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What changed in WRAP TECHNOLOGIES, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of WRAP TECHNOLOGIES, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+401 added−307 removedSource: 10-K (2026-03-26) vs 10-K (2025-03-31)

Top changes in WRAP TECHNOLOGIES, INC.'s 2025 10-K

401 paragraphs added · 307 removed · 152 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMost correctional facilities fall under federal, state or local law enforcement jurisdiction and we believe these facilities could leverage Wrap Reality for law enforcement and societal reentry platforms as well as BolaWrap inside and outside of the correctional facility.
Biggest changeMost correctional facilities fall under federal, state, or local jurisdiction and we believe these facilities represent a meaningful market for our products and services, including the use of Wrap Reality for law enforcement and societal reentry training, WrapTactics for officer readiness and skill retention, BolaWrap for use within and around correctional environments, and WrapVision body-worn cameras and our digital evidence management platform to support transparency, incident documentation, and evidentiary requirements within correctional settings.
It is important to note that countries in which we have international customers do not have any transfer or possession restrictions on the non-lethal BolaWrap devices and we believe this should be the future for BolaWrap in the United States.
It is important to note that countries in which we have international customers do not impose similar transfer or possession restrictions on non-lethal BolaWrap devices, and we believe this should be the future for BolaWrap in the United States.
Our SEC filings (including any amendments) are also made available free of charge on www.wrap.com , as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Our SEC filings (including any amendments) are also made available free of charge on www.wrap.com , as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 15 Table of Contents
Available Information As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the Securities and Exchange Commission (the “ SEC ”).
Available Information As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the SEC .
The amount of backlog at any point in time is dependent upon order timing, scheduled delivery dates to our customers and product lead times. Most orders are shipped shortly after order and backlog is typically associated with larger police agency orders.
Backlog is subject to modification, rescheduling, or cancellation and is not necessarily indicative of future revenues. The amount of backlog at any point in time is dependent upon order timing, scheduled delivery dates to our customers and product lead times. Most orders are shipped shortly after order and backlog is typically associated with larger police agency orders.
Private Security Firms and Guard Services According to the 2019 Bureau of Labor Statistics estimates (“Occupational Employment Statistics,” US Department of Labor), there were 1.1 million privately employed security guards in the U.S. They represent a broad range of individuals, including those employed by investigation and security services, hospitals, schools, local government, and others.
Private Security Firms and Guard Services According to the Bureau of Labor Statistics, there were approximately 1.1 million privately employed security guards in the United States. They represent a broad range of individuals, including those employed by investigation and security services, hospitals, schools, local government, and others.
We enter into confidentiality and nondisclosure agreements with employees, consultants, and third parties to whom we disclose proprietary information. These agreements prohibit disclosure of confidential information both during and after the duration of the working relationship. However, we recognize that such agreements may not always prevent disclosure or provide adequate remedies for any breach.
These agreements prohibit disclosure of confidential information both during and after the duration of the working relationship. However, we recognize that such agreements may not always prevent disclosure or provide adequate remedies for any breach.
Our assembly processes involve unique systems and materials, and we contract with third-party suppliers to produce various parts, components, and subassemblies. We established initial startup production in Las Vegas in 2018, and in October 2019, we completed a move to and began production at our current facility in Arizona.
We contract with third-party suppliers to produce various parts, components, and subassemblies, and we perform final assembly, testing, quality verification, and shipping at our manufacturing facility. We established initial production in Las Vegas in 2018 and relocated to a facility in Arizona in October 2019.
We began sales of our first public safety product, the BolaWrap 100 remote restraint device, in late 2018. In the first quarter of 2022, we delivered a new generation product, the BolaWrap 150. The BolaWrap 150 is electronically deployed and is more robust, smaller, lighter and simpler to deploy than the BolaWrap 100 that has since been phased out.
In the first quarter of 2022, we introduced the BolaWrap® 150, a next‑generation, electronically deployed device that is more robust, smaller, lighter, and simpler to deploy than the BolaWrap 100, which has since been phased out. In December 2020, we acquired NSENA Inc.
Because of our history of shipping shortly after order, we do not currently believe backlog at any period end is predictive of future order volume or revenues beyond the reported amount. Distributor and customer orders for future deliveries are generally subject to modification, rescheduling or in some instances, cancellation in the normal course of business.
Because of our history of shipping shortly after order, we do not currently believe backlog at any period end is predictive of future order volume or revenues beyond the reported amount.
Conversely, in the US, the market is more fragmented with many smaller agencies and longer procurement and sales cycles. We expect international sales to continue to be lumpy due the timing of purchase decisions and relatively large size of orders.
Conversely, the U.S. market is more fragmented, with a large number of smaller agencies and longer procurement and sales cycles. International sales may be uneven from period to period due to the timing of national-level purchase decisions and the relatively large size of individual orders.
In late 2020 we added a new solution to our public safety technologies, our virtual reality (“VR”) training platform, Wrap Reality, and in August 2023 we acquired Intrensic, LLC, a Delaware limited liability company (“Intrensic”), which added a Body-Worn Camera (“BWC”) and Digital Evidence Management (“DEM”) solution to our portfolio of policing solutions.
In August 2023, we acquired Intrensic, LLC, a Delaware limited liability company (“Intrensic”), which added body‑worn camera ("body-worn cameras" or “BWC”) and digital evidence management ("digital evidence management" or “DEM”) capabilities to our portfolio.
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.
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.
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.
While we anticipate supply chain conditions to continue to stabilize, we recognize that future supplier shortages, logistics disruptions, or other supply chain challenges could have a material adverse effect on our operations and financial results. Backlog As of December 31, 2025, backlog was approximately $209 thousand, primarily related to larger agency orders scheduled for near term delivery.
Correctional Facilities In 2019, the US Bureau of Justice statistics (“Census of State and Federal Correctional Facilities, 2019,” US Department of Justice, Bureau of Justice Statistics, published November 2022) estimated that there were 240,000 correctional officers in over 1,000 federal and state correctional facilities in the U.S., representing a large potential market for our products and services.
Bureau of Justice Statistics ("Census of State and Federal Correctional Facilities, 2019," published November 2022), there were approximately 240,000 correctional officers in over 1,000 federal and state correctional facilities in the United States.
The purchasing decision for our BolaWrap products and accessories is typically made by a group including agency heads, procurement, training staff, and use of force experts, and may involve political decision-makers such as city council members. The decision-making process may take several weeks to over a year due to budget constraints and other considerations.
The purchasing decision for our products and services is typically made by a group that may include agency leadership, procurement officials, training coordinators, use-of-force policy advisors, and in some cases political decision-makers such as city council members. The decision-making process can range from several weeks to over a year, influenced by budgetary constraints, policy review cycles, and multi-stakeholder approval requirements.
