WRAP TECHNOLOGIES, INC.
For the period ended Jun 30, 2026. Filed Aug 11, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 11, 2026
WRAP$1.18+15.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-13.
0001140361-26-021091
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001140361-26-032276
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 83 previous paragraphs and 126 current paragraphs.
52 unchanged; 28 reworded; 33 added; 3 removed; 0 previous and 13 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
We are a global public safety technology company that delivers non-lethal public safety solutions to law enforcement and security personnel worldwide. Management is pursuing a strategy to expand the Company from a provider of individual non-lethal products toward a provider of an integrated public safety platform that the Company refers to as WrapShield™. WrapShield is designed to connect threat detection, AI-assisted decision support, and proportionate response, with human decision-makers remaining in control. The initial focus for the platform is counter-unmanned aircraft system (“counter-UAS”) applications, and management intends to extend the architecture over time to additional public safety, critical infrastructure, and defense applications. The Company’s current commercial foundation remains the BolaWrap® 150 remote restraint device and its related products and services, and is a critical piece of the platform strategy.
Current report
Our core offerings are designed to provide officers and agencies with integrated non-lethal tools, training, and tactics that support safer outcomes and sustained readiness across the public safety ecosystem. BolaWrap gives officers a proactive, non-lethal tactical option through a tether deployment system sold with recurring consumable cassettes. In July 2026, the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”) issued a ruling classifying the BolaWrap® 150 as an instrument of restraint rather than a firearm or an “any other weapon.” Our non-lethal response offerings are designed to function as a family of instruments of restraint. In addition to the handheld BolaWrap® 150, the Company completed a first operational prototype of Wraptor MX™, a multi-shot restraint platform intended for tactical, corrections, and security environments, and is developing the DFR-X™ drone-deployed restraint system. Wraptor MX and DFR-X are in development and are not yet commercially available.
Current report
To establish an advanced-sensing detection capability for the platform, in July 2026 the Company made a strategic investment in Frenel and obtained an exclusive license to its thermal-polarimetric imaging technology for the United States and NATO markets, as further described below under Recent Developments.
Current report
The following developments occurred subsequent to June 30, 2026. Except as otherwise noted, they did not affect the Company’s financial position or results of operations for the periods presented, and their effect on future results is uncertain.
Current report
ATF Ruling 2026-2
Current report
In July 2026, ATF Ruling 2026-2 became effective, classifying the BolaWrap® 150 as an instrument of restraint and determining that it is neither a “firearm” under the Gun Control Act or an “any other weapon” under the National Firearms Act. The ruling supersedes prior ATF classifications of the BolaWrap 150. Management believes the ruling may reduce federal regulatory ambiguity that has historically complicated BolaWrap procurement in certain corrections, civilian-safety, and international channels, and may support broader adoption. The ruling addresses the BolaWrap 150 only and does not extend to the Company’s other products.
Current report
Strategic Investment in Frenel Imaging Ltd.
Current report
In July 2026, the Company made a strategic investment in Frenel, an advanced-sensing company, and obtained an exclusive license to commercialize Frenel’s TPiCore® thermal-polarimetric imaging technology in the United States and NATO markets. The Company intends to use this technology as the detection layer of the WrapShield platform. The investment and license are in an early stage, and the timing and amount of any resulting revenue are uncertain.
Current report
WrapShield Platform
Current report
In July 2026, the Company introduced WrapShield™, a platform strategy intended to integrate threat detection, AI-assisted decision support, command-and-control, and proportionate response into a single operating architecture, with an initial application in counter-UAS. WrapShield is in an early stage of development, and its commercialization, integration, and market adoption are subject to significant uncertainty.
Current report
Wraptor MX and Early Adopter Program
Current report
In July 2026, the Company completed a first operational prototype of Wraptor MX™, a multi-shot non-lethal restraint platform, and opened an early adopter program to select a limited number of law enforcement agencies for pre-commercial access. Wraptor MX is a prototype and is not commercially available. Participation in the early adopter program may not result in orders or revenue.
Current report
Gross profit was $1.5 million for the three months ended June 30, 2026, compared to $0.5 million for the three months ended June 30, 2025, an increase of $1.1 million, or 217%. Gross margin was 75.3% for the three months ended June 30, 2026, compared to 48.1% for the three months ended June 30, 2025. The improvement in gross margin percentage primarily reflects the higher volume of product sales, which absorbed fixed manufacturing overhead more efficiently, and a more favorable overall mix, as the prior-year quarter included a higher proportion of lower-margin managed services revenue associated with the W1 wind-down. Cost of revenues decreased $18 thousand to $0.5 million despite the higher sales volume, reflecting improved production efficiencies. We expect gross margins to continue to be influenced by the relative mix of product sales and technology-enabled services revenue in future periods.
Current report
Loss from operations was $2.3 million for the three months ended June 30, 2026, compared to $2.9 million for the three months ended June 30, 2025, an improvement of $0.6 million, or 21%. The decreased operating loss reflected higher gross profit driven by increased product sales, partially offset by higher SG&A expense.
Current report
Total other expense, net was $6 thousand for the three months ended June 30, 2026, compared to total other expense, net of $871 thousand for the three months ended June 30, 2025, a decrease in expense of $865 thousand. The year-over-year change is primarily attributable to the non-recurrence of a non-cash loss from the change in fair value of warrant liabilities that was recorded during the three months ended June 30, 2025, prior to the warrants' reclassification to permanent equity.
