NASDAQ: WRAP

On September 19, 2025, we formed a new wholly-owned subsidiary of the Company, Wrap Federal, LLC (“Wrap Federal”), under the laws of the State of Delaware. Wrap Federal was established for the purpose of supporting U.S. federal government clients in the Department of Defense, Department of Homeland Security, and other federal agencies. We believe a continued focus on integrating our systems into existing federal frameworks supports our goal of becoming a fully integrated federal public safety and defense technology enterprise.

On February 18, 2025, we entered into an Asset Purchase Agreement with W1 Global, LLC (“W1”), a Delaware limited liability company (the “W1 Purchase Agreement”), dated as of February 18, 2025, pursuant to which, subject to the terms and conditions set forth therein, we acquired substantially all the assets of W1 used in, held for use in or relating to the business of advisory and investigative professional services, which were primarily the customer contracts assigned at the closing (collectively, the “Acquired Assets”), for a nominal purchase price. We acquired W1 to integrate technology enablement into its core offerings and expand into managed technology services supporting the BolaWrap go-to market strategy.

Following a third-quarter evaluation, the Company determined that W1’s investigative services were not essential to Wrap’s domestic or international expansion; however, customers strongly valued managed services related to policy and training. As a result, Wrap will continue focusing on technology enabled services in policy governance and training to advance the next era of non-lethal technology development, delivering an integrated response package that combines technology with the support, policy alignment, and governance needed for adoption at the state and federal levels.

Industry Background

Public safety agencies worldwide operate under growing expectations for accountability, proportional use of force, and transparency in encounters with the public. The prevalence of body-worn cameras, bystander video, and real-time media coverage has created an environment in which officers are expected to demonstrate measured, defensible decision-making in dynamic and often unpredictable situations. At the same time, law enforcement encounters involving individuals in mental health crisis, substance-related impairment, or emotional disturbance continue to rise, placing additional demands on officers who must resolve these encounters safely while managing legal, tactical, and public perception risks.

These dynamics are driving demand across the public safety sector for tools, training, and operational frameworks that give officers the ability to gain proactive, lawful control of encounters earlier, before situations escalate to the point where higher-force options may be the only alternative. Traditional force options available to officers, including conducted energy weapons, chemical agents, impact projectiles, and batons, rely on pain compliance or neuromuscular incapacitation to gain control. While effective in certain circumstances, these tools carry inherent risks of injury and are often perceived by officers as too high a level of force to deploy early in an encounter, particularly when the subject has not yet become physically combative. This creates an operational gap between verbal commands and pain-compliance tools in which officers frequently have limited options.

Our BolaWrap product line is designed to address this gap by giving officers a non-lethal option that creates a controlled interruption through sight, sound, and sensation, providing time, space, and tactical advantage to manage the encounter before contact distance collapses, and without relying on pain compliance. We believe the adoption of non-lethal tools like BolaWrap can reduce the frequency and severity of use-of-force incidents, potentially lowering the legal, financial, and reputational costs associated with excessive force claims, settlements, and related litigation. More broadly, we believe that equipping officers with integrated non-lethal solutions that combine tools, training, and tactics can improve community trust and strengthen the relationship between public safety agencies and the communities they serve.

Our goal is to equip every public safety officer and agency with an integrated system of non-lethal tools, training, and tactics that they carry and apply every day, supporting safer outcomes for officers, subjects, and the public.

Markets and Customers

We participate in multiple segments of the global public safety and defense technology markets. Our addressable markets include the non-lethal tools market, the law enforcement and public safety training market, the body-worn camera and digital evidence management market, and the emerging counter-unmanned aircraft system market. The following describes our principal market opportunities:

Domestic and International Law Enforcement:

Our products and services are primarily targeted at federal, state, and local law enforcement agencies in the United States. According to the Bureau of Justice Statistics, as of March 2025 there are more than 18,000 law enforcement agencies and approximately 900,000 full-time sworn law enforcement officers in the U.S., including over 100,000 full-time federal officers. Our product and service portfolio, including BolaWrap, WrapTactics, Wrap Reality, and WrapVision, is designed to serve the operational needs of these agencies across tools and training.

We have also identified an international market opportunity encompassing an estimated 12 million police officers across more than 190 countries. We have shipped our products to over 60 countries and maintain a network of international distributors. We anticipate that international markets will represent a meaningful portion of our sales over time, driven in part by the centralized procurement decision-making processes common in many countries with large national police forces. Conversely, the U.S. market is more fragmented, with a large number of smaller agencies and longer procurement and sales cycles. International sales may be uneven from period to period due to the timing of national-level purchase decisions and the relatively large size of individual orders.

