UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38750

Wrap Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware

98-0551945

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

3350 Virginia Street, Suite 200

Miami, Florida 33133

(Address of principal executive offices) (Zip Code)

(800) 583-2652

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		WRAP		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2026 a total of 56,003,638 shares of the Registrant’s common stock, par value $0.0001 per share (“Common Stock”), were issued and outstanding.

WRAP TECHNOLOGIES, INC.

INDEX


		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Interim Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

SIGNATURES		35

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Wrap Technologies, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

(unaudited)


		June 30, 2026			December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	4,781		$	3,468
Accounts receivable and contract assets, net		3,378			2,787
Inventories, net		4,308			4,971
Prepaid expenses and other current assets		729			194
Total current assets		13,196			11,420
Property and equipment, net		89			123
Operating lease right-of-use asset, net		426			2,175
Intangible assets, net		1,603			1,572
Other assets		25			128
Total assets		15,339			15,418

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		764			620
Accrued liabilities		310			407
Customer deposits		98			62
Deferred revenue — short term		378			408
Operating lease liability — short term		91			320
Total current liabilities		1,641			1,817

Non-current liabilities:
Deferred revenue — long term		7			14
Operating lease liability — long term		345			2,097
Total non-current liabilities		352			2,111
Total liabilities		1,993			3,928

Commitments and Contingencies (Note 13)

Stockholders' equity:
Preferred stock - 5,000,000 authorized; par value $0.0001 per share; 11,707 and 12,707 shares issued and outstanding at June 30, 2026, and December 31, 2025, respectively.		-			-
Common stock - 200,000,000 authorized; par value $0.0001 per share; 55,857,933 and 51,733,217 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively		5			5
Series A convertible preferred stock - 10,000 authorized, par value $0.0001 per share; 8,107 and 8,207 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively		-			-
Series B convertible preferred stock - 4,500 authorized, par value $0.0001 per share, 3,600 and 4,500 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively		-			-
Additional paid-in-capital		136,868			127,804
Accumulated deficit		(123,527	)		(116,319	)
Total stockholders' equity		13,346			11,490
Total liabilities and stockholders' equity	$	15,339		$	15,418

The accompanying notes are an integral part of these financial statements.

Wrap Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
		2026			2025			2026			2025
Revenues:
Product sales	$	1,747		$	50		$	2,630		$	359
Technology enabled services		305			962			533			1,419
Total revenues		2,052			1,012			3,163			1,778
Cost of revenues		507			525			927			695
Gross profit		1,545			487			2,236			1,083

Operating expenses:
Selling, general and administrative		3,644			3,181			8,999			7,266
Research and development		152			162			257			594
Total operating expenses		3,796			3,343			9,256			7,860
Loss from operations		(2,251	)		(2,856	)		(7,020	)		(6,777	)

Other income (expense):
Interest income		2			2			3			3
Change in fair value of warrant liabilities		-			(871	)		-			3,158
Gain on lease termination		-			-			227			-
Other		(8	)		(2	)		(7	)		(2	)
Total other income (expense), net		(6	)		(871	)		223			3,159
Net loss	$	(2,257	)	$	(3,727	)	$	(6,797	)	$	(3,618	)

Less: Convertible preferred stock dividends		(162	)		(164	)		(411	)		(328	)
Net loss attributable to common stockholders	$	(2,419	)	$	(3,891	)	$	(7,208	)	$	(3,946	)

Net loss per basic and diluted share	$	(0.04	)	$	(0.07	)	$	(0.13	)	$	(0.07	)
Weighted average common shares — basic and diluted		55,731,095			50,609,509			54,871,126			49,439,838

Comprehensive loss:
Net loss		(2,257	)		(3,727	)		(6,797	)		(3,618	)
Comprehensive loss:		(2,257	)		(3,727	)		(6,797	)		(3,618	)

The accompanying notes are an integral part of these financial statements.