Current report
Gain on Lease Termination.* The $227 thousand non-cash gain on lease termination related to the early termination of the office lease at 3480 Main Highway, Suite 202, Miami, Florida (Coconut Grove) was recognized during the three months ended March 31, 2026 in connection with a Termination and Mutual Release Agreement entered into with the landlord on February 13, 2026. No gain or loss on lease termination was recognized during the three months ended June 30, 2026.
Current report
Net Loss. Net loss was $2.3 million for the three months ended June 30, 2026, compared to net loss of $3.7 million for the three months ended June 30, 2025. The decreased net loss primarily reflects the non-recurrence of the $871 thousand non-cash loss on the change in fair value of warrant liabilities recorded in the prior-year quarter, together with the improvement in operating results driven by higher product sales.
Current report
Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025 (Unaudited)
Current report
Revenue
Current report
Gross Profit
Current report
Selling, General and Administrative Expense
Current report
SG&A expense was $9.0 million for the six months ended June 30, 2026, compared to $7.3 million for the six months ended June 30, 2025, an increase of $1.7 million, or 24%. The increase was driven primarily by higher non-cash share-based compensation expense.
Current report
Research and Development Expense
Current report
Operating Loss
Current report
Other Income (Expense), Net
Current report
Interest Income.* Interest income was $3 thousand for the six months ended June 30, 2026, compared to $3 thousand for the six months ended June 30, 2025.
Current report
Series B Offering
Current report
On August 18, 2025, the Company entered into a Securities Purchase Agreement (the “Series B Purchase Agreement”) with certain accredited investors (the “Series B Purchasers”) for the issuance and sale in a private placement (the “Series B Private Placement”) of an aggregate of (i) 4,500 shares of the Company’s Series B Preferred Stock initially convertible into up to 3,000,000 shares of Common Stock (the “Series B Conversion Shares”), at an initial conversion price of $1.50 per share, and (ii) accompanying warrants (the “Series B Warrants”) to purchase up to 3,000,000 shares of Common Stock (the “Series B Warrant Shares”), with an initial exercise price of $1.50 per share. The Series B Warrants and the shares of Series B Preferred Stock will be exercisable or convertible, respectively, into shares of Common Stock beginning on the effective date of stockholder approval of (i) under Nasdaq Stock Market Rule 5635(d), the issuance of shares of Common Stock in excess of 19.99% of the Company’s issued and outstanding shares of Common Stock at prices below the “Minimum Price” (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) on the date of the Series B Purchase Agreement pursuant to the terms of the Series B Preferred Stock and the Series B Warrants, and (ii) an increase in the authorized shares of the Company. On December 12, 2025, at the Company’s 2025 Annual Meeting of Stockholders, the Company obtained stockholder approval pursuant to the Series B Registration Rights Agreement (the “Series B Stockholder Approval”).
Current report
On August 20, 2025, the Company filed the Series B Certificate of Designations, thereby creating the Series B Preferred Stock. The Series B Certificate of Designations became effective with the Secretary of State of the State of Delaware upon filing. The Series B Preferred Stock are convertible into the Series B Conversion Shares at the election of the holders of the Series B Preferred Stock at any time at an initial conversion price of $1.50 per share. The conversion price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like (subject to certain exceptions).
Current report
Holders of the Series B Preferred Stock shall be entitled to receive dividends when and as declared by the Board, from time to time, in its sole discretion, which dividends will be paid by the Company out of funds legally available therefor, payable, subject to the conditions and other terms of the Series B Certificate of Designations, in cash, in securities of the Company or using assets as determined by the Board on the stated value of such Series B Preferred Stock.
Current report
Series B Warrants
Current report
A holder of the Series B Warrants may not exercise any portion of such holder’s Series B Warrants to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.
Current report
The Series B Warrants will expire five years from December 12, 2025, the effective date of the Series B Stockholder Approval.
Removed paragraphs (3)
Previous report
Private Placement
Previous report
On February 2, 2026, we entered into a securities purchase agreement (the “February 2026 Purchase Agreement”) with certain accredited investors (“February 2026 Purchasers”) for a private placement offering (the “February 2026 Private Placement”) of an aggregate of (i) 1,700,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 800,000 shares of Common Stock (“Pre-Funded Warrants”), and (iii) common warrants to purchase up to 2,500,000 shares of Common Stock (“Common Warrants” and, together with the Pre-Funded Warrants, the “February 2026 Warrants”). The purchase price was $2.00 per share (or $1.9999 per Pre-Funded Warrant), with the Common Warrants having an exercise price of $2.30 per share and a five-year term.
Previous report
The gross proceeds from the February 2026 Private Placement were approximately $5.0 million before deducting offering expenses. The securities were issued in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and Regulation D thereunder.
