WRAP 10-Q

Wrap Technologies, Inc. (WRAP)

10-Q 2026-08-11 For: 2026-06-30

View Original

Added on August 11, 2026

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

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


		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


		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



	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	)


	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


		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
		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


		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


		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


		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	)		(870	)
Total amortizable, net	$	1,182		$	1,151
Indefinite life assets (non-amortizable)		421			421
Total intangible assets, net	$	1,603		$	1,572


2026 (6 months)	$	62
2027		123
2028		123
2029		122
2030		122
Thereafter		630
Total	$	1,182


		June 30, 2026		December 31, 2025

Patent and legal costs	$	115	$	111
Accrued compensation		10		2
Warranty costs		56		30
Royalty		99		99
Accrued purchases		-		6
Taxes and other		30		159
Total accrued liabilities	$	310	$	407

			Weighted Average
	Options on Common Shares			Exercise Price	Remaining Contractual Terms		Aggregate Intrinsic Value

Outstanding December 31, 2025	6,449,534		$	2.05	8.56	$	3,706
Granted	4,818,500			2.12	-		-
Exercised	-			-	-		-
Forfeited, cancelled, expired	(1,219,917	)		2.38	-		-
Outstanding June 30, 2026	10,048,117			2.04	8.72		6
Exercisable June 30, 2026	2,994,159		$	2.16	8.02	$	-


	Six Months Ended June 30,
		2026			2025

Balance, beginning of period	$	30		$	83
Warranty settlements		(5	)		(10	)
Warranty provision		31			2
Balance, end of period	$	56		$	75

2026 (6 months)	$	60
2027		120
2028		120
2029		120
2030		90
Thereafter		-
Total future minimum lease payments		510
Less imputed interest		(74	)
Total	$	436


	Six Months Ended June 30,
		2026			2025

Expected stock price volatility		76	%		76	%
Risk-free interest rate		3.90	%		4.06	%
Expected dividend yield		0	%		0	%
Expected life of options		5.91			6.00
Weighted-average fair value of options granted	$	1.47		$	1.05


			Weighted Average
	Service-Based RSUs			Grant Date Fair Value	Vesting Period (Years)

Unvested at December 31, 2025	1,014,563		$	2.23	3.62
Granted service based	179,267			1.96	-
Vested	(164,518	)		1.96	-
Forfeited and cancelled	-			-	-
Unvested at June 30, 2026	1,029,312		$	2.23	3.57


	Three Months Ended June 30,						Change
		2026			2025			$		%

Revenues:
Product sales	$	1,747		$	50		$	1,697		3,394	%
Technology enabled services		305			962			(657	)	(68	)%
Total revenues		2,052			1,012			1,040		103	%

Cost of revenues		507			525			(18	)	(3	)%
Gross profit		1,545			487			1,058		217	%

Operating expenses:
Selling, general and administrative		3,644			3,181			463		15	%
Research and development		152			162			(10	)	(6	)%
Total operating expenses		3,796			3,343			453		14	%
Loss from operations	$	(2,251	)	$	(2,856	)	$	605		(21	)%

	●	Decisions regarding staffing, development, production, marketing and other functions;

	●	The timing and extent of market acceptance of our products;

	●	Costs, timing and outcome of planned production and required customer and regulatory compliance of our products;

	●	Costs of preparing, filing and prosecuting our patent applications and defending any future intellectual property-related claims;

	●	Costs and timing of additional product development;

	●	Costs, timing and outcome of any future warranty claims or litigation against us associated with any of our products;

	●	Ability to collect accounts receivable; and

	●	Timing and costs associated with any new financing.

	●	Volatility in the capital markets; and

	●	Market price and trading volume of our Common Stock.

Exhibit Number		Description
10.1		Securities Purchase Agreement, dated July 7, 2026, by and among the Company, Frenel Imaging Ltd. and certain other investors listed on the signature paged thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 13, 2026).
10.2		Amended and Restated Investors’ Rights Agreement, dated July 7, 2026, by and among the Company, Frenel Imaging Ltd. and certain Frenel Imaging Ltd. shareholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 13, 2026).
10.3		Exclusive Distribution and License Agreement, dated July 7, 2026, by and between the Company and Frenel Imaging Ltd. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 13, 2026).
31.1*		Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer
31.2*		Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Officer.
32.1**		Section 1350 Certification - Principal Executive Officer
32.2**		Section 1350 Certification - Principal Financial Officer
Extensible Business Reporting Language (XBRL) Exhibits*
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document and include in Exhibit 101)

	Wrap Technologies, Inc.

August 11, 2026	By:	/s/ Scot Cohen
		Scot Cohen Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)