WRAP TECHNOLOGIES, INC. Annual Report - How They Did This Year

I’m putting together a guide to help you understand how Wrap Technologies performed this year. My goal is to explain their financial filings in plain English so you can decide if this company fits your investment goals.

1. What does this company do?

Wrap Technologies (Nasdaq: WRAP) is moving beyond its original product. While they started with the BolaWrap—a handheld device that uses a tether to restrain people without pain—they are now building a full public safety ecosystem. They have added Wrap Reality (virtual reality training), WrapVision (body cameras), and cloud-based evidence software. They are also developing MERLIN, a system designed to stop drones using their tether technology.

2. Financial performance

The company is in a "growth phase," spending heavily to capture more of the market.

• The Bottom Line: Revenue grew to $11.6 million in 2025, up from $9.6 million in 2024. Despite this 21% growth, the company lost $10.3 million, compared to a $5.9 million loss the year before.
• Why the bigger loss? The loss grew due to a $2.5 million non-cash charge from revaluing warrants and higher operating costs. They spent $6.8 million on research and development to speed up the MERLIN system and software.
• The Workforce: They grew their staff by 32% to 115 employees, focusing on technical software roles and a federal sales team to win government contracts.

3. Major wins and changes

• The "Programmatic" Pivot: The company now bundles hardware with software subscriptions. This increased their average contract value by 15% compared to selling hardware alone.
• Federal Push: They created "Wrap Federal" to target the U.S. defense budget. The MERLIN drone-defense system is currently being tested by the Department of Defense.
• Intellectual Property: They hold 93 patents and have 149 applications pending, which protects their technology and creates a barrier for competitors.

4. Financial health

At the end of 2025, the company had $14.2 million in cash. This covers their operations for about 12 months, as they spend roughly $800,000 per month. Management noted they may need to raise more money by selling more stock. For you, this creates a risk of dilution, where issuing new shares reduces your percentage of ownership and potential earnings per share.

5. Key risks

• Regulatory Hurdles: The ATF classifies the BolaWrap as a weapon. This prevents the company from selling to private security or civilians, which limits their total potential customers.
• Profitability: The company is not yet profitable. Because they rely on government contracts, revenue is unpredictable; a single delayed contract can impact quarterly results.
• Seasonality: Sales usually happen near the end of government fiscal years. This makes revenue lower in the first and second quarters, which can cause the stock price to swing.

6. Competitive positioning

Wrap markets its products as "de-escalation tools" rather than "force tools." While competitors like Axon (Taser) use pain-based devices, Wrap’s tether technology appeals to agencies trying to improve community relations and reduce liability.

7. Future outlook

The company’s future depends on selling its subscription-based ecosystem. By locking agencies into multi-year contracts, they hope to create steady, predictable income. Success will depend on converting current users into full-ecosystem subscribers and successfully launching the MERLIN drone-defense platform.

Investor Takeaway: Wrap Technologies is a high-growth, high-risk play. They are betting that their shift toward software subscriptions and federal drone-defense contracts will eventually lead to profitability. Before investing, consider if you are comfortable with the potential for share dilution and the unpredictable nature of government-contract-based revenue.