Reworded paragraphs (28)
Previous wording
We are a global public safety technology and services company that delivers safe and effective policing solutions to law enforcement and security personnel worldwide. Our product and service portfolio includes the BolaWrap® device, Wrap Reality VR training simulator, WrapTactics digital training platform, and WrapVision™ body-worn camera and digital evidence management solution. We also offer technology-enabled services including managed services and policy support. Our core offerings are designed to provide officers and agencies with integrated non-lethal tools, training, and tactics that support safer outcomes and sustained readiness across the public safety ecosystem. BolaWrap gives officers a proactive, non-lethal tactical option through a tether deployment system sold with recurring consumable cassettes. Wrap Reality and WrapTactics are designed to deliver immersive VR and subscription-based digital training focused on decision-making under stress, use of force judgment, and non-lethal response tactics. WrapVision provides a body-worn camera and cloud-based digital evidence management platform designed to meet federal procurement and data-sovereignty requirements. We are also expanding our tether deployment technology into counter-unmanned aircraft systems and defense applications through our MERLIN program, which targets non-lethal drone interdiction capabilities for defense, homeland security, and critical-infrastructure protection missions. We serve law enforcement, corrections, and security personnel across domestic and international markets.
Current wording
Our product and service portfolio includes the BolaWrap® device, cassettes and related accessories. We also offer technology-enabled services including Wrap Reality VR training simulator, WrapTactics digital training platform, and WrapVision™ body-worn camera and digital evidence management solution, managed services and policy support.
Previous wording
In 2026, our near-term focus is on expanding agency-wide deployments of BolaWrap, increasing utilization of our training and subscription-based offerings, including Wrap Reality and WrapTactics, and advancing commercialization efforts for WrapVision. We also expect to continue evaluating development and demonstration opportunities related to our counter-unmanned aircraft system initiatives, although the timing and scale of any resulting revenues remain uncertain and dependent on government testing, funding, and procurement decisions.
Current wording
In 2026, our near-term focus is on expanding agency-wide deployments of BolaWrap, increasing utilization of our training and subscription-based offerings, including Wrap Reality and WrapTactics, and advancing commercialization efforts for WrapVision. Management believes the recent ATF ruling classifying the BolaWrap 150 as an instrument of restraint may support adoption in certain corrections, civilian-safety, and international channels, although the effect on future results is uncertain. Management also intends to advance the WrapShield platform strategy, including the integration of Frenel’s thermal-polarimetric sensing technology and the continued development of the Wraptor MX and DFR-X non-lethal response systems. These initiatives are in early stages, and the timing and scale of any resulting revenue are uncertain and depend on product development, testing, funding, and government procurement decisions. We also expect to continue evaluating development and demonstration opportunities related to our counter UAS initiatives, although the timing and scale of any resulting revenues remain uncertain and dependent on government testing, funding, and procurement decisions.
Previous wording
We are subject to extensive regulation, including firearms classification, export controls, procurement requirements, and data privacy and cybersecurity regulations. Changes in regulatory interpretation or enforcement could adversely affect our ability to manufacture, sell, or distribute our products.
Current wording
We are subject to extensive regulation, including firearms classification, export controls, procurement requirements, and data privacy and cybersecurity regulations. In July 2026, the ATF classified the BolaWrap 150 as an instrument of restraint rather than a firearm, which management believes may reduce certain regulatory friction for that product. This classification applies to the BolaWrap 150 only and does not extend to our other products, and our expansion into advanced sensing, counter-UAS, and defense applications may subject us to additional regulatory regimes, including export controls under the International Traffic in Arms Regulations and the Export Administration Regulations and applicable aviation regulations. Changes in regulatory interpretation or enforcement could adversely affect our ability to manufacture, sell, or distribute our products. Our platform strategy also depends in part on technologies developed by third parties, including Frenel, and on our ability to integrate, commercialize, and support new products.
Previous wording
The Company operates as a single segment. The Company’s chief operating decision maker is Scot Cohen, the Company’s Executive Chairman and Chief Executive Officer, who manages operations for purposes of allocating resources.
Current wording
The Company operates as a single segment. The Company's chief operating decision maker is Scot Cohen, the Company's Executive Chairman and Chief Executive Officer, who manages operations for purposes of allocating resources. See Note 15, Segment Information, to the condensed consolidated financial statements for the significant expense categories regularly reviewed by the CODM and the reconciliation to consolidated loss from operations.
Previous wording
We reported net revenue of $1.1 million for the three months ended March 31, 2026, as compared to $765 thousand for the three months ended March 31, 2025, representing an increase of $346 thousand, or 45%. The increase reflects higher product sales, partially offset by a decline in technology-enabled revenue.
Current wording
We reported net revenue of $2.1 million for the three months ended June 30, 2026, as compared to $1.0 million for the three months ended June 30, 2025, representing an increase of $1.0 million, or 103%. The increase reflects higher product sales, partially offset by a decline in technology-enabled services revenue.
Previous wording
Selling, general and administrative (“SG&A”) expense was $5.4 million for the three months ended March 31, 2026, compared to $4.1 million for the three months ended March 31, 2025, an increase of $1.2 million, or 29%. The increase was driven primarily by higher non-cash share-based compensation expense.
Current wording
Selling, general and administrative (“SG&A”) expense was $3.6 million for the three months ended June 30, 2026, compared to $3.2 million for the three months ended June 30, 2025, an increase of $0.5 million, or 15%. The increase was driven primarily by higher non-cash share-based compensation expense.
Previous wording
Share-based compensation allocated to SG&A was $2.4 million for the three months ended March 31, 2026, compared to $1.6 million for the three months ended March 31, 2025, reflecting grants issued to new and existing employees and officers in connection with the grants of equity incentive awards in 2025.
