Wrap Technologies Inc.

Company Overview

Business Model: Wrap Technologies, Inc. is a global public safety technology and services company that provides integrated non-lethal solutions, training, and tactics for law enforcement, corrections, defense, and other public safety organizations. The company's mission is to enable safer outcomes by offering tools that facilitate proactive, lawful control of encounters, thereby reducing risk to officers and subjects. Revenue is generated through product sales, including BolaWrap devices, cassettes, and body-worn cameras, and technology-enabled services such as software subscriptions for training platforms and digital evidence management, as well as professional training services.

Market Position: Wrap Technologies, Inc. operates in competitive and fragmented global public safety and defense technology markets, including non-lethal tools, law enforcement training, body-worn cameras, digital evidence management, and counter-unmanned aircraft systems (C-UAS). The BolaWrap product line occupies a distinct position by offering a non-pain-compliance, non-neuromuscular incapacitation tool, addressing an operational gap between verbal commands and higher-force options. The company aims to differentiate itself through integrated solutions combining tools, training, and tactics. Its WrapVision body-worn camera solution is assembled in North America to meet federal procurement and data sovereignty requirements.

Recent Strategic Developments: During 2025, Wrap Technologies, Inc. continued its transition from a single-product company to a diversified public safety technology and services provider. Key developments include:

• Product Portfolio Expansion: Launched WrapTactics, a digital training platform, and WrapVision, a North America-assembled body-worn camera solution.
• Defense and Homeland Security Market Entry: Advanced C-UAS initiatives, including the MERLIN program, applying tether deployment technology to non-lethal drone interdiction.
• Subsidiary Formation: Established Wrap Federal, LLC on September 19, 2025, to support U.S. federal government clients in defense and homeland security.
• Acquisition and Strategic Realignment: Acquired W1 Global, LLC in February 2025 for advisory and investigative professional services, later realigning focus to technology-enabled services in policy governance and training.
• Strategic Partnerships: Partnered with Carahsoft Technology Corp. on October 2, 2025, to expand access to products and services across government agencies, and with a U.S.-based manufacturing and technology engineering firm in November 2025 to expand domestic supply chain and production.

Geographic Footprint: Wrap Technologies, Inc. primarily targets federal, state, and local law enforcement agencies in the United States, with an estimated market of over 18,000 agencies and 900,000 officers. The company has also identified an international market opportunity of approximately 12 million police officers across more than 190 countries, having shipped products to over 60 countries. International sales represented approximately 43% of total gross revenue in 2025, with particular momentum noted in South America. Revenue is attributed to countries based on the customer’s delivery location.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 57.8% (2025) vs. 54.7% (2024)
• Operating Margin: -289.0% (2025) vs. -345.5% (2024)
• Net Margin: -219.2% (2025) vs. -131.1% (2024)

Investment in Growth:

• R&D Expenditure: $56 thousand (1.2% of net revenue)
• Capital Expenditures: $0.1 million (for property and equipment)
• Strategic Investments: $0.3 million (for patents, trademarks, and other intangibles)

Business Segment Analysis

Wrap Technologies, Inc. operates as a single operating and reportable segment. However, the company's product and service offerings are diversified across several key areas:

BolaWrap

Financial Performance: Product sales, which include BolaWrap devices and accessories, were $3.5 million in 2025, a decrease of 2.3% year-over-year from $3.6 million in 2024. This decrease was primarily due to lower distributor orders and variability in international demand, partially offset by stable domestic demand. BolaWrap cassettes provide a recurring consumable revenue stream. Product Portfolio: The BolaWrap product line consists of handheld, non-lethal devices designed to deploy a Kevlar tether to entangle subjects. The BolaWrap 150, introduced in Q1 2022, is electronically deployed, more robust, smaller, lighter, and simpler to use than its predecessor. Market Dynamics: BolaWrap addresses an operational gap in law enforcement by providing a non-pain-compliance option to gain control before situations escalate. It is generally classified at the lowest force level within agency policies. The global non-lethal weapons market was valued at approximately $9.9 billion in 2024 and is projected to grow to $19.1 billion by 2033.

