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WRAP TECHNOLOGIES, INC.

WRAP TECHNOLOGIES, INC.WRAPEarnings & Financial Report

Nasdaq · Industrials · Ordnance & Accessories, (No Vehicles/Guided Missiles)

Wrap Technologies, Inc. develops non-lethal safety solutions for law enforcement, corrections, and private security sectors across North America and global markets. Its core products include remote restraint devices and training services designed to reduce use-of-force injuries and improve public safety outcomes.

What changed in WRAP TECHNOLOGIES, INC.'s 10-K — 2023 vs 2024

Top changes in WRAP TECHNOLOGIES, INC.'s 2024 10-K

144 paragraphs added · 110 removed · 91 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

29 edited+1 added−2 removed136 unchanged
Agencies have reported achieving compliance by utilizing the BolaWrap in the following ways: ● by pointing the BolaWrap’s seven dot green line dot laser at the suspect in conjunction with verbal commands; ● by the sound emitted by the BolaWrap upon deployment and causing a distraction; ● through the feeling of being wrapped and/or the restraint of the Kevlar cord around the suspect’s legs, arms, or torso; and ● when used in conjunction with other less-lethal tools. - 5 - Table of Contents While we encourage all law enforcement agencies to fill out a Use of Device Report when the BolaWrap is used during an encounter in the field, agencies do not always report all field deployments.
Agencies have reported achieving compliance by utilizing the BolaWrap in the following ways: ● by pointing the BolaWrap’s seven dot green line dot laser at the suspect in conjunction with verbal commands; ● by the sound emitted by the BolaWrap upon deployment and causing a distraction; ● through the feeling of being wrapped and/or the restraint of the Kevlar cord around the suspect’s legs, arms, or torso; and ● when used in conjunction with other less-lethal tools. -7- Table of Contents While we encourage all law enforcement agencies to fill out a Use of Device Report when the BolaWrap is used during an encounter in the field, agencies do not always report all field deployments.
We anticipate that sales attributable to international markets will continue to represent a significant portion of our sales in the future due in part to the centralized purchase decision-making process at the national level in these markets. Often, the international markets have large national police forces.
We anticipate that sales attributable to international markets will represent a significant portion of our sales in the future due in part to the centralized purchase decision-making process at the national level in these markets. Often, the international markets have large national police forces.
The integration of non-lethal tools like BolaWrap with digital evidence solutions contributes to safer interactions between law enforcement officers and the community, strengthening Wrap Technologies' position in the public safety technology market by offering an end-to-end solution that combines innovative de-escalation devices with state-of-the-art evidence management. - 8 - Table of Contents The Company remains optimistic on the outlook of Wrap Intrensic as a competitive and innovative solution set in the marketplace.
The integration of non-lethal tools like BolaWrap with digital evidence solutions contributes to safer interactions between law enforcement officers and the community, strengthening Wrap Technologies’ position in the public safety technology market by offering an end-to-end solution that combines innovative de-escalation devices with state-of-the-art evidence management. -10- Table of Contents The Company remains optimistic on the outlook of Wrap Intrensic as a competitive and innovative solution set in the marketplace.
The failure to obtain patent protection or the loss of patent protection on our existing and future technologies or the circumvention of our patents by competitors could have a material adverse effect on our ability to compete successfully. - 12 - Table of Contents We have been granted trade name protection for “BolaWrap” and “Wrap” in multiple countries and expect to employ a combination of registered and common law trade names, trademarks and service marks in our business.
The failure to obtain patent protection or the loss of patent protection on our existing and future technologies or the circumvention of our patents by competitors could have a material adverse effect on our ability to compete successfully. -14- Table of Contents We have been granted trade name protection for “BolaWrap” and “Wrap” in multiple countries and expect to employ a combination of registered and common law trade names, trademarks and service marks in our business.
We intend to increase the use of our trademarks throughout our product distribution chain to enhance brand awareness and believe our strong reputation as a pioneer in remote restraint, with excellent training and product support, gives us a competitive edge. - 9 - Table of Contents Demonstration, Training and Customer Success As part of its sales and marketing activities, the Company has a department dedicated to conducting demonstrations and training.
We intend to increase the use of our trademarks throughout our product distribution chain to enhance brand awareness and believe our strong reputation as a pioneer in remote restraint, with excellent training and product support, gives us a competitive edge. -11- Table of Contents Demonstration, Training and Customer Success As part of its sales and marketing activities, the Company has a department dedicated to conducting demonstrations and training.
Given these factors, we believe the BolaWrap may be used more often than certain other tools, positioning us to be widely recognized as standing in a category of our own. - 11 - Table of Contents Indirectly, other use of force devices such as tasers (CEWs), pepper spray, pepperball, batons, and impact weapons may try to compete with the BolaWrap product.
Given these factors, we believe the BolaWrap may be used more often than certain other tools, positioning us to be widely recognized as standing in a category of our own. -13- Table of Contents Indirectly, other use of force devices such as tasers (CEWs), pepper spray, pepperball, batons, and impact weapons may try to compete with the BolaWrap product.
Developed in collaboration with law enforcement professionals, this device enables safe and effective control of low-force encounters, providing a valuable tool for law enforcement officers. - 4 - Table of Contents The BolaWrap is a remote restraint device that safely wraps around an individual's arms and/or legs to impede movement and prevent harm to themselves or others.
Developed in collaboration with law enforcement professionals, this device enables safe and effective control of low-force encounters, providing a valuable tool for law enforcement officers. -6- Table of Contents The BolaWrap is a remote restraint device that safely wraps around an individual’s arms and/or legs to impede movement and prevent harm to themselves or others.
We also aim to target the 100 largest police forces internationally, which have over 12 million police officers. Our objective is to unlock the full potential of our technology solutions suite, which targets law enforcement and security personnel on a global scale. We plan to maintain financial prudence and deliver value to our shareholders.
We also aim to target the 100 largest police forces internationally, which have over 12 million police officers. Our objective is to unlock the full potential of our technology solutions suite, which targets law enforcement and security personnel on a global scale. We plan to maintain financial prudence and deliver value to our stockholders.
We believe we have established a strong brand and market presence globally and have established significant competitive advantages in our markets. - 2 - Table of Contents Industry Background The market for non-lethal and less-lethal products and devices serves law enforcement agencies, correctional facilities, military agencies, private security guard companies, and retail consumers.