Current wording
Share-based compensation allocated to SG&A was $1.2 million for the three months ended June 30, 2026, compared to $0.8 million for the three months ended June 30, 2025, reflecting grants issued to new and existing employees and officers in connection with equity incentive awards granted in 2025.
Previous wording
Change in Fair Value of Warrant Liabilities.* During the three months ended March 31, 2025, the Company recognized a $4.0 million non-cash gain attributable to the decrease in the fair value of outstanding warrant liabilities. On June 30, 2025, the Company amended its warrants issued in connection with the Series A Preferred Stock offering (the “Series A Warrants”) and its warrants issued in the February 2025 private placement (the “PIPE Warrants”), resulting in their reclassification from warrant liabilities to permanent equity under ASC 815-40. Following this reclassification, the Company no longer carries warrant liabilities on its balance sheet and does not record non-cash income or expense related to changes in warrant fair value. Accordingly, no such gain or loss was recognized during the three months ended March 31, 2026, and no comparable item is expected in future periods.
Current wording
Change in Fair Value of Warrant Liabilities.* During the three months ended June 30, 2025, the Company recognized an $871 thousand non-cash loss attributable to an increase in the fair value of outstanding warrant liabilities prior to their reclassification to permanent equity. On June 30, 2025, the Company amended its warrants issued in connection with the Series A Preferred Stock offering (the “Series A Warrants”) and its warrants issued in the February 2025 private placement (the “PIPE Warrants”), resulting in their reclassification from warrant liabilities to permanent equity under ASC 815-40. Following this reclassification, the Company no longer carries warrant liabilities on its balance sheet and does not record non-cash income or expense related to changes in warrant fair value. Accordingly, no such gain or loss was recognized during the three months ended June 30, 2026, and no comparable item is expected in future periods.
Previous wording
Interest Income.* Interest income was $1 thousand for the three months ended March 31, 2026, compared to $2 thousand for the three months ended March 31, 2025, reflecting a lower average balance of interest-bearing money market funds during the period.
Current wording
Interest Income.* Interest income was $2 thousand for the three months ended June 30, 2026, consistent with $2 thousand for the three months ended June 30, 2025.
Previous wording
Net loss attributable to common stockholders was $4.8 million, or $(0.09) per basic and diluted share, for the three months ended March 31, 2026, compared to a net loss attributable to common stockholders of $55 thousand, or $0.00 per basic and diluted share, for the three months ended March 31, 2025. The weighted average common shares used in the calculation were approximately 54.0 million for the three months ended March 31, 2026, compared to 48.4 million for the three months ended March 31, 2025, reflecting shares issued in the February 2025 private placement, the February 2026 private placement, and other equity issuances.
Current wording
Net loss attributable to common stockholders was $2.4 million, or $(0.04) per basic and diluted share, for the three months ended June 30, 2026, compared to a net loss attributable to common stockholders of $3.9 million, or $(0.07) per basic and diluted share, for the three months ended June 30, 2025. The weighted average common shares used in the calculation were approximately 55.7 million for the three months ended June 30, 2026, compared to 50.6 million for the three months ended June 30, 2025, reflecting shares issued in the February 2026 private placement and other equity issuances.
Previous wording
Product sales were $0.9 million for the three months ended March 31, 2026, compared to $0.3 million for the three months ended March 31, 2025, an increase of $0.6 million, or 186%. The increase reflects higher shipments of BolaWrap 150 devices and cassettes to both domestic and international customers as order flow improved following the transition to a more direct, agency-focused go-to-market approach. Cassettes and consumables represented a growing component of product revenue, consistent with the expanding base of BolaWrap devices in active field use.
Current wording
Product sales were $2.6 million for the six months ended June 30, 2026, compared to $0.4 million for the six months ended June 30, 2025, an increase of $2.3 million, or 633%. The increase reflects higher shipments of BolaWrap 150 devices and cassettes to both domestic and international customers as order flow continued to improve following the transition to a more direct, agency-focused go-to-market approach. Cassettes and consumables represented a growing component of product revenue, consistent with the expanding base of BolaWrap devices in active field use.
Previous wording
Technology-enabled services revenue was $0.2 million for the three months ended March 31, 2026, compared to $0.5 million for the three months ended March 31, 2025, a decrease of $0.2 million, or 50%. The decrease reflects the strategic restructuring of our managed services offerings following the Company's decision to wind down certain advisory and investigative service arrangements associated with the W1 asset acquisition in February 2025 and are not necessarily representative of the ongoing business. This decline was partially offset by growth in WrapVision body-worn camera and related software revenue. The Company is focusing its technology-enabled services revenue on its higher-margin subscription and software-based offerings, including WrapTactics and Wrap Reality, as well as WrapVision evidence management subscriptions. The timing of subscription renewals and new contract activations contributed to the year-over-year decline in this revenue category for the three months ended March 31, 2026.
Current wording
Technology-enabled services revenue was $0.5 million for the six months ended June 30, 2026, compared to $1.4 million for the six months ended June 30, 2025, a decrease of $0.9 million, or 62%. The decrease reflects the strategic restructuring of our managed services offerings following the Company's decision to wind down certain advisory and investigative service arrangements associated with the W1 asset acquisition in February 2025, which are not necessarily representative of the ongoing business. This decline was partially offset by growth in WrapVision body-worn camera and related software revenue. The Company is focusing its technology-enabled services revenue on its higher-margin subscription and software-based offerings, including WrapTactics and Wrap Reality, as well as WrapVision evidence management subscriptions. The timing of subscription renewals and new contract activations contributed to the year-over-year decline in this revenue category for the six months ended June 30, 2026.