Wrap Technologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(unaudited)


	Common Stock				Preferred Stock											Additional					Total
					Series A Convertible					Series B Convertible						Paid-in		Accumulated			Stockholders'
		Shares		Amount		Shares			Amount		Shares			Amount		Capital		Deficit			Equity

Balance at December 31, 2025		51,733,217	$	5		8,207		$	-		4,500		$	-	$	127,804	$	(116,319	)	$	11,490
Share-based compensation expense		-		-		-			-		-			-		2,384		-			2,384
Dividends on convertible preferred stock		462,656		-		-			-		-			-		249		(249	)		-
Common Stock issued upon vesting of restricted stock units		72,888		-		-			-		-			-		-		-			-
Common Stock issued upon conversion of preferred stock		668,965		-		(100	)		-		(900	)		-		-		-			-
Common Stock and pre-funded warrants issued with Private Placement		2,500,000		-		-			-		-			-		5,000		-			5,000
Common Stock issued upon warrant exercise		68,966		-		-			-		-			-		100		-			100
Net loss		-		-		-			-		-			-		-		(4,540	)		(4,540	)
Balance at March 31, 2026		55,506,692	$	5		8,107		$	-		3,600		$	-	$	135,537	$	(121,108	)	$	14,434
Share-based compensation expense		-		-		-			-		-			-		1,019		-			1,019
Common stock issued for professional services		96,775		-		-			-		-			-		150		-			150
Dividends on convertible preferred stock		162,836		-		-			-		-			-		162		(162	)		-
Common Stock issued upon vesting of restricted stock units		91,630		-		-			-		-			-		-		-			-
Net loss		-		-		-			-		-			-		-		(2,257	)		(2,257	)
Balance at June 30, 2026		55,857,933	$	5		8,107		$	-		3,600		$	-	$	136,868	$	(123,527	)	$	13,346

The accompanying notes are an integral part of these financial statements.

Wrap Technologies, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(unaudited)



	Common Stock				Preferred Stock									Additional					Total
					Series A Convertible				Series B Convertible					Paid-in		Accumulated			Stockholders'
		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Equity

Balance at December 31, 2024		47,101,631	$	5		8,207		-		-		-	$	105,326	$	(105,081	)	$	250
Share-based compensation expense		-		-		-		-		-		-		1,665		-			1,665
Dividends on convertible preferred stock		113,205		-		-		-		-		-		164		(164	)		-
Common Stock issued upon vesting of restricted stock units		63,199		-		-		-		-		-		-		-			-
Common Stock issued — Private Placement		3,216,666		-		-		-		-		-		543		-			543
Net income for the period		-		-		-		-		-		-		-		109			109
Balance at March 31, 2025		50,494,701	$	5		8,207	$	-		-	$	-	$	107,698	$	(105,136	)	$	2,567
Share-based compensation expense		-		-		-		-		-		-		770		-			770
Dividends on convertible preferred stock		139,431		-		-		-		-		-		164		(164	)		-
Common Stock issued upon vesting of restricted stock units		94,403		-		-		-		-		-		-		-			-
Reclassification of warrant liability due to warrant amendment		-		-		-		-		-		-		12,151		-			12,151
Net loss		-		-		-		-		-		-		-		(3,727	)		(3,727	)
Balance at June 30, 2025		50,728,535	$	5		8,207	$	-		-	$	-	$	120,783	$	(109,027	)	$	11,761

The accompanying notes are an integral part of these financial statements.

Wrap Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended June 30,
		2026			2025
Cash Flows From Operating Activities:
Net loss	$	(6,797	)	$	(3,618	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		111			304
Share-based compensation		3,403			2,435
Common stock issued for professional services		150			-
Warranty provision		31			2
Gain on lease termination		(227	)		-
Change in fair value of warrant liabilities		-			(3,158	)
Non-cash lease expense		75			(199	)
Provision for credit losses		76			60
Inventory obsolescence reserve		73			187

Changes in assets and liabilities:
Accounts receivable and contract assets		(667	)		(453	)
Inventories		590			79
Prepaid expenses and other current assets		(535	)		(156	)
Accounts payable		144			(34	)
Operating lease liabilities		(80	)		197
Customer deposits		36			-
Accrued liabilities and other		(123	)		(523	)
Warranty settlements		(5	)		(10	)
Deferred revenue		(37	)		(180	)
Other non-current assets		103			58
Net cash used in operating activities		(3,679	)		(5,009	)

Cash Flows From Investing Activities:
Capital expenditures for property and equipment		(11	)		(8	)
Investment in patents, trademarks and other intangibles		(97	)		(145	)
Net cash used in investing activities		(108	)		(153	)