We believe we have established a strong brand and market presence globally and have established significant competitive advantages in our markets. -4- Table of Contents Industry Background The market for non-lethal and less-lethal products and devices serves law enforcement agencies, correctional facilities, military agencies, private security guard companies, and retail consumers.
Related Party License and Royalties We are obligated to pay royalties pursuant to an exclusive Amended and Restated Intellectual Property License Agreement (the “License Agreement”), dated as of September 30, 2016, with Syzygy Licensing, LLC (“Syzygy”), a private technology invention, consulting and licensing company owned and controlled by Elwood G.
License and Royalties We are obligated to pay royalties pursuant to an exclusive Amended and Restated Intellectual Property License Agreement (the “License Agreement”), dated as of September 30, 2016, with Syzygy Licensing, LLC (“Syzygy”), a private technology invention, consulting and licensing company owned and controlled by Elwood G.
See “Risk Factors” included below in this Annual Report for additional information regarding risks and uncertainties associated with our business. - 6 - Table of Contents Wrap Reality In 2019, we partnered with an independent technology company to create a virtual reality system with training scenarios.
See “Risk Factors” included below in this Annual Report for additional information regarding risks and uncertainties associated with our business. -8- Table of Contents Wrap Reality In 2019, we partnered with an independent technology company to create a virtual reality system with training scenarios.
We also seek to pursue strategic business initiatives and collaborations, including potential acquisitions, to complement our existing offerings and sales network. - 10 - Table of Contents Manufacturing and Suppliers Manufacturing We believe that maintaining scalable assembly capabilities is crucial to the performance of our products and the growth of our business.
We also seek to pursue strategic business initiatives and collaborations, including potential acquisitions, to complement our existing offerings and sales network. -12- Table of Contents Manufacturing and Suppliers Manufacturing We believe that maintaining scalable assembly capabilities is crucial to the performance of our products and the growth of our business.
Providing security personnel with the BolaWrap may also reduce the potential liability of private security companies and personnel in such encounters. - 3 - Table of Contents Today, ATF classifications play a role in restricting Wrap's ability to transfer easily to non-government security firms.
Providing security personnel with the BolaWrap may also reduce the potential liability of private security companies and personnel in such encounters. -5- Table of Contents Today, ATF classifications play a role in restricting Wrap’s ability to transfer easily to non-government security firms.
This expansion enables us to deliver the platform to a broad range of customers, including law enforcement agencies, public and private security, corrections and the general public for firearms, concealed weapon, and safety training. - 7 - Table of Contents Wrap Intensic In August 2023, Wrap entered into the Intrensic Purchase Agreement (as defined herein) for the acquisition of Intrensic, an innovator of DEMS and body-worn cameras.
This expansion enables us to deliver the platform to a broad range of customers, including law enforcement agencies, public and private security, corrections and the general public for firearms, concealed weapon, and safety training. -9- Table of Contents Wrap Intrensic In August 2023, Wrap entered into the Intrensic Purchase Agreement (as defined herein) for the acquisition of Intrensic, an innovator of DEMS and body-worn cameras.
During 2024, in addition to continued development and enhancement of our remote restraint products, we expect to incur additional costs improving our training systems including enhancing our Wrap Reality on premise and cloud platforms and related content.
During 2025, in addition to continued development and enhancement of our remote restraint products, we expect to incur additional costs improving our training systems including enhancing our Wrap Reality on premise and cloud platforms and related content.
While we anticipate supply chain challenges to improve in the remainder of 2024, we recognize that future supplier shortages and logistics issues could have a material adverse effect on our operations and financial results. Backlog As of December 31, 2023, we had backlog of approximately $209 thousand that was delivered in the first quarter of 2024.
While we anticipate supply chain challenges to improve in the remainder of 2025, we recognize that future supplier shortages and logistics issues could have a material adverse effect on our operations and financial results. Backlog As of December 31, 2024, we had backlog of approximately $64 thousand that was delivered in the first quarter of 2025.
The Treatment Advocacy Center: Office of Research & Public Affairs reported that one in ten police encounters involve individuals with mental illness, with at least one in four fatal police encounters involving individuals with mental illness (Overlooked in the Undercounted: The Role of Mental Illness in Fatal Law Enforcement Encounters (2015)).
The Treatment Advocacy Center: Office of Research & Public Affairs reported that one in ten police encounters involve individuals with mental illness, with at least one in four fatal police encounters involving individuals with mental illness (“Overlooked in the Undercounted: The Role of Mental Illness in Fatal Law Enforcement Encounters,” Office of Research & Public Affairs (2015)).
We have established an active distributor network representing 50 states and one dealer representing the US territory of Puerto Rico. We have distribution agreements with 35 international distributors covering 75 countries. We focus significant sales, training and business development efforts to support our distribution network in addition to our internal sales team.
We have established an active distributor network representing 50 states and one dealer representing the US territory of Puerto Rico. We have distribution agreements with 23 international distributors covering 63 countries. We focus significant sales, training and business development efforts to support our distribution network in addition to our internal sales team.
We currently have distribution agreements with a network of distributors representing 50 states and one dealer representing Puerto Rico. These agreements provide certain territorial rights to distributors and allow us to sell direct to certain agencies under certain terms. We have distribution agreements with 35 international distributors covering 75 countries.
We currently have distribution agreements with a network of distributors representing 50 states and one dealer representing Puerto Rico. These agreements provide certain territorial rights to distributors and allow us to sell direct to certain agencies under certain terms. We have distribution agreements with 23 international distributors covering 63 countries.
We believe the BolaWrap 150 offers important benefits, including: ● Modern electronic deployment ● Smaller size and less weight ● Reduced production costs ● LED status indicator for ease of operation ● Long laser battery life ● LED target illumination to improve accuracy ● Hardened plastic for increased durability ● Enhanced water resistance for harsh environments The BolaWrap 150 employs two micro-gas generators to individually expel each entangling projectile.
We believe the BolaWrap 150 offers important benefits, including: ● Modern electronic deployment; ● Smaller size and less weight; ● Reduced production costs; ● LED status indicator for ease of operation; ● Long laser battery life; ● LED target illumination to improve accuracy; ● Hardened plastic for increased durability; and ● Enhanced water resistance for harsh environments.
In September 2018, we commenced filing our foreign patent applications selectively targeting the members of the European Patent Office (39 countries) and seventeen other countries, of which forty-five patents have been issued to date. To date we have a total of sixty-seven issued domestic and international patents for our small global company.
In September 2018, we commenced filing our foreign patent applications selectively targeting the members of the European Patent Office (39 countries) and 17 other countries, of which 53 patents have been issued to date. To date we have a total of 84 issued domestic and international patents for our small global company.
