removed: 302,144] [added: 404,768] |

| Commitments and contingencies (Note [removed: 10)] [added: 11)] | ​ | | | ​ | | |

| Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] respectively | ​ | | — | ​ | | — |

| Common stock, $0.00001 par value; 200,000,000 shares authorized; [removed: 63,766,555] [added: 70,896,856] and [removed: 59,497,759] [added: 63,766,555] shares issued and outstanding as of December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] respectively | ​ | | 1 | ​ | | 1 |

| Additional paid-in capital | ​ | | [removed: 962,159] [added: 1,095,229] | ​ | | [removed: 528,272] [added: 962,159] |

| Treasury stock at cost, 20,220,227 shares as of December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019] [added: 2020] | ​ | | (155,947) | ​ | | (155,947) |

| Retained earnings | ​ | | [removed: 169,901] [added: 109,883] | ​ | | [removed: 172,265] [added: 169,901] |

| Accumulated other comprehensive income (loss) | ​ | | [removed: 141] [added: (1,317)] | ​ | | [removed: (1,096)] [added: 141] |

| Total stockholders’ equity | ​ | | [removed: 976,255] [added: 1,047,849] | ​ | | [removed: 543,495] [added: 976,255] |

| Marketable securities | ​ | ​ | 72,180 | ​ | ​ | — |

| Inventory, net | ​ | | 108,688 | ​ | | 89,958 |

| Strategic investments | ​ | ​ | 83,520 | ​ | ​ | 11,711 |

| Other long-term assets | ​ | | 98,247 | ​ | | 68,206 |

| Unrealized gains (losses) on available-for-sale investments | ​ | | (207) | ​ | ​ | — | ​ | ​ | — |

| Other comprehensive income | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | — | ​ | | 417 | ​ | | 417 |

| Other comprehensive income | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | — | ​ | | 1,237 | ​ | | 1,237 |

| Issuance of common stock | ​ | 577,956 | ​ | ​ | — | ​ | ​ | 105,514 | ​ | — | ​ | | — | ​ | | — | ​ | | — | ​ | | 105,514 |

| Issuance of common stock under employee plans, net of shares withheld for payroll taxes | | 2,624,446 | ​ | | — | ​ | | (331,309) | | — | ​ | | — | ​ | | — | ​ | | — | ​ | | (331,309) |

| Stock options exercised | ​ | 3,927,899 | ​ | ​ | — | ​ | ​ | 51,614 | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 51,614 |

| Net loss | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | (60,018) | ​ | | — | ​ | | (60,018) |

| Other comprehensive loss | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | — | ​ | | (1,458) | ​ | | (1,458) |

| Balance, December 31, 2021 | | 70,896,856 | ​ | $ | 1 | ​ | $ | 1,095,229 | | 20,220,227 | ​ | $ | (155,947) | ​ | $ | 109,883 | ​ | $ | (1,317) | ​ | $ | 1,047,849 |

| Net gain on strategic investments and marketable securities | ​ | ​ | (23,035) | ​ | ​ | — | ​ | ​ | — |

| Bond amortization | ​ | ​ | 5,217 | ​ | ​ | 3,345 | ​ | ​ | 361 |

| Noncash lease expense | ​ | | 5,573 | ​ | | 4,104 | ​ | | 3,567 |

| Proceeds from sale of strategic investments | ​ | ​ | 14,546 | ​ | ​ | — | ​ | ​ | — |

| Purchases of strategic investments | ​ | ​ | (45,500) | ​ | ​ | (7,068) | ​ | ​ | — |

| | ● | valuation of strategic investments, |

Cash, cash equivalents and investments include cash, money market funds, corporate bonds, municipal bonds, and agency bonds.

During the quarter ended December 31, 2021, upon the sale of a portion of our held-to-maturity security portfolio, we reclassified all remaining held-to-maturity securities to available-for-sale.

We do not anticipate using the held-to-maturity classification in the future.

The transfers to available-for-sale were made as a result of a change in management’s objectives with respect to its investment portfolio, which was implemented in the fourth quarter.