Non-Lethal Tools

According to Straits Research, the global non-lethal weapons market was valued at approximately $9.9 billion in 2024 and is expected to grow to approximately $19.1 billion by 2033, representing a compound annual growth rate of 7.6%. We believe that BolaWrap occupies a distinct position within this market because it does not rely on pain compliance or neuromuscular incapacitation, differentiating it from most existing non-lethal force options and addressing the operational gap described above.

Correctional Facilities

According to the U.S. Bureau of Justice Statistics ("Census of State and Federal Correctional Facilities, 2019," published November 2022), there were approximately 240,000 correctional officers in over 1,000 federal and state correctional facilities in the United States. Most correctional facilities fall under federal, state, or local jurisdiction and we believe these facilities represent a meaningful market for our products and services, including the use of Wrap Reality for law enforcement and societal reentry training, WrapTactics for officer readiness and skill retention, BolaWrap for use within and around correctional environments, and WrapVision body-worn cameras and our digital evidence management platform to support transparency, incident documentation, and evidentiary requirements within correctional settings.

Law Enforcement Training

According to Coherent Market Insights, the U.S. law enforcement training market was valued at approximately $4.0 billion in 2025 and is expected to reach approximately $5.4 billion by 2032, representing a compound annual growth rate of 4.5%. The market is experiencing growing adoption of virtual reality and simulation-based training, as well as increased focus on decision-making, human-factors awareness, and use-of-force judgment. Our Wrap Reality VR platform and WrapTactics digital training subscription are designed to participate in this market, offering agencies both immersive scenario-based simulation and continuous, low-burden digital training that helps prevent skill decay and sustain tactical readiness between in-person training events.

Body-Worn Cameras and Digital Evidence Management

The body-worn camera and digital evidence management markets are driven by growing government mandates, public expectations for transparency, and increasing adoption of cloud-based, AI-enabled evidence platforms. According to Mordor Intelligence, the global body-worn camera market was valued at approximately $2.9 billion in 2025 and is expected to reach approximately $4.1 billion by 2030, with law enforcement agencies representing the largest end-user segment. Separately, the global evidence management market was estimated at approximately $9.7 billion in 2025 and is expected to reach approximately $16.1 billion by 2030, representing a compound annual growth rate of 10.8%. Our WrapVision body-worn camera and cloud-based digital evidence management platform are designed to serve agencies seeking integrated accountability and evidence solutions that complement their non-lethal and training investments.

Counter-Unmanned Aircraft Systems (C-UAS)

According to MarketsandMarkets, the global counter-unmanned aircraft system market is estimated at approximately $6.6 billion in 2025 and is projected to reach approximately $20.3 billion by 2030, representing a compound annual growth rate of 25.1%. North America is projected to be the fastest-growing region, driven by defense spending, homeland security initiatives, and increasing drone-related threats to critical infrastructure. Through our MERLIN program, as well as additional research and development initiatives, we are applying our proprietary mechanical entanglement technology and modular cassette-based platform architecture to address non-lethal drone interdiction requirements across defense, homeland security, and critical-infrastructure protection missions. These programs remain in various stages of development and evaluation.

Private Security Firms and Guard Services

According to the Bureau of Labor Statistics, there were approximately 1.1 million privately employed security guards in the United States. They represent a broad range of individuals, including those employed by investigation and security services, hospitals, schools, local government, and others. We believe that the use of BolaWrap by security personnel could effectively provide a proactive, non-lethal option to gain control of encounters without relying on higher-force alternatives, potentially reducing the liability exposure of private security companies and their personnel. Currently, the Bureau of Alcohol, Tobacco, Firearms and Explosives ("ATF") classifications restrict the ease of transfer of BolaWrap to non-government security firms. We believe this classification is overly restrictive and we continue to work with the ATF and other regulatory bodies to pursue reclassification of our non-lethal products. It is important to note that countries in which we have international customers do not impose similar transfer or possession restrictions on non-lethal BolaWrap devices, and we believe this should be the future for BolaWrap in the United States.

Defense and Homeland Security

Through Wrap Federal, our wholly-owned subsidiary established in 2025, we have created a dedicated entity to support future engagement with U.S. federal government customers, including agencies within the Department of Defense, Department of Homeland Security, and other federal organizations. We believe our non-lethal tools, training platforms, body-worn camera and cloud-based digital evidence management platform and C-UAS technologies have potential applications across multiple defense and federal law enforcement use cases. The formation of Wrap Federal is intended to position us to more effectively navigate the procurement, compliance, and security requirements that are typical of federal government contracting as we seek to develop relationships within these markets.