Suppliers We have established strong relationships with our key suppliers, and their timely and reliable delivery is crucial to our ability to meet customer demand.
We also work with domestic research and development partners to support the advancement of our C-UAS and other emerging technology programs. Suppliers We have established relationships with key suppliers, and their timely and reliable delivery is important to our ability to meet customer demand.
We work with distributors and advisors familiar with applicable import regulations in our international markets. Intellectual Property Rights and Proprietary Information We have a policy of protecting our intellectual property assets, which include issued domestic and international patents, pending patents, trademarks, copyrights, trade secrets, and contractual obligations.
Warranty terms vary by product and jurisdiction. Intellectual Property We have a policy of protecting our intellectual property assets, which include issued domestic and international patents, pending patents, trademarks, copyrights, trade secrets, and contractual obligations. We enter into confidentiality and nondisclosure agreements with employees, consultants, and third parties to whom we disclose proprietary information.
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.
We have shipped our products to over 60 countries and maintain a network of international distributors. We anticipate that international markets will represent a meaningful portion of our sales over time, driven in part by the centralized procurement decision-making processes common in many countries with large national police forces.
In this facility, we perform manufacturing, final assembly, testing, and shipping of our products. We have refined our internal processes to improve how we design, test, and qualify products, and we continue to implement rigorous manufacturing and quality processes to track production and field issues.
We have refined our internal processes to improve how we design, test, and qualify products, and we continue to implement rigorous manufacturing and quality processes to track production and field performance. Our WrapVision body-worn camera is assembled in North America in alignment with our commitment to domestic production and federal data-sovereignty and procurement requirements.
Our marketing staff engages with law enforcement agencies, personnel, and risk management organizations to educate them on the benefits of BolaWrap remote restraint, as well as Wrap Reality and we participate in various domestic and international trade shows and conferences to promote our brands.
Our marketing team engages with law enforcement agencies, public safety personnel, and risk management organizations to educate them on the benefits of our integrated non-lethal solutions. We participate in select domestic and international trade shows, conferences, and industry events that we believe offer the highest return on our investment in market visibility and direct customer engagement.
We also distribute body and dash camera videos of successful BolaWrap use in policing encounters to generate leads. Once a lead is generated, it is qualified by our inside sales team, and a sales representative or distributor communicates with the prospective customer to discuss their needs and the solutions we offer.
Once a lead is generated, it is qualified by our inside sales team, and a sales representative or distribution partner engages with the prospective customer to discuss their operational needs and the solutions we offer. We track our marketing and sales activities to provide visibility into lead flow, pipeline development, and conversion metrics.
However, we are subject to challenges in our global supply chain, such as component shortages, increased lead times, cost fluctuations, and logistics constraints, which can affect our production schedules and have a negative impact on our financial performance. In late 2022, we started to ensure we have more final product inventory on hand to meet new business needs.
We maintain finished goods inventory to support near-term customer demand and to reduce the impact of supply chain variability on order fulfillment. However, we remain subject to risks inherent in our supply chain, including component availability, increased lead times, cost fluctuations, and logistics constraints, which can affect our production schedules and have a negative impact on our financial performance.
Our training not only supports our sales, but it also provides revenue due to the extreme value our customers place on our training services. We started charging for our training services in the third quarter of 2022. Sales Our primary target market is law enforcement agencies in the US and globally.
Our training capabilities not only support sales adoption but also generate revenue independently, as agencies place significant value on our professional training services. Sales Our primary target market is law enforcement agencies in the United States and internationally.
Government Regulation As a global company, we are subject to a wide range of domestic, federal, state, and local laws and regulations, as well as international laws and regulations regarding shipments, customs, import, export, safe working conditions, manufacturing practices, environmental protection, and hazardous substances disposal.
Government Regulation As a global public safety technology and services company, we are subject to a wide range of federal, state, local, and international laws and regulations governing our products, operations, and commercial activities.
Selling, Marketing and Training Our sales, marketing and training organizations work together closely to drive revenue growth by enhancing market awareness of our solutions, generating leads, building a strong sales pipeline, and cultivating customer and distributor relationships.
These initiatives remain in various stages of development and evaluation and are subject to government testing, funding, and procurement timelines. 7 Table of Contents Sales, Marketing, and Distribution Our sales, marketing, and training organizations work together to drive revenue growth by building market awareness of our integrated non-lethal solutions, generating qualified leads, developing a strong sales pipeline, and cultivating long-term relationships with customers and distribution partners.
Warranties Our products come with a warranty that guarantees their quality and performance for up to one year from the date of purchase. This warranty is generally limited and may include certain shipping costs for the customer. We also offer the option for our customers to purchase additional one-year warranty increments for their products.
We also pursue strategic partnerships with organizations that extend our reach into federal, defense, and international markets. 13 Table of Contents Warranties Our products generally include a limited warranty that covers defects in materials and workmanship for up to one year from the date of purchase. Customers may also purchase extended warranty coverage for additional periods.
Markets We participate in the global non-lethal market that, according to the January 2022 report by 360iResearch, was expected to grow to $16.1 billion by 2027. The following segments are our target markets: Domestic and International Law Enforcement Our products and services are primarily targeted at federal, state, and local law enforcement agencies in the U.S.
The following describes our principal market opportunities: Domestic and International Law Enforcement: Our products and services are primarily targeted at federal, state, and local law enforcement agencies in the United States.
In addition, we engage consultants from time to time to provide additional sales, marketing, training and research and development services, and anticipate engaging consultants going forward to supplement our full- and part-time personnel.
During 2025, we grew our workforce 32% compared to the end of the prior year, with additions concentrated in our research and development, sales and marketing divisions. In addition, we engage consultants and contractors from time to time to supplement our full-time personnel across sales, marketing, training, engineering, and other functions.
Wrap Reality is now sold to law enforcement agencies for simulation training as well as corrections departments for the societal reentry scenarios. Our target market for our solutions includes approximately 900,000 full-time sworn law enforcement officers in over 18,000 federal, state, and local law enforcement agencies in the U.S. and over 12 million police officers in more than 100 countries.
According to the Bureau of Justice Statistics, as of March 2025 th ere are more than 18,000 law enforcement agencies and approximately 900,000 full-time sworn law enforcement officers in the U.S., including over 100,000 full-time federal officers.
BolaWrap Instructors are typically sworn law enforcement officers, who are commonly department trainers, defensive tactic instructors, or SWAT officers. They undergo a five-hour BolaWrap Instructor certification course, which includes passing a written exam and demonstrating proficiency in deploying and using the BolaWrap.
Under this program, our Master Instructors certify agency-level BolaWrap Instructors, who then train front-line officers in compliance with their department's policies. BolaWrap Instructors are typically sworn law enforcement officers who serve as department trainers, defensive tactics instructors, or tactical team members. They complete a certification course that includes a written examination and demonstrated proficiency in deploying the BolaWrap.
