Wrap Technologies(WRAP) - 2025 Q2 - Quarterly Results

Executive Summary & Recent Highlights This section provides an overview of Wrap Technologies' Q2 2025 financial and operational performance, along with key business developments and strategic advancements Q2 2025 Financial & Operational Highlights Wrap Technologies achieved significant cost reductions and cash flow improvements in Q2 2025, while strategically repositioning and reclassifying warrant liabilities to reduce future earnings volatility - Wrap Technologies, Inc. announced its Q2 2025 financial and operational results on August 14, 2025[1] Operating Expenses and Cash Flow Improvement | Indicator | Q2 2025 | Q1 2025 | Change (QoQ) | H1 2025 | H1 2024 | Change (YoY) | | :--------------------------------- | :------------- | :------------- | :---------- | :----------- | :----------- | :---------- | | Operating Expenses (in millions) | $3.3 | $4.5 | -26% | $7.9 | $9.1 | -14% | | Net Cash Outflow from Operating Activities (in millions) | - | - | - | $5.0 | $7.2 | -$2.2 | | Cash and Cash Equivalents, End of Period (in millions) | $4.2 | - | +16% (vs. Dec 31, 2024) | - | - | - | - The company successfully amended terms of outstanding warrants, reclassifying liabilities to additional paid-in capital, reducing future non-cash fair value changes and earnings volatility[4] H1 2025 Revenue | Period | Revenue (in millions) | | :--- | :-------------- | | Q2 2025 | $1.0 | | H1 2025 | $1.8 | Other Recent Business Developments Wrap Technologies advanced product innovation with WrapVision, appointed a new CFO, and strengthened its market position in pre-escalation law enforcement tools following a Supreme Court ruling - Wrap launched WrapVision, an all-in-one North American-made body camera solution for law enforcement, public safety, and healthcare[3] - Wrap announced the appointment of Gerald "Jerry" Ratigan as the company's Chief Financial Officer[8] - The Supreme Court's Barnes v. Felix ruling expanded officer liability during pre-escalation, aligning with Wrap's mission and potentially accelerating BolaWrap® adoption[8] - The company expects to take possession of its new manufacturing facility in Norton, Virginia by the end of August 2025[8] About Wrap Technologies, Inc. This section details Wrap Technologies' company overview and its comprehensive product portfolio, including non-lethal tools and training solutions for public safety Company Overview Wrap Technologies, Inc. is a global leader in public safety technology and non-lethal tools, addressing complex challenges for public safety organizations through innovation - Wrap Technologies, Inc. (Nasdaq: WRAP) is a global leader in innovative public safety technology and non-lethal tools[5] Product Portfolio Wrap Technologies offers a diverse public safety product portfolio, including the non-lethal BolaWrap® 150, immersive VR training simulator Wrap Reality™ VR, and North American-made WrapVision body camera system, enhancing law enforcement efficiency and safety BolaWrap® 150 BolaWrap® 150 is a non-pain compliance tool providing a safer pre-escalation option for law enforcement, reducing injury risks for officers and suspects - BolaWrap® 150 is a non-pain compliance tool that provides a safer pre-escalation option for law enforcement through multi-sensory cognitive distraction, reducing injury risks for officers and suspects[6] - The device is used by over 1,000 agencies in the U.S. and 60 countries globally, supported by IADLEST certified training[6] Wrap Reality™ VR Wrap Reality™ VR is an immersive training simulator designed to enhance decision-making under pressure, offering realistic interactive scenarios for first responders - Wrap Reality™ VR is a fully immersive training simulator designed to improve decision-making under pressure, providing first responders with realistic interactive scenarios reflecting modern law enforcement challenges[7] WrapVision WrapVision is a new body camera and evidence management system designed for efficiency, security, and transparency, meeting the stringent demands of modern law enforcement - WrapVision is a new body camera and evidence management system designed for efficiency, security, and transparency, meeting the stringent demands of modern law enforcement[9] - WrapVision cameras, powered by IONODES, feature seamless cloud integration, adhere to TAA compliance and GSA contract requirements, are manufactured in North America, and are planned to be 'Made in USA' by late 2025, ensuring data integrity and eliminating foreign surveillance risks[10] Financial Statements This section presents Wrap Technologies' condensed consolidated balance sheets, statements of operations, and cash flows, highlighting key financial performance indicators Condensed Consolidated Balance Sheets As of June 30, 2025, Wrap Technologies' balance sheet shows a slight increase in total assets and a significant decrease in total liabilities due to warrant liability reclassification, leading to a substantial increase in total stockholders' equity