Products and Solutions

Our core product and service 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. We focus our efforts on the following:

BolaWrap®

Our BolaWrap product line is a handheld, non-lethal device designed to give officers a proactive tactical option by deploying a Kevlar® tether that entangles the arms and/or legs, limiting a subject's mobility and balance. The BolaWrap 150 employs electronic deployment, improved reliability, enhanced durability, and reduced weight compared to prior generations. Upon deployment, the device creates a controlled interruption through sight, sound, and sensation, giving officers time, space, and tactical advantage to intervene earlier and manage encounters before contact distance collapses. BolaWrap is sold with proprietary cassettes that are consumed upon each deployment and must be replaced, providing a recurring consumable revenue stream.

Wrap Reality™ Virtual Reality Training

Wrap Reality is an immersive VR training platform providing scenario-based training focused on human-factors awareness, decision making under stress, and use of force judgment. The platform is designed to build and sustain the cognitive and tactical skills officers need to recognize intervention points, manage distance and positioning, and apply proportional, lawful responses in dynamic environments. Wrap Reality supports law enforcement, corrections, and societal reentry training and offers a growing library of configurable scenarios, including 45 scenarios for law enforcement and corrections and 15 scenarios for societal reentry. Wrap Reality may be deployed on premises or through cloud enabled environments and supports data capture, replay, and performance review.

WrapTactics™ Digital Training Platform

Launched in 2025, WrapTactics is a subscription based digital training and performance platform aimed at delivering short form, scenario-based instruction focused on non-lethal response tactics, decision-making under stress, and follow-on lawful control techniques. The platform is designed to prevent skill decay by providing continuous, low-burden training that reinforces the tactical fundamentals (distance, positioning, timing, and force decision-making) that officers rely on in dynamic encounters. WrapTactics complements our hardware and VR offerings and supports recurring revenue opportunities through bundled training and service offerings.

WrapVision™ Body‑Worn Camera and Digital Evidence Management

WrapVision, launched in 2025, is a body-worn camera solution assembled in North America and designed to meet federal procurement and data-sovereignty requirements. WrapVision replaces our prior-generation Intrensic X2 camera hardware and serves as the front-end capture device within our digital evidence management ecosystem. Our cloud-based DEM platform provides unlimited video storage along with video and evidence uploading, search, retrieval, redaction, and evidence sharing capabilities, reducing the resources agencies require to manage digital evidence. Together, WrapVision and our DEM platform provide agencies with integrated accountability and transparency tools that complement our non-lethal and training solutions. WrapVision builds on the Intrensic acquisition and reflects our strategy to deliver integrated solutions for public safety.

Counter-Unmanned Aircraft Systems (C-UAS) and Defense Applications

During 2025, we expanded research, development, and demonstration efforts applying our tether deployment technology to counter UAS applications. MERLIN is designed to leverage the same self-contained cassette architecture underlying the BolaWrap platform, adapting it for non-lethal drone interdiction capabilities across defense, homeland security, and critical-infrastructure protection missions. These initiatives remain in various stages of development and evaluation and are subject to government testing, funding, and procurement timelines.

Sales, Marketing, and Distribution

Our sales, marketing, and training organizations work together to drive revenue growth by building market awareness of our integrated non-lethal solutions, generating qualified leads, developing a strong sales pipeline, and cultivating long-term relationships with customers and distribution partners. Our training capabilities not only support sales adoption but also generate revenue independently, as agencies place significant value on our professional training services.

Sales

Our primary target market is law enforcement agencies in the United States and internationally. The purchasing decision for our products and services is typically made by a group that may include agency leadership, procurement officials, training coordinators, use-of-force policy advisors, and in some cases political decision-makers such as city council members. The decision-making process can range from several weeks to over a year, influenced by budgetary constraints, policy review cycles, and multi-stakeholder approval requirements.

Our sales model has evolved from a single-product demonstration approach into a broader, solution-based engagement that integrates our full portfolio of non-lethal tools, training platforms, body-worn cameras, and digital evidence management capabilities. We leverage product demonstrations, field deployment footage captured on body-worn cameras, and integrated solution presentations to build the case for agency-wide adoption. Our goal is to convert initial engagement into long-term, multi-product customer relationships that include both product sales and recurring technology-enabled service subscriptions.