ITEM 1. BUSINESS Overview We are a global public safety technology and services company that delivers safe and effective policing solutions to law enforcement and security personnel worldwide. We are leading the movement for safer outcomes by equipping law enforcement with safer, non-painful compliance tools, and immersive training fit for modern society.
ITEM 1. BUSINESS Overview We are a global public safety technology and services company focused on delivering integrated non-lethal solutions for law enforcement, corrections, defense, and other public safety organizations worldwide.
We acquired NSENA Inc. in December 2020, a provider of law enforcement training employing immersive computer graphics virtual reality with proprietary software-enabled content. We branded the system as Wrap Reality Virtual Training and kept building and improving that platform and today it offers 38 built out scenarios targeting law enforcement.
("NSENA"), a provider of immersive virtual reality training for law enforcement utilizing proprietary software-enabled content and computer graphics simulation. This acquisition provided the foundation for Wrap Reality™, our virtual reality ("virtual reality" or “VR”) training platform designed for law enforcement simulation training and correctional reentry scenarios.
Future levels of research and development expenditure will vary depending on the timing of further new product development and the availability of funds to carry on new and additional research and development on currently owned technologies or in other areas.
Future levels of research and development investment will vary depending on the timing of new product development milestones, the progression of our C-UAS programs, the availability of government-funded research opportunities, and the resources available to advance development across our product portfolio.
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Additionally, we are exploring opportunities in other domestic markets, such as military and private security. Our international focus is on countries with the largest police forces. According to 360iResearch, a market research consulting firm, our non-lethal products are part of a global market segment expected to grow to $16.1 billion by 2027.
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Our mission is to enable safer outcomes by providing officers and agencies with the tools, training, and tactics to gain proactive, lawful control of encounters, reducing risk to both officers and subjects, while preserving tactical advantage. We began sales of our first public safety product, the BolaWrap® 100 device, in late 2018.
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We focus our efforts on the following products and services: BolaWrap Remote Restraint Device – a hand-held remote restraint device that discharges a seven and half-foot Kevlar tether to entangle an individual at a range of 10-25 feet. BolaWrap assists law enforcement to safely and effectively control encounters early without resorting to painful force options.
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During 2025, we continued our transition from a single-product company into a diversified public safety technology and services company delivering integrated non-lethal solutions that combine tools, training, and tactics. This transition included expanding our product portfolio, advancing our training and software platforms, entering adjacent defense and homeland security markets, and strengthening our commercial and leadership infrastructure.
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Wrap Reality – a law enforcement 3D training system employing immersive computer graphics VR with proprietary software-enabled content. It allows up to two participants to enter a simulated training environment simultaneously, and customized weapons controllers enable trainees to engage in strategic decision making along the force continuum.
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While we continued to incur operating losses during the year, we implemented cost containment initiatives and focused on aligning our operating structure with our near- and long-term strategic priorities.
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Wrap Reality has 45 scenarios for law enforcement and corrections and 15 scenarios for societal reentry. Wrap Reality is one of the most robust 3D Virtual Reality solutions on the market for law enforcement and societal reentry today. Wrap Intrensic – a Body-Worn Camera and Digital Evidence Management solutions provider.
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We expanded our product portfolio with the launch of WrapTactics™, a digital training platform designed to integrate human-factors awareness, decision-making under stress, and tactical proficiency agency-wide; and WrapVision™, a North America assembled body worn camera solution designed to meet federal procurement and data sovereignty requirements.
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BWC and DEM play crucial roles in capturing, storing, and managing digital evidence, such as video and audio recordings for various purposes, including criminal investigations and maintaining transparency in public interactions. The Wrap Intrensic X2 camera hardware and storage and data management capability, along with awareness of front-line operations, provides customers with a solution to meet their challenges.
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We also advanced several counter unmanned aircraft system ("counter unmanned aircraft system" or “CUAS”) initiatives, including the MERLIN™ program, which apply our proprietary tether deployment technology to non-lethal drone interdiction and defense applications.
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Wrap Intrensic Evidence on our cloud-based video storage platform provides an unlimited video storage platform that includes video and other evidence uploading, search, retrieval, redaction, and evidence sharing while reducing the need for resources required to manage this evidence. In addition to the US law enforcement market, we have shipped our restraint products to 62 countries.
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These initiatives are intended to broaden our addressable market beyond traditional policing into defense, homeland security, and critical infrastructure protection, while maintaining our core focus on providing integrated tools, training, and tactics that give officers proactive, lawful control of encounters and support safer outcomes for officers, subjects and the communities they serve.
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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.
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On September 19, 2025, we formed a new wholly-owned subsidiary of the Company, Wrap Federal, LLC (“Wrap Federal”), under the laws of the State of Delaware. Wrap Federal was established for the purpose of supporting U.S. federal government clients in the Department of Defense, Department of Homeland Security, and other federal agencies.
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We focus significant resources on research and development innovations and continue to enhance our products and plan to introduce new products.
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We believe a continued focus on integrating our systems into existing federal frameworks supports our goal of becoming a fully integrated federal public safety and defense technology enterprise.
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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.
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On February 18, 2025, we entered into an Asset Purchase Agreement with W1 Global, LLC (“W1”), a Delaware limited liability company (the “W1 Purchase Agreement”), dated as of February 18, 2025, pursuant to which, subject to the terms and conditions set forth therein, we acquired substantially all the assets of W1 used in, held for use in or relating to the business of advisory and investigative professional services, which were primarily the customer contracts assigned at the closing (collectively, the “Acquired Assets”), for a nominal purchase price.
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As thought leaders in new public safety products, we focus on the law enforcement agency segment of the market with our BolaWrap remote restraint solution, Wrap Reality virtual reality system, and our Body-Worn Camera and Digital Evidence Management solutions.
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We acquired W1 to integrate technology enablement into its core offerings and expand into managed technology services supporting the BolaWrap go-to market strategy. Following a third-quarter evaluation, the Company determined that W1’s investigative services were not essential to Wrap’s domestic or international expansion; however, customers strongly valued managed services related to policy and training.
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Recent trends, such as the rise in mental health cases, police reform, and reorganization of police departments, have started a growing conversation across the country on the need for de-escalation before applying a pain-compliance policing policy.
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As a result, Wrap will continue focusing on technology enabled services in policy governance and training to advance the next era of non-lethal technology development, delivering an integrated response package that combines technology with the support, policy alignment, and governance needed for adoption at the state and federal levels. 4 Table of Contents Industry Background Public safety agencies worldwide operate under growing expectations for accountability, proportional use of force, and transparency in encounters with the public.
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As this de-escalation movement unfolds, there are thousands of law enforcement, police, and sheriff’s offices focusing on training, policies, and the use of more non-lethal restraining solutions. This movement highlights a growing need for new approaches, which we believe will drive demand for our innovative and safe law enforcement solutions.