During 2023 we filed nine patent applications, seven of which were US filings. We feel the investment in patent protection in the US and abroad strengthens our intellectual property and creates value in Wrap Technologies.
During 2024 we filed four patent applications, two of which were US filings. We feel the investment in patent protection in the US and abroad strengthens our intellectual property and creates value in Wrap Technologies.
We have also identified an international market opportunity of over 12.1 million police officers in the 100 largest police forces outside the US. We have delivered products to 62 countries and have entered into agreements with international distributors, with international sales representing a significant portion of our revenues in 2023.
We have also identified an international market opportunity of over 12.1 million police officers in the 100 largest police forces outside the US. We have delivered products to 62 countries and have entered into agreements with international distributors.
For the fiscal years ended December 31, 2023, and 2022, we spent approximately $3.3 million and $5.1 million, respectively, on company-sponsored research and development. This equates to 53% of revenue in 2023 and 63% of revenue in 2022.
For the fiscal years ended December 31, 2024, and 2023, we spent approximately $2.3 million and $3.3 million, respectively, on company-sponsored research and development. This equates to 52% of revenue in 2024 and 53% of revenue in 2023.
However, patent applications may not result in issued patents covering all important claims, and there is a risk that they could be denied in their entirety. We currently have twenty-two issued US patents related to the BolaWrap technology and six additional US patents pending.
However, patent applications may not result in issued patents covering all important claims, and there is a risk that they could be denied in their entirety. As of the date of this Annual Report, we currently have 31 issued US patents related to the BolaWrap technology and five additional US patents pending.
We have trained our sales team to focus on agency-wide deployment to drive the highest level of immediate success with the device and to integrate it into department-wide use of force polices.
We have trained our sales team to focus on agency-wide deployment to drive the highest level of immediate success with the device and to integrate it into department-wide use of force polices. BolaWrap 150 In late Q1 2022, we delivered the latest generation of our BolaWrap device, the BolaWrap 150.
Financial Information about Customer Concentration and Geographic Areas Financial information regarding customer concentration and geographic areas in which we operate is contained in Note 18. - 13 - Table of Contents Employees We employ 52 full-time employees with 50 in the U.S. and two located in the United Kingdom.
Financial Information about Customer Concentration and Geographic Areas Financial information regarding customer concentration and geographic areas in which we operate is contained in Note 18. -15- Table of Contents Employees As of December 31, 2024, we employ 19 full-time employees in the U.S.
Micro-gas generators are micro explosive parts used in a variety of industrial products, including automobile airbags.
The BolaWrap 150 employs two micro-gas generators to individually expel each entangling projectile. Micro-gas generators are micro explosive parts used in a variety of industrial products, including automobile airbags.
As of December 31, 2023, $919 thousand has been paid out under this royalty obligation, leaving a maximum of $81 thousand to be paid out in the future. Seasonality Local and international law enforcement has seasonality with respect to when they purchase and expend funds.
As of December 31, 2024, we have incurred the maximum $1.0 million in royalties with $81 thousand included in accounts payable at year-end. Seasonality Local and international law enforcement has seasonality with respect to when they purchase and expend funds.
Removed
In January 2023, we launched our Use of Force Reduction Guarantee whereby we will buy back an agency’s devices when they deploy agency wide and do not see a reduction in Use –of -Force by at least 10%, after meeting certain criteria. BolaWrap 150 In late Q1 2022, we delivered the latest generation of our BolaWrap device, the BolaWrap 150.
Added
To support our continued growth and operational needs, we relocated our manufacturing facility to Virginia, where a larger space will allow us to further enhance our processes and scalability.
Removed
In addition to our two executive officers, we had 20 personnel engaged in sales, marketing, sales support and training, 12 in production, seven in research and development and 10 in administration.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

52 edited+48 added−17 removed135 unchanged
We do not have any long-term supply agreements with any suppliers. We actively monitor and attempt to mitigate supply chain risk, but there can be no assurance that our mitigation plans will be effective to prevent disruptions that may arise from shortages of materials that we use in the production of our products.
Additionally, we do not have any long-term supply agreements with any suppliers. We actively monitor and attempt to mitigate supply chain risk, but there can be no assurance that our mitigation plans will be effective to prevent disruptions that may arise from shortages of materials that we use in the production of our products.
If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected. - 27 - Table of Contents As a result of disclosure of information in this report and in the filings that we are required to make as a public company, our business, operating results, and financial condition have become more visible, which has resulted in, and may in the future result in threatened or actual litigation, increased competition due to this insight, including by key competitors and other third parties.
If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected. -30- Table of Contents As a result of disclosure of information in this report and in the filings that we are required to make as a public company, our business, operating results, and financial condition have become more visible, which has resulted in, and may in the future result in threatened or actual litigation, increased competition due to this insight, including by key competitors and other third parties.
Failure to successfully integrate any acquired business in the future may result in reduced levels of revenue, earnings, or operating efficiency than might have been achieved if we had not acquired such businesses. - 20 - Table of Contents In addition, the acquisition of any future businesses could result in additional debt and related interest expense, contingent liabilities, and amortization expense related to intangible assets, as well as the issuance of our Common Stock, which could have a material adverse effect on our financial condition, operating results, and cash flow.
Failure to successfully integrate any acquired business in the future may result in reduced levels of revenue, earnings, or operating efficiency than might have been achieved if we had not acquired such businesses. -22- Table of Contents In addition, the acquisition of any future businesses could result in additional debt and related interest expense, contingent liabilities, and amortization expense related to intangible assets, as well as the issuance of our Common Stock, which could have a material adverse effect on our financial condition, operating results, and cash flow.
If in the future, while any of our Series A Preferred Stock is outstanding, we issue securities at an effective Common Stock purchase price that is less than the applicable conversion price of our Series A Preferred Stock, as then in effect, we will be required, subject to certain limitations and adjustments as provided in the Certificate of Designations for the Preferred Stock, to further reduce the relevant conversion price, which will result in a greater number of shares of Common Stock being issuable upon conversion of the Preferred Stock or upon the payment of dividends to the holders of the Preferred Stock in shares of Common Stock, which in turn will have a greater dilutive effect on our shareholders.