We generate revenue through two primary streams: product sales and technology-enabled services. Product sales include BolaWrap devices, cassettes, accessories, body-worn cameras, and Wrap Reality VR hardware and related equipment. Technology-enabled services include software subscriptions for WrapTactics and our digital evidence management platform, as well as managed services, policy support, and professional training services. We are focused on expanding our technology-enabled services revenue as we deepen customer relationships through programmatic training and service delivery models.

Distribution

We sell our products and services primarily through our internal sales team, supplemented by a network of distributors, resellers, and strategic partners. While we initially adopted a channel-first distribution model in 2019, we have since shifted to a direct sales approach as our primary go-to-market strategy, leveraging distribution partners and strategic relationships to extend our reach into markets and customer segments where local presence, specialized expertise, or established procurement relationships add value.

We maintain distribution coverage across all 50 U.S. states and have shipped our products to over 60 countries. Our domestic and international distribution agreements generally provide certain territorial rights, require minimum sales and follow-on performance commitments, and allow us to sell direct to customers where performance thresholds are not met or where direct engagement better serves the customer relationship.

We are also actively pursuing strategic partnerships with organizations that can extend our reach, enhance our technology integration capabilities, and strengthen our position across federal, defense, and international markets.

On October 2, 2025, we announced a strategic partnership with a government-focused technology aggregator, Carahsoft Technology Corp. (“Carahsoft”) to expand access to our products and services across federal, state, and local government agencies through established procurement vehicles. Under the agreement, Carahsoft will serve as Wrap's Master Government Aggregator, making our portfolio of technologies available to the public sector through Carahsoft's reseller partners and National Association of State Procurements Officials (NASPO) ValuePoint and OMNIA Partners contracts.

In November 2025, we partnered with a U.S.-based manufacturing and technology engineering firm to expand our domestic supply chain and support scalable, Made-in-America production of our non-lethal response and C-UAS platforms.

Marketing

Prospective customers become aware of our solutions through a variety of channels, including social media, digital advertising, media coverage, press releases, web presence, direct sales outreach, and public relations efforts. We also leverage body-worn camera footage of successful field deployments to demonstrate the real-world effectiveness of our products, which serves as a powerful lead generation and credibility-building tool across our broader portfolio. Once a lead is generated, it is qualified by our inside sales team, and a sales representative or distribution partner engages with the prospective customer to discuss their operational needs and the solutions we offer.

We track our marketing and sales activities to provide visibility into lead flow, pipeline development, and conversion metrics. Our marketing team engages with law enforcement agencies, public safety personnel, and risk management organizations to educate them on the benefits of our integrated non-lethal solutions. We participate in select domestic and international trade shows, conferences, and industry events that we believe offer the highest return on our investment in market visibility and direct customer engagement.

Training, Demonstration, and Customer Success

We maintain a dedicated team focused on conducting demonstrations, delivering professional training, and supporting post-sale customer success. We offer in-person training, webinar-based instruction, and digital training through our WrapTactics platform. Training may occur before or after the initial purchase or deployment of our products. We believe that providing comprehensive training and demonstrations to law enforcement officers and agency trainers increases their support for purchasing, deploying, and sustaining the use of our products within their departments.

Our training model is anchored by the Wrap "Train the Trainer" program, established in October 2018. Under this program, our Master Instructors certify agency-level BolaWrap Instructors, who then train front-line officers in compliance with their department's policies. BolaWrap Instructors are typically sworn law enforcement officers who serve as department trainers, defensive tactics instructors, or tactical team members. They complete a certification course that includes a written examination and demonstrated proficiency in deploying the BolaWrap. Instructor certification is valid for two years and requires renewal.

Agencies that adopt BolaWrap typically incorporate it into their use-of-force policies as a proactive, non-lethal tool that officers may deploy early in an encounter to gain time, space, and tactical advantage before resorting to higher-force options. BolaWrap is generally classified at the lowest force level within agency policies, below pain-compliance tools such as chemical agents, impact projectiles, conducted energy weapons, and batons. Many departments that deploy BolaWrap agency-wide integrate it into their broader in-service training rotations, incorporating BolaWrap deployment into scenario-based exercises across a range of operational contexts, including encounters with individuals experiencing mental health crisis, warrant service, and apprehension scenarios.

We believe that our investment in training infrastructure, instructor certification, digital training delivery, and post-sale customer success creates a meaningful competitive advantage and a significant barrier to new competition. Our training and support capabilities are designed to serve agencies of all sizes and to deepen customer engagement over time through recurring training services and technology-enabled support.