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The prevalence of body-worn cameras, bystander video, and real-time media coverage has created an environment in which officers are expected to demonstrate measured, defensible decision-making in dynamic and often unpredictable situations.
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When law enforcement seeks to detain an individual, there usually is a use of force continuum that an agency follows, starting with officer presence and verbal commands.
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At the same time, law enforcement encounters involving individuals in mental health crisis, substance-related impairment, or emotional disturbance continue to rise, placing additional demands on officers who must resolve these encounters safely while managing legal, tactical, and public perception risks.
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If verbal commands break down, agencies may authorize the use of less lethal pain inducing compliance tools, such as pepper spray, pepper ball, wooden batons or metal collapsible batons, launchers and bean bags, and conducted energy weapons, such as Taser®. Our BolaWrap product offers an alternative.
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These dynamics are driving demand across the public safety sector for tools, training, and operational frameworks that give officers the ability to gain proactive, lawful control of encounters earlier, before situations escalate to the point where higher-force options may be the only alternative.
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It can be used in many cases to restrain an individual after verbal commands break down and prior to the need to use pain-inducing compliance tools.
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Traditional force options available to officers, including conducted energy weapons, chemical agents, impact projectiles, and batons, rely on pain compliance or neuromuscular incapacitation to gain control.
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The use of nonlethal solutions like BolaWrap potentially could lead to a reduction in use of force incidents that result in ending careers as well as the number of legal cases filed against agencies for excessive use of force, wrongful death, and injury, thus decreasing expensive litigation, settlements, and insurance costs.
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While effective in certain circumstances, these tools carry inherent risks of injury and are often perceived by officers as too high a level of force to deploy early in an encounter, particularly when the subject has not yet become physically combative. This creates an operational gap between verbal commands and pain-compliance tools in which officers frequently have limited options.
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We anticipate that use of the BolaWrap by public safety agencies can increase goodwill between public safety agencies and their communities, especially in a time when interactions with public safety officers are increasingly subject to public and media scrutiny.
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Our BolaWrap product line is designed to address this gap by giving officers a non-lethal option that creates a controlled interruption through sight, sound, and sensation, providing time, space, and tactical advantage to manage the encounter before contact distance collapses, and without relying on pain compliance.
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We believe the law enforcement community’s response to BolaWrap demonstrates the need for the product and its utility in safely detaining individuals. Our goal is to equip every public safety officer with a BolaWrap remote restraint solution that they carry with them each day.
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We believe the adoption of non-lethal tools like BolaWrap can reduce the frequency and severity of use-of-force incidents, potentially lowering the legal, financial, and reputational costs associated with excessive force claims, settlements, and related litigation.
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As of 2018, there were over 18,000 law enforcement agencies and 800,000 full-time local and state law enforcement officers in the US, while the US Department of Justice reported over 100,000 full-time federal officers based on 2016 data. Our product line, including BolaWrap, can be an effective tool for safe detention of individuals under the jurisdiction of these agencies.
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More broadly, we believe that equipping officers with integrated non-lethal solutions that combine tools, training, and tactics can improve community trust and strengthen the relationship between public safety agencies and the communities they serve.
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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.
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Our goal is to equip every public safety officer and agency with an integrated system of non-lethal tools, training, and tactics that they carry and apply every day, supporting safer outcomes for officers, subjects, and the public. Markets and Customers We participate in multiple segments of the global public safety and defense technology markets.
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We believe that the use of BolaWrap by security personnel could effectively de-escalate some encounters without eliminating other devices available today.
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Our addressable markets include the non-lethal tools market, the law enforcement and public safety training market, the body-worn camera and digital evidence management market, and the emerging counter-unmanned aircraft system market.
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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.
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Our product and service portfolio, including BolaWrap, WrapTactics, Wrap Reality, and WrapVision, is designed to serve the operational needs of these agencies across tools and training. We have also identified an international market opportunity encompassing an estimated 12 million police officers across more than 190 countries.
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We believe the classification is overly onerous and we will continue to work with the ATF and others to change our nonlethal product’s classification.
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Non-Lethal Tools According to Straits Research, the global non-lethal weapons market was valued at approximately $9.9 billion in 2024 and is expected to grow to approximately $19.1 billion by 2033, representing a compound annual growth rate of 7.6%.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

102 edited+121 added−23 removed110 unchanged
Biggest changeThe EU AI Act, and developing interpretation and application of the GDPR in respect of automated decision making, together with developing guidance and/or decisions in this area, may affect our use of AI technologies and our ability to provide, improve or commercialize our business, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition.
Biggest changeThe EU AI Act, and developing interpretation and application of the GDPR in respect of automated decision making, together with developing guidance and/or decisions in this area, may affect our use of AI technologies and our ability to provide, improve or commercialize our business, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition. 30 Table of Contents It is possible that further new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI technologies for our business, or require us to change the way we use AI technologies in a manner that negatively affects the performance of our business and the way in which we use AI technologies.
As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or market perception of their requirements may have on our business and may not always be able to anticipate how to respond to these laws or regulations.
As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or market perception of their requirements may have on our business and may not always be able to anticipate how to respond to these laws or regulations.
The Certificate of Designations also contains “full ratchet” anti-dilution provisions applicable to the conversion prices used in voluntary conversions of Series A Preferred Stock by the holders thereof and by the Company in paying any dividends in shares of Common Stock, which provisions require the lowering of the applicable conversion price, as then in effect, to the purchase price of equity or equity-linked securities issued in subsequent offerings.
The Series A Certificate of Designations also contains “full ratchet” anti-dilution provisions applicable to the conversion prices used in voluntary conversions of Series A Preferred Stock by the holders thereof and by the Company in paying any dividends in shares of Common Stock, which provisions require the lowering of the applicable conversion price, as then in effect, to the purchase price of equity or equity-linked securities issued in subsequent offerings.
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.
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 Series A Certificate of Designations for the Series A 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 Series A Preferred Stock or upon the payment of dividends to the holders of the Series A Preferred Stock in shares of Common Stock, which in turn will have a greater dilutive effect on our stockholders.