We report available-for-sale investments at fair value as of each balance sheet date and record any unrealized gains or losses as a component of stockholders’ equity.

The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in interest and other income, net within the consolidated statements of operations.

When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses

is made.

The credit-related impairment amount is recognized in the consolidated statements of operations.

Credit losses are recognized through the use of an allowance for expected credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account.

If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations.

We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases.

There were no credit losses recorded on our investment portfolio during the year ended December 31, 2021.

We use a standard cost methodology to determine the cost basis for our inventories.

Costs include allocations for materials, labor, and overhead.

All variances between actual costs and standard costs are apportioned to inventory and cost of product sales based upon inventory turnover.

During the year ended December 31, 2021, we recorded an immaterial amount of impairment charges.

| ​ | | 2021 | | ​ | 2020 | |

We may source from other countries as well.

Although we have experienced supply chain disruptions relating to materials and port constraints, we have remained focused on closely managing our supply chain.

We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers.

| ​ | ​ | ​ |

| --- | --- | --- |

| Inventory | ​ | | 89,958 | ​ | | 38,845 |

| Other assets | ​ | | 79,917 | ​ | | 40,181 |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance, December 31, 2017 | | 52,969,869 | ​ | $ | 1 | ​ | $ | 201,672 | | 20,220,227 | ​ | $ | (155,947) | ​ | $ | 123,185 | ​ | $ | (1,467) | ​ | $ | 167,444 |

| Issuance of common stock under employee plans, net | | 1,136,925 | ​ | ​ | — | ​ | ​ | (12,370) | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (12,370) |

| Net income | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | 29,205 | ​ | | — | ​ | | 29,205 |

| Foreign currency translation adjustments | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | — | ​ | | 417 | ​ | | 417 |

| Cumulative effect of applying a change in accounting principle | ​ | — | ​ | | — | ​ | | — | ​ | — | ​ | | — | ​ | ​ | (640) | ​ | ​ | — | ​ | | (640) |

| Issuance of common stock | ​ | 3,450,000 | ​ | ​ | — | ​ | ​ | 306,779 | ​ | — | ​ | | — | ​ | | — | ​ | | — | ​ | | 306,779 |

| Foreign currency translation adjustments | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | — | ​ | | 1,237 | ​ | | 1,237 |

| Other noncash, net | ​ | | 7,449 | ​ | | 3,928 | ​ | | 34 |

| Investments in unconsolidated affiliates | ​ | ​ | (7,068) | ​ | ​ | — | ​ | ​ | — |

| Payment of contingent consideration for business acquisitions | ​ | | — | ​ | | — | ​ | | (2,275) |

1.

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

Based on management’s intent and ability to hold our investments, they are classified as held to maturity investments and are recorded at amortized cost.

Held-to-maturity investments are reviewed quarterly for impairment to determine if other-than-temporary declines in the fair value have occurred for any individual investment that may affect our intent and ability to hold the investment until recovery.

Other-than-temporary declines in the value of held-to-maturity investments are recorded as expense in the period the determination is made.

Cost is determined using the weighted average cost of raw materials, which approximates the first-in, first-out (“FIFO”) method and includes allocations of manufacturing labor and overhead.

intangible assets may warrant revision or that the remaining balance of these assets, including intangible assets with indefinite lives, may not be recoverable.

During the year ended December 31, 2018, we abandoned certain developed technology acquired in a business combination resulting in an impairment charge of $2.0 million which was included in sales, general and administrative expense in the accompanying consolidated statements of operations and comprehensive income.

these performance obligations may not be satisfied until formal customer acceptance occurs.

Cost

a greater than 50% likelihood of being realized upon ultimate resolution.

We also strategically hold safety stock levels on custom components to further reduce this risk.

For off the shelf components, we believe that in most cases there are readily available alternative suppliers who can consistently meet our needs for these components.