Manufacturing and Supply Chain

We believe that maintaining scalable, domestically based assembly and manufacturing capabilities is critical to the performance of our products, the growth of our business, and our ability to meet the procurement requirements of federal, defense, and international customers. We are committed to strengthening our domestic manufacturing footprint and supply chain as part of our broader strategy to support Made in America production across our product portfolio.

Manufacturing

Our assembly processes involve specialized systems, materials, and quality control procedures. We contract with third-party suppliers to produce various parts, components, and subassemblies, and we perform final assembly, testing, quality verification, and shipping at our manufacturing facility. We established initial production in Las Vegas in 2018 and relocated to a facility in Arizona in October 2019. In September 2025, we completed a move to a new facility in Norton, Virginia, which provides significantly expanded capacity compared to our prior location. The Norton facility supports our current production requirements and provides the ability to accommodate future growth as demand increases across our product lines. We have refined our internal processes to improve how we design, test, and qualify products, and we continue to implement rigorous manufacturing and quality processes to track production and field performance.

Our WrapVision body-worn camera is assembled in North America in alignment with our commitment to domestic production and federal data-sovereignty and procurement requirements. We also work with domestic research and development partners to support the advancement of our C-UAS and other emerging technology programs.

Suppliers

We have established relationships with key suppliers, and their timely and reliable delivery is important to our ability to meet customer demand. We source parts, components, and subassemblies from a combination of domestic and international suppliers and are actively working to increase the proportion of our supply chain that is U.S.-based. We periodically implement design and component changes to reduce product costs, improve reliability and manufacturability, and where possible, shift sourcing to domestic alternatives.

We maintain finished goods inventory to support near-term customer demand and to reduce the impact of supply chain variability on order fulfillment. However, we remain subject to risks inherent in our supply chain, including component availability, increased lead times, cost fluctuations, and logistics constraints, which can affect our production schedules and have a negative impact on our financial performance. While we anticipate supply chain conditions to continue to stabilize, we recognize that future supplier shortages, logistics disruptions, or other supply chain challenges could have a material adverse effect on our operations and financial results.

Backlog

As of December 31, 2025, backlog was approximately $209 thousand, primarily related to larger agency orders scheduled for near term delivery. Backlog is subject to modification, rescheduling, or cancellation and is not necessarily indicative of future revenues. The amount of backlog at any point in time is dependent upon order timing, scheduled delivery dates to our customers and product lead times. Most orders are shipped shortly after order and backlog is typically associated with larger police agency orders. Because of our history of shipping shortly after order, we do not currently believe backlog at any period end is predictive of future order volume or revenues beyond the reported amount. Distributor and customer orders for future deliveries are generally subject to modification, rescheduling or in some instances, cancellation in the normal course of business.

Competition

The markets in which we operate are competitive and fragmented. We compete with providers of conducted energy devices, less-lethal weapons, training platforms, body-worn cameras, digital evidence management systems, and emerging defense technologies. Many of our competitors have substantially greater financial, technical, manufacturing, and marketing resources than we do.

We position BolaWrap as a non-lethal tool that is distinct from pain-compliance and neuromuscular incapacitation devices. Rather than relying on pain or incapacitation to achieve compliance, BolaWrap creates a controlled interruption through sight, sound, and sensation, giving officers a proactive, lawful option to gain time, space, and tactical advantage before contact distance collapses. While purchasing decisions may involve tradeoffs across use-of-force tools due to budgetary constraints, many agencies view BolaWrap as complementary rather than substitutive, addressing an operational gap where existing tools may represent too high a level of force to be deployed early in an encounter.

Beyond BolaWrap, we are building an integrated system of tools, training, and tactics designed to address the broader operational needs of public safety agencies; spanning non-lethal response technology, scenario-based and human-factors training, body-worn cameras, and evidence management. In these areas, we compete with both legacy 2D simulator providers and newer VR-based platforms, as well as established body-worn camera and digital evidence management vendors. In the emerging counter-UAS market, we compete with a growing number of companies offering detection, electronic warfare, and kinetic interdiction solutions, though we believe our patented mechanical entanglement technology and modular cassette-based platform approach differentiate our offerings.

Competitive factors include safety, effectiveness, reliability, integration capabilities, regulatory acceptance, pricing, customer support, and training quality.