Wrap Reality Virtual Reality Training

Financial Performance: Revenue from technology-enabled services, which includes Wrap Reality, increased to $1.7 million in 2025 from $0.9 million in 2024, representing an 85.0% increase. Product Portfolio: Wrap Reality is an immersive VR training platform focused on human-factors awareness, decision-making under stress, and use-of-force judgment. It offers 45 scenarios for law enforcement and corrections, and 15 for societal reentry, supporting both on-premises and cloud-enabled deployments. Market Dynamics: The U.S. law enforcement training market was valued at approximately $4.0 billion in 2025 and is expected to reach $5.4 billion by 2032, with growing adoption of VR and simulation-based training.

WrapTactics Digital Training Platform

Financial Performance: Included within technology-enabled services revenue, which saw significant growth in 2025. Product Portfolio: Launched in 2025, WrapTactics is a subscription-based digital training and performance platform delivering short-form, scenario-based instruction on non-lethal response tactics and lawful control techniques. It is designed to prevent skill decay and reinforce tactical fundamentals. Market Dynamics: Complements hardware and VR offerings within the growing law enforcement training market, supporting continuous, low-burden training.

WrapVision Body-Worn Camera and Digital Evidence Management

Financial Performance: Included within technology-enabled services revenue, which saw significant growth in 2025. Product Portfolio: Launched in 2025, WrapVision is a North America-assembled body-worn camera solution designed to meet federal procurement and data-sovereignty requirements. It integrates with a cloud-based digital evidence management (DEM) platform offering unlimited video storage, uploading, search, retrieval, redaction, and sharing capabilities. Market Dynamics: The global body-worn camera market was valued at approximately $2.9 billion in 2025, projected to reach $4.1 billion by 2030. The global evidence management market was estimated at $9.7 billion in 2025, projected to reach $16.1 billion by 2030. These markets are driven by government mandates and transparency expectations.

Counter-Unmanned Aircraft Systems (C-UAS) and Defense Applications

Financial Performance: Research, development, and demonstration efforts expanded in 2025. The company expects continued investment in this area before material revenue is generated, as initiatives are in various stages of development and evaluation. Product Portfolio: The MERLIN program applies the company's proprietary tether deployment technology and modular cassette-based platform architecture to non-lethal drone interdiction for defense, homeland security, and critical-infrastructure protection. Market Dynamics: The global C-UAS market is estimated at approximately $6.6 billion in 2025 and is projected to reach $20.3 billion by 2030, driven by defense spending and homeland security initiatives.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Not disclosed.
• Dividend Payments: $0.9 million declared on Series A Convertible Preferred Stock in 2025 ($0.492 million paid in Common Stock, $0.411 million accrued). In 2024, $1.218 million declared ($1.158 million paid in Common Stock, $0.060 million paid in cash).
• Dividend Yield: Not applicable for Common Stock as no cash dividends have been paid.
• Future Capital Return Commitments: No cash dividends are anticipated on Common Stock in the foreseeable future. Dividends on Series A Preferred Stock are payable in cash or Common Stock at the company's option, subject to certain conditions.

Balance Sheet Position:

• Cash and Equivalents: $3.5 million (as of December 31, 2025)
• Total Debt: $2.4 million (Operating lease liabilities as of December 31, 2025)
• Net Cash Position: $1.1 million
• Credit Rating: Not disclosed.
• Debt Maturity Profile: Operating lease liabilities include $0.320 million short-term and $2.097 million long-term as of December 31, 2025. Future minimum lease payments total $3.409 million through 2030 and thereafter.

Cash Flow Generation:

• Operating Cash Flow: $(10.3) million (used in operating activities for 2025)
• Free Cash Flow: $(10.4) million (Operating Cash Flow of $(10.3) million - Capital Expenditures of $0.1 million)
• Cash Conversion Metrics: Not explicitly disclosed.

Operational Excellence

Production & Service Model: Wrap Technologies, Inc. maintains scalable, domestically based assembly and manufacturing capabilities. The company contracts with third-party suppliers for parts, components, and subassemblies, performing final assembly, testing, quality verification, and shipping at its manufacturing facility. The operational philosophy emphasizes integrated non-lethal solutions, training, and tactics, supported by professional training services and a "Train the Trainer" program for BolaWrap.

