WRAP TECHNOLOGIES, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in our Exchange Act reports is accumulated and communicated to management, including our Executive Chairman and Chief Executive Officer, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, with the participation of our Executive Chairman and Chief Executive Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025 and, based on this evaluation, our Executive Chairman and Chief Executive Officer concluded that our disclosure controls and procedures were effective as of December 31, 2025. Management ’ s Report on Internal Control Over Financial Reporting We are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting refers to the process designed by, or under the supervision of, our Executive Chairman, Chief Executive Officer, and Principal Financial Officer, and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and the disposition of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP and that receipts and expenditures are being made only in accordance with authorizations of our management and Board, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With our participation, an evaluation of the effectiveness of our internal control over financial reporting was conducted as of December 31, 2025, based on the framework and criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and SEC guidance on conducting such assessments. Based on this evaluation, our Executive Chairman, Chief Executive Officer and Principal Financial Officer concluded that our internal control over financial reporting was effective as of December 31, 2025. This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to such attestation as we are a “smaller reporting company” as defined by Item 10 of Regulation S-K Changes in Internal Controls There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies, which may be identified during this process. 56 Table of Contents ITEM 9B. OTHER INFORMATION 10b5-1 Trading Arrangements During the fourth fiscal quarter ended December 31, 2025, none of the Company's directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" (as each term is defined in Item 408(a) of Regulation S-K). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 57 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Board of Directors The Board is currently composed of six members. Under the Amended and Restated Bylaws of the Company, as amended, the number of directors will be fixed by the Board or the stockholders at an annual meeting of the stockholders, and directors serve until the next annual election, and their successors are duly elected and qualified, or until their earlier resignation, removal or death. Below is a list of the names, ages as of March 23, 2026, and positions of the individuals who currently serve as our directors. Name Age Position Scot Cohen 57 Chief Executive Officer and Executive Chairman of the Board Bruce Bernstein (1)(2) 62 Director Marc Savas (1)(3) 57 Director Rajiv Srinivasan (1)(2)(3) 39 Director Vice Admiral Tim Szymanski (2)(3) 63 Director John Shulman 63 Director (1) Member of our Audit Committee. (2) M ember of our Compensation Committee. (3) M ember of our Nominating Committee. Director Biographies Information concerning our directors is set forth below. The biographical description of each director includes the specific experience, qualifications, attributes and skills that led the Board to conclude that such person should serve as a director. Scot Cohen - Mr. Cohen cofounded the Company in March 2016, and has previously served as a non-independent Director of the Company from June 2021 until October 2023 and Executive Chairman of the Company from July 2017 until June 2021 and then again beginning in October 2023, and currently serves as Chief Executive Officer, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. Mr. Cohen has over 20 years of experience in institutional asset management, wealth management, and capital markets. He currently manages several operating partnerships that actively invest in the energy sector in addition to maintaining an active investment portfolio in various public companies, early-stage private companies, hedge funds and alternative assets including real estate. Mr. Cohen is the Founder and Managing Partner of V3 Capital Partners, a private investment firm focused on early-stage companies primarily in the consumer products industry, and Co-Manager of Red Fortune Fund, a private equity fund based in Hong Kong. Mr. Cohen also is the Founder of Petro River Oil, LLC and Chairman of Petro River Oil Corp. (OTCBB: PTRC), a publicly traded oil and gas producer with assets in Kansas and Oklahoma, and Petro Spring LLC, a global oil and gas technology solutions provider. Prior to creating V3 Capital Partners, Mr. Cohen was the Founder and Managing Partner at Iroquois Capital Opportunity Fund, a special situations private equity investment fund, and a Co-Founder of Iroquois Capital, a hedge fund with investments in small and micro-cap private and public companies. Mr. Cohen currently serves on the board of directors of Charlie’s Holding, Inc. (OTCQB: CHUC), and has served as Executive Chair of the board of directors of Petro River Oil Corp. since 2012. Mr. Cohen earned his Bachelor of Science degree from Ohio University in 1991. The Board believes Mr. Cohen’s success with multiple private investment firms, his extensive contacts within the investment community and financial expertise strengthens the Company’s efforts to raise capital to fund the continued implementation of its business plan. 58 Table of Contents Bruce Bernstein - Mr. Bernstein was appointed as a director of the Company in April 2023. Mr. Bernstein has over thirty-five years of experience in the securities industry, primarily as senior portfolio manager for two alternative finance funds as well as in trading and structuring of arbitrage strategies. Mr. Bernstein has served as President of Rockmore Capital, LLC since 2006, the manager of a direct investment and lending fund with peak assets under management of $140 million. Previously, he served as Co-President of Omicron Capital, LP, an investment firm based in New York, which he joined in 2001. Omicron Capital focused on direct investing and lending to public small cap companies and had peak assets under management of $260 million. Prior to joining Omicron Capital, Mr. Bernstein was with Fortis Investments Inc., where he was Senior Vice President in the bank’s Global Securities Arbitrage business unit, specializing in equity structured products and equity arbitrage and then President in charge of the bank’s proprietary investment business in the United States. Prior to Fortis, Mr. Bernstein was Director in the Equity Derivatives Group at Nomura Securities International specializing in cross-border tax arbitrage, domestic equity arbitrage and structured equity swaps. Mr. Bernstein started his career at Kidder Peabody, where he rose to the level of Assistant Treasurer. Mr. Bernstein serves as a member of the Board of Directors of Xwell, Inc. (Formerly XpresSpa Holdings, Inc.) the leading airport spa company in the world, based in New York, serves as a Director for Neurotrope since November 14, 2016, Petros Pharmaceuticals, Inc. and Q/C Technologies, Inc. Mr. Bernstein holds a Bachelor of Business Administration from City University of New York (Baruch). The Board believes that Mr. Bernstein’s experience in finance, audit, capital markets and in advising public companies provides significant benefit to the Company and as a member of the Board. Marc Savas - Mr. Savas was appointed as a director of the Company in April 2023. Mr. Savas has over 35 years of experience in accelerating revenue for companies, and is skilled in developing and guiding leadership teams, executing tactical, strategic and technical plans, and brings a comprehensive understanding of organizational efficiency. Mr. Savas served as President of Vector97, a privately held waste hauling and recycling consulting firm, since February 2012 until December 2025. He has overseen Vector97 from a startup company through engineering its sale to SIB in June of 2022. Previously, he founded Unfair Advantage, Inc. and Living Full Blast, Inc., a management and efficiency consulting firm serving the Venture Capital and Legal vertical markets serving as Chief Executive officer until January 2012. Mr. Savas has also served as a member of the Board of Directors of Motivational, Inc., a charitable organization, from July 2020 to present, and as a member of the Board of Directors of RMP, a charitable organization, from December 2022 to present. Mr. Savas holds a Bachelor of Science in Marketing from Northern Arizona University of Flagstaff Arizona and completed the Executive Development Program of the Marshall School of Business of the University of Southern California. The Board believes that Mr. Savas’ experience in organizational efficiency and effectiveness, together with his extensive knowledge in finance, scalability and implementing successful business strategies, makes him a valuable member of the Board. Rajiv Srinivasan - Mr. Srinivasan was appointed director in October 2023. Mr. Srinivasan served at LinkedIn by Microsoft (NYSE:MSFT) from 2019 to 2023, as the Director of the NAMER Globals Program from 2021 to 2023, and the Director of Global Clients from 2019 to 2021. Prior to that, he served as a Global Account manager at VMware (NYSE: VMW) from 2016 to 2019, and as a sales manager at MobileIron (NYSE: MOBL) from 2013 to 2015. Mr. Srinivasan’s startup experience includes Investor and Sales Advisor at Nirmata since 2017, Interim VP of Sales at Myally from 2018 to 2020 and Co-Founder and Head of Sales at Morta Security from 2011 to 2013. Mr. Srinivasan served as a Captain of the U.S. Army from 2004 to 2011 and is a contributor and commentator on miliary and veterans affairs, is on the board of directors and finance committee of Families Against Mandatory Minimums, a lobby to end mass incarceration. Mr. Srinivasan earned a Bachelor of Science in Arabic and Comparative Politics from the U.S. Military Academy, a Master of Science in Applied Mathematics with a focus on Data Science and Numerical Methods from Columbia University, and a Masters of Business Administration from the Wharton School of Business. The Board believes that Mr. Srinivasan’s experience in technology based companies and early stage growth firms, together with his extensive knowledge and experience in implementing successful business strategies, makes him a valuable member of the Board. 59 Table of Contents Vice Admiral Tim Szymanski - Mr. Szymanski was appointed a director in October 2023. Mr. Szymanski is a distinguished retired United States Navy vice admiral, with thirty-seven years of military service. Mr. Szymanski currently provides consulting services to Pallas Advisors as a principal, a strategic advisory firm specializing in navigating complex national and international security dynamics, which he joined in August 2023, Odyssey Group International, Inc., Senseye, Inc., and Q30 Sports Science, LLC. Mr. Szymanski further serves on the Veteran Advisory Committee, at NanoDx Inc. and at Verkada Inc., on the Federal Advisory Board. Additionally, he is the board chair of Navy SEAL Museum San Diego. Prior to his retirement from the United States Navy, Mr. Szymanski last served as deputy commander of United States Special Operations Command and prior as the Commander of Naval Special Warfare. Mr. Szymanski also served on the Joint Staff as the J3 deputy directorate for Special Operations, as the Global War on Terror branch chief and as chief staff officer of Pakistan-Afghanistan Coordination Cell. Mr. Szymanski graduated from the United States Naval Academy in 1985. He completed a Master of Joint Campaign Planning and Strategy at the Joint Advanced Warfighting School. The Board believes that Vice Admiral Szymanski’s experience in organizational efficiency and effectiveness, together with his military leadership experience, makes him a valuable member of the Board. John Shulman - Mr. Shulman was appointed a director in October 2025. Mr. Shulman is the Founder and Managing Partner of Juggernaut Capital Partners, a private equity firm he founded in 2009, which has over $1 billion in assets under management. He leads the firm’s Investment Committee and has more than 25 years of experience in private equity and investment management, with a focus on the consumer, healthcare, pharmaceutical, and business services sectors. Prior to founding Juggernaut Capital Partners, Mr. Shulman served as a Managing Director at Allied Capital Corporation from 2001 to 2009, where he was a member of both the Management Committee and the Investment Committee. Earlier in his career, he held senior investment and financial roles with other institutional investment firms. Mr. Shulman currently serves on the boards of several private companies, including Foundation Consumer Brands, Kemper Sports Management, PLEZi Nutrition, and ZOA Energy, LLC. He holds a Bachelor of Science degree in Finance from the University of Virginia’s McIntire School of Commerce and also attended the London School of Economics. The Board believes that Mr. Shulman’s experience in private equity and investment management, together with his extensive knowledge and experience in capital formation and strategic growth initiatives, makes him a valuable member of the Board. Executive Officers Below is a list of the names, ages as of March 23, 20 26, positions, and a brief account of the business experience of the individuals who serve as our executive officers. Name Age Position Scot Cohen 57 Chief Executive Officer and Executive Chairman of the Board Jared Novick 42 President and Chief Operating Officer 60 Table of Contents Executive Officer Biographies Jared Novick - Mr. Novick has served as Chief Operating Officer of the Company since December 2023 and has served as President of the Company since March 2025. From June 2023 to December 2023, Mr. Novick served as Chief Operating Officer and Senior Vice President of Strategy and Special Projects at Sidus Space, Inc. (NASDAQ:SIDU), where he oversaw diverse areas such as manufacturing, sales, product development, supply chain management, marketing, and human resources. Since 2018, he has also served on the Board of Advisors at BlueVoyant LLC (“Blue Voyant”), where he also served as Head of Strategy from 2017 until 2018. Before his tenure in public companies, Mr. Novick experienced success with two early-stage technology ventures, each culminating in notable exits. He co-founded and served as Chief Executive Officer of BitVoyant, a cybersecurity threat monitoring product and service provider for commercial enterprises, later acquired by cybersecurity unicorn BlueVoyant. Additionally, he founded and led CurvedSkies LLC, serving as Chief Executive Officer of a professional services firm catering to classified U.S. Federal Government customers in the aerospace and defense sectors. Mr. Novick’s professional career includes significant roles as a U.S. Intelligence Community Civil Servant and a contractor for Special Projects to the Office of the Secretary of Defense. He collaborated extensively with the U.S. Intelligence Community, the Department of Defense, and international partners to then deploy and operationally support critical National Security challenges across South America, Central-Asia and Africa. In the early stages of his career, Mr. Novick trained as a NASA Aircrew Member, operating High-Altitude Technologies above 60,000 feet and necessitating NASA pressure suit operations. He has logged over 2,000 hours of flight time in various fixed-wing aircrafts. During Operation Enduring Freedom, he accumulated over 400 combat flight hours while supporting special military units of the Special Operations community. Mr. Novick actively contributes to board activities, including a gubernatorial appointment by Florida Governor Ron DeSantis to the Department of Business & Professional Regulation. Mr. Novick holds a Bachelor of Arts in Physics from the University of Florida in Gainesville. Mr. Cohen’s biography is incorporated by reference from Item 10 of this Annual Report on Form 10-K above. There is no arrangement or understanding between any of the directors or officers identified above and any other person pursuant to which he was selected as a director or officer. None of the directors or officers identified above is, or has been, a participant in any transaction involving the Company, and is not a participant in any proposed transaction with the Company, in each case, required to be disclosed pursuant to Item 404(a) of Regulation S-K, other than as described in the “Certain Relationships and Related Transactions, and Director Independence” section contained herein. Family Relationships There are no family relationships among our directors or executive officers. Involvement in Certain Legal Proceedings None of our directors or executive officers has been involved in any of the following events during the past ten years: any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; or being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity (not including any settlement of a civil proceeding among private litigants), and the judgment has not been reversed, suspended, or vacated. been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 61 Table of Contents Director Independence Our Board has reviewed the independence of our directors based on the listing standards of the Nasdaq Capital Market (“Nasdaq”). Based on this review, the Board determined that Messrs. Bernstein, Savas, Shulman, Srinivasan and Vice Admiral Szymanski are independent, as defined in Rule 5605(a)(2) of the Nasdaq rules. In making this determination, our Board considered the relationships that each of these non-employee directors has with us and all other facts and circumstances our Board deemed relevant in determining their independence. Committees of the Board of Directors Our Board currently has three standing committees which consist of the Audit Committee, Compensation Committee and Nominating and Governance Committee. Our Board has adopted written charters for each of the Audit Committee, Compensation Committee, and Nominating and Governance Committee, copies of which are publicly available on our website at https://ir.wrap.com/ under the “Governance” tab. Our Board may establish other committees from time to time as it deems necessary or appropriate. Audit Committee The Audit Committee assists our Board in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions by approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal accounting controls. The Audit Committee also oversees the audit efforts of our independent accountants and takes those actions as it deems necessary to satisfy that the accountants are independent of management. The Audit Committee currently consists of Messrs. Bernstein, Savas and Srinivasan, with Mr. Bernstein serving as the Chair of the Audit Committee. Our Board has determined that Mr. Bernstein is an audit committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication and is considered independent under the applicable rules and regulations of Nasdaq. Compensation Committee The Compensation Committee determines our general compensation policies and the compensation provided to our directors and officers. The Compensation Committee also reviews and determines bonuses for our officers and other employees. In addition, the Compensation Committee reviews and determines equity-based compensation for our directors, officers, employees and consultants and administers the 2017 Plan. The Compensation Committee currently consists of Messrs. Szymanski, Bernstein and Srinivasan, with Mr. Bernstein serving as Chair of the Compensation Committee. We adopted a Compensation Recovery Policy on November 20, 2023, as an additional safeguard to mitigate compensation risks. Nominating and Governance Committee The Nominating and Governance Committee is responsible for making recommendations to our Board regarding candidates for directorships and the size and composition of our Board. In addition, the Nominating and Governance Committee is responsible for overseeing our corporate governance guidelines and reporting and making recommendations to the full Board concerning corporate governance matters. The Nominating and Governance Committee currently consists of Messrs. Savas, Srinivasan and Szymanski, with Mr. Savas serving as Chair of the Nominating and Governance Committee. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics (the “Code”) applicable to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code is available to security holders in the “Investors’’ section on our website, https://ir.wrap.com/. We intend to disclose any amendments to, or waivers from, our Code at the same website address provided above. 