Government Regulation

As a global public safety technology and services company, we are subject to a wide range of federal, state, local, and international laws and regulations governing our products, operations, and commercial activities. These regulations affect multiple aspects of our business, including product classification and licensing, manufacturing, export and import controls, data privacy and security, drone operations, defense procurement, and workplace safety and environmental compliance. Compliance with these requirements is critical to our ability to manufacture, market, and sell our products and services, and the costs of compliance, as well as any failure to comply, could affect our financial results and competitive position.

Firearms Classification and Licensing

Our BolaWrap products are classified as "Any Other Weapon" ("AOW") by the ATF. As a result, we are required to maintain a Federal Firearms License ("FFL") and Special Occupational Tax ("SOT") registration to manufacture and distribute these products. This classification requires that transfers of BolaWrap to end users comply with applicable ATF requirements, which in practice limits our ability to transfer products directly to private security firms and individual consumers without additional regulatory steps. Transfer, possession, and use restrictions on non-lethal devices such as BolaWrap vary by country, and we work with international distributors and legal advisors to ensure compliance with applicable local requirements in each market.

While the cost of maintaining our FFL and SOT licensing is not a significant financial burden, the classification constrains our competitive position relative to other non-lethal products that are not subject to the requirements of the National Firearms Act of 1934.

State and Local Regulations

Our products are also subject to state and local laws and regulations, which may vary by jurisdiction. Certain states impose restrictions on the possession, transfer, or use of devices classified under the ATF or similar state-level frameworks.

Export Controls and International Trade

Our international sales are subject to U.S. export control regulations, customs requirements, and international trade compliance obligations. Depending on the product and destination, our exports may be regulated under the International Traffic in Arms Regulations (ITAR) administered by the U.S. Department of State, the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce, or both. Compliance with export control regulations adds time and administrative cost to our international sales process and may limit our ability to sell certain products in certain countries or to certain end users. We work with international distributors and trade compliance advisors to navigate applicable import and export regulations in each market.

Counter-UAS and Drone Regulations

Our C-UAS program, MERLIN, involves technologies that may be subject to regulation by multiple federal and international authorities. In the United States, drone operations are regulated by the Federal Aviation Administration ("FAA") under Title 14 of the Code of Federal Regulations, and counter-drone technologies are subject to evolving federal regulatory frameworks that govern which entities are authorized to detect, track, and mitigate unmanned aircraft. Our C-UAS products may also be subject to export control classifications and, if commercialized for defense applications, additional regulatory requirements applicable to defense articles and defense services. The regulatory environment for counter-UAS technology is evolving, and changes in federal law or FAA policy could affect the timeline and scope of commercialization of our C-UAS programs.

Data Privacy, Cybersecurity, and Evidence Management

Our body-worn camera and digital evidence management solutions involve the collection, storage, processing, and transmission of law enforcement data, including video, audio, and evidentiary records. These activities are subject to federal and state data protection, privacy, and information security requirements, including the Criminal Justice Information Services ("CJIS") Security Policy, which establishes security standards for any entity that accesses or manages criminal justice information. We are also subject to state-level privacy laws and, in our international markets, data protection regulations that may impose varying requirements on how law enforcement data is collected, stored, and shared. Compliance with these requirements may require ongoing investment in information security infrastructure, data handling procedures, and audit and certification processes.

Federal Procurement and Trade Compliance

As we pursue opportunities with U.S. federal government customers through Wrap Federal, our wholly-owned subsidiary, we are subject to procurement regulations and compliance requirements applicable to federal contractors. Our products are Trade Agreements Act (TAA) compliant, which is a requirement for products sold through federal procurement channels, including the General Services Administration (GSA). Federal contracting may subject us to additional regulatory requirements.

Strategy

Our strategy is to build a diversified public safety technology platform centered on integrated non-lethal solutions that combine tools, training, and tactics to give officers and agencies proactive, lawful control of encounters while improving safety, transparency, and operational effectiveness. We are executing this strategy through a combination of expanding our core BolaWrap business, developing and scaling new product lines and service offerings, growing recurring revenue through subscription-based platforms, entering adjacent markets through dedicated federal and defense initiatives, and expanding our international presence.

Expanding BolaWrap Adoption

BolaWrap remains the foundation of our product portfolio and our primary customer acquisition tool. Our growth strategy for BolaWrap focuses on both acquiring new agency customers and expanding adoption within existing customers toward agency-wide deployment. Many agencies that have initially purchased BolaWrap for evaluation or limited deployment represent meaningful expansion opportunities as they integrate the device into their use-of-force policies, training programs, and standard-issue equipment. We support this expansion through professional training, instructor certification, policy integration assistance, and ongoing customer success engagement. We believe that broader deployment within agencies also drives recurring consumable revenue through cassette replenishment, replacement, and training use.