If in the future, while any of our Series A Preferred Stock is outstanding, we issue securities at an effective Common Stock purchase price that is less than the applicable conversion price of our Series A Preferred Stock, as then in effect, we will be required, subject to certain limitations and adjustments as provided in the Certificate of Designations for the Preferred Stock, to further reduce the relevant conversion price, which will result in a greater number of shares of Common Stock being issuable upon conversion of the Preferred Stock or upon the payment of dividends to the holders of the Preferred Stock in shares of Common Stock, which in turn will have a greater dilutive effect on our stockholders.
To execute our business plan successfully, we will need to execute on the following objectives, either on our own or with strategic collaborators: ● Grow our commercialization of the BolaWrap product, and develop additional future products and accessories for commercialization; - 15 - Table of Contents ● Maintain required regulatory approvals for our products in global market locations; ● Expand, and as required, enforce our intellectual property portfolio for the BolaWrap product and other future products; ● Maintain sales, distribution and marketing capabilities, and/or enter into strategic partnering arrangements to access such capabilities; and ● Grow market acceptance for the BolaWrap product line and/or other future products.
To execute our business plan successfully, we will need to execute on the following objectives, either on our own or with strategic collaborators: ● Grow our commercialization of the BolaWrap product, and develop additional future products and accessories for commercialization; -17- Table of Contents ● Maintain required regulatory approvals for our products in global market locations; ● Expand, and as required, enforce our intellectual property portfolio for the BolaWrap product and other future products; ● Maintain sales, distribution and marketing capabilities, and/or enter into strategic partnering arrangements to access such capabilities; and ● Grow market acceptance for the BolaWrap product line and/or other future products.
Failure to comply with US and international governmental laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or US export control regulations, could have an adverse impact on our business with the US and international governments. - 17 - Table of Contents Global economic weakness and uncertainty, geopolitical conflict, war, and civil unrest, could adversely affect our revenues, gross margins and expenses.
Failure to comply with US and international governmental laws and regulations applicable to international business, such as the Foreign Corrupt Practices Act or US export control regulations, could have an adverse impact on our business with the US and international governments. -19- Table of Contents Global economic weakness and uncertainty, geopolitical conflict, war, and civil unrest, could adversely affect our revenues, gross margins and expenses.
Any delay in receiving supplies could impair our ability to deliver products to our customers and, accordingly, could have a material adverse effect on our business, results of operations and financial condition. - 19 - Table of Contents We have recently experienced, and in the future are likely to experience, disruption of the supply of some of our parts, components, and assemblies that we obtain from suppliers.
Any delay in receiving supplies could impair our ability to deliver products to our customers and, accordingly, could have a material adverse effect on our business, results of operations and financial condition. -21- Table of Contents We have recently experienced, and in the future are likely to experience, disruption of the supply of some of our parts, components, and assemblies that we obtain from suppliers.
Principal factors affecting the availability of internally generated funds include: ● failure of product sales and services to meet planned projections; ● government spending levels impacting sales of our products; ● working capital requirements to support business growth; - 14 - Table of Contents ● our ability to integrate acquisitions; ● our ability to control spending; ● our ability to collect accounts receivable; and ● acceptance of our products and services in planned markets.
Principal factors affecting the availability of internally generated funds include: ● failure of product sales and services to meet planned projections; ● government spending levels impacting sales of our products; ● working capital requirements to support business growth; -16- Table of Contents ● our ability to integrate acquisitions; ● our ability to control spending; ● our ability to collect accounts receivable; and ● acceptance of our products and services in planned markets.
Our product is also controlled by the US Department of Commerce (“ DOC ”) for exports directly from the US. Consequently, we need to obtain export licenses from the DOC for the export of our products from the US. Compliance with or future changes in US export regulations could significantly and adversely affect any future international sales.
Our product is also controlled by the US Department of Commerce (“DOC”) for exports directly from the US. Consequently, we need to obtain export licenses from the DOC for the export of our products from the US. Compliance with or future changes in US export regulations could significantly and adversely affect any future international sales.
Although we carry product liability insurance, significant litigation could also result in a diversion of management’s attention and resources, negative publicity, and an award of monetary damages in excess of our insurance coverage. - 18 - Table of Contents The nature of our business may result in undesirable press coverage or other negative publicity.
Although we carry product liability insurance, significant litigation could also result in a diversion of management’s attention and resources, negative publicity, and an award of monetary damages in excess of our insurance coverage. -20- Table of Contents The nature of our business may result in undesirable press coverage or other negative publicity.
Our quarterly and annual results will likely be subject to fluctuations caused by many factors, any of which could result in our failure to achieve our expectations. We currently expect that the BolaWrap product will be the primary source of our revenue in 2024. We expect our revenue to vary significantly due to several factors.
Our quarterly and annual results will likely be subject to fluctuations caused by many factors, any of which could result in our failure to achieve our expectations. We currently expect that the BolaWrap product will be the primary source of our revenue in 2025. We expect our revenue to vary significantly due to several factors.
Stock prices of nanocap securities and small cap securities have fluctuated even more than medium and large cap companies in recent years. - 25 - Table of Contents We have been, and in the future may be, subject to securities litigation, which has and may be expensive and has and could divert management attention.
Stock prices of nanocap securities and small cap securities have fluctuated even more than medium and large cap companies in recent years. -28- Table of Contents We have been, and in the future may be, subject to securities litigation, which has and may be expensive and has and could divert management attention.
The issuance of additional shares of Common Stock may reduce the value of your Common Stock. We may issue additional shares of Common Stock without further action by our stockholders. Moreover, the economic and voting interests of each stockholder will be diluted as a result of any such issuances.
We may issue additional shares of Common Stock in the future. The issuance of additional shares of Common Stock may reduce the value of your Common Stock. We may issue additional shares of Common Stock without further action by our stockholders. Moreover, the economic and voting interests of each stockholder will be diluted as a result of any such issuances.
This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. While our management has concluded that our internal control over financial reporting was effective as of December 31, 2023, it is possible that material weaknesses will be identified in the future.
This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. While our management has concluded that our internal control over financial reporting was effective as of December 31, 2024, it is possible that material weaknesses will be identified in the future.
In addition, any patents, if granted, may be held invalid upon challenge, or others may claim rights in or ownership of our patents. - 21 - Table of Contents Our competitive position may be seriously damaged if our products are found to infringe on the intellectual property rights of others.
In addition, any patents, if granted, may be held invalid upon challenge, or others may claim rights in or ownership of our patents. -23- Table of Contents Our competitive position may be seriously damaged if our products are found to infringe on the intellectual property rights of others.
The extent to which the COVID-19 or other pandemics will in the future impact our financial conditions and results of operations, or those of our third-party suppliers, will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the continued duration of the outbreak in the markets we target.