62 Table of Contents Insider Trading Policy We have an insider trading policy designed to promote compliance with insider trading laws, rules and regulations that prohibits our directors, executive officers and all employees of the Company from the purchasing or selling our securities while being aware of material, non-public information about the Company as well as disclosing such information to others who may trade in securities of the Company. Our insider trading policy also prohibits our directors, executive officers, employees and their respective family members from engaging in hedging activities or other short-term or speculative transactions in the Company’s securities such as short sales, options trading, holding the Company’s securities in a margin account or pledging the Company’s securities as collateral for a loan, without the advance approval of our Principal Financial Officer. While the Company is not subject to the insider trading policy, the Company does not trade in its securities when it is in possession of material nonpublic information other than pursuant to previously adopted Rule 10b5-1 trading plans, if any. A copy of the insider trading policy is included in Exhibit 19.1 to this Annual Report on Form 10-K. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that each of our directors and executive officers, and any other person who owns more than ten percent (10%) of our Common Stock, file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock. To our knowledge, based solely on information furnished to us and written representations by such persons that no such other reports were required to be filed, we believe that all such SEC filing requirements were met in a timely manner during 2025 other than with respect to the following: On January 6, 2025, a Form 4 for each of Rajiv Srinivasan, Marc Savas and Bruce Bernstein was filed late to report grants of RSUs on January 1, 2025. On January 7, 2025, a Form 4 for Timothy Szymanski was filed late to report a grant of RSUs on January 1, 2025. On February 13, 2025, a Form 4 for each of Rajiv Srinivasan, Marc Savas and Bruce Bernstein was filed late to report grants of RSUs on February 5, 2025. On February 13, 2025, a Form 4 for each of Jared Novick and Scot Cohen was filed late to report grants of RSUs and stock options on February 5, 2025. On March 12, 2025, a Form 4 for Jared Novick was filed late to report the acquisition of shares of Common Stock and warrants on February 24, 2025. On April 16, 2025, a Form 4 for each of Jared Novick, Marc Savas, Bruce Bernstein and Timothy Szymanski was filed late to report grants of RSUs on April 10, 2025. On June 17, 2025, a Form 4 for Elwood G. Norris was filed late to report the sale of shares of Common Stock on June 11, 2025. On July 10, 2025, a Form 4 for Bruce Bernstein was filed late to report a grant of RSUs on July 1, 2025. On July 21, 2025, a Form 4 for Gerald Ratigan was filed late to report grants of stock options on June 9, 2025. On August 28, 2025, a Form 4 for Scot Cohen was filed late to report the acquisition of Series B Preferred Stock and warrants on August 18, 2025. On October 7, 2025, a Form 4 for each of Rajiv Srinivasan, Marc Savas and Bruce Bernstein was filed late to report grants of RSUs on October 1, 2025. On October 8, 2025, a Form 4 for Timothy Szymanski was filed late to report a grant of RSUs on October 1, 2025. On December 29, 2025, a Form 4 for John Shulman was filed late to report grants of stock options on October 25, 2025. 63 Table of Contents ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table The following table sets forth information regarding the compensation awarded to or earned by the current and former executive officers listed below during the years ended December 31, 2025, and 2024. We have opted to comply with the reduced executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act, which require compensation disclosure for only (i) our principal executive officer, (ii) the two most highly compensated executive officers other than our principal executive officer and (iii) if applicable, up to two individuals who would have qualified as our two most highly compensated executive officers other than the principal executive officer but for the fact that the individual was not serving as an executive officer of the Company at the end of the last completed fiscal year. Throughout this document, the officers below are referred to as our “named executive officers” or “NEOs”. Stock Option All Other Name and Principal Position Year Salary Bonus Awards(1) Awards (2) Compensation (3) Total Scot Cohen 2025 $ 200,000 $ - $ 505,000 $ 699,918 $ - $ 1,404,918 Chief Executive Officer, Executive Chairman, Principal Financial Officer and Principal Accounting Officer 2024 $ 200,000 $ - $ 1,764,753 $ - $ - $ 1,964,753 Jared Novick 2025 $ 200,000 $ - $ 505,000 $ 699,918 $ - $ 1,404,918 President and Chief Operating Officer 2024 $ 190,909 $ 185,000 $ - $ - $ - $ 375,909 Gerald Ratigan (4) 2025 $ 75,694 $ - $ - $ 194,174 $ 50,000 $ 319,868 Former Chief Financial Officer 2024 $ - $ - $ - $ - $ - $ - (1) A mounts reported in this column do not reflect the amounts actually received by our named executive officers. Instead, these amounts reflect the aggregate grant date fair value of restricted stock units (“RSUs”) granted to the named executive officers during each fiscal year, as computed in accordance with the Financial Accounting Standards Board Accounting Standards Codification 718 (“ASC 718”). Assumptions used in the calculation of these amounts are included in the notes to our financial statements included in this Annual Report. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Specifically, the number in the table above includes: f or Mr. Cohen, RSUs granted in February 2025 in connection with his continued service as Chief Executive Officer; and for Mr. Novick, RSUs granted in February 2025 in connection with his continued service as Chief Operating Officer; and for Mr. Cohen, RSUs granted in January 2024 for continued services as a member of the Board ($5,261 of the $1,764,753 relating to such continued services as a member of the Board) and as Chief Executive Officer and RSUs granted in October 2023, as part of an inducement grant in connection with being named Chief Executive Officer (2) A mounts reported in this column do not reflect the amounts actually received by our named executive officers. Instead, these amounts reflect the aggregate grant date fair value of each stock option granted to the named executive officers during each fiscal year, as computed in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in the notes to our financial statements included in our Annual Report. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our named executive officers will only realize compensation to the extent the trading price of our Common Stock is greater than the exercise price of such stock options. Specifically, the number in the table above includes: for Mr. Cohen, options granted in February 2025 in connection with his continued service as Chief Executive Officer; and for Mr. Novick, options granted in February 2025 in connection with his continued service as Chief Operating Officer; and for Mr. Ratigan, options granted in June 2025 in connection with his employment with the Company (3) A mounts reported in this column represent other compensation paid to named executive officers. (4) Gerald Ratigan served as the Company’s Chief Financial Officer from June 23, 2025, to October 24, 2025. 64 Table of Contents Employment Arrangements - Potential Payments Upon Termination or Change-in-Control Scot Cohen. On October 12, 2023, the Board of Directors appointed Scot Cohen to the position of Executive Chairman, effective October 12, 2023. On October 25, 2025, the Board of the Company appointed Scot Cohen to the position of Chief Executive Officer, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. In connection with Mr. Cohen’s appointment as Executive Chairman, the Company and Mr. Cohen entered into an agreement on October 12, 2023 (the “Cohen Employment Agreement”). Pursuant to the Cohen Employment Agreement, unless earlier terminated pursuant to the terms therein, Mr. Cohen will serve as the Company’s Executive Chairman for an initial term of two years from the effective date of his appointment (the “Initial Term”). On the second anniversary of such effective date of appointment (if Mr. Cohen’s employment has not been earlier terminated), and on each subsequent anniversary thereafter, the Cohen Employment Agreement will automatically renew and extend for a period of twelve (12) months (each such twelve (12)-month period, a “Renewal Term”) unless written notice of non-renewal is delivered by either party to the other not less than sixty (60) days prior to the expiration of the then-existing Initial Term or Renewal Term, as applicable, or the Cohen Employment Agreement has been earlier terminated in accordance with its terms. As compensation for Mr. Cohen’s services to the Company, the Cohen Employment Agreement entitles Mr. Cohen to an annualized base salary of $200,000 (the “Base Salary”) and eligibility to participate in customary benefits offered to other executives of the Company. In the event Mr. Cohen’s employment is terminated by either party for any reason, Mr. Cohen will be entitled to: (i) any earned but unpaid Base Salary earned during his employment and applicable to all pay periods prior to the termination date; (ii) any documented and actually incurred unreimbursed business expenses, so long as Mr. Cohen makes any reimbursement request within 30 days following termination; and (iii) any employee benefits to which Mr. Cohen may be entitled under the Company’s employee benefit plans or programs in which Mr. Cohen participates as of the date of termination of Mr. Cohen’s employment. If Mr. Cohen’s employment is terminated by the Company without Cause (as defined in the Cohen Employment Agreement), or by Mr. Cohen for Good Reason (as defined in the Cohen Employment Agreement), or upon the end of the Initial Term or a Renewal Term, as applicable, as the result of the Company’s issuance of a notice of non-renewal, then, subject to certain conditions set forth in the Cohen Employment Agreement (including the execution and non-revocation of a general release of claims), Mr. Cohen will be entitled to: (i) severance payments in a total amount equal to 12 months’ worth of the Base Salary; (ii) any earned but unpaid annual bonus in respect of any completed year that has ended prior to the date of termination; and (iii) receive reimbursement, for a period of up to 12 months, for a portion of the premiums that Mr. Cohen elects to pay for continuation coverage under the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, subject to Mr. Cohen’s timely submission of applicable documentation. On December 12, 2023, the Board appointed Mr. Cohen to the position of Principal Executive Officer. On January 14, 2024, the Board appointed Mr. Cohen, who previously served as the Company’s Executive Chairman and Principal Executive Officer, to the position of Executive Chairman and Chief Executive Officer. In connection therewith, the Company and Mr. Cohen entered into an amendment, dated January 14, 2024, to the Cohen Employment Agreement, dated October 12, 2023, to, among other things, reflect Mr. Cohen’s new title. On April 5, 2024, the Board appointed Mr. Cohen to the position of Interim Principal Financial Officer and Principal Accounting Officer. In connection with the appointment of Mr. Ratigan as Chief Financial Officer, principal accounting officer and principal financial officer of the Company, on June 23, 2025, Mr. Cohen was appointed as Executive Chairman, Chief Executive Officer and Principal Executive Officer of the Company. In connection with the mutual separation of Mr. Ratigan from the Company, on October 24, 2025, Mr. Cohen was appointed as interim Principal Accounting Officer and Principal Financial Officer. Mr. Cohen currently serves as Executive Chairman, Chief Executive Officer, Principal Executive Officer, Principal Accounting Officer and Principal Financial Officer of the Company. Jared Novick. On December 26, 2023, the Board of appointed Jared Novick to the position of Chief Operating Officer. In connection with Mr. Novick’s appointment, on December 26, 2023 (the “Novick Effective Date”), the Company entered into an employment agreement (the “Novick Employment Agreement”) with Mr. Novick setting forth the terms and conditions of Mr. Novick’s employment as the Company’s Chief Operating Officer. Pursuant to the Novick Employment Agreement, Mr. Novick will serve as the Chief Operating Officer of the Company for a two-year initial term commencing on the Effective Date, which term automatically renews each year for successive one-year terms, unless earlier terminated by either party in accordance with the terms of the Novick Employment Agreement. 65 Table of Contents The Novick Employment Agreement provides that Mr. Novick will be entitled to receive an annual base salary of two hundred thousand dollars ($200,000) (“COO Base Salary”), payable in equal installments pursuant to the Company’s customary payroll practices. Mr. Novick is entitled to a one-time sign-on bonus of $75,000, payable in two equal installments as follows, subject to Mr. Novick’s continued service on such dates: (i) 50% on the first payroll date following the Novick Effective Date, and (ii) 50% on the first payroll date following the six-month anniversary of the Novick Effective Date. Mr. Novick is also eligible to receive for each fiscal year during the term of his employment, an annual discretionary bonus, with the actual amount determined by the Board in its sole discretion (“Annual Bonus”), payable prior to March 15 of the fiscal year following the fiscal year to which the bonus relates. The Novick Employment Agreement also entitles Mr. Novick to receive customary benefits and reimbursement for reasonable out-of-pocket business expenses. The Company may terminate Mr. Novick’s employment due to death or disability, for cause (as defined in the Novick Employment Agreement) at any time, and without cause at any time upon written notice. Mr. Novick may terminate his employment without good reason (as defined in the Novick Employment Agreement) at any time upon thirty days’ written notice or with good reason, which requires delivery of a written notice to the Board of the existence of condition(s) giving rise to the good reason within forty-five days after the initial occurrence of such condition(s), and failure of the Company to cure such condition(s) within thirty days following the Board's receipt of such notice. If Mr. Novick’s employment is terminated by either the Company or Mr. Novick for any reason, Mr. Novick shall receive any earned but unpaid COO Base Salary and expenses required to be reimbursed pursuant to the Novick Employment Agreement and any employee benefits Mr. Novick is entitled to under the Company’s employee benefit plans or programs in which Mr. Novick participates. In addition, if Mr. Novick’s employment is terminated by the Company without Cause (as defined in the Novick Employment Agreement) or upon non-renewal or by Mr. Novick for good reason (as defined in the Novick Employment Agreement), then, subject to compliance with the restrictive covenants set forth in the Novick Employment Agreement and the execution of a release of claims in favor of the Company, the Company will pay the following severance payments and benefits: (i) an amount equal to twelve months’ COO Base Salary, payable in equal monthly installments over a twelve-month severance period; (ii) an amount equal to any earned, but unpaid, Annual Bonus for services rendered during the year preceding the date of termination; and (iii) an amount intended to assist Mr. Novick with his post-termination health coverage, provided however, he is under no obligation to use such amounts to pay for continuation of coverage under the Company’s group health plan pursuant to COBRA. On March 10, 2025, the Board appointed Mr. Novick to the position of President and Chief Operating Officer. Mr. Novick will not be provided any additional compensation for his service as President and Chief Operating Officer. The terms of the Novick Employment Agreement have not changed in connection with Mr. Novick’s appointment as President and Chief Operating Officer of the Company. Gerald Ratigan. In June 2025, the Board appointed Mr. Ratigan to the position of Chief Financial Officer, principal accounting officer and principal financial officer of the Company. Beginning June 2025 through October 2025, Mr. Ratigan was paid a base salary equal to $200,000 for his service as Chief Financial Officer, principal accounting officer and principal financial officer of the Company, and on June 23, 2025, was granted stock options to purchase up to 200,000 shares of the Company’s Common Stock, at an exercise price equal to $1.41, which was the closing price of the Company’s Common Stock on the day prior to the grant, which would have vest in four substantially equal installments on each annual anniversary of the date of grant, provided that Mr. Ratigan was employed by or providing services to the Company through the applicable vesting date. In addition, Mr. Ratigan was eligible to receive an annual bonus based on performance targets set at the discretion of the Board. On October 21, 2025, the Company and Mr. Ratigan, mutually agreed to the separation of Mr. Ratigan from such roles, effective as of October 24, 2025. The terms of Mr. Ratigan’s separation from the Company have been memorialized pursuant to a General Release and Severance Agreement, dated as of October 21, 2025, which was executed by the Company and Mr. Ratigan on October 24, 2025 (the “Ratigan Separation Agreement”). Pursuant to the Ratigan Separation Agreement, Mr. Ratigan received a severance payment in an amount equal to $50,000, representing three months of Mr. Ratigan’s base salary, less all lawful and authorized withholdings and deductions, payable in a lump sum on the Company’s first regular pay date following the Effective Date (as defined in the Ratigan Separation Agreement). In exchange for the consideration provided to Mr. Ratigan in the Ratigan Separation Agreement, Mr. Ratigan agreed to waive and release any claims in connection with Mr. Ratigan’s employment and separation from the Company. 66 Table of Contents Outstanding Equity Awards at 2025 Fiscal Year-End The following table sets forth information concerning outstanding equity awards held by each of our named executive officers as of December 31, 2025. Option Awards Stock Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price Option Expiration Date Number of Shares of Stock That Have Not Vested (#) Market Value of Shares of Stock That Have Not Vested ($)(1) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) Scot Cohen 2/5/2025 - 500,000 (7) $ 1.98 2/5/2035 $ - $ - $ - $ - 1/2/2024 - - $ - - $ 632,911 $ 1,506,328 $ - $ - 10/12/2023 241,071 241,072 (2) $ 1.40 10/12/2033 $ - $ - $ - $ - 10/12/2023 430,055 860,111 (3) $ 1.40 10/12/2033 $ 321,429 (4) $ 765,001 $ - $ - 4/1/2021 100,000 (5) - $ 5.56 4/1/2031 $ - $ - $ - $ - Jared Novick 2/5/2025 - 500,000 (8) $ 1.98 2/5/2035 $ - $ - $ - $ - 12/23/2023 166,675 83,325 (6) $ 2.51 12/26/2033 $ - $ - $ - $ - The market value is computed based on the closing market price of our Common Stock on December 31, 2025, of $2.38 per share. Mr. Cohen was awarded stock options which vest in four substantially equal installments at the end of each of the Company’s fiscal years beginning on December 31, 2024, and ending on December 31, 2027, provided Mr. Cohen is employed by or providing services to the Company or an affiliate on the applicable vesting date. Mr. Cohen nonqualified stock options issued in connection with Mr. Cohen’s appointment as Executive Chairman. The stock options will vest, subject to Mr. Cohen’s continued employment with the Company through each vesting date, as follows: (i) 1/3rd on the date on which the Company’s market capitalization meets or exceeds $100 million for each trading day during 2 consecutive months; (ii) 1/3rd on the date on which the Company’s market capitalization meets or exceeds $150 million for each trading day during 2 consecutive months; and (ii) 1/3rd on the date on which the Company’s market capitalization meets or exceeds $200 million for each trading day during 2 consecutive months, subject to accelerated vesting upon the occurrence of certain events. Mr. Cohen was granted restricted shares of Common Stock of the Company issued in connection with Mr. Cohen’s appointment as Executive Chairman. The restricted shares will be issued upon vesting and shall vest, subject to Mr. Cohen’s continued employment, (i) 1/3rd on the date on which the Company’s market capitalization meets or exceeds $100 million for each trading day during 2 consecutive months; (ii) 1/3rd on the date on which the Company’s market capitalization meets or exceeds $150 million for each trading day during 2 consecutive months; and (iii) 1/3rd on the date on which the Company’s market capitalization meets or exceeds $200 million for each trading day during 2 consecutive months. Mr. Cohen was awarded stock options in connection with his previous position with the Company. Mr. Novick was granted stock options in connection with the Novick Employment Agreement. The stock options vest in three substantially equal installments at the end of each of the Company’s first through third fiscal years beginning on December 31, 2024, and ending on December 31, 2026, provided that Mr. Novick is employed by or providing services to the Company through the applicable vesting date. Mr. Cohen was granted stock options by the Board in February 2025 in connection with his continued service as Chief Executive Officer. The options vest in four equal annual installments beginning on the first anniversary of the date of grant. Mr. Novick was granted stock options by the Board in February 2025 in connection with his continued service as Chief Operating Officer. The options vest in four equal annual installments beginning on the first anniversary of the date of grant. Timing and Issuance of Stock Options Our Board does not have a formal policy on the timing of stock option awards in relation to the disclosure of material non-public information; however, it would take into account material non-public information when determining the timing and terms of such an award to avoid an inappropriate impact on the value of the award. The Company has not timed the disclosure of material non-public information for the purpose of affecting the value of executive compensation. 