The market price of our Common Stock has fluctuated significantly to date and in the future may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors listed below and other factors described in this “Risk Factors” section: ● Actual or anticipated fluctuations in our operating results; ● Failure of securities analysts to initiate or maintain coverage of our Company, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors; ● Rating changes by any securities analysts who follow our Company; ● Changes in the availability of federal funding to support local law enforcement efforts, or local budgets; ● International budget changes or changeover in government leadership; ● Announcements by us of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; ● Changes in operating performance and stock market valuations of other security product companies generally; ● Price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; ● Announcements of merger or acquisition transactions; ● Changes in our board of directors or management and key personnel; ● Sales of large blocks of our Common Stock, including sales by our founders, executive officers, directors and significant stockholders; ● Lawsuits threatened or filed against us; ● Short sales, hedging and other derivative transactions involving our capital stock; ● General economic conditions in the US and abroad; and ● Other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
The market price of our Common Stock has fluctuated significantly to date and in the future may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors listed below and other factors described in this “Risk Factors” section: Actual or anticipated fluctuations in our operating results; Failure of securities analysts to initiate or maintain coverage of our Company, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors; Rating changes by any securities analysts who follow our Company; Changes in the availability of federal funding to support local law enforcement efforts, or local budgets; International budget changes or changeover in government leadership; Announcements by us of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; Changes in operating performance and stock market valuations of other security product companies generally; Price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; Announcements of merger or acquisition transactions; Changes in our Board or management and key personnel; Sales of large blocks of our Common Stock, including sales by our founders, executive officers, directors and significant stockholders; Lawsuits threatened or filed against us; Short sales, hedging and other derivative transactions involving our capital stock; General economic conditions in the US and abroad; and Other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
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).
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 Series A Certificate of Designations) without the prior written consent of the Required Holders (as defined in the Series A Certificate of Designations).
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.
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, and either (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 that we timely file all required reports with the SEC or risk delisting, which would have a material adverse effect on our business.
Other companies and our competitors may currently own or obtain patents or other proprietary rights that might prevent, limit or interfere with our ability to make, use or sell our products. Any intellectual property infringement claims made against us, with or without merit, could be costly and time-consuming to defend and divert our management’s attention from our business.
Furthermore, other companies and our competitors may currently own or obtain patents or other proprietary rights that might prevent, limit or interfere with our ability to make, use or sell our products. Any intellectual property infringement claims made against us, with or without merit, could be costly and time-consuming to defend and divert our management’s attention from our business.
Subsequently, on January 23, 2025, the President issued Executive Order ion Removing Barriers to American Leadership in Artificial Intelligence, which directed relevant agencies to develop an action plan to assure global dominance by the United States in artificial intelligence, and to examine any actions taken in connection with the 2023 AI Order, which are incongruent with Trump’s order.
Subsequently, on January 23, 2025, the President issued Executive Order on Removing Barriers to American Leadership in Artificial Intelligence, which directed relevant agencies to develop an action plan to assure global dominance by the United States in artificial intelligence, and to examine any actions taken in connection with the 2023 AI Order, which are incongruent with Trump’s order.
Certain foreign jurisdictions may restrict the importation or sale of our products, limiting our international sales opportunities. Our products, including the BolaWrap 100 and BolaWrap 150, are protected by limited patent and other intellectual property protection. If we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protect our rights.
Certain foreign jurisdictions may restrict the importation or sale of our products, limiting our international sales opportunities. Our products, including the BolaWrap 150, are protected by limited patent and other intellectual property protection. If we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protect our rights .
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.
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 the lawsuits may result in substantial costs.
We feel the significant investment in patent protection in the US and abroad creates a significant amount of IP and value in Wrap Technologies. However, there can be no assurance we will be granted any patent rights from pending patents. The scope of any possible patent rights may not prevent others from developing and selling competing products.
We feel the significant investment in patent protection in the US and abroad creates a significant amount of IP and value in Wrap. However, there can be no assurance we will be granted any patent rights from pending patents. The scope of any possible patent rights may not prevent others from developing and selling competing products.
If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq rules, or seek other sources of capital.
If we are unable to raise capital through a registered offering, we would be required to conduct our equity financing transactions on a private placement basis, which may be subject to pricing, size and other limitations imposed under the Nasdaq Capital Market ("Nasdaq Capital Market" or "Nasdaq") rules, or seek other sources of capital.
Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act is accumulated and communicated to management and is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to management and is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
This may have the effect of increasing the number of shares we would be obligated to issue in order to make a dividend payment in shares of Series A Common Stock. We will not be permitted to pay the dividend in cash unless we are legally permitted to do so under Delaware law.
This may have the effect of increasing the number of shares we would be obligated to issue in order to make a dividend payment in shares of Common Stock. We will not be permitted to pay the dividend in cash unless we are legally permitted to do so under Delaware law.
Further, it is possible that we will not have a sufficient number of available shares to satisfy the conversion of the Preferred Stock or the payment of dividends to the holders of the Preferred Stock in shares of Common Stock if we enter into a future transaction that reduces the applicable conversion price.
Further, it is possible that we will not have a sufficient number of available shares to satisfy the conversion of the Series A Preferred Stock or the payment of dividends to the holders of the Series A Preferred Stock in shares of Common Stock if we enter into a future transaction that reduces the applicable conversion 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.
The declaration and amount of future dividends, if any, will be determined by our Board and will depend on our financial condition, earnings, capital requirements, financial covenants, regulatory constraints, industry practice and other factors our Board deems relevant.
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.
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. 31 Table of Contents Our expenses may vary from period to period, which could affect quarterly results and our stock price.
Risk Factors Related to Our Series A Preferred Stock The Certificate of Designations for the Series A Convertible Preferred Stock provides for dividends to be issued in the form of shares of Common Stock at a conversion price that varies with the trading price of our Common Stock, and it contains “ full ratchet ” anti-dilution provisions applicable to the dividend conversion price and the conversion price for voluntary conversions of Series A Convertible Preferred Stock into Common Stock.
Risk Factors Related to Our Series A and Series B Preferred Stock The Certificate of Designations for the Series A Preferred Stock provides for dividends to be issued in the form of shares of Common Stock at a conversion price that varies with the trading price of our Common Stock, and it contains “ full ratchet ” anti-dilution provisions applicable to the dividend conversion price and the conversion price for voluntary conversions of Series A Preferred Stock into Common Stock.
If we do not competitively price our products, provide high quality big free products and solutions, meet the requirements of any end-users, provide adequate marketing support, or comply with the terms of any distribution arrangements, such distributors may fail to aggressively market our product or may terminate their relationships with us.
If we do not competitively price our products, provide high quality bug free products and solutions, meet the requirements of any end-users, provide adequate marketing support, or comply with the terms of any distribution arrangements, such distributors may fail to aggressively market our product or may terminate their relationships with us.
In that event, the market price of our Common Stock could decline, and you could lose part or all of your investment. Risk Factors Relating to Our Business and Industry We have a history of operating losses, expect additional losses and may not achieve or sustain profitability.
In that event, the market price of our Common Stock could decline, and you could lose part or all of your investment. RISK FACTOR SUMMARY Risk Factors Relating to Our Business and Industry We have a history of operating losses, expect additional losses and may not achieve or sustain profitability .
In the event we are unable to timely collect account receivables associated with international sales, or timing of such international sales is delayed, our financial condition could be adversely and materially affected. If we are unable to manage our projected growth, our growth prospects may be limited, and our future profitability may be adversely affected.
