10-K: Wrap Technologies Diversifies Amidst Persistent Losses

Wrap Technologies reports increased gross revenue and strategic expansion into new public safety and defense markets, despite continued operating losses in 2025.

Summary

• Gross revenue for the year ended December 31, 2025, increased by 15.4% to $5.2 million, up from $4.5 million in 2024.
• Net revenue for 2025 was $4.7 million, a 3.7% increase from $4.5 million in 2024, after accounting for $0.5 million in sales returns and allowances.
• Technology-enabled and managed services revenue grew significantly by 85.0% to $1.7 million in 2025, compared to $0.9 million in 2024.
• Product sales decreased slightly by 2.3% to $3.5 million in 2025 from $3.6 million in 2024, primarily due to lower distributor orders and international demand variability.
• The company continued to incur operating losses, with a net loss of $10.3 million in 2025, an increase from $5.9 million in 2024.
• Operating loss improved by 13.4% to $13.5 million in 2025, compared to $15.6 million in 2024, driven by higher gross profit and lower operating expenses.
• Research and development (R&D) expense decreased by 97.6% to $56 thousand in 2025 from $2.3 million in 2024, reflecting cost containment and a strategic shift.
• Wrap Technologies launched WrapTactics (digital training platform) and WrapVision (North America assembled body-worn camera solution) in 2025.
• The company advanced Counter-Unmanned Aircraft System (C-UAS) initiatives, including the MERLIN program, applying tether deployment technology to non-lethal drone interdiction.
• Wrap Federal, LLC was formed on September 19, 2025, as a wholly-owned subsidiary to support U.S. federal government clients.
• The company acquired substantially all assets of W1 Global, LLC in February 2025 to integrate technology enablement and expand into managed technology services, though investigative services were later deemed non-essential.
• Net cash used in operating activities increased to $10.3 million in 2025 from $8.1 million in 2024.
• The company completed multiple financing transactions in 2025, generating aggregate gross proceeds of $10.2 million, and an additional $5.0 million in February 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with cautious optimism. While strategic diversification and revenue growth in services are positive, the significant increase in net loss and persistent operating losses, coupled with the inherent risks of new market entry and regulatory hurdles, suggest a challenging path to profitability.

Positives

• Total gross revenue increased by 15.4% year-over-year, demonstrating overall top-line growth.
• Technology-enabled and managed services revenue saw substantial growth of 85.0%, indicating successful diversification and expansion into higher-margin service offerings.
• Gross profit increased by 9.5% to $2.7 million, and gross margin improved to 57.8% in 2025 from 54.7% in 2024, reflecting improved product margins and cost discipline.
• Operating loss improved by 13.4% due to higher gross profit and significant reductions in R&D spending and other cost containment initiatives.
• Successful launch of new products like WrapTactics (digital training platform) and WrapVision (North America assembled body-worn camera solution) expands the product portfolio.
• Strategic entry into adjacent defense and homeland security markets with C-UAS initiatives (MERLIN program) and the formation of Wrap Federal, LLC.
• Secured strategic partnership with Carahsoft Technology Corp. to expand access to government agencies, enhancing distribution capabilities.
• Strengthened domestic supply chain and manufacturing footprint with a new, expanded facility in Norton, Virginia, and a partnership with a U.S.-based manufacturing firm.
• Successfully raised significant capital through private placements in 2025 ($10.2 million) and early 2026 ($5.0 million), improving liquidity.

Negatives

• Net loss increased to $10.3 million in 2025 from $5.9 million in 2024, primarily due to lower non-cash income from warrant liabilities and continued operating losses.
• Product sales experienced a modest decline of 2.3%, driven by lower distributor orders and variability in international demand.
• The company has a history of operating losses and expects to incur additional losses for the foreseeable future, indicating ongoing challenges to achieve profitability.
• The W1 acquisition's investigative services were deemed non-essential, leading to an impairment charge of $48 thousand related to customer relationship intangible assets.
• Dependence on sales of the BolaWrap product line for the foreseeable future, with risks if it does not achieve broader market acceptance.
• International sales remain 'lumpy and difficult to forecast' due to centralized government procurement processes and large, infrequent orders.
• The BolaWrap device is classified as a 'firearm' (Any Other Weapon) by the ATF, imposing regulatory restrictions on transfers, especially to private security firms and individuals, limiting market expansion.
• The company relies on a limited number of suppliers, including sole-source suppliers, for key components, creating vulnerability to supply chain disruptions and price increases.
• The market price of the common stock has been and may continue to be volatile, and the company may fail to meet Nasdaq's continued listing requirements.