Deepening Customer Relationships Through Programmatic Delivery

A central element of our strategy is shifting from selling individual products to delivering integrated programs that combine tools, training, and tactics into a sustained operational framework for agencies. Under this approach, we engage with agencies not only as a product supplier but as a long-term partner supporting their non-lethal operational capabilities. This model is designed to include BolaWrap hardware and consumables, WrapTactics digital training subscriptions, professional in-person training services, policy support, and where applicable, body-worn camera and evidence management solutions. We believe this programmatic approach increases customer retention, expands revenue per agency, and creates deeper, longer-term relationships that are more resilient than transactional product sales.

Growing the Body-Worn Camera and Digital Evidence Management Business

Through WrapVision, our body-worn camera, and our cloud-based digital evidence management platform, we are building a standalone product line that also complements our core non-lethal solutions portfolio. We believe our offering provides agencies with a cost-effective alternative to incumbent providers in a market where transparency mandates and evidence management requirements continue to drive adoption. WrapVision can be sold independently to agencies seeking an affordable, high-quality body-worn camera and evidence management solution, and it can also be offered alongside BolaWrap and WrapTactics as part of an integrated program. We believe our ability to offer agencies a single-vendor solution that addresses non-lethal tools, training, and accountability creates a differentiated competitive position, particularly among small and mid-sized agencies that may be underserved.

Advancing Counter-UAS Programs

Through our MERLIN program and related research and development initiatives, we are pursuing entry into the counter-unmanned aircraft system market. Our C-UAS strategy leverages our proprietary mechanical entanglement technology and modular cassette-based platform to offer a non-lethal approach to drone interdiction that does not rely on electronic jamming or kinetic destruction. We are pursuing government testing and evaluation opportunities, research and development partnerships, and internal technology advancement with the goal of positioning our C-UAS solutions for future procurement across defense, homeland security, and critical infrastructure protection applications. These programs remain in various stages of development and evaluation, and we expect continued investment in this area before material revenue is generated.

Expanding Federal and Defense Market Access

Through Wrap Federal, we have established a dedicated entity to support engagement with U.S. federal government customers, including agencies within the Department of Defense, Department of Homeland Security, and other federal organizations. Our non-lethal tools, training platforms, and C-UAS technologies have potential applications across multiple federal use cases, and we believe a dedicated federal subsidiary positions us to more effectively navigate the procurement, compliance, and security requirements specific to these customers as we seek to develop relationships within these markets.

Expanding International Sales

We intend to continue expanding our international presence across law enforcement and public safety markets worldwide. We maintain a network of international distributors. We see broad-based international interest in our solutions, with particular momentum in South America. International growth is supported by the centralized procurement dynamics in many countries, where national-level adoption decisions can result in large-scale deployments. We focus significant resources on supporting our international distribution partners through training, business development, and sales support.

Pursuing Strategic Acquisitions and Partnerships

We intend to continue evaluating strategic acquisitions, partnerships, and collaborations that complement our existing product and service offerings, expand our technology capabilities, strengthen our distribution network, or accelerate entry into new markets. Our acquisition of NSENA in 2020, which provided the foundation for our Wrap Reality virtual reality training platform and our acquisition of Intrensic in 2023, which provided the foundation for our WrapVision body-worn camera and digital evidence management platform, are examples of this approach. We also pursue strategic partnerships with organizations that extend our reach into federal, defense, and international markets.

Warranties

Our products generally include a limited warranty that covers defects in materials and workmanship for up to one year from the date of purchase. Customers may also purchase extended warranty coverage for additional periods. Warranty terms vary by product and jurisdiction.

Intellectual Property

We have a policy of protecting our intellectual property assets, which include issued domestic and international patents, pending patents, trademarks, copyrights, trade secrets, and contractual obligations. We enter into confidentiality and nondisclosure agreements with employees, consultants, and third parties to whom we disclose proprietary information. These agreements prohibit disclosure of confidential information both during and after the duration of the working relationship. However, we recognize that such agreements may not always prevent disclosure or provide adequate remedies for any breach. We rely on copyrights, trade secrets, and other proprietary rights to protect the content of our training services, including the Wrap Reality VR training software and content.

We believe that strong product offerings that are continually upgraded and enhanced, combined with factors such as innovation, technological expertise, and experienced personnel, will keep us competitive. Therefore, we seek patent and other intellectual property protection on important technological improvements that we make. Before filing for patents, we disclose key features to patent counsel and maintain these features as trade secrets prior to product introduction. However, patent applications may not result in issued patents covering all important claims, and there is a risk that they could be denied in their entirety.