In the event we are u nable to timely collect account receivables associated with international sales, or timing of such international sales is delayed, our financial condition could be adversely and materially affected. If we are unable to manage our projected growth, our growth prospects may be limited, and our future profitability may be adversely affected .
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.
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; 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.
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.
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 2026. 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. -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.
Stock prices of nanocap securities and small cap securities have fluctuated even more than medium and large cap companies in recent years. 34 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.
As a result, our management and certain directors, acting individually or as a group, has the potential ability to exert influence on the outcome of issues requiring approval by our stockholders. Sales of a substantial number of shares of our Common Stock may adversely affect the market price of our Common Stock.
As a result, our management and certain directors, acting individually or as a group, have the potential ability to exert influence on the outcome of issues requiring approval by our stockholders. Sales of a substantial number of shares of our Common Stock may adversely affect the market price of our Common Stock.
Substantially all our employees are located in the US. In addition to our employees, we rely on (i) distributors, agents, and third-party logistics providers in connection with product sales and distribution and (ii) raw material and component suppliers in the US, Canada, Europe and Asia.
Substantially all our employees are located in the US. In addition to our employees, we rely on (i) distributors, agents, and third-party logistics providers in connection with product sales and distribution and (ii) raw material and component suppliers in the U.S., Canada, Europe and Asia.
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.
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, 2024, 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, 2025, it is possible that material weaknesses will be identified in the future.
If the Company elects to pay any dividends in shares of Common Stock, the Conversion Price (as defined herein) used to calculate the number of shares issuable will equal to the lower of (i) the then applicable Conversion Price and (ii) 85% of the arithmetic average of the three (3) lowest closing prices of the Common Stock during the twenty (20) consecutive trading day period ending on the trading day immediately preceding the dividend payment date, subject to a floor price.
If the Company elects to pay any dividends in shares of Common Stock, the conversion price used to calculate the number of shares issuable will equal to the lower of (i) the then applicable conversion price and (ii) 85% of the arithmetic average of the three (3) lowest closing prices of the Common Stock during the twenty (20) consecutive trading day period ending on the trading day immediately preceding the dividend payment date, subject to a floor price.
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. -29- Table of Contents There is no assurance that we will maintain compliance with such minimum listing requirements.
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. There is no assurance that we will maintain compliance with such minimum listing requirements.
Any losses or damages we incur could have a material adverse effect on our financial results and our ability to conduct business as expected. We anticipate that a significant portion of our revenue in the short-term will be generated from international sales, which may adversely affect our ability to timely collect accounts receivable.
Any losses or damages we incur could have a material adverse effect on our financial results and our ability to conduct business as expected. 21 Table of Contents We anticipate that a significant portion of our revenue in the short-term will be generated from international sales, which may adversely affect our ability to timely collect accounts receivable.
The potential for such additional issuances may depress the price of our Common Stock regardless of our business performance. We may find it more difficult to raise additional equity capital while any of our Preferred Stock is outstanding.
The potential for such additional issuances may depress the price of our Common Stock regardless of our business performance. We may find it more difficult to raise additional equity capital while any of our Series A Preferred Stock is outstanding.
Further, given the long history of development of AI technologies, other parties may have (or in the future may obtain) patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or sell our own AI technologies. -25- Table of Contents Risk Factors Relating to Our Financial Statements and Operating Results We cannot predict our future operating results.
Further, given the long history of development of AI technologies, other parties may have (or in the future may obtain) patents or other proprietary rights that would prevent, limit or interfere with our ability to make, use or sell our own AI technologies. Risk Factors Relating to Our Financial Statements and Operating Results We cannot predict our future operating results.
The foregoing limitations on our financing approaches could have a material adverse effect on our results of operations, liquidity, and financial position. We expect to be dependent on sales of our BolaWrap product line for the foreseeable future, and if this product is not widely accepted, our growth prospects will be diminished.
The foregoing limitations on our financing approaches could have a material adverse effect on our results of operations, liquidity, and financial position. 16 Table of Contents We expect to be dependent on sales of our BolaWrap product line for the foreseeable future, and if this product is not widely accepted, our growth prospects will be diminished.
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.
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, 2025.
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.
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; 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.
We are working to continually improve our operational, financial, and other internal systems to manage our growth effectively, and any failure to do so may lead to inefficiencies and redundancies, and result in reduced growth prospects and profitability. We may face personal injury and other liability claims that harm our reputation and adversely affect our sales and financial condition.
We are wo rking to continually improve our operational, financial, and other internal systems to manage our growth effectively, and any failure to do so may lead to inefficiencies and redundancies, and result in reduced growth prospects and profitability. We may face personal injury and other liability claims that harm our reputation and adversely affect our sales and financial condition.
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.
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.
These factors include, among others: ● Our ability to develop, manufacture, ship and supply product to customers; ● Market acceptance of, and changes in demand for, our products; ● Gains or losses of significant customers, distributors, or strategic relationships; ● Unpredictable volume and timing of customer orders; ● The availability, pricing, and timeliness of delivery of components in our supply chain for our products; ● Fluctuations in the availability of manufacturing capacity or manufacturing yields and related manufacturing costs; ● Timing of new technological advances, product announcements or introductions by us and by our competitors; ● Unpredictable warranty costs associated with our products; ● Budgetary cycles and order delays by customers or production delays by us or our suppliers; ● Regulatory changes affecting the marketability of our products; ● Logistics challenges of obtaining supplies and components and shipping products resulting from the pandemic; ● General economic conditions that could affect the timing of customer orders and capital spending and result in order cancellations or rescheduling; ● General political conditions in this country and in various other parts of the world that could affect spending for the products that we intend to offer; and ● Seasonality of purchasing timeframes and procurement delays impact sales.
These factors include, among others: Our ability to develop, manufacture, ship and supply product to customers; Market acceptance of, and changes in demand for, our products; Gains or losses of significant customers, distributors, or strategic relationships; Unpredictable volume and timing of customer orders; The availability, pricing, and timeliness of delivery of components in our supply chain for our products; Fluctuations in the availability of manufacturing capacity or manufacturing yields and related manufacturing costs; Timing of new technological advances, product announcements or introductions by us and by our competitors; Unpredictable warranty costs associated with our products; Budgetary cycles and order delays by customers or production delays by us or our suppliers; Regulatory changes affecting the marketability of our products; General economic conditions that could affect the timing of customer orders and capital spending and result in order cancellations or rescheduling General political conditions in this country and in various other parts of the world that could affect spending for the products that we intend to offer; and Seasonality of purchasing timeframes and procurement delays impact sales.
We currently have no reserve for slow moving or obsolete inventory but may incur future charges for obsolete or excess inventory. Our international operations could be harmed by factors including natural disasters, fluctuations in currency exchange rates, and changes in regulations that govern international transactions. We sell our products worldwide and have exported to multiple countries.