67 Table of Contents Director Compensation Program The following table sets forth the compensation awarded to, earned by, or paid to each person who served as a director during the fiscal year ended December 31, 2025. Fees Earned Stock Option or Paid in Awards Awards Name (1) Cash ($) (2) ($) (3) ($) (4) Total ($) Bruce Bernstein $ - $ 212,390 $ - $ 212,390 Marc Savas $ - $ 204,106 $ - $ 204,106 Rajiv Srinivasan $ - $ 131,651 $ - $ 131,651 Timothy Szymanski $ - $ 123,368 $ - $ 123,368 John Shulman $ - $ - $ 83,100 $ 83,100 Additional Director Compensation Information On April 1, 2021, the Board approved a new director compensation plan payable to all non-employee independent directors (“Amended Board Plan”). As revised, under the terms of the Amended Board Plan, non-employee independent directors received $121,000 annually effective January 1, 2021, payable one-half in cash and one half in restricted stock units to be settled in shares of the Company’s Common Stock, with 30% vesting immediately, and the remaining 70% vesting in monthly installments throughout the remainder of the year following the date of grant. In addition, each independent director that chairs a standing committee of the Board will receive an additional annual cash payment of $10,000, and any independent director serving as lead independent director of the Board received additional annual cash compensation of $25,000. In lieu of director compensation, the Executive Chairman, if any, was to be paid $121,000 annually, effective January 1, 2021, in addition to the grant of an option to purchase 100,000 shares of Common Stock with 30% vesting immediately and the remaining 70% vesting in equal monthly installments over the twelve months from the date of grant. In addition to annual compensation paid to each member of the Board, each new director appointed to the Board received an initial grant of options to purchase 30,000 shares of Common Stock at an exercise price based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on the date of grant, which options shall expire, if not previously exercised, ten years from the date of grant, and shall vest as follows: (i) 50% on the one-year anniversary of the date of grant, and (ii) the remaining 50% in four equal quarterly installments over the following year. In October 2023, the Board approved a revised director compensation plan payable to all non-employee independent directors, effective October 1, 2023 (“Revised Board Plan”). As revised, under the terms of the Revised Board Plan, non-employee independent directors receive $121,000 annually, payable in restricted stock units to be settled in shares of the Company’s Common Stock, with 30% vesting immediately, and the remaining 70% vesting in monthly installments throughout the remainder of the year following the date of grant. In addition, each independent director that chairs a standing committee of the Board will receive an additional annual payment of $10,000, payable in restricted stock units to be settled in shares of the Company’s Common Stock, with 30% vesting immediately, and the remaining 70% vesting in monthly installments throughout the remainder of the year following the date of grant. In February 2025, the Board approved a revised director compensation plan payable to all non-employee independent directors, effective February 1, 2025 (“Second Revised Board Plan”). As revised, under the terms of the Second Revised Board Plan, the chair of the Audit Committee of the Board will receive an additional annual payment of $18,000 and each independent director of the Compensation Committee and the Nominating Committee of the Board will receive an additional annual payment of $10,000, payable in restricted stock units to be settled in shares of the Company’s Common Stock, with 30% vesting immediately, and the remaining 70% vesting in monthly installments throughout the remainder of the year following the date of grant. In addition, each independent director that is a member of the audit committee of the Board will receive an additional annual payment of $9,000, payable in restricted stock units to be settled in shares of the Company’s Common Stock, with 30% vesting immediately, and the remaining 70% vesting in monthly installments throughout the remainder of the year following the date of grant. 68 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Equity Compensation Plan Information On March 31, 2017, the Company adopted, and the stockholders approved, the 2017 Equity Incentive Plan (the "Incentive Plan"). The Incentive Plan reserved 2.0 million shares of our Common Stock for issuance as one of four types of equity incentive awards: (i) stock options, (ii) shares of Common Stock, (iii) restricted stock awards, and (iv) restricted stock units. Stockholders authorized an increase to the shares of Common Stock authorized under the plan of an additional 2,100,000 shares in May 2019, an additional 1,900,000 shares in June 2020, an additional 1,500,000 shares in June 2021, an additional 1,500,000 shares in May 2022, an additional 7,500,000 in December 2024, and an additional 4,000,000 in December 2025, for a total of 20,500,000 shares authorized for issuance under the Incentive Plan as of the date of this Annual Report on Form 10-K. As of December 31, 2025, there were 8,011,625 shares of Common Stock available for grant under the Incentive Plan. The following table sets forth information as of December 31, 2025, with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance, aggregated as follows: (c) Number of securities remaining available for (a) Number of securities to be (b) Weighted-average future issuance under issued upon exercise of exercise price of equity compensation plans outstanding options, warrants outstanding options, (excluding securities Name (1) and rights warrants and rights reflected in column (a)) Equity compensation plans approved by security holders 6,449,534 $ 2.05 8,011,625 Equity compensation plans not approved by security holders - $ - - Total 6,449,534 $ 2.05 8,011,625 69 Table of Contents Security Ownership of Certain Beneficial Owners and Management The following table sets forth information with respect to the beneficial ownership of our voting securities as of Marc h 23, 2 026, by (i) each stockholder known by us to be the beneficial owner of more than 5% of our voting securities, (ii) each of our directors and named executive officers, and (iii) all of our directors and executive officers as a group. Unless otherwise noted, the address for each person named in the table is c/o Wrap Technologies, Inc., 3350 Virginia Street, Miami, Florida 33133. Number of Shares of Common Stock Beneficially Percentage of Name and Address of Beneficial Owner Owned (1) Class (2) 5% Stockholders Elwood G. Norris(3) 5,505,981 9.92 % Iroquois Capital Investment Group, LLC (4) 6,159,822 9.99 % Scot Cohen/V4 Global LLC (5) 11,808,987 17.75 % Named Executive Officers and Directors Scot Cohen/V4 Global LLC (5) 11,808,987 17.75 % Jared Novick/Continuum Ventures, LLC (6) 2,383,350 4.14 % Bruce Bernstein (7) 297,673 * Marc Savas/Savbo Investments LLC (8) 1,098,837 1.95 % Rajiv Srinivasan (9) 123,672 * Vice Admiral Tim Szymanski (10) 119,752 * John Shulman / Juggernaut Management, LLC (11) 605,394 1.09 % Gerald Ratigan - * All directors and executive officers as a group (8 persons) 16,437,665 25.89 % * Represents ownership of less than 1%. 70 Table of Contents Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares set forth in the above table. A total of 55,500,054 shares of our Common Stock are considered to be outstanding, pursuant to SEC Rule 13d-3(d)(1) as of March 23, 2026 Based on the Schedule 13D/A filed jointly with the SEC on January 29, 2026, by the Norris Family 1997 Trust (the “Norris Trust”), Elwood G. Norris and Stephanie A. Norris and certain information made available to the Company. The shares of Common Stock are directly held by the Trust and Mr. Norris. The shares of Common Stock directly held by Mr. Norris and the Norris Trust are also indirectly beneficially owned by Stephanie A. Norris, as a trustee of the Norris Trust. The amount reported herein consists of 5,505,981 shares of Common Stock. The address of each of the parties herein is 15891 Blue Crystal Trail, Poway, CA 92064. Based on certain information made available to the Company. The securities reported herein are directly held by Iroquois Capital Investment Group LLC (“ICIG”) and Iroquois Master Fund, Ltd. (“IMF”). Consists of (i) 412,129 shares of common stock held by ICIG, (ii) 425,000 Pre-Funded Warrant Shares and held by ICIG (subject to a 9.99% beneficial ownership limitation), (iii) 425,000 Common Warrant Shares held by ICIG (subject to a 9.99% beneficial ownership limitation), (iv) 1,210,574 shares of common stock issuable upon exercise of certain warrants (subject to a 4.99% beneficial ownership limitation) held by ICIG, (v) 200,000 shares of common stock issuable upon conversion of 290 shares of the Company’s Series A Preferred Stock (subject to a 4.99% beneficial ownership limitation) held by ICIG, (vi) 408,333 shares of common stock issuable upon conversion of 612.5 shares of Series B Preferred Stock held by ICIG (subject to a 4.99% beneficial ownership limitation), (vii) 294,045 shares of common stock held by IMF, (viii) 375,000 Pre-Funded Warrant Shares and held by IMF (subject to a 9.99% beneficial ownership limitation), (ix) 375,000 Common Warrant Shares held by IMF (subject to a 9.99% beneficial ownership limitation), (x) 1,410,344 shares of common stock issuable upon conversion of 2,045 shares of the Company’s Series A Convertible Preferred Stock (subject to a 4.99% beneficial ownership limitation) held by IMF, (xi) 825,000 shares of common stock issuable upon exercise of 1,237.5 shares of Series B Preferred Stock held by IMF, and (xii) 3,643,966 shares of common stock issuable upon exercise of certain warrants (subject to a 4.99% beneficial ownership limitation) held by IMF. Iroquois Capital Management L.L.C. (“ICM”) is the investment manager of IMF. ICM has voting control and investment discretion over securities held by IMF. As Managing Members of ICM, Richard Abbe and Kimberly Page make voting and investment decisions on behalf of ICM in its capacity as investment manager to IMF. Mr. Abbe is the managing member of ICIG. Mr. Abbe has sole voting control and investment discretion over securities held by ICIG. As such, Mr. Abbe may be deemed to be the beneficial owner (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by ICIG. As a result of the foregoing, Mr. Abbe and Mrs. Page may be deemed to have beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act of 1934, as amended) of the securities held by ICM and IMF. The principal business address for ICIG and IMF is 2 Overhill Road, Suite 400, Scarsdale, NY 10583. Based on certain information made available to the Company. Includes (i) 294,045 shares of Common Stock, (ii) 475,000 shares of Common Stock held by V4 Global, LLC (“V4 Global”), (iii) 1,410,344 shares of Common Stock issuable upon conversion of 2,045 shares of Series A Preferred Stock, (iv) 825,000 shares of Common Stock issuable upon conversion of 1237.5 shares of Series B Preferred Stock (subject to a 4.99% beneficial ownership blocker), (v) 3,643,966 shares of Common Stock issuable upon exercise of certain warrants (subject to a 4.99% beneficial ownership blocker), (vi) 375,000 shares of Common Stock issuable upon exercise of certain pre-funded warrants (subject to a 9.99% beneficial ownership blocker), (vii) 375,000 shares of Common Stock issuable upon exercise of certain warrants (subject to a 9.99% beneficial ownership blocker, and (viii) 4,310,632 shares of Common Stock issuable upon exercise of certain warrants held by V4 Global. Mr. Cohen has voting and dispositive control with respect to the securities held by V4 Capital Partners, LLC (“V4 Capital”) and V4 Global. As a result, Mr. Cohen may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act) of the securities held by V4 Capital and V4 Global. The principal business address of V4 Capital, V4 Global and Mr. Cohen is 445 Grand Bay Drive, Apt. P1A, Key Biscayne, FL 33149. Represents (i) 275,000 shares of Common Stock, (ii) 1,583,350 shares of Common Stock underlying stock options that were vested as of the date hereof, or could vest within 60 days hereafter, (iii) 250,000 shares of Common Stock underlying RSUs that were vested as of the date hereof, or could vest within 60 days hereafter and (iv) 275,000 shares of Common Stock underlying certain warrants (subject to a beneficial ownership limitation of 4.99%). The securities reported herein are directly held by Continuum Ventures, LLC and Jared Novick. Jared Novick is a manager of Continuum Ventures, LLC and has voting control and investment discretion over the securities reported herein that are held by Continuum Ventures, LLC. As a result, Mr. Novick may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act of the securities reported herein that are held by Continuum Ventures, LLC. Mr. Bernstein holds (i) 48,706 shares of Common Stock, (ii) 222,500 shares of Common Stock underlying stock options that were vested as of the date hereof, or will vest within 60 days hereafter, and (iii) 26,467 shares of Common Stock underlying RSUs that were vested as of the date hereof, or will vest within 60 days hereafter. Represents (i) 139,409 shares of Common Stock, (ii) 394,827 shares of Common Stock issuable upon exercise of certain warrants (with certain warrants subject to a 4.99% beneficial ownership blocker), (iii) 500 shares of Series A Preferred Stock, convertible into up to approximately 344,828 shares of Common Stock (subject to a 4.99% beneficial ownership blocker), (iv) 69,773 shares of Common Stock underlying RSUs that were vested as of the date hereof, or will vest within 60 days hereafter, (v) 75,000 shares of Common Stock held by Savbo Investments LLC (“Savbo”), and (vi) 75,000 shares of Common Stock issuable upon exercise of certain warrants (with certain warrants subject to a 4.99% beneficial ownership blocker) held by Savbo. Marc Savas is a manager of Savbo Investments LLC and has voting control and investment discretion over the securities reported herein that are held by Savbo Investments LLC. As a result, Mr. Savas may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act of the securities reported herein that are held by Savbo Investments LLC. Mr. Srinivasan holds (i) 29,370 shares of common stock, (ii) 75,000 shares of common stock underlying stock options that were vested as of the date hereof, or will vest within 60 days hereafter and (iii) 19,302 shares of common stock underlying RSUs that were vested as of the date hereof, or will vest within 60 days hereafter. Mr. Szymanski holds (i) 79,810 shares of common stock, (ii) 22,500 shares of common stock underlying stock options that were vested as of the date hereof, or will vest within 60 days hereafter and (iii) 17,442 shares of common stock underlying RSUs that were vested as of the date hereof, or will vest within 60 days hereafter. Based on certain information available to the Company. Consists of (i) 66,000 shares of Common Stock, (ii) 30,000 shares of common stock underlying stock options that were vested as of the date hereof, or will vest within 60 days hereafter, (iii) 9,394 shares of common stock underlying RSUs that were vested as of the date hereof, or will vest within 60 days hereafter, (iv) 250,000 shares of Common Stock held by Juggernaut Management, LLC (“Juggernaut”), and (v) 250,000 shares of Common Stock issuable upon exercise of certain warrants (subject to a 4.99% beneficial ownership blocker). John Shulman is a manager of Juggernaut and has voting control and investment discretion over the securities reported herein that are held by Juggernaut. As a result, Mr. Shulman may be deemed to have beneficial ownership (as determined under Section 13(d) of the Exchange Act of the securities reported herein that are held by Juggernaut. 71 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. Transactions with Related Persons SEC rules require us to disclose any transaction or currently proposed transaction in which we are a participant and in which any related person has or will have a direct or indirect material interest involving an amount that exceeds the lesser of $120,000 or one percent (1%) of the average of the Company’s total assets as of the end of the last two completed fiscal years. A related person is any executive officer, director, nominee for director, or holder of 5% or more of the Company’s Common Stock, or an immediate family member of any of those persons. The Company has adopted a Related Person Transaction Policy pursuant to which the Audit Committee of the Board is responsible for reviewing and approving all transactions in which the Company is a participant and in which any director, executive officer, holder of more than 5% of the Company's voting securities, or any immediate family member of such persons has or will have a direct or indirect material interest. In reviewing and approving any related party transaction, the Audit Committee considers all relevant facts and circumstances, including whether the transaction is on terms no less favorable to the Company than terms that could have been reached with an unrelated third party and whether the transaction is in the best interests of the Company and its stockholders. The Company's Code requires directors, officers, and employees to disclose to their supervisor, the Chair of the Audit Committee, or the Chair of the Board any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest. All of the related party transactions described herein were reviewed and approved or ratified by the Audit Committee in accordance with the Company's Related Person Transaction Policy. Series A Preferred Stock On June 29, 2023, the Company entered into the Series A Purchase Agreement with certain investors, including Scot Cohen, the Company’s Chief Executive Officer, and V4 Global. Mr. Cohen has voting and dispositive control with respect to the securities and is deemed to be the beneficial owner of the securities held by V4 Global. Pursuant to the Series A Purchase Agreement, the Company issued to Mr. Cohen and V4 Global an aggregate of 3,000 shares of Series A Preferred Stock and Series A Warrants to purchase up to an aggregate of 2,068,966 shares of Common Stock for aggregate gross proceeds of $3,000,000. For the year ended December 31, 2025, Mr. Cohen earned dividends totaling $300,000 on his Series A Preferred Stock. February 2025 Private Placement On February 24, 2025, the Company entered into the PIPE Purchase Agreement with the PIPE Purchasers for the issuance and sale in a private placement of an aggregate of 3,216,666 shares of Common Stock and PIPE Warrants to purchase up to 3,216,666 shares of Common Stock, with an exercise price of $1.80 per share. The purchase price for one share of Common Stock and accompanying PIPE Warrant was $1.80. The estimated gross proceeds to the Company were $5.8 million, before estimated offering expenses payable by the Company. The Company issued the following to related parties: (i) Mr. Cohen through V4 Global an aggregate of 1,100,000 shares of Common Stock and PIPE Warrants to purchase up to an aggregate of 1,100,000 shares of common stock for aggregate gross proceeds of $1,980,000, (ii) Mr. Novick through Continuum Ventures LLC an aggregate of 275,000 shares of Common Stock and PIPE Warrants to purchase up to an aggregate of 275,000 shares of Common Stock for aggregate gross proceeds of $495,000, and (iii) Mr. Savas through Savbo Investments LLC an aggregate of 50,000 shares of common stock and PIPE Warrants to purchase up to an aggregate of 50,000 shares of common stock for aggregate gross proceeds of $90,000. For the year ended December 31, 2025, V4 Global earned dividends totali ng $192,500 on t he Series A Preferred Stock. 