Risks

• History of operating losses and may never achieve or sustain profitability.
• Need to raise additional capital, which may not be available on favorable terms or at all, potentially causing dilution to stockholders.
• Substantial dependence on sales of the BolaWrap product line and risk of not achieving broad market acceptance.
• Potential unsuccessfulness in commercializing the Wrap Reality VR training platform in a highly competitive market.
• Operating in a highly competitive market against larger, better-capitalized companies.
• Negative publicity, including from incidents where products perform as designed, could harm reputation and reduce demand.
• Sales to government customers are subject to lengthy procurement cycles, budget constraints, and political/policy changes.
• Recent expansion into drone and counter-UAS technologies may not be successful and subjects the company to additional risks.
• Drone and counter-UAS products are subject to evolving regulations that could delay approvals, increase costs, or limit deployment.
• Exposure to product liability claims due to products being used in dangerous situations that may result in serious injury or death.
• Dependence on a limited number of suppliers, including sole-source suppliers, and vulnerability to supply chain disruptions.
• Operations and products are vulnerable to cybersecurity threats that could disrupt business and harm reputation.
• Evolving regulatory framework for AI technologies could affect products and increase compliance costs.
• International operations subject the company to additional risks, including currency fluctuations, export controls, and geopolitical instability.
• BolaWrap device's classification as a firearm by the ATF subjects the company to significant regulatory requirements.
• Intellectual property rights (patents, trade secrets) may not adequately protect products from competition or may be challenged.
• Series A Convertible Preferred Stock contains anti-dilution and dividend provisions that may result in significant dilution to common stockholders.
• Covenants in financing documents may restrict the ability to obtain additional financing.
• Volatility of the common stock market price and potential for securities litigation.
• Risk of delisting from the Nasdaq Stock Market if continued listing requirements are not met.
• Future issuances of common stock or convertible securities may dilute existing stockholders.
• No expectation to pay dividends for the foreseeable future.
• Inherent limitations in disclosure controls and internal controls over financial reporting.
• Significant costs incurred as a public company.
• The effectiveness of products depends on customer training, policies, and implementation practices, which the company does not control.
• Subscription-based revenue model may result in revenue volatility, delayed recognition, and customer churn.
• Use of certain solutions may be perceived as, or determined by courts to be, in violation of privacy rights and related laws.
• Contracting with government entities can be complex, expensive, and time-consuming.
• Manufacturing and supply-chain challenges as production of new technologies expands.
• Significant and unpredictable warranty costs.
• Charges for excess or obsolete inventory and unusual production costs for improvements or model changes.
• Global economic weakness and uncertainty, geopolitical conflict, war, and civil unrest could adversely affect revenues, gross margins, and expenses.
• Public health crises could adversely affect business, financial condition, and results of operations.
• Inability to timely collect accounts receivable from international sales.
• Inability to manage projected growth, grow sales force, or maintain/grow distributors.
• Lengthy sales cycle and significant resources expended to generate sales that may not materialize.
• Budgetary and political constraints of government end-users may delay or prevent sales.

Future Outlook

The company anticipates continued demand for integrated non-lethal solutions driven by public expectations for proportional force, evolving legal standards, and emphasis on officer safety. The near-term focus for 2026 is on expanding BolaWrap deployments, increasing utilization of Wrap Reality and WrapTactics, and advancing WrapVision commercialization. C-UAS initiatives are expected to continue development and demonstration, but revenue timing and scale remain uncertain. Operating losses are expected to continue until sufficient scale, margin improvement, and recurring revenue are achieved, despite ongoing cost containment efforts.

Management Comments

• Our mission is to enable safer outcomes by providing officers and agencies with the tools, training, and tactics to gain proactive, lawful control of encounters, reducing risk to both officers and subjects, while preserving tactical advantage.
• We believe a continued focus on integrating our systems into existing federal frameworks supports our goal of becoming a fully integrated federal public safety and defense technology enterprise.
• We believe the adoption of non-lethal tools like BolaWrap can reduce the frequency and severity of use-of-force incidents, potentially lowering the legal, financial, and reputational costs associated with excessive force claims, settlements, and related litigation.
• Our goal is to equip every public safety officer and agency with an integrated system of non-lethal tools, training, and tactics that they carry and apply every day, supporting safer outcomes for officers, subjects, and the public.
• We believe that our investment in training infrastructure, instructor certification, digital training delivery, and post-sale customer success creates a meaningful competitive advantage and a significant barrier to new competition.
• Management believes that the Company has sufficient liquidity to fund its operations for at least the next twelve months, based on current operating plan, existing cash balances, and expected cash flows.

Industry Context

StockSavvy.ai notes that Wrap Technologies is strategically positioning itself within a growing public safety technology market, driven by increasing demands for accountability, proportional use of force, and transparency in law enforcement. The company's expansion into virtual reality training, body-worn cameras, digital evidence management, and counter-UAS technologies aligns with broader industry trends towards integrated, non-lethal solutions and advanced training. The global non-lethal weapons market is projected to grow to $19.1 billion by 2033, law enforcement training to $5.4 billion by 2032, BWC to $4.1 billion by 2030, and C-UAS to $20.3 billion by 2030, indicating significant addressable market opportunities for Wrap Technologies' diversified portfolio. However, the company faces intense competition from larger, more established players in these fragmented markets.