Cash Flows From Financing Activities:
Proceeds from private placement		5,000			-
Proceeds from warrant exercise		100			-
Proceeds from issuance of common stock and warrants, net		-			5,729
Net cash provided by financing activities		5,100			5,729

Net increase in cash and cash equivalents	$	1,313		$	567
Cash and cash equivalents, beginning of period	$	3,468		$	3,610
Cash and cash equivalents, end of period	$	4,781		$	4,177

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Reclassification of warrant liabilities to additional paid in capital	$	-		$	12,159
Dividends declared on convertible preferred stock	$	(411	)	$	(328	)
Dividends settled with common stock	$	411		$	328

The accompanying notes are an integral part of these financial statements.

Wrap Technologies, Inc.

Notes to Condensed Consolidated Interim Financial Statements

(in thousands, except per share and share amounts)

(unaudited)

1. ORGANIZATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT DEVELOPMENTS

Organization and Business Description

Wrap Technologies, Inc., a Delaware corporation (the “Company”, “we”, “us”, and “our”), is a publicly traded company with its common stock, par value $0.0001 per share (“Common Stock”), listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “WRAP.” The Company is a developer and supplier of public safety technologies, products, and training services for law enforcement and security personnel. The Company’s principal product is the BolaWrap® 150, a handheld remote restraint device sold together with recurring consumable cassettes and related accessories. The Company also offers technology-enabled services, including Wrap Reality, a virtual reality training simulator, WrapTactics™, a subscription-based digital training platform, WrapVision™, a body-worn camera and digital evidence management solution, and managed services and policy support. As described under Recent Developments, the Company is developing WrapShield™, an integrated detection, orchestration, and response architecture for public safety and security applications, together with additional non-lethal response products that remain in development. The principal markets for the Company's proprietary products and services are in North and South America, Europe, the Middle East, Africa and Asia.

Basis of Presentation

The Company’s unaudited interim condensed consolidated financial statements included herein have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the accompanying financial statements reflect adjustments necessary to present fairly the financial position, results of operations, and cash flows for those periods indicated, and contain adequate disclosure to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the footnotes. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”), as filed with the SEC on March 26, 2026. The accompanying unaudited condensed consolidated balance sheet as of June 30, 2026 has been derived from the audited consolidated balance sheet as of December 31, 2025, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Principles of Consolidation

The Company has three wholly owned subsidiaries, Wrap Reality, Inc., that sells a virtual reality (“VR”) training system primarily targeting law enforcement agencies, Intrensic, LLC (“Intrensic”), specializing in Body Worn Camera and Digital Evidence Management solutions and Wrap Federal, LLC, formed to support federal government clients in federal agencies. The condensed consolidated financial statements include the accounts of these subsidiaries after elimination of intercompany transactions and accounts.

Segment and Related Information

The Company operates as a single operating and reportable segment. The Company's Chief Operating Decision Maker is its Chief Executive Officer, who manages operations for purposes of allocating resources on a consolidated basis.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could materially differ from those estimates.

Revenue Recognition

The Company recognizes revenue under ASC Topic 606 - Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration the Company expects to receive. The Company's revenues consist of product sales (BolaWrap devices, cassettes, and accessories) and technology-enabled services (software subscriptions, body-worn cameras, managed services, policy support, training, and shipping).

Warrants

As of June 30, 2026, all outstanding warrants (Series A Warrants, PIPE Warrants, Series B Warrants, and February 2026 Common Warrants each defined herein) are classified within permanent equity (additional paid-in capital) following amendments executed on June 30, 2025 that enabled equity classification under ASC 815-40 as discussed further in Note 8. These warrants are not subject to subsequent fair value remeasurement and no warrant liability is recorded as of June 30, 2026 or December 31, 2025.

Loss per Share

Basic loss per share (EPS) is computed by dividing net loss, less any dividends, accretion or decretion, redemption or induced conversion, if any, on the Company’s Series A Convertible Preferred Stock ("Series A Preferred Stock"), by the weighted average number of shares outstanding during the reported period.