The extent to which future pandemics will in the future impact our financial conditions and results of operations, or those of our third-party suppliers, will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the continued duration of the outbreak in the markets we target.
However, our ability to successfully implement our business plan and achieve targeted financial results and other benefits including, among other things, greater market presence and development, and enhancements to our product portfolio and customer base, is dependent on our ability to successfully identify, consummate and integrate acquisitions we may acquire in the future.
Intelligence Community professionals. However, our ability to successfully implement our business plan and achieve targeted financial results and other benefits including, among other things, greater market presence and development, and enhancements to our product portfolio and customer base, is dependent on our ability to successfully identify, consummate and integrate acquisitions we may acquire in the future.
Our systems, procedures, controls, and management resources may not be adequate to support our future growing operations, and we have started to upgrade them and will continue to do so in 2024.
Our systems, procedures, controls, and management resources may not be adequate to support our future growing operations, and we have started to upgrade them and will continue to do so in 2025.
Factors that could cause our expense to fluctuate from period to period include: ● The timing and extent of our research and development efforts; - 23 - Table of Contents ● Investments and costs of maintaining or protecting our intellectual property; ● Marketing and sales efforts to promote our products and technologies; ● The timing of personnel and consultant hiring; and ● Supply chain and inventory cost variations.
Factors that could cause our expense to fluctuate from period to period include: ● The timing and extent of our research and development efforts; ● Investments and costs of maintaining or protecting our intellectual property; ● Marketing and sales efforts to promote our products and technologies; ● The timing of personnel and consultant hiring; and ● Supply chain and inventory cost variations.
The shipment of some of our components and our products involve conformity to regulations governing the transport of “dangerous goods”. Failure to comply with shipping regulations could result in the imposition of fines, penalties and other actions that could adversely impact our financial position, cash flows and operating results.
The shipment of some of our components and our products involve conformity to regulations governing the transport of “dangerous goods.” Failure to comply with shipping regulations could result in the imposition of fines, penalties and other actions that could adversely impact our financial position, cash flows and operating results.
Section 404 of the Sarbanes-Oxley Act of 2002 (" Sarbanes-Oxley Act ") and the related rules and regulations promulgated by the SEC require us to include in our Form 10-K a report by management regarding the effectiveness of our internal control over financial reporting.
Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) and the related rules and regulations promulgated by the SEC require us to include in our Annual Report on Form 10-K a report by management regarding the effectiveness of our internal control over financial reporting.
Government regulation of our products may adversely affect sales. Our BolaWrap device is classified as a firearm and the BolaWrap 150 is also classified as an “Any other Weapon” (“ AOW ”). Both firearms and explosive devices are regulated by the US Bureau of Alcohol, Tobacco, Firearms and Explosives (“ ATF ”) involving substantial regulatory compliance.
Government regulation of our products may adversely affect sales. Our BolaWrap device is classified as a firearm and the BolaWrap 150 is also classified as an “Any other Weapon” (“AOW”). Both firearms and explosive devices are regulated by the US Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) involving substantial regulatory compliance.
Our officers and directors are among our largest stockholders and may have certain personal interests that may affect the Company. Management and certain directors owned more than 10% of our Common Stock at December 31, 2023.
Our officers and directors are among our largest stockholders and may have certain personal interests that may affect the Company. Management and certain directors owned more than 10% of our Common Stock as of December 31, 2024.
During the year ended December 31, 2023, we generated approximately38% of our revenue from international sales. Due principally to the longer sales cycle, procurement delays and regulatory issues associated with domestic sales versus international sales, we currently anticipate that a significant portion of our sales in the year ending December 31, 2023 will be generated from international orders.
During the year ended December 31, 2024, we generated approximately 2% of our revenue from international sales. Due principally to the longer sales cycle, procurement delays and regulatory issues associated with domestic sales versus international sales, we currently anticipate that a significant portion of our sales in the year ending December 31, 2025, will be generated from international orders.
Nasdaq’s continued listing standards for our Common Stock require, among other things, that we maintain a closing bid price for our Common Stock of at least $1.00, we maintain (A) stockholders’ equity of $2.5 million; (B) market value of listed securities of $35 million; or (C) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years, and timely file all required reports with the SEC.
Nasdaq’s continued listing standards for our Common Stock require, among other things, that we maintain a closing bid price for our Common Stock of at least $1.00, we maintain (A) stockholders’ equity of $2.5 million; (B) market value of listed securities of $35 million; or (C) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years, and timely file all required reports with the SEC or risk delisting, which would have a material adverse effect on our business.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the Nasdaq Capital Market and other applicable securities rules and regulations.
We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the Nasdaq Capital Market and other applicable securities rules and regulations.
We have a history of operating losses and expect to incur additional losses until we achieve sufficient revenue and resulting margins to offset our operating costs. Our net loss for the years ended December 31, 2023 and 2022 was $30.2 million and $17.6 million, respectively.
We have a history of operating losses and expect to incur additional losses until we achieve sufficient revenue and resulting margins to offset our operating costs. Our net loss for the years ended December 31, 2024, and 2023 was $5.9 million and $30.2 million, respectively.
In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. We may issue additional shares of Common Stock in the future.
In addition, delisting could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.
Our business may be impacted by global economic conditions, which have been volatile in recent years. Geopolitical conflict, such as the current conflict in Ukraine, and related international economic sanctions and their impact may exacerbate this volatility.
Our business may be impacted by global economic conditions, which have been volatile in recent years. Geopolitical conflict and related international economic sanctions and their impact may exacerbate this volatility.
Our future success depends in part upon our proprietary technology. We currently own twenty-two issued US patents related to the BolaWrap technology and have eight US patents pending. We have filed foreign patent applications in the European Union (up to 39 countries) and seventeen other countries and reserved our rights to file additional foreign patents.
Our future success depends in part upon our proprietary technology. We currently have 31 issued US patents related to the BolaWrap technology and five additional US patents pending. We have filed foreign patent applications in the European Union (up to 39 countries) and 17 other countries and reserved our rights to file additional foreign patents.
Approximately 70% of our supply chain is from domestic US suppliers. Our reliance on third-party suppliers creates risks related to our potential inability to obtain an adequate supply of components or sub-assemblies and reduced control over pricing and timing of delivery of components and subassemblies.
During the year ended December 31, 2024, approximately 70% of our supply chain was from domestic US suppliers. Our reliance on third-party suppliers creates risks related to our potential inability to obtain an adequate supply of components or sub-assemblies and reduced control over pricing and timing of delivery of components and subassemblies.
