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 September 30, 2025

☐ 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)

3480 Main Hwy, Suite 202

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 November 11, 2025 a total of 51,549,094 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	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

SIGNATURES		43

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Wrap Technologies, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value and share amounts)

(unaudited)

		September 30, 2025			December 31, 2024

ASSETS
Current Assets:
Cash and cash equivalents	$	5,965		$	3,610
Accounts receivable, net		1,822			513
Inventories, net		5,461			6,170
Prepaids and deposits		334			178
Total Current Assets		13,582			10,471
Property and equipment, net		138			146
Operating lease right of use assets, net		2,242			1,964
Intangible assets, net		2,147			2,354
Other assets, net		128			186
Total Assets	$	18,237		$	15,121

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable		596			609
Accrued liabilities		563			1,403
Customer deposits		61			27
Deferred revenue - short term		382			466
Operating lease liability - short term		305			567
Warrants- short term		-			10,131
Total Current Liabilities		1,907			13,203

Deferred revenue - long term		18			39
Operating lease liability - long term		2,186			1,629
Total long-term liabilities	$	2,204		$	1,668
Total Liabilities	$	4,111		$	14,871

Commitments and Contingencies

Stockholders' Equity
Preferred stock - 5,000,000 authorized; par value $0.0001 per share; 12,707 shares issued and outstanding at September 30, 2025, and December 31, 2024		-			-
Common stock - 150,000,000 authorized; par value $0.0001 per share; 51,497,710 and 47,101,631 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively	$	5		$	5
Series A convertible preferred stocks - 10,000 authorized, par value $0.0001 per share; 8,207 shares issued and outstanding at September 30, 2025 and December 31, 2024		-			-
Series B convertible preferred stocks - 4,500 authorized, par value $0.0001 per share, 4,500 and 0 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		-			-
Additional paid-in capital		126,085			105,326
Accumulated deficit		(111,964	)		(105,081	)
Total Stockholders' Equity		14,126			250
Total Liabilities and Stockholders' Equity	$	18,237		$	15,121

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 September 30,						Nine Months Ended September 30,
		2025			2024			2025			2024
Revenues:
Product sales		1,743		$	434			2,293		$	3,012
Managed services		242			-			1,241			-
Technology enabled services		37			159			265			630
Total revenues, gross		2,022			593			3,799			3,642
Sales returns and allowances		(531	)		-			(531	)		-
Total revenues, net		1,491			593			3,268			3,642
Cost of revenues		608			358			1,303			1,587
Gross profit		883			235			1,965			2,055

Operating Expenses:
Selling, general and administrative		3,477			3,334			10,887			11,029
Research and development		167			527			619			1,960
Total operating expenses		3,644			3,861			11,506			12,989
Loss from operations		(2,761	)		(3,626	)		(9,541	)		(10,934	)

Other income / (expense):
Interest income		2			21			6			154
Change in fair value of warranty liabilities		-			5,600			3,158			12,517
Other		(14	)		(5	)		(14	)		(15	)
Total other income / (expense), net		(12	)		5,616			3,150			12,656
Net (loss) income	$	(2,773	)	$	1,990		$	(6,391	)	$	1,722

Less: convertible preferred stock dividends		(164	)		(317	)		(492	)		(1,017	)
Net (loss) income attributable to common stockholders	$	(2,937	)	$	1,673		$	(6,883	)	$	705

Net (loss) income per basic and diluted share of Common Stock	$	(0.06	)	$	0.04		$	(0.14	)	$	0.02
Weighted average common shares used to compute net loss per basic and diluted shares of Common Stock		51,096,292			45,861,208			49,998,057			45,067,793

Comprehensive (loss) income:
Net (loss) income	$	(2,773	)	$	1,990		$	(6,391	)	$	1,722
Comprehensive (loss) income	$	(2,773	)	$	1,990		$	(6,391	)	$	1,722

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)


Three Months Ended September 30, 2025
					Series A Convertible				Series B Convertible						Additional					Total
	Common Stock				Preferred Stock				Preferred Stock						Paid-in		Accumulated			Stockholders’
		Shares		Amount		Shares		Amount		Shares		Amount			Capital		Deficit			Equity
Balance at July 1, 2025		50,728,535	$	5		8,207	$	-		-	$	-	$	$	120,783	$	(109,027	)	$	11,761
Share-based compensation expense		-		-		-		-		-		-			638		-			638
Dividends on convertible preferred stock		153,409		-		-		-		-		-			164		(164	)		-
Common Stock issued upon vesting of restricted stock units		615,766		-		-		-		-		-			-		-			-
Series B Convertible Preferred Stock issuance		-		-		-		-		4,500		-			4,500		-			4,500
Reclassification of warrant liability due to warrant amendment		-		-		-		-		-		-			-		-			-
Net loss for the period		-		-		-		-		-		-			-		(2,773	)		(2,773	)
Balance at September 30, 2025		51,497,710		5		8,207	$	-		4,500	$	-		$	126,085	$	(111,964	)	$	14,126