We acquire components either through contractual agreements or on a purchase order basis along with in some cases providing rolling 12 month forecasts to suppliers so they can procure or secure subcomponents to further mitigate upstream risks to our supply chain.

| --- | --- | --- |

| | | model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. |

We have cash equivalents and investments, which at December 31, 2020 and 2019, were comprised of money market funds, agency bonds, certificates of deposit, commercial paper, corporate bonds, municipal bonds, U.S. Treasury bills, U.S. Treasury repurchase agreements, and U.S. Treasury inflation-protected securities.

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that as of December 31, [removed: 2020] [added: 2021] our disclosure controls and procedures were effective.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] based on criteria set forth in _Internal Control - Integrated Framework_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

As a result of this assessment, management concluded that, as of December 31, [removed: 2020,] [added: 2021,] our internal control over financial reporting was effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

There was no change in our internal control over financial reporting during the fiscal quarter ended December 31, [removed: 2020,] [added: 2021,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We have audited the internal control over financial reporting of Axon Enterprise, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in the 2013 _Internal [removed: Control-Integrated] [added: Control—Integrated] Framework_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in the 2013 [removed: _Internal Control-Integrated Framework_] [added: Internal Control—Integrated Framework] issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, [removed: 2020,] [added: 2021,] and our report dated February [removed: 25, 2021] [added: 24, 2022] expressed an unqualified opinion on those financial statements.

February 24, 2022

February 25, 2021

Item 1.01 Entry into a Material Definitive Agreement

On February 23, 2022, the Company entered into construction management agreement with Okland Construction Company, Inc. for construction of a new manufacturing and office campus on land the Company owns in Scottsdale, Arizona.

The contract specifies a maximum guaranteed construction price of approximately $149.7 million.

Construction is expected to start no later than May 3, 2022 with final completion by July 25, 2024.

None.

PART III

None.

PART III

The information required to be disclosed by this item is incorporated herein by reference to our definitive proxy statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders (the [removed: “2021] [added: “2022] Proxy Statement”), which proxy statement we expect to file with the SEC within 120 days after the end of our fiscal year ended December 31, [removed: 2020.][added: 2021.]

The information required to be disclosed by this item is incorporated herein by reference to our [removed: 2021] [added: 2022] Proxy Statement.

A description of our equity compensation plans approved by our stockholders is included in Note [removed: 13] [added: 14] to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

The following table provides details of our equity compensation plans at December 31, [removed: 2020:][added: 2021:]

| Equity compensation plans approved by security holders | ​ | [removed: 12,648,300] [added: 4,940,286] | | $ | 28.58 | | [removed: 1,854,655] [added: 1,021,160] |

| Equity compensation plans not approved by security holders(2) | ​ | [removed: 443,200] [added: 111,200] | ​ | ​ | ​ | | 29,600 |

| [removed: (2)] | [removed: In September 2019, our Board of Directors adopted the Axon Enterprise, Inc. 2019 Stock Inducement Plan (the “2019 Inducement Plan”) pursuant to which we reserved 500,000 shares of common stock for issuance under the Inducement Plan. The 2019 Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules. The Inducement Plan provides for the grant of equity-based awards, including] restricted stock units, restricted stock, performance shares and performance units, and its terms are substantially similar to our stockholder-approved 2019 Plan. In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company. |

All other information required to be disclosed by this item is incorporated herein by reference to our [removed: 2021] [added: 2022] Proxy Statement.

| Total | ​ | 5,051,486 | | ​ | ​ | | 1,050,760 |

| (2) | In September 2019, our Board of Directors adopted the Axon Enterprise, Inc. 2019 Stock Inducement Plan (the “2019 Inducement Plan”) pursuant to which we reserved 500,000 shares of common stock for issuance under the Inducement Plan. The 2019 Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules. The Inducement Plan provides for the grant of equity-based awards, including |

| --- | --- |

| Total | ​ | 13,091,500 | | ​ | ​ | | 1,884,255 |

The information required to be disclosed by this item is incorporated herein by reference to our [removed: 2021] [added: 2022] Proxy Statement.