In computing diluted EPS, the Company adjusts the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A and Series B Convertible Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A and Series B Convertible Preferred Stock to its redemption price, or recorded upon a redemption or induced conversion, if any. The Company adjusts the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of the Series A and Series B Convertible Preferred Stock, restricted stock units, and stock options. Stock options and restricted stock units exercisable or issuable for a total of 11,077,429 shares and 7,856,142 shares of Common Stock were outstanding as of June 30, 2026 and 2025, respectively. These securities are not included in the computation of diluted net loss per share of Common Stock for the periods presented as their inclusion would be antidilutive due to losses incurred by the Company.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss, total assets, total liabilities, stockholders’ equity, or cash flows.

Recently Issued Accounting Guidance Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, which requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its financial statements.

2. REVENUE AND PRODUCT COSTS

Revenues consist of product sales and technology-enabled services. Product sales include BolaWrap devices, cassettes, and accessories. Technology-enabled services include software subscriptions, body-worn cameras, managed services, policy and training support, and shipping revenue.

The table below details the activity in our contract liabilities during the six months ended June 30, 2026.

SCHEDULE OF CONTRACT LIABILITIES


		Customer Deposits			Deferred Revenue
Balance at January 1, 2026	$	62		$	422
Additions, net		65			409
Transfer to revenue		(29	)		(446	)
Balance at June 30, 2026	$	98		$	385

Current portion	$	98		$	378
Long-term portion	$	-		$	7

As of June 30, 2026, the Company’s deferred revenue of $385 consisted of $8 related to BolaWrap extended warranties and services, $27 related to WRAP Ready, $323 related to Intrensic extended warranties and services, $15 related to VR, $4 related to training and $8 related to Wrap Tactics.

3. FINANCIAL INSTRUMENTS

Assets and liabilities recorded at fair value on a recurring basis in the Condensed Consolidated Balance Sheets and assets and liabilities measured at fair value on a non-recurring basis or disclosed at fair value, are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value and requires certain disclosures about how fair value is determined. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1-Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2-Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3-Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The following table shows the Company’s short-term investments by significant investment category as of June 30, 2026, and December 31, 2025.


	As of June 30, 2026
		Adjusted Cost		Unrealized Gains		Unrealized Losses		Market Value

Level 1:	$		$		$		$
Money Market Funds	$	641	$	-	$	-	$	641
Total financial assets	$	641	$	-	$	-	$	641


	As of December 31, 2025
		Adjusted Cost		Unrealized Gains		Unrealized Losses		Market Value
Level 1:	$		$		$		$
Money Market Funds	$	639	$	-	$	-	$	639
Total financial assets	$	639	$	-	$	-	$	639

As of June 30, 2026 and December 31, 2025, the Company has no warrant liabilities. All outstanding warrants are classified within permanent equity following amendments completed on June 30, 2025. Refer to Note 8 for further discussion. Other financial instruments, including accounts receivable, accounts payable, accrued liabilities and customer deposits, are carried at cost which approximates fair value due to their short-term nature.

4. INVENTORIES

Inventory is recorded at the lower of cost or net realizable value using the weighted average cost method. Inventories consisted of the following:

SCHEDULE OF INVENTORY


		June 30, 2026			December 31, 2025

Finished goods	$	3,174		$	3,509
Raw materials		1,628			1,978
Reserve for obsolescence		(494	)		(516	)
Inventories, net	$	4,308		$	4,971

Inventory reserve expense was $73 and $73 for the three and six months ended June 30, 2026, respectively, and $169 and $187 for the three and six months ended June 30, 2025, respectively.

5. PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

SCHEDULE OF PROPERTY AND EQUIPMENT


		June 30, 2026		December 31, 2025

Production and lab equipment	$	391	$	391
Tooling		570		570
Computer equipment		194		183
Furniture, fixtures and improvements		81		81
Property and equipment, gross	$	1,236	$	1,225
Accumulated depreciation		(1,147)		(1,102)
Property and equipment, net	$	89	$	123

Depreciation expense was $22 and $45 for the three and six months ended June 30, 2026, respectively, and $27 and $67 for the three and six months ended June 30, 2025, respectively.

6. INTANGIBLE ASSETS

Intangible Assets, net

Intangible assets, net consisted of the following:


		June 30, 2026			December 31, 2025
Amortizable intangible assets:
Patents	$	1,206		$	1,142
Trademarks		400			367
Purchased software and technology		512			512
Gross amortizable intangibles	$	2,118		$	2,021
Accumulated amortization		(936	)