Previous wording
Gross profit was $0.7 million for the three months ended March 31, 2026, compared to $0.6 million for the three months ended March 31, 2025, an increase of $0.1 million, or 16%. Gross margin was 62.2% for the three months ended March 31, 2026, compared to 77.8% for three months ended March 31, 2025. The decline in gross margin percentage reflects the shift in revenue mix toward hardware product sales, which carry lower margins than software subscriptions and managed services. BolaWrap devices and cassettes represent the majority of revenues for the three months ended March 31, 2026, and while product margins remain solid, they are lower than the margins generated by technology-enabled services in the prior-year period. Cost of revenues increased $0.3 million to $0.4 million, consistent with the higher product volume. We expect gross margins to improve as technology-enabled services revenue grows as a proportion of total revenue throughout 2026.
Current wording
Gross profit was $2.2 million for the six months ended June 30, 2026, compared to $1.1 million for the six months ended June 30, 2025, an increase of $1.2 million, or 106%. Gross margin was 70.7% for the six months ended June 30, 2026, compared to 60.9% for the six months ended June 30, 2025. The improvement in gross margin percentage reflects the significantly higher volume of product sales, which absorbed fixed manufacturing overhead more efficiently, partially offset by a shift in revenue mix away from higher-margin technology-enabled services. Cost of revenues increased $232 thousand to $0.9 million, consistent with the higher product volume. We expect gross margins to continue to be influenced by the relative mix of product sales and technology-enabled services revenue in future periods.
Previous wording
Cash-based SG&A costs, including salaries and burden, occupancy, marketing, and professional fees were $3.0 million for the three months ended March 31, 2026, compared to $2.5 million for the three months ended March 31, 2025. The increase of $0.5 million, or 20.3%, was primarily due to increased professional fees and offset by overall declines in office expense and other general and administrative expenses as the Company maintained ongoing cost discipline.
Current wording
Cash-based SG&A costs, including salaries and burden, occupancy, marketing, and professional fees were $5.4 million for the six months ended June 30, 2026, compared to $4.9 million for the six months ended June 30, 2025. The increase of approximately $0.5 million, or 11%, was primarily due to increased professional fees, partially offset by overall declines in office expense and other general and administrative expenses as the Company maintained ongoing cost discipline.
Previous wording
Research and development expense was $105 thousand for the three months ended March 31, 2026, compared to $378 thousand for the three months ended March 31, 2025, a decrease of $273 thousand, or 72%. The decrease reflects the Company's shift to a more variable-cost development model and reduced headcount dedicated to R&D activities, as the primary platforms — BolaWrap 150, WrapTactics, WrapVision, and Wrap Reality — have advanced beyond the primary development phase and are now in commercial deployment. R&D investment is expected to continue at a more modest level in 2026, focused on incremental product enhancements, the WrapTactics content library, and counter-UAS development activities for the MERLIN program.
Current wording
Research and development expense was $257 thousand for the six months ended June 30, 2026, compared to $594 thousand for the six months ended June 30, 2025, a decrease of $337 thousand, or 57%. The decrease reflects the Company's shift to a more variable-cost development model and reduced headcount dedicated to R&D activities, as the primary platforms — BolaWrap 150, WrapTactics, WrapVision, and Wrap Reality — have advanced beyond the primary development phase and are now in commercial deployment. R&D investment is expected to continue at a more modest level in 2026, focused on incremental product enhancements, the WrapTactics content library, and counter-UAS development activities for the MERLIN program.
Previous wording
Loss from operations was $4.8 million for the three months ended March 31, 2026, compared to $3.9 million for the three months ended March 31, 2025. The increased operating loss reflected higher operating expenses, driven primarily by an increase in non-cash share-based compensation expense, partially offset by increased gross profit.
Current wording
Loss from operations was $7.0 million for the six months ended June 30, 2026, compared to $6.8 million for the six months ended June 30, 2025, an increase of $243 thousand, or 4%. The increased operating loss reflected higher operating expenses, driven primarily by an increase in non-cash share-based compensation expense, substantially offset by increased gross profit.
Previous wording
Total other income, net was $229 thousand for the three months ended March 31, 2026, compared to $4.0 million for the three months ended March 31, 2025, a decrease of $3.8 million. The year-over-year change is primarily attributable to the non-recurrence of the non-cash gain from the change in fair value of warrant liabilities that was recorded during the three months ended March 31, 2025, partially offset by a non-cash gain on lease termination during the three months ended March 31, 2026.
Current wording
Total other income, net was $223 thousand for the six months ended June 30, 2026, compared to $3.2 million for the six months ended June 30, 2025, a decrease of $2.9 million. The year-over-year change is primarily attributable to the non-recurrence of the net non-cash gain from the change in fair value of warrant liabilities that was recorded during the six months ended June 30, 2025, partially offset by a non-cash gain on lease termination recognized during the six months ended June 30, 2026.