The information required to be disclosed by this item is incorporated herein by reference to our [removed: 2021] [added: 2022] Proxy Statement.

| 3.1 | ​ | [Amended and Restated Certificate of Incorporated (incorporated by reference to Exhibit 3.1 to the [removed: Current] [added: Quarterly] Report on Form [removed: 8-K,] [added: 10-Q,] filed [removed: June 12, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000106918320000056/aaxn-20200612ex310496f6a.htm)] [added: August 6, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021010634/axon-20210630xex3d1.htm)] |

| 3.2 | ​ | [Bylaws, as amended and restated (incorporated by reference to Exhibit [removed: 3.2] [added: 3.1] to the Current Report on Form 8-K, filed [removed: June 12, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000106918320000056/aaxn-20200612ex3213caf55.htm)] [added: January 31, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022000641/axon-20220125xex3d1.htm)] |

| [removed: 4.2*] [added: 4.2] | ​ | [Description of securities of Axon Enterprise, Inc. registered under Section 12 of the Exchange [removed: Act](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex4d2.htm)] [added: Act (incorporated by reference to Exhibit 4.2 to the Annual Report on Form 10-K, filed February 28, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex4d2.htm)] |

| [removed: 10.3+] [added: 10.4+] | ​ | [removed: [2013] [added: [2016] Stock Incentive Plan (incorporated by reference to [removed: Appendix] [added: Annex B] of [removed: 2013] [added: 2016] Proxy Statement, filed on April [removed: 3, 2013)](https://www.sec.gov/Archives/edgar/data/1069183/000119312513140133/d515500ddef14a.htm)] [added: 15, 2016)](https://www.sec.gov/Archives/edgar/data/1069183/000106918316000167/a2016proxystatement.htm)] |

| [removed: 10.4+] [added: 10.3+] | ​ | [TASER International, Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to Form 8-K, filed on July 12, 2013)](https://www.sec.gov/Archives/edgar/data/1069183/000119312513289557/d567690dex101.htm) |

| 10.5+ | ​ | [removed: [2016] [added: [Axon Enterprise, Inc. 2018] Stock Incentive Plan (incorporated by reference to Annex B of [removed: 2016] [added: the Company’s] Proxy Statement, filed on April [removed: 15, 2016)](https://www.sec.gov/Archives/edgar/data/1069183/000106918316000167/a2016proxystatement.htm)] [added: 13, 2018)](https://www.sec.gov/Archives/edgar/data/1069183/000106918318000035/a2018defproxystatement.htm)] |

| [removed: 10.6+] [added: 10.7+] | ​ | [Axon Enterprise, Inc. [removed: 2018] [added: 2019] Stock Incentive Plan (incorporated by reference to Annex [removed: B] [added: A] of the Company’s Proxy Statement, filed on [removed: April 13, 2018)](https://www.sec.gov/Archives/edgar/data/1069183/000106918318000035/a2018defproxystatement.htm)] [added: December 31, 2018)](https://www.sec.gov/Archives/edgar/data/1069183/000106918318000143/a2018definitivespecialprox.htm)] |

| [removed: 10.7+] [added: 10.6+] | ​ | [CEO Performance Award (incorporated by reference to Annex A of the Company’s Proxy Statement, filed on April 13, 2018)](https://www.sec.gov/Archives/edgar/data/1069183/000106918318000035/a2018defproxystatement.htm) |

| 10.8+ | ​ | [Axon Enterprise, Inc. 2019 Stock Incentive Plan [added: Exponential Stock Unit Grant Notice] (incorporated by reference to Annex [removed: A] [added: B] of the Company’s Proxy Statement, filed on December 31, 2018)](https://www.sec.gov/Archives/edgar/data/1069183/000106918318000143/a2018definitivespecialprox.htm) |

| [removed: 10.9+] [added: 10.14+] | ​ | [Axon Enterprise, Inc. 2019 Stock [removed: Incentive] [added: Inducement] Plan [removed: Exponential Stock Unit Grant Notice] (incorporated by reference to [removed: Annex B of] [added: Exhibit 99.1 to] the [removed: Company’s Proxy Statement, filed] [added: registration statement] on [removed: December 31, 2018)](https://www.sec.gov/Archives/edgar/data/1069183/000106918318000143/a2018definitivespecialprox.htm)] [added: Form S-8, filed September 23, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000123/a2019stockinducementplan.htm)] |