Supply Chain Architecture: The company relies on a limited number of domestic and international suppliers for key components, including sole-source suppliers for the BolaWrap battery assembly and propulsion component for BolaWrap cassettes. Efforts are underway to increase the proportion of U.S.-based supply chain. As of December 31, 2025, 71% of the supply chain is from domestic U.S. suppliers. Key Suppliers & Partners:

• Manufacturing Partners: A U.S.-based manufacturing and technology engineering firm (partnered in November 2025) to expand domestic supply chain and support scalable, Made-in-America production.
• Technology Partners: Specialized consultants and domestic R&D partners for C-UAS and other emerging technology programs.

Facility Network:

• Manufacturing: Relocated to a new 20,000 square foot facility in Norton, Virginia, in September 2025, providing expanded capacity. Early occupancy began August 18, 2025.
• Research & Development: R&D efforts are led by an internal engineering, software development, and product design team, supplemented by consultants and partners.
• Distribution: Warehousing and logistics infrastructure supports domestic and international distribution.

Operational Metrics:

• Backlog: Approximately $209 thousand as of December 31, 2025, primarily for larger agency orders. Backlog is subject to modification, rescheduling, or cancellation and is not necessarily indicative of future revenues.
• Inventory Obsolescence Reserve: $516 thousand as of December 31, 2025.

Market Access & Customer Relationships

Go-to-Market Strategy: The company's sales model has evolved from single-product demonstrations to a broader, solution-based engagement integrating its full portfolio. The primary go-to-market strategy is direct sales, supplemented by distribution partners and strategic relationships. The goal is to convert initial engagement into long-term, multi-product customer relationships, including product sales and recurring technology-enabled service subscriptions.

Distribution Channels:

• Direct Sales: Internal sales team focused on law enforcement agencies.
• Channel Partners: Network of distributors, resellers, and strategic partners across all 50 U.S. states and over 60 countries. Distribution agreements generally provide territorial rights and require minimum sales commitments.
• Digital Platforms: Online presence and digital advertising support market awareness.
• Strategic Aggregators: Carahsoft Technology Corp. serves as Wrap's Master Government Aggregator, expanding access to federal, state, and local government agencies through established procurement vehicles.

Customer Portfolio:

• Enterprise Customers: Primarily federal, state, and local law enforcement agencies, correctional facilities, and private security firms (though BolaWrap transfer to private firms is restricted by ATF classification in the U.S.).
• Customer Concentration: For the year ended December 31, 2025, revenue from one distributor accounted for approximately 38% of total revenue. Accounts receivable from two distributors accounted for approximately 71% and 10%, respectively, of net accounts receivable and contract assets at December 31, 2025.

Geographic Revenue Distribution:

• Americas: $2.861 million (55.0% of total gross revenue)
• Europe, Middle East and Africa: $2.320 million (44.6% of total gross revenue)
• Asia Pacific: $0.022 million (0.4% of total gross revenue)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The public safety sector faces growing expectations for accountability, proportional use of force, and transparency. Law enforcement encounters involving individuals in mental health crisis or substance impairment are rising. This drives demand for tools, training, and operational frameworks that enable proactive, lawful control of encounters, reducing use-of-force incidents and associated costs. The non-lethal weapons market is growing, as is the law enforcement training market, with increasing adoption of virtual reality and simulation. The body-worn camera and digital evidence management markets are driven by government mandates and cloud-based, AI-enabled platforms. The C-UAS market is emerging and rapidly growing.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Conducted Energy Devices, Less-Lethal Weapons: Competing providers in the non-lethal tools market.
• Training Platforms: Legacy 2D simulator providers and newer VR-based platforms.
• Body-Worn Camera and Digital Evidence Management: Established vendors in these markets.
• Counter-UAS Market: Growing number of companies offering detection, electronic warfare, and kinetic interdiction solutions.

Emerging Competitive Threats: New entrants, disruptive technologies, and alternative solutions across all markets. The evolving regulatory framework for AI technologies could also affect products and increase compliance costs.