Comparison to Industry Standards

• The global non-lethal weapons market was valued at approximately $9.9 billion in 2024 and is expected to grow to approximately $19.1 billion by 2033, representing a compound annual growth rate of 7.6%. Wrap Technologies' BolaWrap occupies a distinct position by not relying on pain compliance, differentiating it from most existing non-lethal force options.
• The U.S. law enforcement training market was valued at approximately $4.0 billion in 2025 and is expected to reach approximately $5.4 billion by 2032, representing a compound annual growth rate of 4.5%. Wrap Reality VR platform and WrapTactics digital training are designed to participate in this market, which is experiencing growing adoption of VR and simulation-based training.
• The global body-worn camera market was valued at approximately $2.9 billion in 2025 and is expected to reach approximately $4.1 billion by 2030. The global evidence management market was estimated at approximately $9.7 billion in 2025 and is expected to reach approximately $16.1 billion by 2030, representing a compound annual growth rate of 10.8%. WrapVision and its DEM platform compete in this market, driven by government mandates and transparency expectations.
• The global counter-unmanned aircraft system market is estimated at approximately $6.6 billion in 2025 and is projected to reach approximately $20.3 billion by 2030, representing a compound annual growth rate of 25.1%. Wrap Technologies' MERLIN program aims to leverage its mechanical entanglement technology in this rapidly growing sector.

Management Changes

Corporate Governance

Legal Proceedings

• The company may become subject to legal proceedings, demands, and claims in the normal course of business, including alleged infringement of third-party patents, breach of contract, and employment law violations.
• Such claims, even if not meritorious, could result in significant financial and management resource expenditure.
• An unfavorable outcome in litigation could require substantial damages, ongoing royalty payments for intellectual property infringement, or prevent the sale of certain products.

Related Party Transactions

• Scot Cohen (CEO), V4 Global LLC (controlled by Mr. Cohen), Jared Novick (President & COO), Continuum Ventures, LLC (controlled by Mr. Novick), Marc Savas (Director), Savbo Investments LLC (controlled by Mr. Savas), and John Shulman (Director), Juggernaut Management, LLC (controlled by Mr. Shulman) participated in various private placements of common stock, preferred stock, and warrants in 2023, 2025, and 2026.
• Mr. Cohen and V4 Global earned dividends totaling $330 thousand on Series A Preferred Stock for the year ended December 31, 2025.
• The company is obligated to pay royalties to Syzygy Licensing, LLC (owned and controlled by Elwood G. Norris, a 5% stockholder and former officer) under an intellectual property license agreement. Royalties incurred were $18 thousand in 2025 and $66 thousand in 2024.
• Consulting services were provided by Mr. Elwood Norris for laboratory facility costs and invention consulting services, totaling $17 thousand in 2024, with the contract terminated in February 2024.

Stakeholder Impact

• Shareholders face potential dilution from ongoing equity issuances (common stock, preferred stock, warrants) used to fund operations and growth initiatives.
• Employees benefit from continued investment in R&D, product development, and workforce growth (32% increase in 2025), but also face risks from cost containment initiatives and potential workforce reductions.
• Customers (law enforcement, corrections, defense) benefit from expanded product offerings (BolaWrap, Wrap Reality, WrapTactics, WrapVision, C-UAS) and integrated non-lethal solutions aimed at improving safety and operational effectiveness.
• Suppliers face continued demand for components but are also subject to the company's efforts to diversify its supply chain and increase U.S.-based sourcing.
• Creditors and investors are impacted by the company's persistent operating losses and reliance on capital raises, but also by the strategic moves to diversify revenue streams and improve long-term financial health.

Next Steps

• Expand agency-wide deployments of BolaWrap and increase adoption within existing customers.
• Increase utilization of training and subscription-based offerings, including Wrap Reality and WrapTactics.
• Advance commercialization efforts for WrapVision body-worn cameras and digital evidence management.
• Continue evaluating development and demonstration opportunities related to counter-unmanned aircraft system initiatives.
• Focus on integrating systems into existing federal frameworks to become a fully integrated federal public safety and defense technology enterprise.
• Deepen customer relationships through programmatic delivery models that combine tools, training, and tactics.
• Expand international presence across law enforcement and public safety markets worldwide, particularly in South America.
• Continue evaluating strategic acquisitions, partnerships, and collaborations to complement offerings, expand capabilities, and accelerate market entry.

Key Dates

Recommendation

Wrap Technologies is in a transitional phase, actively diversifying its product portfolio and expanding into new, high-growth markets like C-UAS and federal defense. This strategic shift, coupled with improved gross margins and significant growth in technology-enabled services, presents long-term potential. However, the company continues to report substantial net losses, indicating that profitability remains a significant challenge. The stock price is subject to high volatility, and future capital raises could lead to further dilution. While the strategic direction is positive, the execution risk and the ongoing need to achieve sustainable profitability warrant a 'Hold' recommendation. Investors should monitor the company's ability to convert its strategic initiatives into consistent revenue growth and reduced operating losses before considering further investment.

Keywords

Public Safety Technology, Non-Lethal Solutions, Law Enforcement, BolaWrap, Virtual Reality Training, Wrap Reality, Body-Worn Camera, Digital Evidence Management, WrapVision, Counter-UAS, Drone Interdiction, Defense Technology, Tactical Training, SEC Filing, Annual Report, WRAP