72 Table of Contents August 2025 Private Placement On August 18, 2025, the Company entered into the Series B Securities Purchase Agreement with the Series B Purchasers for the issuance and sale in a private placement of an aggregate of (i) 4,500 shares of Series B Preferred Stock, initially convertible into up to 3,000,000 shares of the Company’s Common Stock, at an initial conversion price of $1.50 per share, and (ii) accompanying Series B Warrants to purchase up to 3,000,000 shares of Common Stock, with an initial exercise price of $1.50 per share. The estimated gross proceeds of the Series B Private Placement to the Company were $4.5 million, before estimated offering expenses payable by the Company. In connection with the Series B Private Placement, the Company issued to Mr. Cohen, through V4, an aggregate of 1,000 shares of Series B Preferred Stock and Series B Warrants to purchase up to an aggregate of 666,667 shares of Common Stock for aggregate gross proceeds of $1,000,000. February 2026 Private Placement 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) Common Warrants to purchase up to 2,500,000 shares of Common Stock, with an exercise price of $2.30 per share. The estimated gross proceeds from the February 2026 Closing were approximately $5.0 million, prior to deducting offering expenses payable by us. The Company issued the following to related parties: (i) an aggregate of 475,000 shares of Common Stock and Common Warrants to purchase up to an aggregate of 475,000 shares of Common Stock for aggregate gross proceeds of $950,000 to Mr. Cohen through V4 Global, (ii) an aggregate of 250,000 shares of Common Stock and Common Warrants to purchase up to an aggregate of 250,000 shares of Common Stock for aggregate gross proceeds of $500,000 to Mr. Shulman through Juggernaut Management, LLC, and (iii) an aggregate of 25,000 shares of Common Stock and Common Warrants to purchase up to an aggregate of 25,000 shares of Common Stock for aggregate gross proceeds of $50,000 to Mr. Savas through Savbo Investments LLC. Director Independence See “Directors, Executive Officers and Corporate Governance - Director Independence” and “Directors, Executive Officers and Corporate Governance - Board Committees” above. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Independent Registered Public Accounting Firm The Audit Committee, effective as of May 7, 2024, appointed HTL International, LLC (“HTL”) as the Company’s independent registered public accounting firm for the Company’s fiscal year since then. Audit and Non-Audit Fees The Company engaged HTL from May 7, 2024, to present. The following table presents fees for professional audit services rendered by HTL for audit and other services provided for the fiscal years ended December 31, 2025, and December 31, 2024. 2025 2024 Audit Fees(1) $ 175,000 $ 165,000 Audit Related Fees(2) 19,000 - Tax Fees(3) - - All Other Fees(4) - - Total $ 194,000 $ 165,000 (1) A udit Fees include fees for services rendered for the audit of our annual financial statements, the review of financial statements included in our Quarterly Reports on Form 10-Q, assistance with and review of documents filed with the SEC and consents and other services normally provided in connection with regulatory filings. (2) A udit Related fees principally include fees incurred for due diligence in connection with potential transactions and accounting consultations. (3) T ax Fees would include fees for services rendered for tax compliance, tax advice, and tax planning. (4) A ll Other Fees would include fees that do not constitute Audit Fees, Audit Related Fees, or Tax Fees. The percentage of services set forth above in the category audit related fees, that were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) (relating to the approval of a de minimis amount of non-audit services after the fact but before completion of the audit), was 100%. 73 Table of Contents Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval. 1. Audit services include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards. 2. Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements. 3. Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areas of tax compliance, tax planning, and tax advice. 4. Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from our independent registered public accounting firm. Prior to engagement, the Audit Committee pre-approves these services by category of service, including for the fiscal year ended December 31, 2025. The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. 74 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List of documents filed as a part of this report: (1) Index to Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 7000) F-2 Balance Sheets as of December 31, 2025 and 2024 F-3 Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2025 and 2024 F-4 Statements of Stockholders’ Equity for the Years Ended December 31, 2025 and 2024 F-5 Statements of Cash Flows for the Years Ended December 31, 2025 and 2024 F-6 Notes to Financial Statements F-7 (2) Financial Statement Schedules All schedules have been omitted because the information is not applicable, is not material or because the information required is included in the financial statements or the notes thereto. (3) Index to Exhibits The exhibits listed on the accompanying index to exhibits immediately following the financial statements are filed as part of, or hereby incorporated by reference into, this Form 10-K. (a)(2) Consolidated Financial Statement Schedules: 75 Table of Contents Schedules not filed are omitted because of the absence of the conditions under which they are required or because the required information is included in the consolidated financial statements or the notes thereto. Exhibit Number Description 2.1 Asset Purchase Agreement, dated as of February 18, 2025, by and between Wrap Technologies, Inc. and W1 Global, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 24, 2025). 3.1 Amended and Restated Certificate of Incorporation of Wrap Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on April 17, 2017). 3.1.1 Certificate of Amendment of Amended and Restated Certificate of Incorporation of Wrap Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on December 17, 2025). 3.2 Amended and Restated Bylaws of Wrap Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 10, 2023). 3.2.1 Amendment No.1 to the Amended and Restated Bylaws of Wrap Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 15, 2023). 3.2.2 Second Amendment to the Amended and Restated Bylaws of Wrap Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on November 5, 2025). 3.3 Certificate of Designations of Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2023). 3.3.1 Certificate of Amendment of Certificate of Designations of Series A Convertible Preferred Stock. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2024). 3.4 Certificate of Designations of Series B Convertible Preferred Stock of Wrap Technologies, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on August 26, 2025). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on May 30, 2017). 4.2 Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2023). 4.3 Form of Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 28, 2025). 4.4 Form of Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the SEC on August 18, 2025). 4.5 Form of Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed with the SEC on February 4, 2026). 4.6 Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed with the SEC on February 4, 2026). 4.7 * Description of Securities. 10.1 Amended and Restated Intellectual Property License Agreement, dated September 30, 2016, by and between Wrap Technologies, LLC and Syzygy Licensing LLC (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on April 17, 2017). 10.2+ Wrap Technologies, Inc. 2017 Equity Compensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on April 17, 2017). 10.2.1+ Amendment No. 1 to the Wrap Technologies, Inc. 2017 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 24, 2019). 10.2.2+ Amendment No. 2 to the Wrap Technologies, Inc. 2017 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 17, 2020). 10.2.3+ Amendment No. 3 to the Wrap Technologies, Inc. 2017 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-8 filed with the Securities and Exchange Commission on November 5, 2021). 10.2.4+ Amendment No. 4 to the Wrap Technologies, Inc. 2017 Equity Compensation Plan (incorporated by reference to Exhibit 10.2.4 to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on April 25, 2025). 10.2.5+ Fifth Amendment to the Wrap Technologies, Inc. 2017 Equity Compensation Plan (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 December 26, 2024). 10.2.6+ Sixth Amendment to the Wrap Technologies, Inc. 2017 Equity Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on December 17, 2025). 10.4+ Form of At-Will Employment, Confidential Information, Non-Compete/ Non-Solicitation, Invention Assignment, and Arbitration Agreement between the Key Employees and the Company dated December 14, 2020 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 14, 2020). 10.5 Cooperation Agreement by and between the Company and Elwood G. Norris and certain of his affiliates dated March 4, 2021 (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 March 9, 2021). 10.6 Consulting Agreement between the Company and LWV Consulting, LLC, dated January 24, 2022 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission filed on January 26, 2022). 10.7 Consulting Agreement between the Company and LRHIRSH, LLC, dated January 24, 2022 (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 January 26, 2022). 10.8+ Employment Agreement between Wrap Technologies, Inc. and TJ Kennedy, dated April 13, 2022 (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 April 19, 2022). 10.9+ Employment Agreement between Wrap Technologies, Inc. and Kevin Mullins, dated April 13, 2022. (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 April 19, 2022). 10.9.1+ First Amendment to Employment Agreement, by and between Kevin Mullins and Wrap Technologies, Inc. dated January 14, 2024 (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 January 19, 2024). 10.10 Professional Services and Technology Acquisition Agreement, dated November 22, 2022, by and between Wrap Technologies, Inc., Lumeto, Inc. and Spatial Industries Group, Inc (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 November 29, 2022). 10.11 Separation Agreement between the Company and Mr. Kennedy (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 April 19, 2023). 76 Table of Contents 10.12 Severance Agreement and Release of Claims, dated May 8, 2023, by and between Wrap Technologies, Inc. and Glenn Hickman (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2023). 10.13 Form of Securities Purchase Agreement (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 June 30, 2023). 10.14 Engagement Letter, dated June 29, 2023 by and between Wrap Technologies, Inc. and Katalyst Securities LLC (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 June 30, 2023). 10.15** Membership Interest Purchase Agreement, dated August 9, 2023, by and among Wrap Technologies, Inc., Buford Ortale, and the sellers signatory 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 August 21, 2023). 10.16+ Employment Agreement by and between Scot Cohen and Wrap Technologies, Inc. dated October 12, 2023 (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 October 16, 2023). 10.16.1+ First Amendment to Employment Agreement, by and between Scot Cohen and Wrap Technologies, Inc. dated January 14, 2024 (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 January 19, 2024). 10.17+ Employment Agreement, by and between the Company and Jared Novick, effective as of December 26, 2023 (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 December 26, 2023). 10.18 Separation Agreement and Mutual Release of Claims, dated January 5, 2024, by and between Wrap Technologies, Inc. and Chris DeAlmeida (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 January 5, 2024). 10.19 Form of Amendment, dated August 19, 2024, by and between Wrap Technologies, Inc. and the investors party 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 August 23, 2024). 10.20 Securities Purchase Agreement, dated February 24, 2025, by and among the Company and the investors signatory thereto. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on February 28, 2025). 10.21 Registration Rights Agreement, dated February 24, 2025, by and among the Company and the investors signatory 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 February 28, 2025). 10.22 Form of Series A Warrant Amendment, dated as of June 30, 2025, by and among Wrap Technologies, Inc. and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2025) 10.23 Form of 2025 Warrant Amendment, dated as of June 30, 2025, by and among Wrap Technologies, Inc. and the investors signatory thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2025). 10.24 Securities Purchase Agreement, dated August 18, 2025, by and among the Company and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on August 18, 2025). 10.25 Registration Rights Agreement, dated August 18, 2025, by and among the Company and the investors signatory thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on August 18, 2025). 10.26 General Release and Severance Agreement, dated October 21, 2025 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on October 27, 2025). 10.27 Form of Senior Indenture (incorporated by reference to Exhibit 4.12 to the Company's Registration Statement on Form S-3, filed with the SEC on November 21, 2025). 10.28 Form of Senior Subordinated Indenture (incorporated by reference to Exhibit 4.12 to the Company's Registration Statement on Form S-3, filed with the SEC on November 21, 2025). 10.29 Securities Purchase Agreement, dated February 2, 2026, by and among the Company and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on February 4, 2026). 10.30 Registration Rights Agreement, dated February 2, 2026, by and among the Company and the investors signatory thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on February 4, 2026). 14.1 Wrap Technologies, Inc. Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 4, 2021). 19.1 Wrap Technologies, Inc. Insider Trading Policy (incorporated by reference to Exhibit 19.1 to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on March 24, 2025). 21.1* Subsidiaries of Wrap Technologies, Inc. 23.1* Consent of Independent Registered Public Accounting Firm - HTL International, LLC. 31.1* Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 - Principal Executive Officer 31.2* Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 - Principal Financial Officer 32.1*** Section 1350 Certification - Principal Executive Officer 32.2*** Section 1350 Certification - Principal Financial Officer 97.1 Wrap Technologies, Inc. Compensation Recovery Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 28, 2024) 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) + Management contract or compensatory plan or arrangement. * Filed concurrently herewith. ** Certain portions of this exhibit (indicated by “[***]”) have been omitted as the Company has determined (i) the omitted information is not material and (ii) the omitted information would likely cause harm to the Company if publicly disclosed. *** Furnished herewith. Item 16. FORM 10-K SUMMARY None. 77 Table of Contents WRAP TECHNOLOGIES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Audited Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm (PCAOB ID: 7000 ) F-2 Consolidated Balance Sheets as of December 31, 202 5 and 202 4 F- 3 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 202 5 and 2024 F- 4 Consolidated Statements of Stockholders’ Equity for Years Ended December 31, 202 5 and 2024 F- 5 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 and 2024 F- 6 Notes to Consolidated Financial Statements F - 7 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Wrap Technologies Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Wrap Technologies, Inc. (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its consolidated cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ HTL International, LLC We have served as the Company’s auditor since 2024. Houston, TX March 26, 2026 F-2 Table of Contents Wrap Technologies, Inc. Consolidated Balance Sheets (in thousands, except par value and share amounts) December 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 3,468 $ 3,610 Accounts receivable and contract assets 2,787 513 Inventories, net 4,971 6,170 Prepaid expenses and other current assets 194 178 Total current assets 11,420 10,471 Property and equipment, net 123 146 Operating lease right-of-use asset, net 2,175 1,964 Intangible assets, net 1,572 2,354 Other assets 128 186 Total assets 15,418 15,121 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 620 $ 609 Accrued liabilities 407 1,403 Customer deposits 62 27 Deferred revenue- short term 408 466 Operating lease liability - short term 320 567 Warrants - short term - 10,131 Total current liabilities 1,817 13,203 Long-term liabilities: Deferred revenue- long term 14 39 Operating lease liability - long term 2,097 1,629 Total long-term liabilities 2,111 1,668 Total liabilities 3,928 14,871 Commitments and contingencies (Note 15) Stockholders' equity: Preferred stock - 5,000,000 authorized; par value $ 0.0001 per share; 12,707 and 8,207 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively - - Common stock - 200,000,000 authorized; par value $ 0.0001 per share; 51,733,217 and 47,101,631 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively 5 5 Series A convertible preferred stock - 10,000 authorized, par value $ 0.0001 per share; 8,207 shares issued and outstanding at December 31, 2025 and December 31, 2024 - - Series B convertible preferred stock - 4,500 authorized, par value $ 0.0001 per share, 4,500 and 0 shares issued and outstanding at December 31, 2025 and December 31, 2024, respectively - - Additional paid-in capital 127,804 105,326 Accumulated deficit ( 116,319 ) ( 105,081 ) Accumulated other comprehensive loss - - Total stockholders' equity 11,490 250 Total liabilities and stockholders' equity $ 15,418 $ 15,121 See accompanying notes to consolidated financial statements. F-3 Table of Contents Wrap Technologies, Inc. Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) Year Ended December 31, 2025 2024 Revenues: Product sales $ 3,507 $ 3,590 Technology enabled services 1,696 917 Total revenues, gross 5,203 4,507 Sales returns and allowances ( 531 ) - Total revenues, net 4,672 4,507 Cost of revenues 1,973 2,042 Gross profit 2,699 2,465 Operating expenses: Selling, general and administrative 16,128 15,688 Research and development 56 2,344 Total operating expenses 16,184 18,032 Loss from operations ( 13,485 ) ( 15,567 ) Other income / (expense): Interest Income 7 156 Change in fair value of warrant liabilities 3,158 9,572 Other ( 15 ) ( 36 ) Total other income / (expense), net 3,150 9,692 Net loss $ ( 10,335 ) $ ( 5,875 ) Less: Convertible preferred stock dividends ( 903 ) ( 1,218 ) Net loss attributable to common stockholders $ ( 11,238 ) $ ( 7,093 ) Net loss per basic and diluted share of Common Stock $ ( 0.22 ) $ ( 0.16 ) Weighted average shares of Common Stock used to compute net loss per basic and diluted shares of Common Stock 50,390,735 45,621,214 Comprehensive loss: Net loss $ ( 10,335 ) $ ( 5,875 ) Comprehensive loss $ ( 10,335 ) $ ( 5,875 ) F-4 Table of Contents Wrap Technologies, Inc. Consolidated Statements of Stockholders' Equity (in thousands, except share and per share amounts) 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 January 1, 2024 43,855,503 $ 4 9,898 $ - - $ - $ 101,147 $ ( 97,988 ) $ 3,163 Common shares issued upon exercise of stock options 232,081 - - - - - 588 - 588 Share-based compensation expense - - - - - - 2,433 - 2,433 Dividends on convertible preferred stock 1,125,300 - - - - - 1,158 ( 1,218 ) ( 60 ) Common Stock issued upon vesting of restricted stock units 497,564 1 - - - - - - 1 Common shares issues upon convertible preferred stock exercising convertible rights 1,391,183 - ( 1,691 ) - - - - - - Net loss for the year - - - - - - - ( 5,875 ) ( 5,875 ) Balance at December 31, 2024 47,101,631 $ 5 8,207 $ - - $ - $ 105,326 $ ( 105,081 ) $ 250 Share-based compensation expense - - - - - - 4,076 - 4,076 Dividends on convertible preferred stock 406,045 - - - - - 903 ( 903 ) - Common Stock issued upon vesting of restricted stock units 837,460 - - - - - - - - Common shares issued upon exercise of stock options 171,415 - - - - - 245 245 Series B Convertible Preferred Stock and warrants issuance - - - - 4,500 - 4,500 - 4,500 Common Stock issued with Private Placement 3,216,666 - - - - - 603 - 603 Reclassification of warrant liability due to warrant amendment - - - - - - 12,151 - 12,151 Net loss for the year - - - - - - - ( 10,335 ) ( 10,335 ) Balance at December 31, 2025 51,733,217 $ 5 8,207 $ - 4,500 $ - 127,804 ( 116,319 ) 11,490 See accompanying notes to consolidated financial statements. F-5 Table of Contents Wrap Technologies, Inc. Consolidated Statements of Cash Flows (in thousands, except share and per share amounts) Year Ended December 31, 2025 2024 Cash Flows From Operating Activities: Net loss $ ( 10,335 ) $ ( 5,875 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 594 827 Impairment of goodwill and intangibles 588 1,631 Loss on disposition of assets 10 - Share-based compensation 4,076 2,433 Warranty provision ( 40 ) 90 Change in fair value of warrant liabilities ( 3,158 ) ( 9,572 ) Non-cash lease expense ( 211 ) 292 Credit losses 117 66 Inventory obsolescence reserve 36 15 Changes in assets and liabilities: Accounts receivable ( 2,391 ) 2,446 Inventories 1,163 ( 391 ) Prepaid expenses and other current assets ( 16 ) 775 Accounts payable 11 ( 441 ) Operating lease liabilities 221 ( 91 ) Customer deposits 35 ( 975 ) Accrued liabilities and other ( 951 ) 700 Warranty settlement ( 13 ) ( 79 ) Deferred revenue ( 83 ) ( 39 ) Other non-current assets 58 63 Net cash used in operating activities ( 10,289 ) ( 8,125 ) Cash Flows From Investing Activities: Proceeds from maturities of short-term investments - 7,500 Capital expenditures for property and equipment ( 100 ) ( 12 ) Investment in patents, trademarks, and other intangibles ( 287 ) ( 156 ) Net cash paid for acquisition of Intrensic - ( 20 ) Net cash (used in) provided by investing activities ( 387 ) 7,312 Cash Flows From Financing Activities: Proceeds from exercise of stock options 245 588 Proceeds from issuance of Series B convertible preferred stock 4,500 - Proceeds from issuance of warrants and common stock, net of offering costs 5,789 - Dividends settled in cash - ( 120 ) Net cash provided by financing activities 10,534 468 Net decrease in cash and cash equivalents ( 142 ) ( 345 ) Cash and cash equivalents, beginning of period 3,610 3,955 Cash and cash equivalents, end of period 3,468 3,610 Supplemental Disclosure of Non-Cash Investing and Financing Activities Reclassification of warrant liabilities to additional paid in capital 12,151 - Dividends declared on convertible preferred stock ( 1,067 ) ( 1,098 ) Dividends settled with common stock 492 1,158 See accompanying notes to consolidated financial statements. F-6 Table of Contents Wrap Technologies, Inc. Notes to Consolidated Financial Statements (in thousands, except per share and share amounts) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Business Description Wrap Technologies, Inc., a Delaware corporation (the “ Company ”), is a publicly traded company with its common stock, par value $ 0.0001 per share (“ Common Stock ”), listed on the Nasdaq Capital Market (“ Nasdaq ”) under the trading symbol “WRAP”. The Company is a developer and supplier of public safety products and training services for law enforcement and security personnel. The Company’s primary product is the BolaWrap® device. The principal markets for the Company’s proprietary products and services are in North and South America, Europe, the Middle East and Asia. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of intercompany transactions and balances. Basis of Presentation and Use of Estimates The accompanying financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“ US GAAP ”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions (e.g., share-based compensation valuation, allowance for doubtful accounts, valuation of inventory and intangible assets, warranty reserve, accrued costs, valuation allowance related to deferred tax assets and recognition and measurement of contingencies) that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Concentrations of Risk Credit Risk – Financial instruments that potentially subject the Company to concentration of credit risk consisted primarily of cash, cash equivalents, US treasury bills and accounts receivable from customers. The Company maintains its cash and cash equivalent deposits at two domestic financial institutions. The Company is exposed to credit risk in the event of default by a financial institution to the extent that cash and cash equivalents are in excess of the amount insured by the Federal Deposit Insurance Corporation. The Company places its cash and cash equivalents with high-credit quality financial institutions and are managed within established guidelines to mitigate risks. To date, the Company has not experienced any losses on its cash and cash equivalents. Concentrations of Accounts Receivable and Revenue – The Company has a limited number of domestic and international customers. The Company may experience concentrations in both accounts receivable and revenue due to the timing of sales and collections of related payments (see Note 18). Concentration of Suppliers – The Company assembles its BolaWrap products in-house using components and subassemblies from a limited number of suppliers and contract suppliers. In particular, a single supplier is currently the sole manufacturer of the BolaWrap battery assembly, and another single supplier is the sole manufacturer of the propulsion component for BolaWrap cassettes. Other parts are solely sourced from other suppliers. If supplier shortages or logistic delays occur, or quality problems arise, production schedules could be significantly delayed or costs significantly increased, which could in turn have a material adverse effect on the Company’s financial condition, results of operation and cash flows. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in Money Market Funds and US (“ US ”) Treasury bills and are stated at fair value. F-7 Table of Contents Share-Based Compensation The Company follows the fair value recognition provisions issued by the Financial Accounting Standards Board ("FASB") in Accounting Standards Codification ("ASC") Topic 718, Stock Compensation (“ ASC 718 ”) and has adopted Accounting Standards Update (“ ASU ”) 2018-07 for share-based transactions with non-employees. Share-based compensation expense recognized during 2025 and 2024 includes stock option and restricted stock unit compensation expense. The grant date fair value of stock options is determined using the Black-Scholes option-pricing model. The grant date is the date at which an employer and employee or non-employee reach a mutual understanding of the key terms and conditions of a share-based payment award and approved by the Company’s Board of Directors. The Black-Scholes option-pricing model requires inputs including the market price of the Company’s Common Stock on the date of grant, the term that the stock options are expected to be outstanding, the implied stock volatilities of several publicly traded peers over the expected term of stock options, risk-free interest rate and expected dividend. Each of these inputs is subjective and generally requires significant judgment to determine. The grant date fair value of restricted stock units is based upon the market price of the Company’s Common Stock on the date of the grant. The Company determines the amount of share-based compensation expense based on awards that the Company ultimately expect to vest and account for forfeitures as they occur. The fair value of share-based compensation is amortized to compensation expense over the vesting term. Loss per Share Basic loss per share (EPS) is computed by dividing net loss, less any dividends, accretion or decretion, redemption or induced conversion, if any, on the Company's Series A and Series B Convertible Preferred Stock, by the weighted average number of shares outstanding during the reported period. In computing diluted EPS, the Company adjusts the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A and Series B Convertible Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A and Series B Convertible Preferred Stock to their respective redemption prices, or recorded upon a redemption or induced conversion, if any. The Company adjusts the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of the Series A and Series B Convertible Preferred Stock, restricted stock units, and stock options. Stock options and restricted stock units exercisable or issuable fo r a total of 7,464,097 and 4,932,386 shares of Common Stock were outstanding at December 31, 2025 and 2024, respectively. These securities are not included in the computation of diluted net loss per share of common stock for the years presented as their inclusion would be antidilutive due to losses incurred by the Company. Accounts Receivable and Allowance for Credit Losses ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The expected credit losses are developed using an estimated loss rate method that considers historical collection experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The estimated loss rates are applied to accounts receivables with similar risk characteristics such as the length of time the balance has been outstanding and the location of the customer. In certain instances, the Company may identify individual accounts receivable assets that do not share risk characteristics with other accounts receivables, in which case the Company records its expected credit losses on an individual asset basis. If an accounts receivable asset is evaluated on an individual basis, the Company excludes those assets from the portfolios of accounts receivables evaluated on a collective basis. At December 31, 2025 and 2024, the Company had an allowance for credit losses related to accounts receivable of $ 119 an d $ 230 , respectively. If a major customer’s creditworthiness deteriorates, or actual defaults exceed our historical experience, such estimates could change and impact our future reported financial results. Inventories Inventories are valued at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the FIFO cost method. Inventory is comprised of raw materials, assemblies and finished products intended for sale to customers . The Company evaluates the need for reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for the Company’s products. As of December 31, 2025 and 2024 the Company h ad $ 516 an d $ 480 in reserves, respectively for obsolescence. F-8 Table of Contents Property, Equipment and Depreciation Property and equipment are stated at cost. Depreciation on property and equipment is computed over the estimated useful lives of three years using the straight-line method. On any retirement or disposition of property and equipment, the related cost and accumulated depreciation or amortization is removed, and a gain or loss recorded. Business Combinations The Company accounts for its business combinations under the provisions of ASC Topic 805-10, Business Combinations ("ASC 805-10"), which requires that the purchase method of accounting be used for all business combinations. Assets acquired and liabilities assumed, including non-controlling interests, are recorded at the date of acquisition at their respective fair values. The estimated fair value of net assets acquired, including the allocation of the fair value to identifiable assets and liabilities, was determined using established valuation techniques. ASC 805-10 also specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. Goodwill represents the excess purchase price over the fair value of the tangible net assets and intangible assets acquired in a business combination. Acquisition-related expenses are recognized separately from the business combinations and are expensed as incurred. The estimated fair value of the acquired intangible assets was determined using a method which reflects the present value of the operating cash flows generated by this asset after taking into account the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. Certain adjustments to the assessed fair values of the assets and liabilities made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Goodwill Goodwill represents the difference, if any, between the aggregate consideration paid for an acquisition and the fair values of the underlying net assets and liabilities assumed from an acquired business. Goodwill is not amortized but instead is tested for impairment. The Company tests goodwill for impairment on an annual basis during the fourth quarter, or more frequently if conditions indicate that such impairment could exist. The Company evaluates qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value and whether it is necessary to perform goodwill impairment process. Definite-lived Intangible Assets Definite-lived intangible assets represent certain trade names, patents, licenses, software, acquired technology and customer relationships. Definite-lived intangible assets are recorded at cost less any accumulated amortization and accumulated impairment losses, if any. Definite-lived intangible assets acquired through the business combination are measured at fair value at the acquisition date. The Company amortizes these acquired definite-lived intangibles assets with a finite life on a straight-line basis, over 6 years for technology; 7 years for customer relationships; and 8 years for trademarks and trade names. Intangible Assets Intangible assets consist of (a) capitalized legal fees and filing costs related to obtaining patents and trademarks, (b) tradenames and software, (c) purchased software, and (d) the purchase cost of indefinite-lived website domains. The estimated useful lives of identifiable intangible assets with definite useful lives have been estimated to be between one and twenty years . Purchased website domain costs with an indefinite useful life are not subject to amortization, but are subject to an annual impairment test, by comparing their carrying amount with their corresponding fair value. For any given intangible asset with an indefinite useful life, if its fair value exceeds its carrying amount no impairment loss shall be recognized. The carrying value of intangibles is periodically reviewed and impairments, if any, are recognized when the future undiscounted cash flows realized from the assets is less than its carrying value. F-9 Table of Contents Impairment of Long-Lived Assets Long-lived assets and identifiable intangibles held for use are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of undiscounted expected future cash flows is less than the carrying amount of the asset or if changes in facts and circumstances indicate, an impairment loss is recognized and measured using the asset’s fair value. In December 2024, the Company determined that the assessment of the Intrensic unit’s fair value indicated that its carrying value exceeded its fair value by $ 1,631 and therefore the Company recorded a $ 1,631 impairment charge related to the goodwill initially recorded from the acquisition. During the year ended December 31, 2025, the Company recorded impairment charges of $ 588 related to certain purchased software and technology and customer relationship intangible assets. These impairment charges were primarily the result of revisions to projected future operating results and cash flows associated with these assets, which indicated that their carrying amounts were not recoverable. Warrants The Company accounts for warrants as liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ ASC 480”) and ASC 815, Derivatives and Hedging (“ ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. The Company accounts for the warrants issued in accordance with the guidance contained in ASC 815-40-15-7C, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the warrants as liabilities at their fair value and adjusts the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statement of operations. On June 30, 2025, the Company entered into the Series A Warrant Amendment (as defined herein) and the 2025 Warrant Amendment (as defined herein). As a result, the Series A Warrants (as defined herein) and the PIPE Warrants (as defined herein), each satisfy the requirements outlined in ASC 815-10-15-74(a)(1) and in ASC 815-10-15-74(a)(2). Under ASC 815-40-35-10, the amended instruments qualify for equity-classification on a prospective basis. The effective date of the relating reclassification from warrant liabilities to additional paid-in capital was June 30, 2025. See Footnote 10: Warrants for additional detail. Series A Preferred Stock The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with ASC 480 and ASC 815 to determine if those instruments or embedded components of those instruments qualify as derivatives and are subject to bifurcation accounting. The Company determines that the economic characteristics and risks of the embedded derivative instrument are clearly and closely related to the economic characteristics and risks of the host contract. The convertible instruments are accounted for as a single hybrid instrument. Additionally, the convertible instruments do not have any redemption features that would preclude permanent equity classification in accordance with the guidance contained in ASC 480-10-S99. The Company issued the Series A Warrants (as defined herein), which are classified as liabilities and measured at fair value on a recurring basis, and the Company's Series A Convertible Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”) in one transaction. The proceeds from the issuances were allocated by using the with and-without method. Under this method, the Company first allocated the proceeds to the Series A Warrants based on their initial fair value measurement and then allocated the remaining proceeds to the Series A Preferred Stock. On June 30, 2025, the Company and holders of the Series A Warrants amended the Series A Warrants, which allowed the Company to account for the Series A Warrants as equity under ASC 480 and a reclassification was recorded from warrant liability to additional paid-in-capital. F-10 Table of Contents Advertising and Promotion Costs Advertising costs are charged to expense as incurred and we re $ 384 and $ 575 for the years ended December 31, 2025 and 2024, respectively. The Company also incurred product promotion costs for demonstration products delivered to prospective customers of $ 45 and $ 129 for the years ended December 31, 2025 and 2024, respectively. Advertising and promotion costs are included in selling, general and administrative expenses in the accompanying statements of operations. Demonstration and Training Costs The Company maintains a demonstration and training department as a part of its sales and marketing activities and does not charge for product demonstrations or training. Training is not a condition or requirement of sale as most sales are made through distributors to their end customers. The Company conducts local and regional in-person, webinar and on-line demonstrations and use of force and escalation training to support law enforcement agencies with no purchase requirement. Such training, when provided, may occur before or after initial or subsequent purchase or field deployment of the Company’s products. The Company believes that law enforcement trainers and officers that have seen demonstrations or have been trained about its products are more supportive of their departments purchase and deployment of product. Research and Development Costs Research and development costs are expensed as incurred. Contract Manufacturers The Company employs contract manufacturers for production of certain components and sub-assemblies. The Company may provide parts and components to such parties from time to time but recognizes no revenue or markup on such transactions. Leases The Company adopted ASC Topic 842, Leases (“ Topic 842 ”) on January 1, 2019. In accordance with the guidance in Topic 842, the Company recognizes lease liabilities and corresponding right-of-use assets for all leases with terms of greater than 12 months. Leases with a term of 12 months or less will be accounted for in a manner similar to the guidance for operating leases prior to the adoption of Topic 842. Refer to Note 9, Leases for more information. Revenue Recognition The Company adopted ASC Topic 606, Revenue from Contracts with Customers on January 1, 2018. The Company enters into contracts that include various combinations of products, accessories, software and services, each of which are generally distinct and are accounted for as separate performance obligations. Product sales include BolaWrap products and accessories. Other revenue includes VR revenues, professional service, training and shipping revenues. The timing of revenue recognition may differ from the timing of invoicing to customers. The Company generally has an unconditional right to consideration when customers are invoiced, and a receivable is recorded. A contract asset is recognized when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. The Company recognizes an asset if there are incremental costs of obtaining a contract with a customer such as commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract. The Company may receive consideration, per terms of a contract, from customers prior to transferring goods to the customer. The Company records customer deposits as a contract liability. Additionally, the Company may receive payments, most typically for service and warranty contracts, at the onset of the contract and before the services have been performed. In such instances, a deferred revenue liability is recorded. The Company recognizes these contract liabilities as revenue after all revenue recognition criteria are met. Estimated costs for the Company’s standard warranty, generally one-year, are charged to cost of products sold when revenue is recorded for the related product. Royalties are also charged to cost of products sold. Shipping and Handling Costs Shipping and handling costs are included in cost of revenues. Shipping and handling costs invoiced to customers are included in revenue. Actual shipping and handling costs wer e $ 33 and $ 125 for the years ended December 31, 2025 and 2024, respectively. Actual revenues from shipping and handling we re $ 24 and $ 73 for the years ended December 31, 2025 and 2024, respectively. F-11 Table of Contents Warranty Reserves The Company warrants its products and accessories to be free from defects in materials and workmanship for a period of one year from the date of purchase. The warranty is generally limited. The Company currently provides direct warranty service. International market warranties are generally similar to the US market. The Company establishes a warranty reserve based on anticipated warranty claims at the time product revenues are recognized. Factors affecting warranty reserve levels include the number of units sold, anticipated cost of warranty repairs and anticipated rates of warranty claims. The Company evaluates the adequacy of the provision for warranty costs each reporting period. The warranty reserve was $ 30 and $ 83 at December 31, 2025 and 2024, respectively. Actual warranty costs could differ from estimates. Segment Information The Company operates as a single operating and reportable segment in accordance with ASC 280, Segment Reporting . The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM reviews financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources. Resource allocation decisions are primarily based on consolidated operating results, cash flows, liquidity, and overall strategic priorities rather than discrete financial information at a product line, geography, or functional level. While the Company monitors certain operating metrics, including revenue by product line and other operational data, such information is used for operational oversight, forecasting, and strategic planning and is not used by the CODM to assess segment performance or to allocate resources among components of the business. The Company’s operations are managed on an integrated basis, with shared sales channels, manufacturing, research and development, and administrative functions. As a result, discrete financial information at a level below the consolidated financial statements is not regularly reviewed by the CODM for purposes of allocating resources or assessing performance. The Company does not present disaggregated segment profit or loss, assets, or other segment-level information, as such information is not used by the CODM in managing the business. Accordingly, the Company has determined that it operates as one operating segment and one reportable segment. The Company has provided the required entity-wide disclosures in accordance with ASC 280. Major Customers and Related Information for further discussion. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company measures deferred tax assets and liabilities using the enacted tax rates for the years and jurisdictions in which the temporary differences are expected to be recovered. A change to the tax rates used to measure the Company’s deferred taxes is recognized in income during the period in which the new rate(s) were enacted. The Company recognizes deferred tax assets to the extent the Company’s assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including the future reversals of existing taxable temporary differences, projected future taxable income exclusive of reversing temporary differences and carryforwards, tax-planning strategies, taxable income in prior carryback years if permitted under tax law, and the results from prior years. If the Company determines it is more likely than not that all or a portion of a deferred tax asset will not be realized a valuation allowance is recorded with a charge to income tax expense. Alternatively, if the Company determines that all or a portion of a deferred tax asset previously not meeting the more likely than not threshold will be realized, the Company reduces its valuation allowance and recognizes a benefit in income tax expense. The Company recognizes and measure uncertain tax benefits in accordance with ASC 740 based on a two-step process in which (1) the Company determines whether it is more likely than not that the tax position will be sustained based on the technical merits of the position, and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than fifty percent likely to be realized upon ultimate settlement with the related tax authority. The Company's policy is to recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no effect on previously reported net loss, total assets, total liabilities, stockholders’ equity, or cash flows. Recently Issued Accounting Guidance In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This guidance enhances disclosures about significant segment expenses and applies to entities with single reportable segments. The amendments were effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The Company adopted ASU 2023-07 during the year ended December 31, 2025. Adoption did not impact the Company’s determination that it operates as a single reportable segment but resulted in expanded segment-related disclosures. In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"), which enhances the transparency and decision usefulness of income tax disclosures. Adjustments to the annual disclosure of income taxes include: (1) A tabular rate reconciliation comprised of eight specific categories, (2) Incomes taxes paid, disaggregated between significant national, state, and foreign jurisdictions, (3) Eliminates requirements to disclose the nature and estimate of reasonably possible changes to unrecognized tax benefits in the next 12 months or that an estimated range cannot be made, and (4) Adds a requirement to disclose income (or loss) from continuing operations before income tax expense (or benefit) by national and foreign, and income tax expense (or benefit) from continuing operations disaggregated between national, state and foreign. The ASU is effective for public business entities for fiscal years beginning on or after December 15, 2024 with early adoption permitted. The amendments in ASU 2023-09 were adopted by the Company on a prospective basis. There was no material impact to the Company's financial statements as a result of adopting ASU 2023-09. F-12 Table of Contents In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregation of certain costs and expenses, including employee compensation, and requires other improvements to disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The update may be applied on a prospective or retrospective basis. The Company is evaluating the impact of ASU 2024-03 on the Company’s notes to the consolidated financial statements. 2. REVENUES AND PRODUCT COSTS Revenues consist of product revenue and other revenue. Product sales include BolaWrap products and accessories. Other revenue includes VR revenues, professional service, training and shipping revenues. The table below details the activity in our contract liabilities during the year ended December 31, 2025. Customer Deferred Deposits Revenue Balance at January 1, 2025 $ 27 $ 505 Additions, net 34 717 Transfer to revenue - ( 800 ) Balance at December 31, 2025 $ 62 $ 422 Current portion $ 62 $ 408 Long-term portion $ - $ 14 As of December 31, 2025, the Company’s deferred rev enue of $ 422 consisted of $ 12 related to BolaWrap extended warranties and software, $ 25 related to Wrap Ready, $ 339 related to Intrensic extended warranties and services, $ 30 related to VR, and $ 16 rela ted to training. As of December 31, 2024, the Company’s deferred revenue of $ 505 consisted of $ 76 related to BolaWrap extended warranties and software, $ 352 related to Intrensic extended warranties and services, $ 73 related to VR, and $ 4 related to training. 3. ASSET ACQUISITIONS On February 18, 2025, the Company entered into an Asset Purchase Agreement with W1 Global, LLC (“W1”), pursuant to which the Company acquired substantially all of the assets used in, held for use in, or relating to W1’s advisory and investigative professional services business associated with specific identified customer contracts. The transaction was accounted for as an asset acquisition in accordance with ASC 805. As a result of the transaction, the Company recorded approximately $ 58 of customer relationship intangible assets, which were included within Customer Relationships (see Note 7, Intangible Assets). The customer relationships were initially assigned an estimated useful life of three years . During the third quarter of 2025, management performed an evaluation of the acquired assets in connection with a strategic realignment of the Company’s managed services offerings. Based on this evaluation, the Company determined that certain investigative services acquired from W1 were no longer aligned with the Company’s strategic objectives. Accordingly, the Company recorded an impairment charge of $ 48 related to customer relationship intangible assets during the year ended December 31, 2025. Following this evaluation, the Company continues to focus its managed services efforts on policy governance and training services in support of its broader go-to-market strategy. F-13 Table of Contents 4. FINANCIAL INSTRUMENTS Assets and liabilities recorded at fair value on a recurring basis in the Consolidated Balance Sheets and assets and liabilities measured at fair value on a non-recurring basis or disclosed at fair value, are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value and requires certain disclosures about how fair value is determined. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 —Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 —Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3 —Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data. The Company’s short-term investments consisting of US Treasury bill securities and Certificate of Deposits are classified as Level 1 because they are valued using quoted market prices. The following table shows the Company’s short-term investments by significant investment category as of December 31, 2025 and 2024. As of December 31, 2025 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: Money Market Funds $ 639 $ - $ - $ 639 Total Financial Assets $ 639 $ - $ - $ 639 As of December 31, 2024 Adjusted Unrealized Unrealized Market Cost Gains Losses Value Level 1: Money Market Funds $ 631 $ - $ - $ 631 Total Financial Assets $ 631 $ - $ - $ 631 The warrant liabilities as of December 31, 2024 are measured at fair value on a recurring basis. The subsequent measurement of the warrant liabilities is classified as Level 3 due to the use of an observable market quote in a non-active market and the management’s assumption of the expected stock price volatility. During the year ended December 2025, the warrant liability was reclassified to equity due to an amendment of the warrant agreement. F-14 Table of Contents The following table presents the fair value in the beginning of the period, the changes in the fair value, and the fair value at the end of the period of warrant liabilities: Level 3: December 31, 2025 December 31, 2024 Fair value at inceptions for December 31, 2024 or the beginning of the period for December 31, 2025 $ ( 10,131 ) $ ( 19,703 ) Warrants issued with Private Placement ( 5,178 ) - Change in fair value of warrant liabilities 3,158 9,572 Reclassification of warrant liabilities to equity 12,151 - Fair value as of period end $ - $ ( 10,131 ) MONTE CARLO SIMULATION MODEL - SERIES A WARRANTS As of June 30, 2025 Reclassification Date Expected stock price volatility 86 % Risk-free interest rate 3.73 % Dividends yield 0 % Terms (years) 4.5 Strike Price $ 1.45 Stock Price $ 1.56 Fair Value Per Warrant Share $ 1.235 MONTE CARLO SIMULATION MODEL - FEBRUARY 2025 WARRANTS As of June 30, 2025 Reclassification Date Expected stock price volatility 89 % Risk-free interest rate 3.77 % Dividends yield 0 % Terms (years) 5.15 Strike Price $ 1.80 Stock Price $ 1.56 Fair Value Per Warrant Share $ 1.132 The following table summarizes the assumptions used under the Black-Scholes model to compute the fair value of the Company's warrants: As of December 31, 2024 Expected stock price volatility 88 % Risk-free interest rate 4.25 % Dividends yield 0 % Weighted average expected life of warrants (years) 3.5 Weighted average exercise price $ 1.45 Our other financial instruments also include accounts receivable, accounts payable, accrued liabilities and business acquisition liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the balance sheet. F-15 Table of Contents 5. INVENTORIES Inventory is recorded at the lower of cost or net realizable value. The cost of substantially all the Company’s inventory is determined by the weighted average cost method. Inventories consisted of the following: December 31, 2025 2024 Finished goods $ 3,509 $ 4,387 Raw materials 1,978 2,263 Reserve for Obsolescence ( 516 ) ( 480 ) Inventories - net $ 4,971 $ 6,170 6. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: December 31, 2025 2024 Production and lab equipment $ 391 $ 432 Tooling 570 570 Computer equipment 183 229 Furniture, fixtures and improvements 81 120 1,225 1,351 Accumulated depreciation ( 1,102 ) ( 1,205 ) Property and equipment, net $ 123 $ 146 Depreciation expense was $ 113 and $ 377 for the years ended December 31, 2025 and 2024, respectively. 7. INTANGIBLE ASSETS Intangible Assets Intangible assets consisted of the following: December 31, 2025 December 31, 2024 Amortizable intangible assets: Patents $ 1,142 $ 1,013 Trademarks 367 264 Purchased software and technology 512 1,752 Customer relationships - 160 $ 2,021 3,189 Accumulated amortization ( 870 ) ( 1,256 ) Total amortizable $ 1,151 1,933 Indefinite life assets (non-amortizable) 421 421 Total intangible assets, net $ 1,572 $ 2,354 Amortization expenses were $ 481 and $ 450 for the years ended December 31, 2025 and 2024, respectively. The Company recognized impairment charges for Purchases software and technology and Customer relationships of $ 588 f or the year ended December 31, 2025. No impairment charges were recognized for the year ended December 31, 2024. F-16 Table of Contents At December 31, 2025, annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following: 2026 118 2027 116 2028 116 2029 116 2030 116 Thereafter 569 Total $ 1,151 Goodwill As of December 31, 2025, the Company had no Goodwill. During 2024, the Company recorded an increase of $ 21 to goodwill as result of additional liabilities assumed related to the August 2023 Intrensic Acquisition. In December 2024, the Company assessed the fair value of its Intrensic unit and determined that its carrying value exceeded its fair value by $ 1,631 and therefore the Company recorded a $ 1,631 impairment charge related to the goodwill initially recorded from the 2023 acquisition. The table below summarizes the changes in the carrying amount of goodwill: Balance at December 31, 2023 1,610 Additional liabilities recorded post acquisition 21 Impairment charge ( 1,631 ) Balance at December 31, 2024 $ - 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES We are obligated to pay royalties pursuant to an exclusive Amended and Restated Intellectual Property License Agreement (the “License Agreement”), dated as of September 30, 2016, with Syzygy Licensing, LLC (“Syzygy”), a private technology invention, consulting and licensing company owned and controlled by Elwood G. Norris, a founder and former officer and current 5 % stockholder of the Company, and James A. Barnes, a former officer and stockholder of the Company (see Note 16). Accrued liabilities include $ 99 and $ 81 due to Syzygy pursuant to the License Agreement as of December 31, 2025 and 2024, respectively. Accrued liabilities consist of the following: December 31, 2025 2024 Patent and legal costs $ 111 $ 60 Accrued compensation 2 121 Warranty costs 30 83 Royalty 99 81 Contract settlement - 300 Accrued purchases 6 584 Taxes and other 159 174 Total $ 407 $ 1,403 F-17 Table of Contents Changes in our estimated product warranty costs were as follows: Year Ended December 31, 2025 2024 Balance, beginning of period $ 83 $ 72 Warranty settlements ( 13 ) ( 79 ) Warranty provision ( 40 ) 90 Balance, end of period $ 30 $ 83 9. LEASES The Company determines if an arrangement is a lease at inception. The guidance in FASB ASC Topic 842, Leases defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Operating lease right of use ( “ ROU ”) assets and lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. The Company’s leases do not provide an implicit rate. Due to a lack of financing history or ability, the Company uses an estimate of low-grade debt rate published by the Federal Reserve Bank as its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The ROU asset includes any lease payments made and excludes lease incentives and initial direct costs incurred. For leases beginning on or after January 1, 2019 , lease components are accounted for separately from non-lease components for all asset classes. In March 2026, the Company entered into a month-to-month service agreement for a business address located in Miami, Florida. Amortization of ROU operating lease assets was $ 286 a nd $ 292 for the years ended December 31, 2025 and 2024, respectively. Operating lease expense for capitalized operating leases included in operating activities was $ 610 a nd $ 644 for the years ended December 31, 2025 and 2024, respectively. Operating lease obligations recorded on the balance sheet at December 31, 2025 are: Operating lease liability - short term $ 320 Operating lease liability - long term 2,097 Total Operating Lease Liability $ 2,417 Future lease payments included in the measurement of lease liabilities on the balance sheet at December 31, 2025 for future periods are as follows: 2026 $ 627 2027 642 2028 658 2029 674 2030 661 Thereafter 147 Total future minimum lease payments 3,409 Less imputed interest ( 992 ) Total $ 2,417 The weighted average remaining lease term is 5.15 years, and the weighted average discount rate is 13.5 % . Certain leases contain provisions for payment of real estate taxes, insurance and maintenance costs by the Company. These expenses are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. The Company ha d $ 38 a nd $ 109 variable lease expenses during the year December 31, 2025 and 2024, respectively. The Company ha d $ 0 and $ 16 short-term lease expense during the year December 31, 2025, and 2024 respectively. The Company does not have any finance leases. F-18 Table of Contents 10. WARRANTS On June 29, 2023, the Company entered into a Securities Purchase Agreement (the “Series A Purchase Agreement”) with certain directors of the Company and certain accredited and institutional investors (collectively, the “Series A Investors”), pursuant to which it agreed to sell to the Series A Investors in a registered direct offering (the “Series A Offering”) (i) an aggregate of 10,000 shares of the Company’s newly-designated Series A Convertible Preferred Stock, with par value $ 0.0001 per share and a stated value of $ 1,000 per share (the “Series A Preferred Stock”), initially convertible into up to 6,896,553 shares of the Company’s common stock, at an initial conversion price of $ 1.45 per share, and (ii) warrants to acquire up to an aggregate of 6,896,553 shares of Common Stock (the “Series A Warrants”). Each Series A Warrant has an exercise price of $ 1.45 , became exercisable after the date that was six months from the date of issuance and will expire 5 years following the date of issuance. The exercise price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price (subject to certain exceptions). The closing of the Offering occurred on July 3, 2023. The aggregate gross proceeds from the Offering were $ 10,000 , of which $ 7,717 was allocated to the Series A Warrants. The Company expects to use the net proceeds from the Offering for general corporate purposes (see Note 4). On February 24, 2025, the Company entered into a securities purchase agreement (the “PIPE Purchase Agreement”) with certain accredited investors (collectively, the “PIPE Purchasers”) for the issuance and sale in a private placement of an aggregate of 3,216,666 shares (the “Common Shares”) of Common Stock and accompanying warrants (“PIPE Warrants”) to purchase up to 3,216,666 shares of Common Stock, with an exercise price of $ 1.80 per share. The purchase price for one Common Share and accompanying PIPE Warrant was $ 1.80 . The gross proceeds to the Company were $ 5,790 before estimated offering expenses payable by the Company, of which $ 5,178 was allocated to the PIPE Warrants. On June 30, 2025, the Company entered into a warrant amendment (the “Series A Warrant Amendment”) with the Required Holders (as defined in the Series A Purchase Agreement), pursuant to which, the Required Holders agreed to amend the terms of the Series A Warrants to make certain adjustments to the definition of “Black Scholes Value” in each of the Series A Warrants, as described in the Series A Warrant Amendment, such that the underlying price per share as used in such calculation equals the sum of the price per share being offered in cash in the applicable Fundamental Transaction (as defined in the Series A Warrants), if any, plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction, if any. As consideration for entering into the Series A Warrant Amendment, the Company and the Required Holders agreed to amend the term of the Series A Warrants to be six and one-half years from the date of issuance. Additionally, on