Competitive Response Strategy: Wrap Technologies, Inc. aims to build an integrated system of tools, training, and tactics to address broader operational needs. It positions BolaWrap as complementary to existing tools, addressing an operational gap. The company is focused on expanding its core BolaWrap business, developing and scaling new product lines, growing recurring revenue through subscriptions, entering adjacent markets (federal, defense), and expanding internationally. Strategic acquisitions and partnerships are also part of the strategy.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Dependence on law enforcement market acceptance; potential for negative publicity harming reputation and demand; lengthy procurement cycles, budget constraints, and political/policy changes for government customers.
• Technology Disruption: Risks in commercializing Wrap Reality VR training platform in a competitive market; success of recent expansion into drone and counter-UAS technologies is uncertain.
• Customer Concentration: Revenue from one distributor accounted for 38% of gross revenue in 2025, and accounts receivable from two distributors accounted for 71% and 10% respectively, indicating potential dependency risks.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Dependence on a limited number of suppliers, including sole-source suppliers, for key components, leading to vulnerability to price increases, inflation, recession, and supply shortages.
• Geographic Concentration: International operations expose the company to currency fluctuations, export controls, and geopolitical instability.
• Capacity Constraints: Challenges in scaling manufacturing for new and technically complex products, including securing critical components and controlling manufacturing costs.
• Product Liability: Products used in dangerous situations may result in injury or death, exposing the company to product liability claims, regulatory investigations, and negative publicity.
• Training & Implementation: Effectiveness of products depends on customer training, policies, and implementation practices, which the company does not control.

Financial & Regulatory Risks

• Market & Financial Risks: History of operating losses and expectation of additional losses; need to raise additional capital, which may cause dilution or restrict operations; revenue volatility due to subscription model, delayed recognition, and customer churn; significant and unpredictable warranty costs.
• Regulatory & Compliance Risks: BolaWrap classified as a "firearm" (Any Other Weapon) by the ATF, requiring Federal Firearms License (FFL) and Special Occupational Tax (SOT) registration, which limits transfers to private security firms and individuals. Drone and counter-UAS products are subject to evolving regulations (FAA, export controls). Data privacy, cybersecurity, and evidence management solutions are subject to federal and state data protection laws (e.g., CJIS Security Policy). Evolving regulatory framework for AI technologies could affect products and increase compliance costs.

Geopolitical & External Risks

• Geopolitical Exposure: Global economic weakness and uncertainty, geopolitical conflict, war, and civil unrest could adversely affect revenues, gross margins, and expenses.
• Trade Relations: International sales are subject to U.S. export control regulations (ITAR, EAR), customs requirements, and international trade compliance obligations, which can add cost and limit market access.
• Public Health Crises: Future pandemics, epidemics, or infectious disease outbreaks could adversely impact business, financial condition, and results of operations.

Innovation & Technology Leadership

Research & Development Focus: Wrap Technologies, Inc. conducts ongoing R&D to enhance existing products, develop new applications, advance emerging technology programs, and improve manufacturing efficiency. Core Technology Areas:

• BolaWrap Platform: Investing in next-generation BolaWrap development, including future device iterations and refinement of the cassette-based platform architecture. Focus on manufacturing process improvements and cost reduction.
• Counter-UAS Technologies: Significant R&D effort directed toward C-UAS programs (e.g., MERLIN), advancing proprietary mechanical entanglement technology for non-lethal drone interdiction. All C-UAS R&D is currently company-sponsored.
• WrapTactics Training Platform: Developing and enhancing the platform, expanding content library, building hybrid training capabilities, and improving functionality.
• WrapVision and Digital Evidence Management: Making enhancements to cloud-based DEM software for improved functionality, user experience, and integration.
• Wrap Reality Virtual Reality Training: Plans to expand content library and enhance the platform as VR training adoption grows.

Intellectual Property Portfolio: As of December 31, 2025, the company held 93 issued patents and 149 pending patent applications with expiration dates ranging from 2032 to 2047 in the United States and internationally, related to non-lethal systems, tethered-deployment technology, training platforms, and digital evidence management solutions. The company relies on copyrights, trade secrets, and contractual obligations to protect proprietary information.

Technology Partnerships: Partnered with a U.S.-based manufacturing and technology engineering firm to expand domestic supply chain and support scalable production. Domestic R&D partners support C-UAS development.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company's success depends on retaining and motivating high-quality personnel, including managers, sales, and skilled engineering and manufacturing personnel.

Board Composition: The Board is composed of six members. As of March 23, 2026, Bruce Bernstein, Marc Savas, Rajiv Srinivasan, Vice Admiral Tim Szymanski, and John Shulman are independent directors. The Board has an Audit Committee (Chair: Bruce Bernstein), a Compensation Committee (Chair: Bruce Bernstein), and a Nominating and Governance Committee (Chair: Marc Savas).