We currently have no reserve for slow moving or obsolete inventory but may incur future charges for obsolete or excess inventory. 20 Table of Contents Our international operations could be harmed by factors including natural disasters, fluctuations in currency exchange rates, and changes in regulations that govern international transactions. We sell our products worldwide and have exported to multiple countries.
We may be subject to criticism and unflattering media coverage regarding the effectiveness of our remote restraint solutions and the cost of our solutions to our customers, or the appropriateness of use on persons in crisis or the mentally ill. Such negative publicity could have an adverse impact on new sales, which would adversely impact our financial results and prospects.
We may be subject to criticism and unflattering media coverage regarding the effectiveness of our non-lethal solutions and the cost of our solutions to our customers, or the appropriateness of use on persons in crisis or the mentally ill. Such negative publicity could have an adverse impact on new sales, which would adversely impact our financial results and prospects.
In addition, agencies such as the Department of Commerce and the FTC have issued proposed rules governing the use and development of AI technologies. Legislation related to AI technologies has also been introduced at the federal level and is advancing at the state level.
In addition, agencies such as the Department of Commerce and the Federal Trade Commission have issued proposed rules governing the use and development of AI technologies. Legislation related to AI technologies has also been introduced at the federal level and is advancing at the state level.
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.
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.
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.
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 and 4,500 shares have been designated as Series B Preferred Stock. Our Board may determine the terms of future preferred stock offerings without further action by our stockholders.
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.
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, 2025 , we had outstanding options and unvested stock units of 6 .4 million shares o f our Common Stock.
Applications to transfer AOWs to U.S., state or local government entities are usually processed in 1-3 weeks, while transfers to private, non-licensed individuals require a longer processing time because of the required background investigation of the transferee. These types of transfers may take 6-8 months or longer.
Applications to transfer AOWs to U.S., state or local government entities are usually processed in 1-3 weeks, while transfers to private, non-licensed individuals require a longer processing time because of the required background investigation of the transferee.
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.
Our systems, procedures, controls, and management resources may not be adequ ate to support our future growing operations, and we have started to upgrade them and will continue to do so in 2026.
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.
Our future success depends in part upon our proprietary technology. We currently own 32-issued US patents related to the BolaWrap technology and have 8 US patents pending. We have filed foreign patent applications in the European Union (up to 39 countries) and 23 other countries and reserved our rights to file additional foreign patents.
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.
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. 29 Table of Contents We may suffer material losses relating to cyberattacks or other information security breaches.
For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our Common Stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.
For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our Common Stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital 35 Table of Contents We may issue additional shares of Common Stock in the future.
We may not be able to compete successfully against current or future competitors, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand the development and marketing of new products, any of which would adversely impact our results of operations and financial condition.
We may not be able to compete successfully against current or future competitors, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand the development and marketing of new products, any of which would adversely impact our results of operations and financial condition. 17 Table of Contents We are materially dependent on the acceptance of our product by the law enforcement market.
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.
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, 2026 will be generated from international orders .
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.
We have a history of operating losses and expect to incur additional losses until we achieve sufficient revenue and operating margins to offset our operating costs. Our net loss for the years ended December 31, 2025 and 2024 was approximately $10.3 million and $5.9 million, respectively.
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.
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 2025 we filed 7 patent application s all of which were US filings.
If any such claims are successful, our business, operating results and financial condition could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, operating results and financial condition.
If any such claims are successful, our business, operating results and financial condition could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, operating results and financial condition. 36 Table of Contents The payment of dividends will be at the discretion of our Board.
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 are subject to the reporting requirements of the Exchange Act , the Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley Act"), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Capital Market and other applicable securities rules and regulations.
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.
During the year ended December 31, 2025 , 71% of our supply chain is from domestic U.S. 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.
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.
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.
We are materially dependent on the acceptance of our product by the law enforcement market. If law enforcement agencies do not purchase our product or we do not meet their expectations, our revenue will be adversely affected and we may not be able to expand into other markets, or otherwise continue as a going concern.
If law enforcement agencies do not purchase our product or we do not meet their expectations, our revenue will be adversely affected and we may not be able to expand into other markets, or otherwise continue as a going concern. A substantial number of law enforcement agencies may not purchase our product.
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.
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 the ATF has classified our devices as AOWs, we must register our devices with the ATF at the time of manufacture.
The Certificate of Designations (the “Certificate of Designations”) for our Series A Convertible Preferred Stock (“Series A Preferred Stock”) provides for the payment of dividends to the holder of our Series A Preferred Stock in cash or shares of Common Stock, or a combination thereof, at the Company’s option.
The Series A Certificate of Designations (as defined herein) for our Series A Preferred Stock provides for the payment of dividends to the holder of our Series A Preferred Stock in cash or shares of Common Stock, or a combination thereof, at the Company’s option.
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.
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.
The payment of dividends will be at the discretion of our Board of Directors. We have never declared dividends on our Common Stock, and currently do not anticipate that we will do so in the foreseeable future.
We have never declared dividends on our Common Stock, and currently do not anticipate that we will do so in the foreseeable future.
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.
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. 23 Table of Contents We may not be able to successfully integrate acquisitions in the future, and we may not be able to realize revenue enhancements or other synergies from such acquisitions .
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.
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.
In addition, components of our internal control over financial reporting may require improvement from time to time. If management is unable to assert that our internal control over financial reporting is effective in any future period, investors may lose confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the Company’s stock price.
If management is unable to assert that our internal control over financial reporting is effective in any future period, investors may lose confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the Company’s stock price. 37 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
As such, we may rely on having available shares of Common Stock to pay such dividends, which will result in dilution to our stockholders.
As such, we may rely on having available shares of Common Stock to pay such dividends, which will result in dilution to our stockholders. If we do not have such available shares, we may not be able to satisfy our dividend obligations.
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.
Maintaining an effective system of internal control over financial reporting is necessary for us to provide reliable financial reports. Section 404 of the 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.
A substantial number of law enforcement agencies may not purchase our remote restraint product. In addition, if our product is not widely accepted by the law enforcement market or we do not meet their expectations, we may not be able to expand sales of our product into other markets.
In addition, if our product is not widely accepted by the law enforcement market or we do not meet their expectations, we may not be able to expand sales of our product into other markets. Law enforcement agencies may be influenced by claims or perceptions that our product is not effective or may be used in an abusive manner.
The Series A Preferred Stock provides for the payment of dividends in cash or in shares of our Common Stock, or a combination thereof, and we may not be permitted to pay such dividends in cash, which will require us to have shares of Common Stock available to pay the dividends.
If we do not have a sufficient number of available shares for any Series A Preferred Stock conversions, we will be required to increase our authorized shares, which may not be possible and will be time-consuming and expensive. 32 Table of Contents The Series A Preferred Stock provides for the payment of dividends in cash or in shares of our Common Stock, or a combination thereof, and we may not be permitted to pay such dividends in cash, which will require us to have shares of Common Stock available to pay the dividends.