Previous wording
Gain on Lease Termination.* During the three months ended March 31, 2026, the Company recognized a $227 thousand gain on lease termination in connection with the early termination of the office lease at 3480 Main Highway, Suite 202, Miami, Florida (Coconut Grove). On February 13, 2026, the Company entered into a Termination and Mutual Release Agreement with the landlord, terminating the lease effective as of that date. Under ASC 842, upon termination the Company derecognized the carrying value of the operating lease right-of-use asset and the corresponding lease liability, resulting in the $227 thousand non-cash gain representing the excess of the liability extinguished over the right-of-use asset derecognized as of the termination date. The gain is non-cash and non-recurring in nature.
Current wording
Gain on Lease Termination.* During the six months ended June 30, 2026, the Company recognized a $227 thousand gain on lease termination in connection with the early termination of the office lease at 3480 Main Highway, Suite 202, Miami, Florida (Coconut Grove). On February 13, 2026, the Company entered into a Termination and Mutual Release Agreement with the landlord, terminating the lease effective as of that date. Under ASC 842, upon termination the Company derecognized the carrying value of the operating lease right-of-use asset and the corresponding lease liability, resulting in the $227 thousand non-cash gain representing the excess of the liability extinguished over the right-of-use asset derecognized as of the termination date. The gain is non-cash and non-recurring in nature.
Previous wording
Net Loss. Net loss was $4.5 million for the three months ended March 31, 2026, compared to net income of $109 thousand for the three months ended March 31, 2025. The change from net income to net loss reflects the non-recurrence of the $4.0 million non-cash warrant fair value gain, partially offset by the $227 thousand non-cash gain on lease termination.
Current wording
Net Loss. Net loss was $6.8 million for the six months ended June 30, 2026, compared to net loss of $3.6 million for the six months ended June 30, 2025. The increase in net loss primarily reflects the non-recurrence of the $3.2 million non-cash net gain from the change in fair value of warrant liabilities recorded in the prior-year period, partially offset by the $227 thousand non-cash gain on lease termination recognized in the current-year period.
Previous wording
As of March 31, 2026, we had cash and cash equivalents of $7.3 million and working capital of $12.6 million (total current assets of $14.5 million less total current liabilities of $1.9 million). This compares to cash and cash equivalents of $3.5 million and working capital of $9.6 million as of December 31, 2025. The $3.8 million increase in cash during the quarter was driven primarily by $5.0 million in proceeds from the February 2026 private placement and $100 thousand from warrant exercises, partially offset by $1.2 million of cash used in operations and $58 thousand used in investing activities.
Current wording
As of June 30, 2026, we had cash and cash equivalents of $4.8 million and working capital of $11.6 million (total current assets of $13.2 million less total current liabilities of $1.6 million). This compares to cash and cash equivalents of $3.5 million and working capital of $9.6 million as of December 31, 2025. The $1.3 million increase in cash during the six months ended June 30, 2026 was driven primarily by $5.0 million in proceeds from the February 2026 private placement and $100 thousand from warrant exercises, partially offset by $3.7 million of cash used in operations and $108 thousand used in investing activities.
Previous wording
Total liabilities decreased to $2.3 million as of March 31, 2026, from $3.9 million as of December 31, 2025. This decline was principally driven by the derecognition of the long-term operating lease liability of $2.1 million upon termination of the Coconut Grove, Florida lease (3480 Main Highway, Suite 202, Miami, Florida), partially offset by increases in accounts payable and accrued liabilities associated with the Company's normal business operations. Total stockholders' equity increased to $14.4 million from $11.5 million, reflecting the $5.1 million in net equity proceeds from the private placement and warrant exercises, offset by the net loss for the period.
Current wording
Total liabilities decreased to $2.0 million as of June 30, 2026, from $3.9 million as of December 31, 2025. This decline was principally driven by the derecognition of the operating lease liability upon termination of the Coconut Grove, Florida lease (3480 Main Highway, Suite 202, Miami, Florida), partially offset by increases in accounts payable and customer deposits associated with the Company's normal business operations. Total stockholders' equity increased to $13.3 million from $11.5 million, reflecting $5.1 million in net equity proceeds from the private placement and warrant exercises and non-cash share-based compensation expense, offset by the net loss for the period.
Previous wording
On February 2, 2026, we entered into the February 2026 Purchase Agreement with the February 2026 Purchasers for the issuance and sale in a private placement of (i) an aggregate of 1,700,000 shares of Common Stock, (ii) Pre-Funded Warrants to purchase up to 800,000 shares of Common Stock, with an exercise price of $0.0001 per share, and (iii) February 2026 Common Warrants to purchase up to 2,500,000 shares of Common Stock, with an exercise price of $2.30 per share. The purchase price for one share of Common Stock and accompanying February 2026 Common Warrant was $2.00 and the purchase price for one Pre-Funded Warrant and accompanying February 2026 Common Warrant was $1.9999.
Current wording
On February 2, 2026, we entered into the February 2026 Purchase Agreement with the February 2026 Purchasers for the issuance and sale in a private placement of (i) an aggregate of 1,700,000 shares of Common Stock, (ii) Pre-Funded Warrants to purchase up to 800,000 shares of Common Stock, with an exercise price of $0.0001 per share, and (iii) February 2026 Common Warrants to purchase up to 2,500,000 shares of Common Stock, with an exercise price of $2.30 per share. The purchase price for one share of Common Stock and accompanying February 2026 Common Warrant was $2.00 and the purchase price for one Pre-Funded Warrant and accompanying February 2026 Common Warrant was $1.9999. The Pre-Funded Warrants expire when exercised in full, and the February 2026 Common Warrants expire on February 3, 2031, five years from the date of issuance.