| [removed: 10.10] [added: 10.9] | ​ | [Amended and Restated Credit Agreement dated December 31, 2018 between the Company and JP Morgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed January 7, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000010/ex101jpmcreditagreement.htm) |

| [removed: 10.11+] [added: 10.10+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and Jawad A. Ahsan (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed June 4, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex102.htm) |

| [removed: 10.12+] [added: 10.11+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and Luke S. Larson (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed June 4, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex101.htm) |

| [removed: 10.13+] [added: 10.12+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and Joshua M. Isner (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed June 4, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex103.htm) |

| [removed: 10.14+] [added: 10.13+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and Jeffrey C. Kunins, dated September 23, 2019 (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K, filed February 28, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000106918320000016/ex1016jeffkuninsemploy.htm) |

| [removed: 10.16] [added: 10.15] | ​ | [Auction Statement from the Company to the Arizona State Land Department (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed November 6, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000106918320000075/aaxn-20200930ex1018fc955.htm) |

| [removed: 10.17] [added: 10.16] | ​ | [Amendment to the Amended and Restated Credit Agreement between the Company and JP Morgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed February 3, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000106918321000003/axon-20210129ex101bd48a9.htm) |

| 21.1* | ​ | [List of [removed: Subsidiaries](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex21d1.htm)] [added: Subsidiaries](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex21d1.htm)] |

| 23.1* | ​ | [Consent of Grant Thornton, LLP, independent registered public accounting [removed: firm](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex23d1.htm)] [added: firm](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex23d1.htm)] |

| 31.1* | ​ | [Principal Executive Officer Certification pursuant to Rule 13a-14(a) or Rule [removed: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex31d1.htm)] [added: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex31d1.htm)] |

| 31.2* | ​ | [Principal Financial Officer Certification pursuant to Rule 13a-14(a) or Rule [removed: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex31d2.htm)] [added: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex31d2.htm)] |

| 32 | ​ | [Principal Executive Officer and Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1069183/000155837021001873/axon-20201231xex32.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex32.htm)] |

| 104 | ​ | The cover page from the Company’s Annual Report for the year ended December 31, [removed: 2020,] [added: 2021,] formatted in Inline XBRL |

| 10.17 | ​ | [Letter Amendment to the Amended and Restated Credit Agreement between the Company and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed November 15, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021016019/axon-20210930xex10d1.htm) |

| 10.18 | ​ | [Distribution Agreement, dated August 10, 2021, by and between Axon Enterprise, Inc. and J.P. Morgan Securities LLC (incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K, filed August 10, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021011057/axon-20210810xex1d1.htm) |

| 10.19*± | ​ | [Construction Management Agreement, dated February 23, 2022, by and between Axon Enterprise, Inc. and Okland Construction Company, Inc.](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex10d19.htm) |

| ± | Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“\[*\]”) because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed. |

| --- | --- |

| 10.15+ | ​ | [Axon Enterprise, Inc. 2019 Stock Inducement Plan (incorporated by reference to Exhibit 99.1 to the registration statement on Form S-8, filed September 23, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000123/a2019stockinducementplan.htm) |

| Date: February [removed: 25, 2021] [added: 24, 2022] | ​ | ​ |

| Date: February [removed: 25, 2021] [added: 24, 2022] | By: | /s/ JAWAD A. AHSAN |

| /s/ PATRICK W. SMITH | ​ | (Principal Executive Officer) | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ JAWAD A. AHSAN | ​ | (Principal Financial and Accounting Officer) | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ ADRIANE M. BROWN | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ RICHARD H. CARMONA | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ JULIE A. CULLIVAN | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ MICHAEL GARNREITER | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ CAITLIN E. KALINOWSKI | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ MARK W. KROLL | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ MATTHEW R. MCBRADY | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |

| /s/ HADI PARTOVI | ​ | Director | ​ | February [removed: 25, 2021] [added: 24, 2022] |