Sales of shares of Common Stock issuable upon the exercise of any future options or warrants and vesting of restricted stock units may lower the price of our Common Stock. At December 31, 2023, we had we had outstanding options and unvested stock units of 5.2 million shares of our Common Stock.
Sales of shares of Common Stock issuable upon the exercise of any future options or warrants and vesting of restricted stock units may lower the price of our Common Stock. As of December 31, 2024, we had outstanding options and unvested stock units of 4.9 million shares of our Common Stock.
The federal firearms laws impose strict controls over the possession and transfers of firearms, which may impact our ability to transfer devices to customers. Because ATF has classified our devices as AOWs, we must register our devices with the ATF at the time of manufacture.
Any such actions could have a material adverse impact on our operations. The federal firearms laws impose strict controls over the possession and transfers of firearms, which may impact our ability to transfer devices to customers. Because ATF has classified our devices as AOWs, we must register our devices with the ATF at the time of manufacture.
Our expenses may vary from period to period, which could affect quarterly results and our stock price. If we incur additional expenses in a quarter in which we do not experience increased revenue, our results of operations will be adversely affected, and we may incur larger losses than anticipated for that quarter.
If we incur additional expenses in a quarter in which we do not experience increased revenue, our results of operations will be adversely affected, and we may incur larger losses than anticipated for that quarter.
Our protective measures taken thus far, including our issued patents, pending patents, issued and pending trademarks and trade secret laws, may prove inadequate to protect our proprietary rights. To date we have a total of 67 issued domestic and international patents for our small global company. During 2023 we filed nine patent applications, seven of which were US filings.
Our protective measures taken thus far, including our issued patents, pending patents, issued and pending trademarks and trade secret laws, may prove inadequate to protect our proprietary rights. To date we have a total of 84 issued domestic and international patents. During 2024, we filed four patent applications, two of which were US filings.
As a result of these and other factors, we believe that period-to-period comparisons of our operating results may not be meaningful in the near term, and accordingly you should not rely upon our performance in a particular period as indicative of our performance in any future period.
As a result of these and other factors, we believe that period-to-period comparisons of our operating results may not be meaningful in the near term, and accordingly you should not rely upon our performance in a particular period as indicative of our performance in any future period. -26- Table of Contents Our expenses may vary from period to period, which could affect quarterly results and our stock price.
Any interruption of supply for any material components of our products could significantly delay production and shipment of our products and have a material adverse effect on our revenue, profitability, and financial condition.
Any interruption of supply for any material components of our products could significantly delay production and shipment of our products and have a material adverse effect on our revenue, profitability and financial condition. Market and economic conditions may negatively impact our business, financial condition and share price.
The declaration and amount of future dividends, if any, will be determined by our Board of Directors and will depend on our financial condition, earnings, capital requirements, financial covenants, regulatory constraints, industry practice and other factors our Board of Directors deems relevant. General Risk Factors Our disclosure controls and procedures may not prevent or detect all acts of fraud.
The declaration and amount of future dividends, if any, will be determined by our Board of Directors and will depend on our financial condition, earnings, capital requirements, financial covenants, regulatory constraints, industry practice and other factors our Board of Directors deems relevant.
If ATF finds a violation, it can institute a wide range of enforcement actions, ranging from warnings to more severe sanctions such as fines, penalties, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions or total shutdown of production, and criminal prosecution. Any such actions could have a material adverse impact on our operations.
ATF regulations are enforced by surveillance and inspection of federal firearms licensees (“FFLs”). If ATF finds a violation, it can institute a wide range of enforcement actions, ranging from warnings to more severe sanctions such as fines, penalties, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions or total shutdown of production, and criminal prosecution.
We are authorized to issue up to 5.0 million shares of preferred stock in one or more series. Our Board of Directors may determine the terms of future preferred stock offerings without further action by our stockholders. If we issue preferred stock, it could affect your rights or reduce the value of your Common Stock.
We are authorized to issue up to 5.0 million shares of preferred stock in one or more series, in which 10,000 shares have been designated as Series A Preferred Stock. Our Board of Directors may determine the terms of future preferred stock offerings without further action by our stockholders.
Delays in our suppliers’ abilities, especially any sole suppliers, to provide us with necessary materials and components may delay production or may require us to seek alternative supply sources.
In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities or changes for bugs or enhancements. Delays in our suppliers’ abilities, especially any sole suppliers, to provide us with necessary materials and components may delay production or may require us to seek alternative supply sources.
In November 2022, we acquired the rights to certain software assets and services to drive the rapid enhancement of our Wrap Reality Cloud platform, and in August 2023 we acquired Intrensic, LLC, which included a Body-Worn Camera and Digital Evidence Management solution.
In November 2022, we acquired the rights to certain software assets and services to drive the rapid enhancement of our Wrap Reality Cloud platform, in August 2023 we acquired Intrensic which included a Body-Worn Camera and Digital Evidence Management solution and in February 2025, we acquired W1 Global, LLC (“W1 Global”), a professional services and consulting firm led by an executive team of former high-ranking law enforcement and U.S.
We incur substantial costs as a result of being a public company. As a public company, we incur significant levels of legal, accounting, insurance, exchange listing fees and other expenses that we did not incur as a private company.
Preferred stock terms may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights and sinking fund provisions. We incur substantial costs as a result of being a public company. As a public company, we incur significant levels of legal, accounting, insurance, exchange listing fees and other expenses that we did not incur as a private company.
The inability to attract and retain the necessary managerial, sales and technical personnel could cause our business, operating results or financial condition to suffer. In 2022, the business went through significant transformation including the creation of our mission, vision and core values.
The inability to attract and retain the necessary managerial, sales and technical personnel could cause our business, operating results or financial condition to suffer.
Specifically, we depend on suppliers of sub-assemblies, electronic components, injection molded plastic parts, and other miscellaneous custom parts for our product, some from sole source suppliers.
Specifically, we depend on suppliers of sub-assemblies, electronic components, injection molded plastic parts, and other miscellaneous custom parts for our product, some from sole source suppliers. We are still subject to the risk of shortages and long lead times in the supply of these components and the risk that our suppliers discontinue or modify components used in our products.
If we do not have such available shares, we may not be able to satisfy our dividend obligations. - 24 - Table of Contents Risk Factors Relating to Our Common Stock Our stock price is volatile and may continue to be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors.