Previous wording
Net cash used in operating activities was $1.2 million for the three months ended March 31, 2026, compared to $3.1 million for the three months ended March 31, 2025. The significant improvement of $1.9 million year-over-year was driven by more favorable working capital changes and a lower operating loss on a cash basis, partially offset by the non-recurrence of changes in warrant-related items. The primary components of operating cash flow for the three months ended March 31, 2026 were the net loss of $4.5 million, adjusted for non-cash items including share-based compensation of $2.4 million and the non-cash $227 thousand gain on lease termination. Changes in working capital were a source of cash of approximately $1.0 million in the three months ended March 31, 2026, driven by collections of accounts receivable of $797 thousand and inventory reductions of $326 thousand, partially offset by an increase in prepaid expenses and deposits of $380 thousand.
Current wording
Net cash used in operating activities was $3.7 million for the six months ended June 30, 2026, compared to $5.0 million for the six months ended June 30, 2025. The improvement of $1.3 million year-over-year was driven by a lower cash operating loss and the non-cash gain on lease termination, partially offset by less favorable changes in working capital as compared to the prior-year period. The primary components of operating cash flow for the six months ended June 30, 2026 were the net loss of $6.8 million, adjusted for non-cash items including share-based compensation of $3.6 million and the non-cash $227 thousand gain on lease termination. Changes in working capital used approximately $0.6 million of cash during the six months ended June 30, 2026, driven by an increase in accounts receivable and contract assets of $667 thousand and an increase in prepaid expenses and other current assets of $535 thousand, partially offset by a decrease in inventories of $590 thousand and an increase in accounts payable of $144 thousand. This compares to changes in working capital that used approximately $1.0 million of cash during the six months ended June 30, 2025.
Previous wording
Net cash used in investing activities was $58 thousand for the three months ended March 31, 2026, compared to $100 thousand for the three months ended March 31, 2025. Investing outflows in the three months ended March 31, 2026 consisted of $53 thousand invested in patents and other intangible assets and $5 thousand in capital expenditures for property and equipment. The $54 thousand paid for the W1 asset acquisition in the three months ended March 31, 2025 did not recur.
Current wording
Net cash used in investing activities was $108 thousand for the six months ended June 30, 2026, compared to $153 thousand for the six months ended June 30, 2025. Investing outflows in the six months ended June 30, 2026 consisted of $97 thousand invested in patents and other intangible assets and $11 thousand in capital expenditures for property and equipment.
Previous wording
Net cash provided by financing activities was $5.1 million for the three months ended March 31, 2026, compared to $5.7 million for the three months ended March 31, 2025. Financing inflows in the three months ended March 31, 2026 consisted of $5.0 million in net proceeds from a private placement of common stock and $100 thousand from the exercise of warrants. No dividends on the Series A or Series B Convertible Preferred Stock were paid in cash during the three months ended March 31, 2026; dividends of $249 thousand were settled in shares of Common Stock.
Current wording
Net cash provided by financing activities was $5.1 million for the six months ended June 30, 2026, compared to $5.7 million for the six months ended June 30, 2025. Financing inflows in the six months ended June 30, 2026 consisted of $5.0 million in net proceeds from the February 2026 private placement and $100 thousand from the exercise of outstanding common stock purchase warrants. Financing inflows in the six months ended June 30, 2025 consisted of $5.7 million in net proceeds from the February 2025 private placement of common stock and warrants. No dividends on the Series A Convertible Preferred Stock or Series B Convertible Preferred Stock were paid in cash during the six months ended June 30, 2026; dividends of $411 thousand were settled in shares of Common Stock.
Previous wording
In March 2026, the Company entered into a month-to-month service agreement for a business address located in Miami, Florida, at an approximate monthly cost of $165. The agreement may be terminated by either party in accordance with its terms. The Company does not have any material long-term debt obligations as of March 31, 2026.
Current wording
In March 2026, the Company entered into a month-to-month service agreement for a business address located in Miami, Florida, at an approximate monthly cost of $165. The agreement may be terminated by either party in accordance with its terms.
Previous wording
There have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2026, or subsequently thereto, that we believe are of potential significance to our financial statements.
Current wording
There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2026, or subsequently thereto, that we believe are of potential significance to our financial statements.
Previous wording
There have been no significant changes to our critical accounting policies and estimates from those described in the Annual Report. Our critical accounting policies include revenue recognition, share-based compensation, allowance for credit losses, valuation of inventories and intangible assets. The gain on lease termination recorded in the three months ended March 31, 2026 was determined based on the carrying values of the derecognized right-of-use asset and lease liability at the termination date in accordance with ASC 842.
Current wording
There have been no significant changes to our critical accounting policies and estimates from those described in the Annual Report. Our critical accounting policies include revenue recognition, share-based compensation, allowance for credit losses, valuation of inventories and intangible assets. The gain on lease termination recorded in the six months ended June 30, 2026 was determined based on the carrying values of the derecognized right-of-use asset and lease liability at the termination date in accordance with ASC 842.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
Wrap Reality and WrapTactics are designed to deliver immersive VR and subscription-based digital training focused on decision-making under stress, use of force judgment, and non-lethal response tactics. WrapVision provides a body-worn camera and cloud-based digital evidence management platform designed to meet federal procurement and data-sovereignty requirements.