June 30, 2025, the Company entered into a warrant amendment (the “2025 Warrant Amendment”) with certain of the PIPE Purchasers, pursuant to which, such PIPE Purchasers agreed to amend the terms of their respective PIPE Warrants to make certain adjustments to the definition of “Black Scholes Value,” as described in the 2025 Warrant Amendment, such that the underlying price per share as used in such calculation equals the sum of the price per share being offered in cash in the applicable Fundamental Transaction (as defined in the PIPE Warrants), if any, plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction, if any. As consideration for entering into the 2025 Warrant Amendment, the Company and the applicable PIPE Purchasers agreed to amend the term of their respective 2025 Warrants to be five and one-half years from the date of issuance. Under ASC 815-40-35-10, upon effective amendment on June 30, 2025, each of the Series A Warrants and PIPE Warrants qualify for equity-classification. Immediately before the equity reclassification, such warrants were each revalued at fair value with the resulting gain or loss being recorded in the Statement of Operations. After fair value remeasurement, the reclassification from warrant liabilities to additional paid-in capital was completed. On August 18, 2025, the Company entered into a securities purchase agreement with certain accredited investors, including V4 Global, LLC (an entity controlled by the Company's Chief Executive Officer), for the issuance and sale of 4,500 shares of Series B Convertible Preferred Stock (par value $ 0.0001 , stated value $ 1,000 per share) and accompanying warrants to purchase 3,000,000 shares of Common Stock (the "Series B Warrants") for aggregate gross proceeds of $ 4,500 before offering expenses. V4 Global, LLC purchased 1,000 shares ( 22 % of the offering) on the same terms as non-affiliated investors. The Series B Preferred Stock and Series B Warrants were not exercisable or convertible until stockholder approval was obtained on December 12, 2025, pursuant to Nasdaq Stock Market Rule 5635(d) for issuances exceeding 19.99% of outstanding Common Stock at prices below the Minimum Price. F-19 Table of Contents Series B Warrants The Series B Warrants are exercisable for 3,000,000 shares of Common Stock at an exercise price of $ 1.50 per share and expire on December 12, 2030 ( five years from the date stockholder approval was obtained). Warrant holders may not exercise if such exercise would result in the holder owning more than 4.99% (or at holder election, 9.99%) of the Company's outstanding Common Stock immediately after exercise. The Series B Warrants are classified within permanent equity (additional paid-in capital) and are not subject to subsequent fair value remeasurement. Allocation of Proceeds The Company allocated the $ 4,500 gross proceeds between the Series B Preferred Stock and Series B Warrants using the with-and-without method. Under this method, the warrants were valued at their fair value as of the issuance date (August 18, 2025), with the residual proceeds allocated to the preferred stock. The fair value of the warrants was determined using the Black-Scholes option pricing model with the following key assumptions as of August 18, 2025: Stock price: $ 1.40 Exercise price: $ 1.50 Expected term: 5.0 years Expected volatility: 72.4 % (based on 1-year historical analysis) Risk-free interest rate: 3.90 % Expected dividend yield: 0 % Based on this valuation, the Company allocated $ 2,553 to the Series B Warrants and $ 1,947 to the Series B Preferred Stock within additional paid-in capital. The Company performed sensitivity analysis on the key valuation assumptions. A 10% change in stock price results in approximately 13 % change in warrant value, while a 10 % change in volatility results in approximately 7 % change in warrant value. Across reasonable scenarios, the warrant valuation ranges from $ 2,000 to $ 3,100 , confirming the materiality of the warrant component and the appropriateness of the allocation methodology. Interim Recording and Year-End Adjustment At September 30, 2025, the Company initially recorded the full proceeds as preferred stock equity pending completion of a formal valuation. In the fourth quarter of 2025, upon obtaining a formal Black-Scholes valuation as of the August 18, 2025 issuance date, the Company reallocated $ 2,553 from additional paid-in capital attributable to preferred stock to additional paid-in capital attributable to warrants to reflect the proper allocation based on relative fair values. 11. DEBT The Company’s debt at December 31, 2025 and 2024 included operating lease liabilities (see Note 9). F-20 Table of Contents 12. STOCKHOLDERS ’ EQUITY The Company’s authorized capital consists of 200,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $ 0.0001 per share (“Preferred Stock”), of which 10,000 and 4,500 are designated as Series A and Series B Preferred Stock, respectively. Series A Preferred Stock On July 3, 2023, the Company filed the Certificate of Designations of the Series A Preferred Stock (the “Certificate of Designations”) with the Secretary of State of the State of Delaware, designating 10,000 shares of its Preferred Stock as Series A Convertible Preferred Stock. The terms of the Series A Preferred Stock are as set forth in the form of Certificate of Designations. of the Series A Preferred Stock (the “Certificate of Designations”). The Series A Preferred Stock is convertible into shares of Common Stock (the “Conversion Shares”) at the election of the holder at any time at an initial conversion price of $ 1.45 (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). The holders of the Series A Preferred Stock are entitled to dividends of 8 % per annum, compounded monthly, which are payable in cash or shares of Common Stock, or a combination thereof, at the Company’s option in accordance with the terms of the Certificate of Designations. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Certificate of Designations), the Series A Preferred Stock will accrue dividends at the rate of 20 % per annum. If the Company elects to pay any dividends in shares of Common Stock, the Conversion Price used to calculate the number of shares issuable will equal to the lower of (i) the then applicable Conversion Price and (ii) 85 % of the arithmetic average of the three (3) lowest closing prices of the Company’s Common Stock during the twenty ( 20 ) consecutive trading day period ending on the trading day immediately preceding the dividend payment date, provided that such price shall not be lower than the lower of (x) $ 0.2828 (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events ) and (y) 20% of the “Minimum Price” (as defined in Nasdaq Stock Market Rule 5635) on the date of the Stockholder Approval (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) or, in any case, such lower amount as permitted, from time to time, by the Nasdaq Stock Market. On August 19, 2024, the Company entered into an Amendment Agreement (the “August 2024 Amendment”) with the Required Holders (as defined in the Certificate of Designations). Pursuant to the August 2024 Amendment, the Required Holders agreed that (A) the unpaid and accrued dividends on the Series A Preferred Stock due July 1, 2024 (the “July Delinquent Dividend Amount”), shall be payable, at the option of the Company, in (i) cash and/or (ii) shares of Common Stock, at a price per share of Common Stock equal to the lower of (x) $ 1.00 and (y) the Dividend Conversion Price (as defined in the Certificate of Designations), using July 1, 2024, as the applicable date of determination in accordance with the Certificate of Designations; (B) the dividends due on October 1, 2024 (the “October Dividend Amount” and, together with the July Delinquent Dividend Amount, the “Delinquent Dividend Amounts”), shall be payable in shares of Common Stock based on a per share price of Common Stock equal to 80 % of the arithmetic average of the three (3) lowest closing sale prices of the Common Stock during the month of September 2024; and (C) such Delinquent Dividend Amounts and any Dividend Balance Shares (as defined in the Certificate of Designations), with respect thereto, if applicable, shall be delivered on October 1, 2024. The Company and the Required Holders further agreed pursuant to the August 2024 Amendment to amend (i) the Certificate of Designations, as described below, by filing a Certificate of Amendment to the Certificate of Designations (the “August 2024 Certificate of Amendment”) and (ii) the Series A Purchase Agreement to amend the definition of “Excluded Securities.” The August 2024 Certificate of Amendment amends the Certificate of Designations to, among other things, (A) allow for the payment of dividends in the form of Common Stock to a holder of the Series A Preferred Stock who serves as a director, officer or employee of the Company; provided that such issuance is approved by the Company’s stockholders prior to such issuance, and (B) amend certain conditions required for (i) a mandatory conversion of the Series A Preferred Stock (as described below), and (ii) the Company’s right to redeem, all or a portion, of the Series A Preferred Stock outstanding pursuant to an optional redemption (as described below), in each case, pursuant to the terms of the Certificate of Designations. F-21 Table of Contents Pursuant to the August 2024 Certificate of Amendment, the Company may require holders to convert their shares of Series A Preferred Stock into shares of Common Stock if the closing price of the Company’s Common Stock exceeds $ 8.00 per share (subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) for 20 consecutive trading days and the daily dollar trading volume of the Common Stock exceeds $ 2,000 per day during the same period, provided that certain equity conditions described in the Certificate of Designations are satisfied. Pursuant to the August 2024 Certificate of Amendment, at any time beginning 18 months from the date of the issuance, provided that the Company has filed all reports required to be filed by it pursuant to the Exchange Act on a timely basis for a continuous period of one year and provided further that certain equity conditions described in the Certificate of Designations are satisfied, the Company has the right to redeem in cash all or some of the shares of the Series A Preferred Stock outstanding at such time at a redemption price equal to the product of (x) 125 % multiplied by (y) the sum of (A) the stated value of the Series A Preferred Stock plus (B) all declared and unpaid Dividends on such Preferred Stock and any other unpaid amounts then due and payable hereunder with respect to such Series A Preferred Stock, plus (C) the make-whole amount, plus (D) any accrued and unpaid late charges with respect to such stated value and amounts payable pursuant to clause (B) as of such date of determination. On October 14, 2024, the Company entered into an Amendment Agreement with the Required Holders (as defined in the Certificate of Designations), pursuant to which, the Required Holders agreed to amend the Certificate of Designations of the Company’s Series A Preferred Stock, as described below, by filing a Certificate of Amendment to the Certificate of Designations (the “October 2024 Certificate of Amendment”). The October 2024 Certificate of Amendment amends the Certificate of Designations to, among other things, provide that, except as required by applicable law, the holders of the Series A Preferred Stock will be entitled to vote with holders of the Common Stock on an as converted basis, with the number of votes to which each holder of Series A Preferred Stock is entitled to be calculated assuming a conversion price of $ 1.414 per share, which was the Minimum Price (as defined in Rule 5635 of the Rule of the Nasdaq Stock Market) applicable immediately before the execution and delivery of the Series A Purchase Agreement, subject to certain beneficial ownership limitations as set forth in the Certificate of Designations. The October 2024 Certificate of Amendment further provides that (i) certain holders of the Series A Preferred Stock will not be subject to certain beneficial ownership limitations as described in the Certificate of Designations, and (ii) stockholder approval will not be required in connection with the payment of dividends in the form of Common Stock to a holder of the Series A Preferred Stock who serves as a director, officer or employee of the Company. The October 2024 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of October 14, 2024. The holders of the Series A Preferred Stock have no voting rights, other than with respect to certain matters affecting the rights of the Series A Preferred Stock. On November 25, 2024, the Company entered into an Amendment and Agreement with the Series A Investors (the “November 2024 Amendment Agreement”), pursuant to which, (i) the Series A Investors agreed to amend the Certificate of Designations, as described below, by filing a Certificate of Amendment to the Certificate of Designations with the Secretary of State (the “November 2024 Certificate of Amendment”), and (ii) the Series A Investors and the Company agreed that all payment amounts that have accrued and are unpaid as of November 25, 2024, pursuant to the Certificate of Designations and the August 2024 Amendment will be satisfied by delivery of shares of Common Stock on or prior to November 25, 2024, with each Series A Investor entitled to receive the number of shares of Common Stock specified below such Series A Investor’s name on its respective signature page thereto. The November 2024 Certificate of Amendment amends the Certificate of Designations to provide that upon the occurrence of a Triggering Event (as defined in the Certificate of Designations), the Series A Preferred Stock will accrue dividends compounded monthly at the rate of 20 % per annum. The Certificate of Amendment became effective with the Secretary of State on December 6, 2024. At the time of issuance, $ 2,036 of the net proceeds less transaction cost of the Series A Purchase Agreement was allocated to the 10,000 shares of Series A Preferred Stock initially issued. As of December 31, 2024, a total of 1,793 shares of Series A Preferred Stock were converted into approximately 1,468,000 shares of Common Stock. There were no additional conversions for the year ended December 31, 2025. For the year ended December 31, 2025, the Company authorized and declared dividends totaling $ 903 , of which $ 492 was paid in shares of the Company’s Common Stock. For the year ended December 31, 2024, authorized and declared dividends total ing $ 1,218 , of which $ 60 was paid in cash, $ 1,158 was paid in shares of the Company’s Common Stock. F-22 Table of Contents Series B Preferred Stock Series B Issuance On August 18, 2025, the Company entered into the Series B Purchase Agreement with the Series B Purchasers, including V4 Global, LLC (an entity controlled by the Company's Chief Executive Officer), for the issuance and sale in a 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, at an initial conversion price of $ 1.50 per share, and (ii) accompanying Series B Warrants to purchase up to 3,000,000 shares of Common Stock, with an initial exercise price of $ 1.50 per share, for aggregate gross proceeds of $ 4,500 before offering expenses. V4 Global, LLC purchased 1,000 shares ( 22 % of the offering) on the same terms as unrelated investors. The Series B Preferred Stock and Series B Warrants were not exercisable or convertible until stockholder approval was obtained on December 12, 2025, pursuant to Nasdaq Stock Market Rule 5635(d) for issuances exceeding 19.99 % of outstanding common stock at prices below the Minimum Price. 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 terms of the Series B Convertible Preferred Stock are as set forth in the Series B Certificate of Designations. 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 ( 3,000,000 shares in aggregate), the conversion price is subject to customary anti-dilution adjustments for stock dividends, stock splits, reclassifications, stock combinations and similar corporate events. Classification Analysis The Company evaluated the Series B Preferred Stock and Series B Warrants under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Contracts in Entity's Own Equity. Management concluded that both instruments qualify for permanent equity classification from inception because: Neither instrument contains mandatory redemption provisions requiring liability classification under ASC 480 Both instruments are indexed to the Company's own stock under ASC 815-40-15 (fixed conversion/exercise price with only standard anti-dilution provisions) The Company has sufficient authorized and unissued shares available to settle both instruments Physical settlement in registered shares only; no net-cash settlement provisions The stockholder approval contingency represents an internal regulatory requirement within the Company's control, not an event outside the issuer's control that would preclude equity classification The Series B Preferred Stock has no voting rights except for protective provisions requiring majority holder approval for certain actions that would adversely affect the rights of Series B holders. Holders are entitled to receive dividends if and when declared by the Board of Directors, payable in cash, securities, or assets at the Board's determination. The Series B Preferred Stock has no mandatory redemption provisions and is classified within permanent stockholders' equity. F-23 Table of Contents 13. SHARE-BASED COMPENSATION On March 28, 2017, the Company adopted, and the Company’s stockholders approved, the Wrap Technologies, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) subject to stockholder approval. Under the 2017 Plan as originally adopted, the Company initially reserved 2,000,000 shares of Common Stock for issuance as awards under the 2017 Plan. The 2017 Plan was amended by the First Amendment to the 2017 Plan to increase the total number of shares of Common Stock for issuance under the 2017 Plan to 4,100,000 shares, which was adopted by the Board on March 16, 2019, and by stockholders on May 23, 2019. The 2017 Plan was also amended by the Second Amendment to the 2017 Plan to increase the total number of shares of Common Stock for issuance under the 2017 Plan to 6,000,000 shares which was adopted by the Board on April 8, 2020, and by stockholders on June 5, 2020. The 2017 Plan was also amended by the Third Amendment to the 2017 Plan to increase the total number of shares of Common Stock for issuance under the 2017 Plan to 7,500,000 shares which was adopted by the Board on April 23, 2021, and by stockholders on June 22, 2021. The 2017 Plan was also amended by the Fourth Amendment to the 2017 Plan to increase the total number of shares of Common Stock for issuance under the 2017 Plan to 9,000,000 shares which was adopted by the Board on April 22, 2022, and by our stockholders on June 23, 2022.The 2017 Plan was amended by the Fifth Amendment to the 2017 Plan to increase the total number of shares of Common Stock for issuance under the 2017 Plan to 16,500,000 shares which was adopted by the Board on November 12, 2024, and by our stockholders on December 23, 2024. The 2017 Plan was amended by the Sixth Amendment to the 2017 Plan to increase the total number of shares of Common Stock for issuance under the 2017 Plan to 20,500,000 shares which was adopted by the Board of Directors on October 20, 2025, and by the Company stockholders on December 12, 2025. As of December 31, 2025, there were 8,011,625 shar es of Common Stock remaining available for grant under the 2017 Plan. Stock Options The following table summarizes stock option activity for the year en ded December 31, 2025: Weighted Average Options on Common Shares Exercise Price Remaining Contractual Term Aggregate Intrinsic Value Outstanding January 1, 2025 3,944,284 $ 2.12 8.30 $ 1,486 Granted 5,273,927 1.98 - - Exercised ( 171,415 ) 1.43 - - Forfeited, cancelled, expired ( 2,597,262 ) 2.05 - - Outstanding December 31, 2025 6,449,534 $ 2.05 8.56 $ 3,469 Exercisable December 31, 2025 1,713,774 $ 2.41 7.37 $ 936 At December 31, 2025, there wer e 5,159,368 se rvice-based stock options outstanding, and 1,290,166 performance-based stock options outstanding which were granted in October 2023 to the Company’s current Chief Executive Officer, subject to vesting based on future market capitalization targets. The Company uses the Black-Scholes option pricing model to determine the fair value of service-based options granted. The following table summarizes the assumptions used to compute the fair value of options granted to employees and non-employees: For the Year Ended December 31, 2025 2024 Expected stock price volatility 76 % 76 % Risk-free interest rate 4.06 % 3.82 % Expected dividend yield 0 % 0 % Expected life of options 6 6 Weighted-average fair value of options granted $ 1.38 $ 1.44 F-24 Table of Contents Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of awards. The Company’s estimated volatility was based on an average of the historical volatility of peer entities whose stock prices were publicly available. The Company’s calculation of estimated volatility is based on historical stock prices of these peer entities over a period equal to the expected life of the awards. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price. The Company records forfeitures as they are incurred. The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. The Company calculates the expected life of the options using the "simplified method," whereby the expected term is calculated as the average of the vesting term and the contractual term of the option, as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Stock option expense was $ 1,759 a nd $ 1,132 for the years ended December 31, 2025 and 2024, respectively. The following table summarizes information about stock options outstanding at December 31, 2025: Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Prices Outstanding Life (Years) Price Exercisable Price $ 1.00 – $ 2.00 4,282,059 8.60 $ 1.58 982,542 $ 1.43 $ 2.01 – $ 3.00 1,735,000 9.26 $ 2.48 398,758 $ 2.45 $ 3.01 – $ 4.00 150,000 8.09 $ 3.88 49,999 $ 3.88 $ 4.01 – $ 5.00 83,975 5.02 $ 4.37 83,975 $ 4.37 $ 5.01 – $ 6.58 198,500 3.54 $ 5.96 198,500 $ 5.96 Restricted Stock Units The 2017 Plan provides for the grant of restricted stock units (“ RSUs ”). RSUs are settled in shares of the Company’s Common Stock as the RSUs become vested. The following table summarizes RSU activity for the years ended December 31, 2025 and 2024: Weighted Weighted Service-Based Average Grant Average Vesting RSU's Date Fair Value Period (Years) Unvested at December 31, 2023 810,588 1.73 2.52 Granted-service based 881,004 2.60 Vested ( 465,763 ) 2.03 Forfeited and cancelled ( 237,727 ) 2.26 Unvested at December 31, 2024 988,102 $ 2.25 3.67 Granted-service based 897,225 1.88 - Vested ( 870,794 ) 1.89 - Forfeited and cancelled - - - Unvested at December 31, 2025 1,014,563 $ 2.23 3.62 The Company used the Monte Carlo Simulation Model to value at the grant date the aggregate of 632,911 market condition performance RSUs granted in January 2024 to the Company’s Chief Executive Officer. The assumptions used in the Monte Carlo Simulation were stock price on the date of grant equal to $ 3.40 , a contract term of 10 years, expected volatility of 78 % and risk-free interest rate of 4.10 % . Vesting is based on sustained market capitalization of $ 1,000,000 in consecutive two months , and the derived service period is 4.3 years . RSU exp ense was $ 2,317 and $ 1,301 for the years ended December 31, 2025 and 2024, respectively. F-25 Table of Contents Share-Based Compensation Expense The Company recorded share-based compensation in its statements of operations for the relevant periods for options and RSUs as follows: For the Year ended December 31, 2025 2024 Selling, general, and administrative $ 4,076 $ 2,296 Research and development - 137 Total share-based expense $ 4,076 $ 2,433 As of December 31, 2025, total estimated compensation cost of stock options granted and outstanding but not yet vested w as $ 4,847 w hich is expected to be recognized over the weighted average period of 3.08 years. As of December 31, 2025, total estimated compensation cost of RSUs granted and outstanding but not yet vested w as $ 1,112 w hich is expected to be recognized over the weighted average period of 2.12 years. 14. DEFINED CONTRIBUTION PLAN The Company has a defined contribution savings plan for all eligible U.S. employees established under the provisions of Section 401(k) of the Internal Revenue Code. This plan was formed on January 1, 2022. Eligible employees may contribute a percentage of their salary subject to certain limitations. The Company’s contributions for the years ended December 31, 2025 and 2024, was $ 23 and $ 0 , respectively. 15. COMMITMENTS AND CONTINGENCIES Facility lease The Company entered into a facility lease agreement for its new production facility based in Norton, Virginia. The initial term of the agreement is for five years and commenced on October 1, 2025 (the "Term"). The Company was granted early occupancy of the facility for use beginning on August 18, 2025. The total cash payments to the lessor during the Term are $ 600 . 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 less than $ 1 . Purchase Commitments As of December 31, 2025, the Company was committed for approximate ly $ 338 for futu re component deliveries that are generally subject to modification or rescheduling in the normal course of business. Indemnifications and Guarantees Our officers and directors are indemnified as to personal liability as provided by the Delaware law and the Company’s articles and bylaws. The Company may also undertake indemnification obligations in the ordinary course of business related to its operations. The Company is unable to estimate with any reasonable accuracy the liability that may be incurred pursuant to any such indemnification obligations now or in the future. Because of the uncertainty surrounding these circumstances, the Company’s current or future indemnification obligations could range from immaterial to having a material adverse impact on its financial position and its ability to continue in the ordinary course of business. The Company has no liabilities recorded for such indemnities. Regulatory Agencies The Company is subject to oversight from regulatory agencies regarding firearms that arises in the ordinary course of its business. F-26 Table of Contents Litigation The Company is subject to litigation and other claims in the ordinary course of business. The Company records a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed and adjusted to include the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel, and other information and events pertaining to a particular matter. 16. RELATED PARTY TRANSACTIONS Consulting Services Commencing in October 2017, the Company began reimbursing Mr. Elwood Norris, a former officer, current 5 % stockholder and consultant of the Company, $ 1.5 per month on a month-to-month basis for laboratory facility costs and $ 7.5 per month on a month-to month basis for invention consulting services, for an aggregate of $ 17 for the years ended December 31, 2024. The Company terminated the contract in February 2024. The Company is obligated to pay royalties and development and patent costs pursuant to an exclusive Amended and Restated Intellectual Property License Agreement dated September 30, 2016, with Syzygy Licensing, LLC (“Syzygy”), a company owned and controlled by a 5 % stockholder of the Company, Mr. Elwood Norris, and a former officer of the Company, Mr. James Barnes. The agreement provides for royalty payments of 4 % of revenue from products employing the licensed ensnarement device technology up to an aggregate of $ 1,000 in royalties or until September 30, 2026, whichever occurs earlier. During the years ended December 31, 2025 and 2024, the Company incurred royalties to Syzygy of $ 18 and $ 66 , respectively. Series A Preferred Stock On June 29, 2023, the Company entered into the Series A Purchase Agreement with certain investors, including Scot Cohen, the Company’s Chief Executive Officer, and V4 Global LLC (“V4”). Mr. Cohen has voting and dispositive control with respect to the securities as is deemed to be the beneficial owner of the securities held by V4. Pursuant to the Series A Purchase Agreement, the Company issued Mr. Cohen and V4 an aggregate of 3,000 shares of Series A Preferred Stock and Series A Warrants to purchase up to an aggregate of 2,068,966 shares of Common Stock for aggregate gross proceeds of $ 3,000 . For the year ended December 31, 2025, Mr. Cohen and V4 earned dividends totalin g $ 330 on the Series A Preferred Stock. PIPE Financing On February 24, 2025, the Company entered into the PIPE Purchase Agreement with certain accredited including: V4, an entity controlled by Mr. Cohen, the Company’s Chief Executive Officer; Continuum Ventures, LLC (“Continuum”), an entity controlled by Jared Novick, the Company’s President and Chief Operating Officer; and Savbo Investments LLC (“Savbo”), an entity controlled by Marc Savas, a member of the Company’s Board, pursuant to which, the Company issued and sold in a private placement an aggregate of 3,216,666 shares of Common Stock and PIPE Warrants with an exercise price of $ 1.80 per share, to purchase up to 3,216,666 shares of Common Stock (the “Private Placement”). Pursuant to the PIPE Private Placement, the Company sold to (i) V4 1,100,000 shares of Common Stock and PIPE Warrants to purchase up to an aggregate of 1,100,000 shares of Common Stock, for aggregate gross proceeds of $ 1,980 , (ii) Continuum an aggregate of 275,000 shares of Common stock and PIPE Warrants to purchase up to an aggregate of 275,000 shares of Common Stock for aggregate gross proceeds of $ 495 and (iii) Savbo an aggregate of 50,000 shares of Common stock and PIPE Warrants to purchase up to an aggregate of 50,000 shares of Common Stock for aggregate gross proceeds of $ 90 . On August 18, 2025, the Company entered into the Series B Purchase Agreement with the Series B Purchasers, including V4, pursuant to which, the Company issued and sold in a private placement 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, at an initial conversion price of $ 1.50 per share, and (ii) accompanying Series B Warrants to purchase up to 3,000,000 shares of Common Stock, with an initial exercise price of $ 1.50 per share. Pursuant to the Series B Private Placement, the Company sold to V4 1,000 shares of Series B Preferred Stock and 666,667 Series B Warrants for aggregate gross proceeds of $ 1,000 . See Note 8 for additional information on related party transactions and obligations. F-27 Table of Contents 17. INCOME TAXES Until its reverse recapitalization on March 31, 2017, the Company was treated as a partnership for federal and state income tax purposes and did not incur income taxes. The Company accounts for income taxes under ASC 740. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized. The following table summarizes income (loss) before income taxes: Year Ended December 31, 2025 Domestic $ ( 10,335 ) Foreign - Total $ ( 10,335 ) The Company's income tax expense (benefit) is as follows: Year Ended December 31, 2025 U.S. Federal $ - State - Foreign - Current income tax expense (benefit) - U.S. Federal - State - Foreign - Deferred income tax expense (benefit) - Total income tax expense (benefit) $ - The Company's effective tax rate for the years ended December 31, 2025 was 0 %. For the year ended December 31, 2025, the primary drivers of the variance from the statutory rate were fair value adjustments, state taxes, and valuation allowance. F-28 Table of Contents The following is a reconciliation from the Company's statutory rate to the effective tax rate reported in the financial statements: Year Ended December 31, 2025 Statutory Federal Income Tax Rate $ ( 2,170 ) 21.0 % State and local income taxes, net of federal benefit of state ( 978 ) 9.5 % Foreign Tax Effects - 0.0 % Federal Law Changes - 0.0 % Total Effect of Cross-Border Tax Laws - 0.0 % Tax Credits (Federal) - 0.0 % Valuation Allowance 3,440 ( 33.3 )% Non-Deductible or Non-Taxable Items ( 584 ) 5.7 % Unrecognized Tax Benefits - 0.0 % Other Adjustments 292 ( 2.9 )% Effective Income Tax Rate $ - 0.0 % The tax effect of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases that give rise to deferred tax assets and liabilities is as follows: Year Ended December 31, 2025 Capitalized Sec. 174 expenses $ 1,137 Stock-based compensation 2,631 Tax credits 81 Net operating losses - U.S. 22,195 Accruals and other 967 Gross deferred tax assets 27,011 Valuation allowance ( 26,455 ) Net deferred tax assets 556 Deferred tax liabilities Capital Lease - ROU Asset ( 516 ) Prepaid Expense ( 40 ) Total deferred tax liabilities ( 556 ) Total deferred tax assets (liabilities) $ - For the year ended December 31, 2025, the Company federal and state post-apportioned net operating loss carryforwards are approximately $ 95,684 and $ 51,267 , respectively. There are no foreign operating loss carryforwards. The federal operating loss carryforwards have $ 94,981 with an indefinite carryforward period and $ 703 that begin to expire in 2037. The state post-apportioned operating loss carryforwards of $ 50,555 have a limited carryforward period and will begin to expire in 2037. For the year ended December 31, 2025, the Company federal tax carryforward is $ 81 . There are no state and foreign tax credit carryforwards. All tax credits have a limited carryforward period and will begin to expire in 2037. In accordance with Section 382 and Section 383, utilization of the net operating losses ("NOL") and tax credit carryforwards may subject to limitations based on prior or future ownership changes. At this time, no Section 382 study has been completed. Additionally, after weighing up all available and positive and negative evidence for the year ended December 31, 2025, the Company has recorded a valuation allowance of approximately $ 26,455 . F-29 Table of Contents The Company is subject to income tax in multiple jurisdictions, including federal, states, and city jurisdictions. The Company has federal, state, and city income tax returns that are open to examination from 2022, 2023, and 2024 . In addition, the utilization of tax carryforwards from periods prior to those previously mentioned may also be audited by the taxing authorities once utilized. Year Ended December 31, 2025 Balance as of December 31, 2024 $ - Additions based on tax positions related to the current year - Additions for tax positions of prior years - Reductions for tax positions of prior years - Reductions related to settlements - Reductions from lapse of statute of limitations - Balance as of December 31, 2025 $ - The Company has no t accrued any interest expense or penalties related to the unrecognized tax benefits for the year ended December 31, 2025. The Company has made no income tax payments and received no income tax refunds during the year. All payments made to taxing authorities were for non-income based tax liabilities and are outside the scope of ASC 740. The Company has provided a valuation allowance against the Company’s deferred tax assets, since, in the opinion of management, based upon the earnings history of the Company, it is not more likely than not that the benefits will be realized. All or a portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits. The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025. The Company has evaluated whether OBBBA has a material impact on its 2025 financial statements. The only provision of OBBBA that impacts the Company’s income tax accounting under ASC 740 is the new IRC. Sec. 174A, which permanently allows taxpayers to fully expense domestic research or experimental (R&E) expenditures paid or incurred in taxable years beginning after December 31, 2024. The requirement to capitalize foreign Sec. 174 expenses over 15 years has not changed. On August 28, 2025, the IRS released procedural guidance (Rev. Proc. 2025-28) for implementing Section 174A and related elections for domestic research or experimental. Transition rules provide taxpayers with options to account for any remaining unamortized domestic R&E expenditures paid or incurred in taxable years beginning after December 31, 2021, and before January 1, 2025. Taxpayers may continue to amortize such unamortized amounts over the remaining five-year period; alternatively, they may elect to deduct any remaining unamortized domestic R&E expenditures either entirely in the first tax year beginning after December 31, 2024, or ratably over two taxable years (e.g., 2025 or ratably in 2025 and 2026). The Company has decided it will elect to continue to amortize previously capitalized and unamortized domestic R&E expenditures over the remaining five-year period. As of December 31, 2024, the Company has approximately $ 8,600 of remaining unamortized domestic R&D expenditures, representing approximately $ 1,900 of its gross deferred tax assets. As of December 31, 2025, the Company has approximately $ 4,800 of remaining unamortized domestic R&D expenditures, representing approximately $ 1,100 of its gross deferred tax assets. The provision/(benefit) for Income Taxes for the year ended December 31, 2024, consists of the following: Year Ended December 31, 2024 Current Tax Expense/(Benefit) Deferred Tax Expense/(Benefit) $ ( 2,712 ) Change in Valuation Allowance 2,712 Income Tax Provision/(Benefit) $ - F-30 Table of Contents The Company’s effective income tax rate is different from the federal statutory tax rate in 2024 predominantly due to the valuation allowance, permanent differences, and state taxes. A reconciliation of the statutory U.S. Federal Tax Rate to the Company's Effective Tax Rate is as follows: Year Ended December 31, 2024 U.S. Statutory Federal Income Tax Rate $ ( 1,234 ) State Income Taxes, net of Federal Income tax Benefit ( 67 ) Permanent differences and other ( 1,411 ) Valuation Allowance 2,712 Income Tax Provision/(Benefit) $ - Deferred income taxes represent the tax effect of transactions that are reported in different periods for financial and tax reporting purposes. The combined temporary differences and carryforwards of each tax paying component of the Company that give rise to a significant portion of the deferred income tax benefits and liabilities are as follows as of December 31, 2024: Year Ended December 31, 2024 Deferred income tax assets: Net operating loss carryforwards $ 18,832 Sec. 174 capitalization 1,931 Research and development credits 81 Stock Based Compensation 1,708 Accruals and Other 925 Total deferred tax assets (gross) 23,477 Less valuation allowance ( 23,015 ) Net deferred tax assets 462 Deferred income tax liabilities: - Depreciation and other ( 462 ) Net deferred tax liabilities $ ( 462 ) Net deferred income taxes $ - F-31 Table of Contents 18. MAJOR CUSTOMERS AND RELATED INFORMATION Major Customers For the year ended December 31, 2025, revenue from one distributor accounted for approximatel y 38 % of revenue with no other single customer accounting for more than 10% of total revenue. Accounts receivable from two distributors accounted for approximat ely 71 % and 10 %, res pectively, of net accounts receivable and contract assets at December 31, 2025. For the year ended December 31, 2024, revenues from two distributors accounted for approximately 23 % and 14 %, respectively, of revenues with no other single customer accounting for more than 10% of total revenues. Accounts receivable from two distributors accounted for approximately 11 % and 10 %, respectively, of net accounts receivable and contract assets at December 31, 2024. The following table summarizes revenue by geographic region. Revenue is attributed to countries based on customer’s delivery location. For the Year Ended December 31, 2025 2024 Americas $ 2,861 $ 4,423 Europe, Middle East and Africa 2,320 76 Asia Pacific 22 8 Total revenues, gross $ 5,203 $ 4,507 See Note 1 – Concentrations of Risks for information on reliance on suppliers. 19. SUBSEQUENT EVENTS On February 2, 2026, the Company entered into a securities purchase agreement with certain accredited investors for a private placement offering. On February 3, 2026, the Company closed the private placement and issued (i) 1,700,000 shares of Common Stock, (ii) pre-funded warrants to purchase up to 800,000 shares of Common Stock, and (iii) common warrants to purchase up to 2,500,000 shares of Common Stock. 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. The gross proceeds from the private placement were approximately $ 5,000 , 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. On February 13, 2026, the Company entered into a Termination and Mutual Release Agreement with Atlantic Gateway, LLC, the landlord of the Company's office space located at 3480 Main Highway, Suite 202, Miami, Florida 33133. Pursuant to the agreement, the Office Lease dated September 20, 2023 was terminated effective as of February 13, 2026, and the Company surrendered possession of the premises. The landlord agreed to refund the prorated portion of February 2026 rent attributable to the period following the termination date and to return the security deposit in accordance with the terms of the original lease. The parties exchanged mutual releases of all claims arising out of or relating to the lease, except for obligations expressly set forth in the termination agreement and any obligations that by their terms survive termination. In March 2026, the Company entered into a month-to-month service agreement for a business address located at 3350 Virginia Street, Miami, Florida 33133. F-32 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, State of Florida, on the 26th day of March, 2026. WRAP TECHNOLOGIES, INC Date: March 26, 2026 By: /s/ Scot Cohen Scot Cohen (Principal Executive Officer and Principal Financial Officer and Principal Accounting Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Position Date /s/ Scot Cohen Chief Executive Officer and Director March 26, 2026 Scot Cohen (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) /s/ Bruce Bernstein Director March 26, 2026 Bruce Bernstein /s/ Marc Savas Director March 26, 2026 Marc Savas /s/ Rajiv Srinivasan Director March 26, 2026 Rajiv Srinivasan /s/ Timothy Szymanski Director March 26, 2026 Timothy Szymanski /s/ John Shulman Director March 26, 2026 John Shulman 78 Table of Contents