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.
If the 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.
The validity and breadth of claims covered in any possible patents involve complex legal and factual questions, and the resolution of such claims may be highly uncertain, lengthy, and expensive.
The validity and breadth of claims covered in any possible patents involve complex legal and factual questions, and the resolution of such claims may be highly uncertain, lengthy, and expensive. In addition, any patents, if granted, may be held invalid upon challenge, or others may claim rights in or ownership of our patents.
Our product sales may be significantly affected by international, federal, state and local regulations. Failure to comply with regulations could also result in the imposition of fines, penalties and other actions that could adversely impact our financial position, cash flows and operating results.
Failure to comply with regulations could also result in the imposition of fines, penalties and other actions that could adversely impact our financial position, cash flows and operating results. Our product is also controlled by the US Department of Commerce for exports directly from the US.
The commercial launch of the Wrap Reality Virtual Training product is in the early stages in a new marketplace for 3D Virtual Reality training that competes with a legacy 2D virtual training environment.
The commercial launch of the Wrap Reality Virtual Training product is in the early stages in a new marketplace for 3D Virtual Reality training that competes with a legacy 2D virtual training environment. We expect 2D virtual training companies to either try to buy out companies like ours or choose to build 3D Virtual reality to compete with us.
These changes in international end-user costs may result in lost orders and reduce the competitiveness of our products in certain international markets. These changes may also negatively affect the financial condition of some international customers and reduce or eliminate their future orders of our products. Our business is dependent on the ability to attract and retain key personnel.
These changes may also negatively affect the financial condition of some international customers and reduce or eliminate their future orders of our products. Our business is dependent on the ability to attract and retain key personnel. We are dependent on our ability to retain and motivate our high-quality personnel, especially managers, sales and skilled engineering and manufacturing personnel.
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.
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, which included a Body-Worn Camera and Digital Evidence Management solution.
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.
Global economic weakness and uncertainty, geopolitical conflict, war, and civil unrest, could adversely affect our revenues, gross margins and expenses . 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.
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.
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.
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.
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur risk management, legal, information technology, and compliance personnel identify and oversee risks from cybersecurity threats associated with our use of such entities. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment, and then reported to Mr. Srinivasan, our designated member of our Board of Directors. Mr.
Biggest changeOur risk management, legal, information technology, and compliance personnel identify and oversee risks from cybersecurity threats associated with our use of such entities. Any incident assessed as potentially being or potentially becoming material is immediately escalated for further assessment, and then reported to Mr. Srinivasan, our designated member of our Board. Mr.
Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with the designated member of the Board of Directors.
Senior management regularly discusses cyber risks and trends and, should they arise, any material incidents with the designated member of the Board.
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.
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.
Srinivasan has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks, and report any findings and recommendations, as appropriate, to the full Board of Directors for consideration.
Srinivasan has oversight responsibility for risks and incidents relating to cybersecurity threats, including compliance with disclosure requirements, cooperation with law enforcement, and related effects on financial and other risks, and report any findings and recommendations, as appropriate, to the full Board for consideration.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOn 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.
Biggest changeOn January 3, 2025, we signed a lease that was to commence on the later of October 2025, or the completion of the premises, for a manufacturing facility located at 182 Progress Way NE, Norton, Virginia 24273.
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.
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-year term, subject to adjustments based on the Consumer Price Index. Monthly lease payments are $10,000, calculated at $6 per gross square foot per year.
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.
ITEM 2. PROPERTIES In November 2023, we commenced a lease in an office building located at 3480 Main Highway, Coconut Grove, Florida, which served as our corporate headquarters. The lease covered approximately 4,487 square feet for an initial term of 89 months, including five months of rent abatement during the first two years of the lease.
Following two years of occupancy from the start of the lease, we may terminate the lease without penalty by providing sixty-days written notice.
Following two years of occupancy from the start of the lease, we may terminate the lease without penalty by providing sixty days' written notice . The Company was granted early occupancy of the facility for use beginning on August 18, 2025.
Removed
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.
Added
Monthly lease payments recommenced in 2024 at approximately $39,635 per month and an increase of 3% annually through the lease term, plus certain additional costs and charges as specified in the lease agreement. In February 2026, the Company entered into a Termination and Mutual Release Agreement with the landlord, terminating this lease effective February 13, 2026.
Removed
The lease of 11,256 square feet commenced in June 2019 and was for an initial lease term through July 2022. In January 2022 we renewed this lease for three years with aggregate monthly payments of $9,905 commencing August 2022, increasing 4% annually through the term ending July 31, 2025.
Added
In March 2026, we entered into a month-to-month service agreement for a business address located at 3350 Virginia Street, Miami, Florida 33133, at an approximate monthly cost of $165, which serves as the Company's headquarters. We consider our current office space adequate for our current operations. 38 Table of Contents
Removed
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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThese 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.
Biggest changeThese 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.
LEGAL PROCEEDINGS We may become subject to other legal proceedings, as well as demands and claims that arise in the normal course of our business, including claims of alleged infringement of third-party patents and other intellectual property rights, breach of contract, employment law violations, and other matters and matters involving requests for information from us or our customers under federal or state law.
LEGAL PROCEEDINGS We may become subject to legal proceedings, as well as demands and claims that arise in the normal course of our business, including claims of alleged infringement of third-party patents and other intellectual property rights, breach of contract, employment law violations, and other matters and matters involving requests for information from us or our customers under federal or state law.
Such claims, even if not meritorious, could result in the expenditure of significant financial and management resources. We make a provision for liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
Such claims, even if not meritorious, could result in the expenditure of significant financial and management resources. We make a provision for liability relating to legal matters in our financial statements when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
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
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. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends 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.
Biggest changeDividends We have never declared or paid any cash dividends on our Common Stock. We currently do not anticipate paying any cash dividends in the foreseeable future. The decision to pay dividends is at the discretion of our Board and depends upon our financial condition, results of operations, capital requirements, and other factors that our Board deems relevant.
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).
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 Series A Certificate of Designations) without the prior written consent of the Required Holders (as defined in the Series A Certificate of Designations).
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.
Recent Sales of Unregistered Securities No unregistered securities were issued during the fiscal year ended December 31, 2025 that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K. Repurchases Not applicable. 39 Table of Contents ITEM 6. [RESERVED] ITEM 7.
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.
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 23, 2026 there w ere 55,500,054 shares of Common Stock outstanding and approximat ely 37 sto ckholders of record.
Added
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion and analysis set forth below should be read in conjunction with the information presented in other sections of this Annual Report, including “ Item 1. Business, ” “ Item 1A. Risk Factors, ” and “

Other WRAP 10-K year-over-year comparisons