Current report — wording carried from elsewhere
We are also expanding our tether deployment technology into counter UAS and defense applications through our MERLIN program, which management expects to advance within the WrapShield platform, and which targets non-lethal drone interdiction capabilities for defense, homeland security, and critical-infrastructure protection missions.
Current report — wording carried from elsewhere
Product sales were $1.7 million for the three months ended June 30, 2026, compared to $50 thousand for the three months ended June 30, 2025, an increase of $1.7 million. The increase reflects higher shipments of BolaWrap 150 devices and cassettes to both domestic and international customers, as order flow continued to improve following the transition to a more direct, agency-focused go-to-market approach. Cassettes and consumables represented a growing component of product revenue, consistent with the expanding base of BolaWrap devices in active field use. Product sales for the three months ended June 30, 2025 reflected an unusually low level of shipments as compared to more typical quarterly volumes.
Current report — wording carried from elsewhere
Technology-enabled services revenue was $0.3 million for the three months ended June 30, 2026, compared to $1.0 million for the three months ended June 30, 2025, a decrease of $0.7 million, or 68%. The decrease reflects the continued wind-down of the managed services and advisory arrangements associated with the W1 asset acquisition completed in February 2025, which contributed a higher level of revenue in the prior-year quarter and are not necessarily representative of the ongoing business. This decline was partially offset by growth in WrapVision body-worn camera and related software revenue. The Company continues to focus its technology-enabled services revenue on its higher-margin subscription and software-based offerings, including WrapTactics and Wrap Reality, as well as WrapVision evidence management subscriptions. The timing of subscription renewals and new contract activations also contributed to the year-over-year decline in this revenue category for the three months ended June 30, 2026.
Current report — wording carried from elsewhere
Cash-based SG&A costs, including salaries and burden, occupancy, marketing, and professional fees were $2.5 million for the three months ended June 30, 2026, compared to $2.4 million for the three months ended June 30, 2025. The increase of approximately $49 thousand, or 2%, was primarily due to increased professional fees, largely offset by ongoing cost discipline across office and other general and administrative expenses.
Current report — wording carried from elsewhere
Research and development expense was $152 thousand for the three months ended June 30, 2026, compared to $162 thousand for the three months ended June 30, 2025, a decrease of $10 thousand, or 6%. R&D spending remained at a modest level as the Company's primary platforms — BolaWrap 150, WrapTactics, WrapVision, and Wrap Reality — remain in commercial deployment, with continued investment focused on incremental product enhancements, the WrapTactics content library, and counter-UAS development activities for the MERLIN program.
Current report — wording carried from elsewhere
The following table sets forth for the periods indicated certain items of our condensed consolidated statement of operations. The financial information and the discussion below should be read in conjunction with the financial statements and notes contained in this Quarterly Report on Form 10-Q.
Current report — wording carried from elsewhere
We reported net revenue of $3.2 million for the six months ended June 30, 2026, as compared to $1.8 million for the six months ended June 30, 2025, representing an increase of $1.4 million, or 78%. The increase reflects higher product sales, partially offset by a decline in technology-enabled services revenue.
Current report — wording carried from elsewhere
Prior period "Managed services" and "Other revenue" have been reclassified into "Technology enabled services" to conform to the current period presentation.
Current report — wording carried from elsewhere
Share-based compensation allocated to SG&A was $3.6 million for the six months ended June 30, 2026, compared to $2.4 million for the six months ended June 30, 2025, reflecting grants issued to new and existing employees and officers in connection with equity incentive awards granted in 2025.
Current report — wording carried from elsewhere
Change in Fair Value of Warrant Liabilities.* During the six months ended June 30, 2025, the Company recognized a net non-cash gain of $3.2 million attributable to changes in the fair value of outstanding warrant liabilities, consisting of a $4.0 million gain recognized during the three months ended March 31, 2025, partially offset by an $871 thousand loss recognized during the three months ended June 30, 2025, prior to the warrants' reclassification to permanent equity. On June 30, 2025, the Company amended its warrants issued in connection with the Series A Preferred Stock offering (the “Series A Warrants”) and its warrants issued in the February 2025 private placement (the “PIPE Warrants”), resulting in their reclassification from warrant liabilities to permanent equity under ASC 815-40. Following this reclassification, the Company no longer carries warrant liabilities on its balance sheet and does not record non-cash income or expense related to changes in warrant fair value. Accordingly, no such gain or loss was recognized during the six months ended June 30, 2026, and no comparable item is expected in future periods.
Current report — wording carried from elsewhere
Net loss attributable to common stockholders was $7.2 million, or $(0.13) per basic and diluted share, for the six months ended June 30, 2026, compared to a net loss attributable to common stockholders of $3.9 million, or $(0.07) per basic and diluted share, for the six months ended June 30, 2025. The weighted average common shares used in the calculation were approximately 54.9 million for the six months ended June 30, 2026, compared to 49.4 million for the six months ended June 30, 2025, reflecting shares issued in the February 2025 private placement, the February 2026 private placement, and other equity issuances.
Current report — wording carried from elsewhere
The Company does not have any material long-term debt obligations as of June 30, 2026.