As of December 31, 2025, we held 93 issued patents and 149 pending patent applications with expiration dates ranging from 2032 to 2047 in the United States and internationally related to non-lethal systems, tethered-deployment technology, training platforms, and digital evidence management solutions.
We enter into confidentiality and invention assignment agreements with employees, consultants, and third parties. Despite these efforts, there can be no assurance that our intellectual property rights will not be challenged, circumvented, or invalidated.

Research and Development

We conduct research and development ("R&D") on an ongoing basis to enhance our existing products, develop new applications for our core technologies, advance emerging technology programs, and improve manufacturing efficiency and product reliability. Our R&D efforts are led by our internal engineering, software development, and product design team and are supplemented by specialized consultants and domestic research and development partners when additional expertise or capacity is required. Our R&D activities span mechanical and electrical engineering, software development, materials science, manufacturing process improvement, and content development for our training platforms.

BolaWrap Platform

We are investing in next-generation BolaWrap development, including early-stage work on future device iterations and continued refinement of our cassette-based platform architecture. We also focus on manufacturing process improvements and design changes intended to reduce production costs, improve product reliability, and enhance manufacturability. We believe our modular cassette architecture provides a foundation for future product variants and expanded use-case applications.

Counter-UAS Technologies

A significant portion of our research and development effort is directed toward our counter-unmanned aircraft system programs, including MERLIN and related initiatives. This work focuses on advancing our proprietary mechanical entanglement technology and modular platform for non-lethal drone interdiction applications across defense, homeland security, and critical infrastructure protection missions. Our C-UAS development efforts are supported by domestic R&D partners with specialized capabilities in areas relevant to these programs. All C-UAS research and development is currently company-sponsored.

WrapTactics Training Platform

We are continuing to develop and enhance the WrapTactics platform, including expanding its content library, building out hybrid training capabilities that integrate digital delivery with in-person instructor certification, and improving platform functionality and user experience. We believe ongoing investment in WrapTactics is central to our strategy of delivering programmatic, subscription-based training that sustains officer readiness and generates recurring revenue.

WrapVision and Digital Evidence Management

Our WrapVision body-worn camera platform is stable and in active deployment. We continue to make enhancements to our cloud-based digital evidence management software to improve functionality, user experience, and integration with agency workflows. Development efforts in this area focus on incremental improvements and feature additions rather than fundamental platform redesign.

Wrap Reality Virtual Reality Training

Our Wrap Reality VR platform currently includes scenario libraries for law enforcement, corrections, and societal reentry applications. While our near-term training development investment is primarily focused on WrapTactics, we have plans to expand the Wrap Reality content library with additional scenarios and to continue enhancing the platform as virtual reality and simulation-based training adoption grows across public safety markets.

Future levels of research and development investment will vary depending on the timing of new product development milestones, the progression of our C-UAS programs, the availability of government-funded research opportunities, and the resources available to advance development across our product portfolio. We expect research and development to be a meaningful area of investment as we continue to expand our diversified public safety technology platforms.

Seasonality

Our operating results are influenced by government budget cycles and procurement timing. Many U.S. law enforcement agencies operate on fiscal years ending June 30, while federal agencies operate on fiscal years ending September 30, which can result in higher purchasing activity in certain quarters. International purchasing patterns may also contribute to variability in quarterly results.

Employees

As of December 31, 2025, we employed approximately 25 full-time employees. During 2025, we grew our workforce 32% compared to the end of the prior year, with additions concentrated in our research and development, sales and marketing divisions. In addition, we engage consultants and contractors from time to time to supplement our full-time personnel across sales, marketing, training, engineering, and other functions.

Our success depends on the continued service of our employees and on our ability to attract, retain, and motivate talented individuals across our organization. We are committed to fostering a work environment that supports professional development, encourages innovation, and aligns our team with the Company's mission of enabling safer outcomes in public safety. We believe our employees are critical to our ability to execute on our strategic priorities and we continue to invest in building the capabilities and culture necessary to support our growth.

Available Information

As a public company, we are required to file our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements on Schedule 14A and other information (including any amendments) with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. You can find our SEC filings at the SEC’s website at www.sec.gov.

Our Internet address is www.wrap.com. Information contained on our website is not part of this Annual Report. Our SEC filings (including any amendments) are also made available free of charge on www.wrap.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.