Our stock price is volatile and may continue to be volatile or may decline regardless of our operating performance, resulting in substantial losses for investors.
Our increase in net losses in 2023 was primarily attributable to a non-cash charge of approximately $12.0 million related to the change in value of our warrant liability initially recorded as part of the preferred stock issuance in July 2023.Our ability to achieve future profitability is dependent on a variety of factors, many of which are outside of our control.
Our decrease in net losses in 2024 was primarily attributable to non-cash other income of approximately $9.6 million related to the change in value of our warrant liability from December 31, 2023 to December 31, 2024, as compared to a non-cash charge of approximately $12.0 million in 2023 related to the change in value as of December 31, 2023 of the same warrant liability initially recorded as part of the Series A Preferred Stock (as defined herein) issuance in July 2023.
As a result of our failure to timely file our Annual Report on Form 10-K for the year ended December 31, 2023, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, we are currently ineligible to file a registration statement on Form S-3, which may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.
As a result of our failure to timely file certain reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months, we are currently ineligible to file a registration statement on Form S-3, which may impair our ability to raise capital on terms favorable to us, in a timely manner or at all.
In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with or sell our assets to a third party. Preferred stock terms may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights and sinking fund provisions.
If we issue additional shares of preferred stock, it could affect your rights or reduce the value of your Common Stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with or sell our assets to a third party.
The lawsuit was dismissed in May 2022. Lawsuits of this nature divert financial and management resources that would otherwise be used to benefit our operations. Although we denied the material allegations in the lawsuits and defended ourselves vigorously, defending the lawsuits may result in substantial costs.
Our share price is volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. Lawsuits of this nature divert financial and management resources that would otherwise be used to benefit our operations and defending such lawsuits may result in substantial costs.
We now receive earned media that is often positive and helps our sales and growth and having negative earned media will create the opposite effect. - 16 - Table of Contents We may incur significant and unpredictable warranty costs as our products are produced, sold, and used.
We now receive earned media that is often positive and helps our sales and growth and having negative earned media will create the opposite effect. -18- Table of Contents Our Company may be positively or negatively impacted by continued social unrest, protests against racial inequality, and movements like “Defund the Police.” Our Company may be positively or negatively impacted by continued social unrest, protests against racial inequality, and movements like “Defund the Police.” Such unrest may be further fueled by misleading information or negative publicity about our solutions.
Nasdaq may grant the Company an additional exception of up to a maximum of 180 calendar days from the filing due date of the Form 10-K to file all Delinquent Filings, or until October 14, 2024, to regain compliance. - 26 - Table of Contents A delisting of our common stock from The Nasdaq Capital Market could materially reduce the liquidity of our common stock and result in a corresponding material reduction in the price of our common stock.
A delisting of our Common Stock from Nasdaq could materially reduce the liquidity of our Common Stock and result in a corresponding material reduction in the price of our Common Stock.
Removed
As a result of our failure to timely file our Annual Report on Form 10-K for the year ended December 31, 2023, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, we are currently ineligible to file registration statements on Form S-3.
Added
Additionally, as a result of the Company’s cost containment efforts in 2024, our operating expenses were reduced by $3.6 million in 2024 as compared to 2023. Our ability to achieve future profitability is dependent on a variety of factors, many of which are outside of our control.
Removed
Our inability to use Form S-3 may impair our ability to raise necessary capital to fund our operations and execute our strategy.
Added
We believe our solutions are the answer to reducing use of force and driving safer outcomes for officers and the citizens they interact with each day. Although the intensity of these events may have subsided, some may still indirectly or directly, influence police agency budgets and the funding available to current and potential customers.
Removed
If we seek to access the capital markets through a registered offering during the period of time that we are unable to use Form S-3, we may be required to publicly disclose the proposed offering and the material terms thereof before the offering commences, we may experience delays in the offering process due to SEC review of a Form S-1 registration statement and we may incur increased offering and transaction costs and other considerations.
Added
In addition, participants in these events may attempt to create the impression that our solutions are contributing to the perceived problems, potentially harming our business and operations, including our revenues, earnings, and cash flows from operations. We may incur significant and unpredictable warranty costs as our products are produced, sold, and used.
Removed
Disclosing a public offering prior to the formal commencement of an offering may result in downward pressure on the stock price of our Common Stock.
Added
Concerns over inflation, geopolitical issues, the U.S. financial markets and a declining real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward, increased unemployment rates, and increased credit defaults in recent years.
Removed
In late 2022 we started to drive more diversity into our supply chain, and we plan to continue to build multiple suppliers for critical parts to reduce our dependence on a small number of suppliers.
Added
Our general business strategy may be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly, and more dilutive.
Removed
We are still subject to the risk of shortages and long lead times in the supply of these components and the risk that our suppliers discontinue or modify components used in our products. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in quantities or changes for bugs or enhancements.
Added
In addition, there is a risk that one or more of our current and future service providers, manufacturers, suppliers, hospitals and other medical facilities, our third-party payors, and other partners could be negatively affected by difficult economic times, which could adversely affect our ability to attain our operating goals on schedule and on budget or meet our business and financial objectives.
Removed
For example, the rapid increase in global demand as the COVID-19 pandemic waned caused, and may continue to cause, significant stress on global supply chains.
Added
A failure in or breach of our or our operational or security systems or infrastructure, or those of third parties with which we do business, including as a result of cyberattacks, could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
Removed
As economies around the world have reopened, sharp increases in demand created significant disruptions to the global supply chain, which affected our ability to source and receive certain goods on a timely basis and at anticipated costs. Increases in input costs and freight due to price inflation and global supply chain disruptions may adversely affect our financial performance.
Added
Information security risks have significantly increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct operations, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties, including foreign state actors.
Removed
ATF regulations are enforced by surveillance and inspection of federal firearms licensees (“ FFLs ”).
Added
Our operations and certain of our products rely on the secure processing, transmission and storage of confidential, proprietary and other information in our computer systems and networks. We rely on our digital technologies, computer and email systems, software, and networks to conduct our operations.
Removed
New management built the company's first strategic roadmap to outline the market space where BolaWrap and Wrap Reality fit and have changed significant elements of the business to improve training, which has now become a revenue source over a cost center. There has been a shift to build repeatable domestic sales and build additional resources into international sales.
Added
Our technologies, systems, networks are likely to be the target of, cyberattacks, computer viruses, malicious code, phishing attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, or otherwise disrupt our or our customers’ or other third parties’ business operations.