Balance Sheet Key Data (in thousands) | Indicator | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------- | :------------- | | Cash and Cash Equivalents | $4,177 | $3,610 | | Total Assets | $15,612 | $15,121 | | Warrant Liabilities | $0 | $10,131 | | Total Liabilities | $3,851 | $14,871 | | Additional Paid-in Capital | $120,783 | $105,326 | | Total Stockholders' Equity | $11,761 | $250 | - Warrant liabilities decreased from $10,131 thousand on December 31, 2024, to $0 on June 30, 2025, primarily due to reclassification to additional paid-in capital[15] Condensed Consolidated Statements of Operations and Comprehensive Loss In Q2 2025, Wrap Technologies experienced a year-over-year decrease in total revenue but significant growth in managed services revenue; despite operating expense reductions, net loss expanded due to fair value changes in warrant liabilities Statements of Operations and Comprehensive Loss Key Data (in thousands) | Indicator | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------- | :------------- | :------------- | :----------- | :----------- | | Product Sales Revenue | $197 | $1,251 | $550 | $2,578 | | Managed Services Revenue | $764 | $0 | $1,000 | $0 | | Technical Support Services Revenue | $51 | $322 | $228 | $471 | | Total Revenue | $1,012 | $1,573 | $1,778 | $3,049 | | Selling, General and Administrative Expenses | $3,181 | $3,475 | $7,266 | $7,695 | | Research and Development Expenses | $162 | $679 | $594 | $1,434 | | Total Operating Expenses | $3,343 | $4,154 | $7,860 | $9,129 | | Operating Loss | $(2,856) | $(3,170) | $(6,777) | $(7,309) | | Change in Fair Value of Warrant Liabilities | $(871) | $2,738 | $3,158 | $6,917 | | Net Loss | $(3,727) | $(385) | $(3,618) | $(268) | | Basic and Diluted Net Loss Per Share | $(0.07) | $(0.02) | $(0.07) | $(0.02) | - Managed services revenue significantly increased to $764 thousand in Q2 2025 from $0 in the prior year, with H1 managed services revenue reaching $1,000 thousand[17] - Despite a year-over-year decrease in operating expenses, net loss significantly increased due to a change in fair value of warrant liabilities from $2,738 thousand in Q2 2024 to ($871) thousand in Q2 2025[17] Condensed Consolidated Statements of Cash Flows In H1 2025, Wrap Technologies saw reduced cash outflows from operating activities and a substantial increase in cash inflows from financing activities, primarily from warrant and common stock issuance, leading to a significant increase in cash and cash equivalents Cash Flow Statement Key Data (in thousands) | Indicator | H1 2025 | H1 2024 | | :--------------------------------- | :------------- | :------------- | | Net Cash Outflow from Operating Activities | $(5,009) | $(7,249) | | Net Cash (Outflow) Inflow from Investing Activities | $(153) | $4,890 | | Net Cash Inflow from Financing Activities | $5,729 | $468 | | Net Increase (Decrease) in Cash and Cash Equivalents | $567 | $(1,891) | | Cash and Cash Equivalents, End of Period | $4,177 | $2,064 | - Cash inflows from financing activities primarily stemmed from $5,729 thousand generated by the issuance of warrants and common stock[19] - Non-cash investing and financing activities included $12,159 thousand from the reclassification of warrant liabilities to additional paid-in capital[19] Additional Information This section includes important legal and corporate details, such as trademark information, cautionary notes on forward-looking statements, and investor relations contact information Trademark Information This report mentions Wrap, the Wrap logo, BolaWrap®, Wrap Reality™, and Wrap Training Academy as trademarks of Wrap Technologies, Inc., some registered in the U.S. and abroad - Wrap, the Wrap logo, BolaWrap®, Wrap Reality™ and Wrap Training Academy are trademarks of Wrap Technologies, Inc., some of which are registered in the U.S. and abroad[11] Cautionary Note on Forward-Looking Statements This press release contains forward-looking statements subject to various risks and uncertainties that could cause actual results to differ materially, including compliance with Nasdaq listing standards, product training and sales capabilities, market acceptance, funding availability, regulatory risks, and geopolitical conflicts - This press release contains "forward-looking statements" subject to various risks and uncertainties that could cause actual results to differ materially[12] - Risk factors include the company's ability to maintain Nasdaq listing standards, successfully implement product training programs, manufacture and sell products, achieve market acceptance, secure funding, navigate complexities of government sales, address product defects, manage litigation risks, comply with government regulations, respond to health crises, mitigate geopolitical conflicts, and protect intellectual property[12] Investor Relations Contact Investors can contact Wrap Technologies' investor relations department via phone or email - Investor Relations contact information: phone (800) 583-2652, email ir@wrap.com[13]