Human Capital Strategy

Workforce Composition: As of December 31, 2025, Wrap Technologies, Inc. employed approximately 25 full-time employees, representing a 32% increase compared to the prior year-end. Additions were concentrated in research and development, sales, and marketing divisions. The company also engages consultants and contractors.

Talent Management: Acquisition & Retention: The company's success depends on its ability to attract, retain, and motivate talented individuals. Employee Value Proposition: The company is committed to fostering a work environment that supports professional development, encourages innovation, and aligns the team with its mission.

Diversity & Development: Not explicitly disclosed in the filing. Culture & Engagement: Not explicitly disclosed in the filing.

Environmental & Social Impact

No material information regarding environmental commitments or social impact initiatives was explicitly disclosed in the provided filing.

Business Cyclicality & Seasonality

Demand Patterns: Operating results are influenced by government budget cycles and procurement timing. Many U.S. law enforcement agencies operate on fiscal years ending June 30, while federal agencies operate on fiscal years ending September 30, which can result in higher purchasing activity in certain quarters. International purchasing patterns, often involving centralized procurement, may also contribute to variability in quarterly results, leading to "lumpy" and difficult-to-forecast international sales.

Planning & Forecasting: The company's ability to predict future operating results with certainty is limited due to these factors.

Regulatory Environment & Compliance

Regulatory Framework: Wrap Technologies, Inc. is subject to federal, state, local, and international laws and regulations across its products and operations. Industry-Specific Regulations:

• Firearms Classification: BolaWrap products are classified as "Any Other Weapon" (AOW) by the ATF, requiring a Federal Firearms License (FFL) and Special Occupational Tax (SOT) registration for manufacturing and distribution. This classification limits direct transfers to private security firms and individual consumers in the U.S.
• State and Local Regulations: Products are subject to varying state and local laws regarding possession, transfer, or use.
• Data Privacy, Cybersecurity, and Evidence Management: Body-worn camera and digital evidence management solutions are subject to federal and state data protection, privacy, and information security requirements, including the Criminal Justice Information Services (CJIS) Security Policy.
• AI Technologies: The regulatory framework for AI is rapidly evolving, with new laws and interpretations (e.g., EU Artificial Intelligence Act, U.S. executive orders) potentially affecting the use and commercialization of AI in the company's products and increasing compliance costs.

Trade & Export Controls:

• Export Restrictions: International sales are subject to U.S. export control regulations (International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR)), customs requirements, and international trade compliance obligations.
• Sanctions Compliance: Compliance with export control regulations adds time and administrative cost and may limit sales in certain countries or to certain end users.
• Federal Procurement: As a federal contractor through Wrap Federal, the company is subject to specific procurement regulations and compliance requirements, including Trade Agreements Act (TAA) compliance.

Legal Proceedings: The company may become subject to legal proceedings and claims in the normal course of business, including alleged intellectual property infringement, breach of contract, and employment law violations. Material litigation or regulatory investigations could result in substantial damages, ongoing royalty payments, or restrictions on product sales.

Tax Strategy & Considerations

Tax Profile: Wrap Technologies, Inc. has a 0% effective tax rate for the year ended December 31, 2025, primarily due to fair value adjustments, state taxes, and a full valuation allowance against its deferred tax assets. The company has federal and state post-apportioned net operating loss carryforwards of approximately $95.7 million and $51.3 million, respectively, as of December 31, 2025. Geographic Tax Planning: The company is subject to income tax in multiple jurisdictions (federal, state, city). Tax Reform Impact: The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, permanently allows taxpayers to fully expense domestic research or experimental (R&E) expenditures paid or incurred after December 31, 2024. The company has elected to continue amortizing previously capitalized and unamortized domestic R&E expenditures over the remaining five-year period.

Insurance & Risk Transfer

Risk Management Framework: The company carries product liability insurance to mitigate risks associated with its products being used in dangerous situations. However, significant litigation could result in damages exceeding insurance coverage. Officers and directors are indemnified as to personal liability as provided by Delaware law and company articles/bylaws. The company may also undertake indemnification obligations in the ordinary course of business. Insurance Coverage: Product liability insurance is maintained, but its adequacy for all potential claims is not assured. Risk Transfer Mechanisms: Indemnification obligations are in place for officers and directors.