Removed
We changed our customer service department into a customer success team. We improved our pricing on devices and cassettes. We built additional distributor relationships. The new management team significantly reduced operating expenses in almost all areas. These changes reduced overall headcount, contractor costs and spending.
Added
We may suffer material losses relating to cyberattacks or other information security breaches. Our risk and exposure to these matters remain heightened because of, among other things, the evolving nature of these threats, the continued uncertain global economic environment, threats of cyberterrorism, and system and customer account conversions.
Removed
While greatly improving our financial foundation, it also required turnover of personnel and changes to how we operate. - 22 - Table of Contents Risk Factors Relating to Our Financial Statements and Operating Results We cannot predict our future operating results.
Added
As a result, cybersecurity and the continued development and enhancement of our controls, processes and practices designed to protect our systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for us.
Removed
Our share price is volatile, and in the past companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. For instance, in September 2020 a putative class action lawsuit and in November 2020 a shareholder derivative lawsuit were filed against us and certain of our directors and officers.
Added
As cyber threats continue to evolve, we may be required to expend significant additional financial, technical and operational resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. -24- Table of Contents In addition, we also face the risk of operational failure, termination or capacity constraints of any of the third parties with which we do business or that facilitate our and our subsidiaries’ business activities.
Removed
On April 18, 2024, the Company received a notice (the “Initial Notice”) from the Listing Qualifications Staff of the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that as it has not yet filed its Annual Report on Form 10-K (the “Form 10‑K”) for the year ended December 31, 2023, the Company is not in compliance with Listing Rule 5250(c)(1) (the “Listing Rule”) for continued listing on Nasdaq.
Added
Any such failure, termination or constraint could adversely affect our and our subsidiaries’ ability to provide our services and products, service the customers, manage the exposure to risk or expand our businesses and could have an adverse impact on our liquidity, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
Our business strategy, results of operations and financial condition have no t been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.

Item 2. Properties

Properties — owned and leased real estate

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The aggregate monthly payments will restart in 2024 for $39,635 per month, increasing 3% each year through the lease term, plus other certain costs and charges as specified in the lease agreement. Our executive offices, sales, training, assembly, and warehouse facilities are located at 1817 West 4th Street, Tempe, Arizona.
The aggregate monthly payments will restart in 2024 for $39,635 per month, increasing 3% each year through the lease term, plus other certain costs and charges as specified in the lease agreement. Our current assembly, and warehouse facilities are located at 1817 West 4th Street, Tempe, Arizona.
ITEM 2. PROPERTIES In November 2023, we commenced a lease in an office building located at 3480 Main Highway, Coconut Grove, Florida. The lease of 4,487 square feet for an initial term of 94 months, including 5 months of rent abatement in the first two years of the lease.
ITEM 2. PROPERTIES In November 2023, we commenced a lease in an office building located at 3480 Main Highway, Coconut Grove, Florida, which currently serves as our Company’s headquarters. The lease of 4,487 square feet for an initial term of 89 months, including five months of rent abatement in the first two years of the lease.
Beginning in October 2017, we commenced reimbursing former officer, stockholder and consultant, Mr. Elwood Norris, $1,500 per month on a month-to-month basis for laboratory facility costs. The Company leased the laboratory facilities for all twelve months in 2023.
In 2025, our assembly, and warehouse facilities will be moved to our new facility in Norton, VA (see below). Beginning in October 2017, we commenced reimbursing former officer, stockholder and consultant, Mr. Elwood Norris, $1,500 per month on a month-to-month basis for laboratory facility costs. The Company terminated this agreement in February 2024.
Added
On January 3, 2025, we signed a lease that will commence in October 2025, or upon the completion of the premises, whichever happens later, for a manufacturing facility located at Pad 1A of the technology park at the intersection of US 23 and US 58 Alternate in Norton, Virginia.
Added
The lease of the 20,000 square foot facility has an initial term of five years with the option to renew for an additional two-years, subject to adjustments based on the Consumer Price Index. Monthly lease payments will be $10,000, calculated at $6 per gross square foot per year.
Added
Following two years of occupancy from the start of the lease, we may terminate the lease without penalty by providing sixty-days written notice.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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As a result, a settlement of, or an unfavorable outcome on, any of the matters referenced above or other litigation matters, or legal proceedings could have a material adverse effect on our business, operating results, financial condition and cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. - 29 - Table of Contents PART II
As a result, a settlement of, or an unfavorable outcome on, any of the matters referenced above or other litigation matters, or legal proceedings could have a material adverse effect on our business, operating results, financial condition and cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. -32- Table of Contents PART II
These provisions are reviewed and adjusted to include the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events pertaining to a particular matter. On December 31, 2023, we had no provision for liability under existing litigation.
These provisions are reviewed and adjusted to include the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events pertaining to a particular matter. On December 31, 2024, we had no provision for liability under existing litigation.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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ITEM 4. Mine Safety Disclosures 29 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 ITEM 6. Selected Financial Data 30 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31
ITEM 4. Mine Safety Disclosures 32 PART II ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 ITEM 6. [Reserved]. 33 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Dividends We have never declared or paid any cash dividends on our Common Stock. The decision to pay dividends is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, and other factors that our board of directors deems relevant.
Dividends We have never declared or paid any cash dividends on our Common Stock. The decision to pay dividends is at the discretion of our board of directors and depends upon our financial condition, results of operations, capital requirements, and other factors that our board of directors deems relevant.
Recent Sales of Unregistered Securities No unregistered securities were issued during the fiscal year that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K. Repurchases Not applicable.
Recent Sales of Unregistered Securities No unregistered securities were issued during the fiscal year ended December 31, 2024, that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K. Repurchases Not applicable.
ITEM 5. MARKET FOR THE REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock is listed on the Nasdaq Capital Market under the symbol “WRAP”. Holders As of August 26, 2024 there were 45,860,545 shares of Common Stock outstanding and approximately 32 stockholders of record.
ITEM 5. MARKET FOR THE REGISTRANT ’ S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Common Stock is listed on the Nasdaq Capital Market under the symbol “WRAP”. Holders As of March 25, 2025, there were 50,494,701 shares of Common Stock outstanding and approximately 39 stockholders of record.
Added
In addition, so long as any shares of Series A Preferred Stock are outstanding, as they are at this time, we are not able to declare or pay any cash dividend or distribution on any of our capital stock (other than as required by the Certificate of Designations) without the prior written consent of the Required Holders (as defined in the Certificate of Designations).

Other WRAP 10-K year-over-year comparisons