Nine months Ended September 30, 2025

Balance at January 1, 2025		47,101,631	$	5		8,207	$	-		-	$	-		$	105,326	$	(105,081	)	$	250
Share-based compensation expense		-		-		-		-		-		-			3,073		-			3,073
Dividends on convertible preferred stock		406,045		-		-		-		-		-			492		(492	)		-
Common Stock issued upon vesting of restricted stock units		773,368		-		-		-		-		-			-		-			-
Series B Convertible Preferred Stock issuance		-		-		-		-		4,500		-			4,500		-			4,500
Common Stock issued with Private Placement		3,216,666		-		-		-		-		-			543		-			543
Reclassification of warrant liability due to warrant amendment		-		-		-		-		-		-			12,151		-			12,151
Net loss for the period		-		-		-		-		-		-			-		(6,391	)		(6,391	)
Balance at September 30, 2025		51,497,710	$	5		8,207	$	-		4,500	$	-		$	126,085	$	(111,964	)	$	14,126

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)


Three Months Ended September 30, 2024
					Series A Convertible					Series B Convertible					Additional						Total
	Common Stock				Preferred Stock					Preferred Stock					Paid-in			Accumulated			Stockholders’
		Shares		Amount		Shares			Amount		Shares		Amount		Capital			Deficit			Equity

Balance at July 1, 2024		45,793,112	$	4		8,207		$	-		-	$	-	$	102,793		$	(98,956	)	$	3,841
Share-based compensation expense		-		-		-			-		-		-		896			-			896
Dividends on convertible preferred stock		-		-		-			-		-		-		(4	)		(317	)		(321	)
Common Stock issued upon convertible preferred stock exercising conversion rights		-		-		-			-		-		-		-			-			-
Common Stock issued upon vesting of restricted stock units		76,278		-		-			-		-		-		-			-			-
Net income for the period		-		-		-			-		-		-		-			1,990			1,990
Balance at September 30, 2024		45,869,390	$	4		8,207		$	-		-	$	-	$	103,685		$	(97,283	)	$	6,406
													-
Nine months Ended September 30, 2024

Balance at January 1, 2024		43,855,503	$	4		9,898		$	-		-	$	-	$	101,147		$	(97,988	)	$	3,163
Common Stock issued upon exercise of stock options		232,081		-		-			-		-		-		588			-			588
Share-based compensation expense		-		-		-			-		-		-		1,814			-			1,814
Dividends on convertible preferred stock		128,233		-		-			-		-		-		136			(1,017	)		(881	)
Common Stock issued upon convertible preferred stock exercising conversion rights		1,391,183		-		(1,691	)		-		-		-		-			-			-
Common Stock issued upon vesting of restricted stock units		262,390		-		-			-		-		-		-			-			-
Net income for the period		-		-		-			-		-		-		-			1,722			1,722
Balance at September 30, 2024		45,869,390	$	4		8,207		$	-		-	$	-	$	103,685		$	(97,283	)	$	6,406

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

Wrap Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Nine Months ended September 30,
		2025			2024
Cash Flows From Operating Activities:
Net (loss) income	$	(6,391	)	$	1,722
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		455			646
Loss on disposition of assets		9			-
Share-based compensation		3,073			1,814
Warranty provision		42			(37	)
Change in fair value of warrant liabilities		(3,158	)		(12,517	)
Non-cash lease expense		(278	)		217
Provision for doubtful accounts		35			(89	)
Inventory obsolescence reserve		(397	)		12

Changes in assets and liabilities:
Accounts receivable		(1,344	)		2,337
Inventories		1,106			(529	)
Prepaid expenses and other current assets		(156	)		666
Accounts payable		(13	)		168
Operating lease liability		295			(99	)
Customer deposits		34			(956	)
Accrued liabilities and other		(876	)		(370	)
Warranty settlement		(13	)		(42	)
Deferred revenue		(105	)		130
Changes in other non-current assets		58			8
Net cash used in operating activities		(7,624	)		(6,919	)

Cash Flows From Investing Activities:
Proceeds from maturities of short-term investments		-			7,500
Capital expenditures for property and equipment		(93	)		(13	)
Investment in patents and trademarks		(156	)		(124	)
Net cash (used in) provided by investing activities		(249	)		7,363

Cash Flows From Financing Activities:
Proceeds from exercise of stock options		-			588
Proceeds from issuance of Series B convertible preferred stock		4,500			-
Proceeds from issuance of warrants and common stock, net of offering costs		5,728			-
Dividends settled in cash		-			(120	)
Net cash provided by financing activities		10,228			468

Net increase in cash and cash equivalents		2,355			912
Cash and cash equivalents, beginning of period		3,610			3,955
Cash and cash equivalents, end of period	$	5,965		$	4,867

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Reclassification of warrant liabilities to additional paid in capital	$

SEC Form 10-Q filed by Wrap Technologies Inc.